Below I have posted a summary of stories from the Fifth session of the 12th SPA. The stories cover the lead up to the SPA, the completion of Kim Jong-un’s succession (inheriting the title “First Chairman” of the National Defense Commission), and KCNA reports of the official DPRK state budget.
UPDATE 20 (2012-4-21):38 North has posted three articles on the Party Conference and SPA meeting in Pyongyang. Read the articles by James Church, Aidan Foster-Carter, and Bruce Klinger.
The fifth session on the 12th Supreme People’s Assembly was held on April 13. Premier Choe Yong Rim told the legislators the nation’s top priority is to build up the light and agricultural industries to become an economically powerful nation.
According to the KCNA, Premier Choe also reported on the results of last year’s accomplishments while presenting this year’s goals. He elaborated, “The total industrial production rose by 102 percent against last year (2011) and production of hydroelectric power, iron ore, zinc, generators, fertilizers, and magnesia clinker has significantly increased.”
Other achievements of 2011 were announced, completion of Huichon Power Station, technological improvements in three major chemical factories (Hungnam Fertilizer Complex, 2.8 Vinalon Complex, and Namhung Youth Chemical Complex), and construction of high-rise apartments in the Mansudae area in Pyongyang.
It also stressed that the development and joint venture of special economic zones (SEZ) will be strengthened to promote economic and technological cooperation with foreign countries.
Finance Minister Choe Kwang Jin reported on the state budget, stating that last year’s revenue was 101.1 percent, while local government budget reached 112.8 percent. The national budget expenditure was 99.8 percent. For this year’s national budget, revenue was set higher at 108.7 percent and expenditure at 110.1 percent.
Out of the targeted state budget revenue of 108.7 percent, the detailed for budget revenue increase is as follows: transaction revenue (107.5 percent), national corporation profit (110.7 percent), cooperative organization profit (105.3 percent), real estate usage revenue (101.9 percent), and social insurance (101.7 percent).
As for the aimed 110.1 percent increase for this year’s national budget expenditure, the breakdown of the increase is as follows: light and agriculture industries (109.4 percent); power, coal, metal, railroad industries (112.1 percent); basic construction (112.2 percent); science and technology development (110.9 percent); education (109.2 percent); health (108.9 percent); social insurance and welfare (107 percent); sports (106.9 percent) and culture (106.8 percent).
From the total budget expenditure, 15.8 percent will be allocated to national defense and special scholarships and aid will continue to be provided to ethnic Korean children in Japan.
Kim Jong-un’s first public speech: New direction for economic policy stressed
Institute For Far Eastern Studies (IFES)
2012-4-25
Kim Jong Un, the first chairman of the National Defence Commission of the DPRK, made his first speech during a military parade to commemorate the centenary of the birth of his grandfather, Kim Il Sung.
The Rodong Sinmun, the official newspaper of the Central Committee of the Workers’ Party of Korea, released an article on April 19 with the details of the speech.
In the article, Kim Jong Un emphasized, “songun is our autonomy, dignity and life” and pledged to uphold the songun politics to continue the teachings of his father, Kim Jong Il.
Kim Jong Un also underlined that the most important national agenda is becoming a powerful nation through improving the national economy, and resolving the food shortage problem. In addition, he stressed that strong knowledge-based economy must be built by way of new industrial revolution.
The economic policy Kim Jong Un set forth involved resolving the food crisis for the people, development of light industry, transition to a powerful knowledge-based economy, land management, and improvement of cultural and education projects. The Cabinet will be directing the new economic plan. The details of the plan are as follows:
First, in order to resolve the food issue, agricultural production should be improved through investment and technological assistance from the state level. Grain yields should be increased to reach the grain production goals to normalize food distribution for the people.
Second, light industry must be reinforced to resolve the shortages of daily necessities. Specific measures should be established to secure raw materials and to improve the quality to elevate the demand of North Korean products.
Third, housing, food, fuel and other issues related to livelihood must be given priority to improve the quality of life for the people.
Fourth, basic industrial sectors must be developed to build a strong foundation for economic development which can lead to advance production in all areas of the people’s economy.
Fifth, power, coal, metal, and railway system should lead the way to revitalize the people’s economy and stabilize the lives of the people. In particular, power production must be drastically increased and distributed in order to effectively improve the quality of life and monitoring and control must be reinforced.
Sixth, the nation must be established as a strong knowledge-based nation. It was acknowledged that the world is quickly transitioning to the informatization of the economy and North Korea must develop the national economy and build an economic structure that meets international demand. Science and technology should be the forerunner to incorporate science and technology with production and resolve all problems in the economic development process from the science and technology aspect.
ORIGINAL POST (2012-4-15): KCNA reports on the speech:
Kim Jong Un Speaks at Military Parade
Pyongyang, April 15 (KCNA) — The dear respected Kim Jong Un made a congratulatory speech at the military parade celebrating the centenary of the birth of Generalissimo Kim Il Sung.
In his speech Kim Jong Un said that the military parade is a great festival of victors which was provided according to the noble intention of leader Kim Jong Il and on his direct initiative to glorify forever the feats Kim Il Sung performed in the army building and demonstrate the might of the socialist power before the world.
Kim Il Sung, who directed primary efforts to strengthening the revolutionary armed forces in the whole period of his protracted revolutionary activities, worked such military miracle in the 20th century as defeating the most ferocious two imperialisms in one generation, trained the Korean People’s Army into a match-for-a hundred revolutionary army, put all the people under arms and turned the whole country into a fortress, providing a strong military guarantee for the sovereignty of the country and the eternal prosperity of the nation, he noted.
Kim Jong Il, who regarded it as his lifelong mission to carry forward and accomplish the Songun revolutionary cause of Juche pioneered by Kim Il Sung, ushered in the greatest heyday of the development of the Korean revolutionary armed forces with his extraordinary wisdom, outstanding commanding art and matchless grit, he said, and went on:
The Korean revolutionary armed forces have fully demonstrated the might of the powerful revolutionary army distinct in its revolutionary nature and strong in its militant spirit and might under the care of Kim Il Sung and Kim Jong Il.
The military and technical superiority is no longer a monopoly of the imperialists and gone are the days when the enemies could threaten and blackmail against the DPRK with A bombs.
The far-reaching strategy and final victory of the Korean revolution lie in advancing straight along the road of independence, the road of Songun and the path of socialism indicated by Kim Il Sung and Kim Jong Il.
It is the firm resolution of the Workers’ Party of Korea to enable our people, the best people in the world who have remained loyal to the party, overcoming all difficulties, to live, without tightening their belts any longer, and fully enjoy wealth and prosperity under socialism.
The WPK and the DPRK government will join hands with anyone who truly wants the reunification of the country and the peace and prosperity of the nation and make responsible and patient efforts to accomplish the historic cause of national reunification.
The sun’s flag of Kim Il Sung and Kim Jong Il will fly forever before the ranks of the Korean revolution demonstrating victory and glory only and will always encourage us to win fresh victories, he concluded.
With global attention focused on North Korea’s failed rocket launch today, it’s worth also taking a look at the other claim the Pyongyang regime has long made for the imminent April 15 birth centennial of its founding leader, Kim Il-sung: emergence into economic prosperity.
Originally, the regime had declared that the country would emerge as “a strong and prosperous nation” during this time, but with that aspiration far from attainment, the goal has been relaxed recently to marking the country’s “passage through the gate” to prosperity. In reality, the North Korean economy today is characterized by macroeconomic instability, widening inequality and growing corruption.
No one (including the North Korean government) knows with any true confidence the size or growth rate of the country’s economy, but the consensus among outside observers is that per capita income today is lower than it was 20 years ago, and by some reckonings is only now re-attaining the level it first achieved in the 1970s.
Price data indicate that since a disastrous currency reform in November 2009, inflation, including for basic goods such as rice and coal, has been running at well over 100 percent a year. The black market value of the currency has been falling at a similar rate, meaning that those with access to foreign exchange are insulated from the ravages of inflation while those reliant on the local currency have seen their buying power dwindle. Unlike in the past, when grain prices fell after the harvest – sometimes by quite substantial amounts – prices have continued to rise this year. Analyses by both the U.S. government and international groups indicate that there is not enough food to go around, and some families are going without.
Help was supposed to be on the way in the form of a resumption of U.S. aid, but the unraveling of the “Leap Day” food-for-weapons deal in the wake of North Korea’s announcement of its rocket launch means that conditions for the North’s chronically food-insecure population may not improve.
This picture stands in sharp contrast to numerous anecdotal reports of improved living standards, abundant cell phones, and even traffic jams in Pyongyang, though it is consistent with the less numerous reports of grim conditions in provincial cities. My colleague Stephan Haggard has dubbed this phenomenon “Pyongyang illusion” and believes that it may well go beyond typically observed urban- or capital-bias in governance, and represents an attempt by an insecure regime to forestall any Tahrir Square type activity in the capital city.
Macroeconomic imbalances and shortages have exacerbated the country’s problems with corruption, already assessed by Transparency International as the worst in the world. The situation not only represents a drag on growth, but could impair the regime’s capacity to govern, as the parochial interests of corrupt officials diverge from the policy preferences of Pyongyang. In the wake of the December death of leader Kim Jong-il, the state has responded with heightened control measures, including purging the security units who were supposed to pursue corrupt officials but who had evidently themselves been corrupted. But there are limits to the effectiveness of repression when the underlying problems remain unresolved.
In short, the country is beset with macro instability, deepening inequality, rising corruption, and a political leadership that appears to lack the vision or capacity to respond. Some current policies have allegedly been ascribed to Kim Jong-il’s “dying wish,” and it would not be surprising if the regime uses this rationale for some time. But at some point Kim Jong-un and the new leadership will have to take ownership of policy. That transition could well begin on the centennial of his revered grandfather’s birth.
Read the full article here:
Behind North Korea’s rocket launch, economic turmoil East-West Centre
Marcus Noland
2012-4-12
UPDATE 12 (2012-9-21): Taiwanese television was able to send reporters to the new Changjon Street construction site:
Part 1:
Part 2:
UPDATE 11 (2012-4-23): the Daily NK reports on the quality of the housing:
Complaints have emerged regarding the unfinished and potentially dangerous nature of some of the new apartments built at breakneck speed in Pyongyang to meet the 2012 deadline imposed by the 100th anniversary of Kim Il Sung’s birth and help give the impression of rapid development in the North Korean capital.
In order to declare the successful completion of the new apartments, which are most notably to be found in the Mansudae area of the downtown core, the authorities reportedly gave the order to move people into the buildings before the internal décor could be completed.
A Pyongyang source explained to the Daily NK, “Originally, there was no progress going on with new construction because of a serious shortage of materials, so they ordered it to stop while the interiors of finished apartments were dealt with.”
“Despite this order, the work brigades lacked the construction materials to finish the interior construction, and so they started passing responsibility on to the residents,” the source went on. “Most of them are reluctantly getting on with the interior construction, having been told by the work brigades that they are just going to have to get on with it.”
“The residents, scared as they are that they may lose their homes again after losing them once when they were ripped down in the first place, are just living in them while working on the interior construction,” he added.
However, the source noted, “Due to the serious burden of the materials needed to do that, a few others are selling their homes to middlemen,” before adding, “Soon-to-be residents are not readily moving in either, concerned as they are that the buildings might collapse.”
North Korea faces such difficulties not only because of chronic economic problems but because of corruption in the construction management system.
According to sources, cadres and site managers have been guilty of continuously diverting materials, such as sand and steel rods, materials which in a number of cases have come from local people, not the state.
A South Pyongan Province source criticized the situation, saying, “The authorities goal of ‘a hundred thousand homes’ has not been completed after three years of hard work. What is the purpose of offering materials to the state when the cadres are diverting them for themselves? Only the people will end up suffering.”
UPDATE 10 (2012-4-15): A reader sends in an April 15, 2012 satellite image of Pyongyang allowing me to produce before/after images of the construction:
Pictured above: Before and after pictures of the Mansudae Area renovations. Dates: 2010-10-6(L), 2012-4-15 (R)
North Korea announced that the apartment construction in the Mansudae area in Pyongyang is in the completion stage. This has been touted as a part of the effort in building a powerful nation. North Korea announced in January 2008 of its plans to construct 100,000 apartment units in Pyongyang by 2012 to provide housing for the residents.
The Rodong Sinmun, a mouthpiece of the Workers’ Party of Korea, announced on March 24 that, “The completion of Pyongyang Mansudae Apartment Complex is right before our eyes,” and “presenting a magnificent view of the new road in Pyongyang.”
North Korea is busily preparing for the centennial of Kim Il Sung’s birth on April 15, gathering military and youth brigades, and university students to the Mansudae area. When completed, it will house 14 high-rise apartments, convenient facilities and parks in the region.
According to a source in North Korea, “The apartment construction in Mansudae is built differently from the slipform method commonly found in the apartment construction in South Korea. It incorporates a combination of concrete and PC (precast concrete) method.”
The PC method uses less concrete than the reinforced concrete method. North Korea opted to use this method, as it is seen as a better choice for North Korea, which has limited construction equipment (such as concrete mixers and vehicles), and because of the tight time constraint.
Since the seventieth birthday celebration of Kim Jong Il on February 16, North Korea introduced newly constructed buildings and industrial facilities as a symbol of the strong and prosperous nation and as an achievement of Kim Jong Un’s leadership.
On February 23, Rodong Sinmun published an article, “Mansudae area will provide housing for the workers,” and “The nearly completed high-rise apartment is standing tall, boasting to the world of the greatness of our everlasting socialism under the respected Comrade Kim Jong Un.”
In another article, the news reported, “The new road in the Mansudae area incorporates the paramount importance of the people and the masses. We will wholeheartedly remember our Father and Dear Leader Kim Jong Il’s love for his people through the new road.” It added, “At the behest of our General and under the leadership of Kim Jong Un, we are full of determination to construct a powerful socialist nation providing happiness to all the people on our land.”
Such statements are regarded as a movement to idolize Kim Jong Un, by acclaiming the construction of new buildings as emblematic of his accomplishment in building a strong and prosperous nation.
This is similar to what occurred in the 1980s and the 1990s, when there was construction of large-scale buildings including the Juche Tower,Monument to the Party Foundation, the West Sea Floodgate, and the Arch of Triumph. All these buildings were attributed as achievements of Kim Jong Il.
UPDATE 8 (March 2012): Google has updated imagery of Pyongyang:
Pictured above (Google Earth: 2011-10-6): Mansudae area renovation
UPDATE 7 (2012-2-14): Google has uploaded new satellite imagery of Pyongyang to Google Maps (but not Google Earth). I just started going through it, but we can see some of the changes in the Mansudae area:
Click images to see larger versions
Pictured to the left is the “before” picture (2010-10-6). The structures that have survived are outlined in yellow. To the right is the new image on Google Maps. I am unsure of the date this image was captured.
The structures that have survived (as of hte image date): 1. Part of the Changjon Primary School, the Pyongyang Kyongsong Kindergarten, and the Kumsong Middle School No. 1.
Access to the Sungri Metro Station also appears to be unimpeded.
Progress on the project to build 100,000 homes in Pyongyang is moving forward rapidly in at least one location: central Changjeon Street. According to a source from the city who spoke with The Daily NK yesterday, “There are around 30,000 homes being constructed along Changjeon Street, and the shells have almost all gone up.”
Changjeon Street is in the heart of Pyongyang, near well-known spots such as Mansudae Assembly Hall and the giant bronze statue of Kim Il Sung. The authorities are known to be focusing the state’s limited power on construction in this area, with the intention of completing at least the most visible part of planned projects ordered for the commemoration of the 100th anniversary of Kim Il Sung’s birth in April, 2012.
North Korea is understood to have invited a number of foreign dignitaries to witness several big events it has planned for next April, including the Spring Friendship Art Festival and the April 15th ‘Day of the Sun’ birthday celebrations. In that context, completing construction along Changjeon Street is a natural priority.
Changjeon Street was apparently given a further boost following the visit of Kim Jong Il to China in May. Kim was reportedly struck by the inadequacy of Pyongyang when held up against major cities in China, and called for improvement.
The authorities thereafter ordered that the skeletons of homes on Changjeon Street be completed by the anniversary of the Party foundation, which falls on October 10th. According to the source, “The pace of construction has picked up since the authorities ordered that the building frames be completed by October 10th.”
“They started work on a 40-storey building at the end of May, and now are up to the 35th storey. They are using a waterproofing agent that causes the cement to dry quickly, which means they sometimes get through three floors a day,” he continued.
Rodong Shinmun, the Party mouthpiece publication, described the renewed pace of operations on Changjeon Street last Thursday, stating proudly, “The blinding pace of the audacious construction offensive, paying no heed to night or day, has allowed for the construction of the framework of a 40-floor high-rise residential building in no time at all.”
Similar progress is being seen on road extensions and beautification projects nearby. The source said, “Road extension projects have been completed, including that of the road in front of the Botong River and Pyongyang Gymnasium. They’ve put flower beds by the side of the road and the whole area is now in a very good state.”
However, the fixation with construction on Changjeon Street is leading to accidents there, the source added, noting, “Because they only pressure us to speed up and don’t say anything about safety, there have been frequent incidents of workers falling.”
It is also causing other projects in the city to lag far behind. According to the source, “The authorities are doing renovations on houses along the main roads, but only painting and sprucing up the areas which can be seen. The buildings along Tongil, Hyungsaesan and Yongseon Streets were all demolished in 2009, but as yet there is no sign of progress from the company which has been tasked with the construction work.”
Finally, yesterday’s Rodong Shinmun, citing a statement from Kim Jong Il himself, went on to remind the people, “Construction in Pyongyang is not simply an issue of operational economics regarding the formation of roads and construction of homes, it is an important political issue related to the prestige of Socialist Chosun and dignity of the Kim Il Sung Motherland.”
This kind of propaganda push is aimed at ensuring the people are cogent of fact that modern buildings are being constructed by the authorities; an attempt to bring to life ongoing propaganda about the strong and prosperous state, which inside sources suggest is viewed with considerable public cynicism.
According to the Chosun Shinbo piece dated June 23rd, the construction at Mansudae is set to include a complex of 14 new apartment buildings, including North Korea’s tallest at 45 floors, a school, nursery and other public buildings. Elsewhere, there is a plan to pull down older construction in Mansu-dong and replace it with a park, and another to put up a modern cylindrical and square apartment building in the vicinity of Pyongyang Students’ and Children’s Palace.
Meanwhile, all the talk of modernity fits well with efforts to promote the youthful vigor of successor Kim Jong Eun, especially as it surrounds the statue of Kim Il Sung on Mansudae Hill, which is itself said to be undergoing a facelift.
In yesterday’s piece, Rodong Shinmun went on, “According to the Party’s grand capital construction plan, a fire of new Pyongyang creation is blazing violently in the ongoing Mansudae area construction,” adding, “According to this warlike strategy, in a short time, less than a month after it began, the groups taking part in the construction had achieved innovative results, digging the vast foundations of the new homes and laying the concrete.”
However, rumor has it that the reality does not meet the heights of this official propaganda, with the authorities having only managed to construct some 500 new residences in the period to the end of 2010.
UPDATE 4 (2011-6-8): KCTV has braodcast new footage of the construction zone and explained what a few of the new buildings will be. I have uploaded the particular video clip to YouTube, and you can watch it here.
Below are screen shots. In the picture on the left, we can see that many of the older buildings in the area have already been removed and holes have been dug for the new foundations. In the picture on the right we can see another conceptual shot of the area from the other side of the Taedong River.
A huge construction project has been undertaken to renew the looks of the Mansudae area of Pyongyang on the occasion of the 100th birthday of President Kim Il Sung (April 2012) as part of the grand capital construction plan of the Workers’ Party of Korea.
The project includes the construction of modern dwelling houses and a monumental structure in the area in central Pyongyang where the statue of President Kim Il Sung stands and the development of parks in the surroundings to meet the requirements of the new century. It will be a big stride forward to building Pyongyang magnificently as the world-level city.
The ground-breaking ceremony took place on May 22.
It brought together Premier Choe Yong Rim, Minister of the People’s Armed Forces Kim Yong Chun, Vice-Premiers Jon Ha Chol and Ro Tu Chol, officials from ministries, national agencies and municipality and tens of thousands of builders.
Premier Choe Yong Rim made a keynote speech.
He noted that leader Kim Jong Il saw that monumental structures were built everywhere in the capital to glorify the President’s revolutionary exploits for all ages. He then referred to the facts that the leader initiated the construction of Changgwang and Kwangbok Streets and other large projects and led them in the van to bring about a radical turn in building the capital and improving the people’s livelihood.
He said that under his wise guidance modern houses including those in Mansudae Street and at the foot of Haebang Hill, cultural and public service facilities, parks and recreation grounds were built in recent years and gigantic housing development and city landscaping projects are now dynamically pushed forward in Pyongyang.
More recently the leader suggested the development of the Mansudae area and took drastic measures to push the project from design to mobilizing the builders and supply of materials, he noted, and added that all the officials and builders should be well aware of the importance and significance of this construction, strictly observe the instructions of the designs, building operations and construction methods and work hard to create a new building speed.
He stressed the need to finish the construction of houses in Ryongsong, Sopho and Ryokpho areas in time together with the construction in the Mansudae area.
He called on the whole Party, the entire nation and all the people to turn out to support the construction in the Mansudae area.
He was followed by other speakers.
UPDATE 2 (2011-6-3):KCNA has finally published a story about the new construction in the Central District:
There started the project to build on the best level the Mansudae area in Pyongyang where President Kim Il Sung’s statue stands in the run-up to the centenary of his birth.
A monumental edifice, high-rise apartment houses, skyscraping buildings, public buildings and cultural and service facilities will appear as required by the new century in the vast area covering dozens of hectares where its old appearance will be no longer to be seen.
A new street will make its appearance as required by the modern sense of beauty, completely free from the existing mode of urban construction.
It will be unique in the formative artistic representation of architecture and the whole area will turn into a huge park. This is a new idea in the lay-out of the street in the area.
A round-shape big people’s theater will spring up in the area of Mansu-dong.
Trees of good species and flowering plants will be planted in the more than ten hectare area around the theater facing the Mansudae Assembly Hall. Promenades and public service facilities will keep in good harmony.
The height of the high-rise apartment houses to be built in the area covering hundreds of thousands of square meters in Kyongsang-dong, Jongro-dong and Taedongmun-dong is expected to gradually increase and twin tower buildings will be concentrated in the area near the Changjon Intersection so that one can enjoy a bird-eye-view of rhythmic distribution of huge buildings on the street.
A catering street will rise to face Okryu Restaurant and public buildings and cultural and service facilities of unique styles will be distributed to the convenience of the residents. They will be decorated with peculiar street lamps and diverse lights.
What draws attention in the lay-out of the streets is the fashionable appearance of high-rise and skyscraping apartment houses of peculiar styles, a harmonious combination of circular, semi-circular and angle style architecture.
The houses will have de luxe flats which will meet the cultural need of Pyongyangites.
When the construction of the Mansudae area completed, it will best match the monumental edifices including the Chollima Statue, the Tower of the Juche Idea, the Monument to Party Founding, the Grand People’s Study House and the Moranbong Theater and structures in the era of the Workers’ Party including An Sang Thaek, An Sang Thaek Street, Munsu, Mansudae and Changwang streets. This will change the appearance of the capital city beyond recognition.
Conceptual images of the construction area can be seen below.
UPDATE 1 (2011-5-24): In the comments, a reader points out a photo by a recent visitor to Pyongyang. See a LARGE version of the photo here. The photo (2011-4-24) shows that renovation of the Mansudae area began over a month ago. As of April 24, area families and all of their belongings had already been relocated (to where?); shops had been closed and emptied; and building destruction had begun.
I used the project overview map in the evening news to map out the construction area on Google Earth:
In Jongro-dong (종로동) the Pyongyang School Children’s Palace (평양학생소년궁전) will be spared destruction. It looks as if the exclusive Kumsong Middle School No. 1 next door (굼성제1 중학교–not to be confused with the Kumsong School in Mangyongdae) will be torn down, but I bet it will be spared.
In Mansu-dong (만수동) we will see the destruction of the historical Changjon Primary School (평양창전소학교) and the DPRK’s central bank. Maybe the central bank will get a home in the new facilities, but I have no idea.
In Kyongsang-dong (경상동) the Pyongyang Kyongsang Kindergarden (for musically gifted youngsters) as well as the Pyongyang Children’s Department Store will be torn down. These too may receive a new home in the reconstructed neighborhood facilities.
2. This residential construction project, though unlikely to be completed by April 2012, is probably part of the DPRK’s 2012 Kangsong Taeguk (강성대국) campaign. As part of the campaign, Pyongyang is to receive 100,000 new housing units. Read more about 2012 construction projects here, here, and here.
Click image above to see KCNA video of interview with Yun Yong-sok, vice department director of DPRK Joint Venture Investment Committee
According to KCNA (2012-3-23):
The Democratic People’s Republic of Korea is willing to further improve its environment for foreign investment, Yun Yong Sok, a vice department director of the DPRK Committee for Investment and Joint Venture, told KCNA.
He said:
The nation’s economy is gaining momentum, with many industrial establishments and power stations being built across the country.
It is a consistent policy of the DPRK Government to enhance economic cooperation with other countries, while beefing up its self-reliant national economy.
In December last year, the government amended investment-related laws, including the DPRK Law and Regulations on Foreign Investment, laws on joint venture and joint collaboration and the Law on Foreign-funded Businesses and Foreigners’ Tax Payment, in step with the nation’s developing economy and international practices.
It enacted the law on economic zone on Hwanggumphyong and Wihwa islets in the River Amnok and revised and supplemented the law on the Rason economic and trade zone.
The joint development and management in the two economic zones takes on a new way of cooperation. Now it has been under way in a creditable way, driven by the active efforts of both sides of the DPRK and China.
Contracts on joint venture and joint collaboration have been on increase with the investment environment changing for the better.
Rare earth abundant in the country and infrastructure projects lure foreign investment in the DPRK.
The committee will pay deep attention to ensuring the interests of foreign investors, while invigorating the exchange and cooperation with governments, investors and businesses.
In other news, KCNA has adopted the American colloquialism “beefing up”.
Just a few days after Choson Exchange published a PDF copy of the “Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone”, KCNA published laws on both of its recently announced special economic zones along the Chinese border (Rason and Hwanggumphyong). I have posted both laws below in text-recognized PDF format.
Law of the Democratic People’s Republic of Korea of the Hwanggumphyong and Wihwado Economic Zone
Published by KCNA on March 17, 2012 Download PDF here.
Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone Published by KCNA on March 17, 2012 Download PDF here.
Details Released for the Law on the Hwanggumpyong and Wihwado Economic Zone
Institute for Far Eastern Studies (IFES)
2012-4-4
North Korea recently announced that the Law on the Hwanggumpyong and Wihwado (Islands) Economic Zone, with seven chapters and 74 articles, was approved by the Presidium of the Supreme People’s Assembly (SPA) on December 3, 2011.
On the same day, the text of the amended Law on the Rason Economic and Trade Zone was also released.
The newly passed law on Hwanggumpyong and Wihwado included the details of the management policy stating,“Management and operation of the industrial parks and designated areas of the Zone shall be undertaken by the management committee under the guidance and assistance of the central guidance authority of special economic zones and the North Pyongan Provincial People’s Committee” and asserted, “Other institutions shall not get involved in the work of the management committee.”
The details of the law are as follows:
Article 1 specifies the objective of the zones is to provide strict guidelines that can contribute to the development and expansion of foreign economic cooperation and exchange. Hwanggumpyong and Wihwado Economic Zone was designated as the “special economic zone of the Democratic People’s Republic of Korea,” under the jurisdiction of North Pyongan Province and Hwanggumpyong Island and Wihwa Island districts.
Article 3 states the development of the Zone was to be carried out regionally and in phases, centered around several industries — IT, light industry, agricultural, commerce, and tourism — in Hwanggumpyong Island and Wihwa Island, and will follow the Wihwa Island Development Plans.
In comparison, the Rason Economic and Trade Zone passed on January 31, 1993, was announced as a development area for high-tech industry, international logistics business, equipment manufacturing, primary processing industry, light industry, service business and modern agriculture industries.
Article 6 on the section for “Promotion, Prohibition, and Restriction of Investment,” specifies that the government will encourage investments particularly in the highly competitive sectors in the international market. In contrast, those investments or business activities that can harm the safety, health, and morality of the (North Korean) people or the environment will be prohibited or restricted.
Article 7 stipulates that management and operation of the zone will fall under the central guidance authority of special economic zones and North Pyongan Provincial People’s Committee. Here, it was emphasized that no other organizations can meddle with management and operation of the zone.
Article 8 covers the interests of the investors, in protecting their property, interest and rights. It states, “The property, legitimate income and invested rights of investors in the Zone shall be protected by the law. The State shall not nationalize or expropriate the property of the investors.”
Article 9 provides guidelines for the protection of personal safety, human rights, prohibition of illegal detention and arrest.
Article 13 (Development Method of the Zone) states that the land in Hwanggumpyong will be leased to companies but will be developed and managed comprehensively. The land lease term is set at 50 years from the date of issuance of the land use certificate, with options for renewal.
Chapter 4 (Establishment of Enterprises, Economic and Trade Activities), considered the core section of this law, indicates the specifics of business activities, from establishment, accounting, taxes, wages, employment, and other technical and administrative contents.
Article 36 is particularly eye-catching, which indicates that priority in employment must be given to North Korean residents and the minimum monthly wage will be determined by the management committee.
Lastly, corporate income tax rate set at 14 percent of the profit will be reduced to 10 percent to those businesses in the sectors encouraged by the state (Article 43).
In 2010, the DPRK revised the laws governing Rason Special Economic Zone.
This booklet, scanned into pdf form, sketches out the new laws in both Korean and English (English is in the back half). It was at this time that the authorities removed Rason from provincial administration, giving it more autonomy in some ways, while also giving authorities in Pyongyang a more direct link to planning for the SEZ.
Potentially interesting clauses include:
– Ships regardless of nationality are permitted to port (article 26)
– Business licenses can be revoked if DPRK law is “seriously” violated. (article 15)
– Prices will be set between the buyer and seller, though some basic consumer goods may be fixed by the local government. (article 26)
– Disputes may be resolved by arbitration either in the DPRK or a 3rd country. (article 45)
The KCNA announced on February 9 that the “Foreign Investment Bank Law” was modified and supplemented. According to the report, the amended law included “those businesses in operation for over ten years are exempt from income tax on the profit collected in the first year and Bank of Chosun [Bank of North Korea] will be exempt from business taxes on the interest revenue collected from loans provided to companies on favorable terms.”
The previous law already had regulations about exemption of transaction taxes but nothing on business tax. The foreign investment company and foreigner tax law regulated that two to ten percent of profit to be paid by the foreign companies in service and construction sectors.
While the prior law stated, “tax exemption will be provided for the first year for income tax on those businesses over ten years old, and 50 percent exemption will be given in the next two years,” the “50 percent limit” was omitted in the amended legislation.
According to the KCNA, “The law has 5 chapters and 32 articles which included the contents of categorization and specification for areas to establish foreign investment banks, property rights, and autonomy on business management.”
On February 10, the KCNA announced that the Foreign Investment Company Registration Law, Foreign Investment Company and Foreigner Tax Law, and Foreign Investment Company Bankruptcy Law were amended.
In reference to the ordinance of the Supreme People’s Assembly Standing Committee signed on December 21, 2011, provided that this law consisted of 6 chapters and 34 articles with specifics on business establishment, address, tax, and tariff registrations. However, no other details were given.
On January 30, the KCNA also reported the “Labor Law of Foreign Investment Company” was amended and supplemented. This law consists of 8 chapters and 51 articles on hiring and labor contracts, rest, protection, social insurance, and security.
In addition, the “Financial Management Law of Foreign Investment Company” and “Fiscal Law of Foreign Investment Company,” was also modified. However, no other details were provided.
The KCNA has reported that North Korea modified foreign investment laws previously in 1992, 1999, and 2004. This year marks the fourth amendment.
The news elaborated, “The DPRK is encouraging foreign companies to investment in our country based on complete equality and reciprocity and will not nationalize or collect the invested asset,” reiterating the safety and security of foreign investment.
Some analyze the recent amendment as an effort to attract more foreign investment into the country. Similarly, North Korea has recently announced the Special Economic Zone Act for the development of Hwanggumpyong and Wiwha Islands. In addition, the state-run Academy of Social Sciences published a newsletter emphasizing the rational tax investigation for foreign companies.
On February 10th, Choson Central News Agency (KCNA) reported fresh amendments to North Korea’s laws governing foreign investment.
KCNA revealed, “Chosun’s law on the registration of foreign-funded enterprises has changed. 34 articles in 6 chapters of the law, which was made according to a December 21st, 2011 decision of the Standing Committee of the Supreme People’s Assembly to cover the founding, residence, taxation and customs of businesses, have been amended.”
As is ordinarily the case, specific amendments were not included in the report.
On February 9th, North Korea also announced revisions to its Foreign Investment Bank Law issuing exemptions from consumption tax. Last month also saw revisions to banking as well as labor and financial management laws.
The amendments appear aimed at assuaging the fears of Chinese enterprises over issues such as the threat of expropriation. Indeed, China is said to have last month rejected initial laws governing the management of special economic zones at Hwanggeumpyeong and Wihwa Island nr. Shinuiju for a variety of reasons.
Read the full story here:
NK Investment Laws Get Another Makeover Daily NK
Kim Tae Hong
2012-2-13
Law on foreign-funded banks has been amended in the Democratic People’s Republic of Korea.
The law, which breaks into 32 articles in five chapters, deals with classification, residence, property right and independent management of foreign-funded banks.
The law stipulates that the banks with 10 or more years of banking activities shall be exempted from paying income tax for the first-year profits.
It also provides that business taxes shall not be levied on the interest receipts from loans that were credited to local banks and businesses in their favor.
Choson Central News Agency (KCNA) announced on the 30th that North Korean authorities had enacted revisions regarding its Law on Registration of Foreign-invested Enterprise.
KCNA states “Chapter 8 Article 51 of the Law on Registration of Foreign-invested Enterprises protects the signing of labor contracts, labor and repose, labor protection, as well as the right of social insurance and social security.”
In addition, Chapter 10 Article 72 of the Foreign Investment Law and Chapter 4 Article 59 calls for the revision of foreign investment enterprise accounting, KCNA said. Specific changes, however, were not revealed.
North Korea’s Law on Registration of Foreign-invested Enterprise was established in May 1992 and has faced revision in 1999 and 2004. Laws applicable to foreign investment enterprises under the Law on Registration of Foreign-invested Enterprise are subject to change and amendment is scheduled in eight years.
This revision seems to be based on North Korea’s intent to secure foreign currency and foreign investment.
Such measures are expected to attract foreign exchange through assurance. Recently enacted laws have been introduced in the development of special economic zones. The Academy of Social Sciences at the North Korea National Research Institute stressed that an occasional audit of foreign companies may be reasonable.
In response, a representative of the Samsung Economic Research Institute stated in a phone call with Daily NK “At this time, Chinese companies seem to be primarily subject to revisions of the law.” He continued, “The intent seems to be to vanguard special economic zones.”
Following “sanctions on North Korea due to its nuclear policy and pattern of international relations, attraction of foreign investment may not be solved through a framework of law. Much remains unresolved.”
Read the full story here:
NK Enacts Foreign Investment Law Daily NK
Kim Tae Hong
2012-1-31
