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North Korea Offers Sand, Rents for Concrete, Fuel, Munhwa Says

Wednesday, March 10th, 2010

Sangim Han
Bloomberg
3/10/2010

North Korea’s cash-strapped government is offering to swap sand, resources licenses and rental income in return for concrete, steel and fuel, according to Munhwa Ilbo newspaper.

The government sent letters to companies in China and South Korea asking them to invest $320 million in a construction project in the capital, Pyongyang, the Korean-language paper reported. In addition to the investment, the government is seeking 30,000 tons of diesel and gasoline, 50,000 tons of steel bars and 300,000 tons of cement, the paper said, citing one of the letters.

In return, the letters offer investors long-term rental income, the rights to resource development and sand. North Korea’s finances are being squeezed by United Nations sanctions imposed because of the country’s nuclear weapons program.

The letters were sent to the companies via an investment group, the paper said. The government wants to build 100,000 homes in Pyongyang, it said.

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Construction, Economic reform, Foreign direct investment, Real estate, Sand | Comments Closed

North Korea revises economic management laws

Tuesday, December 22nd, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No.09-12-21-1
12/21/2009

The Korean Central Broadcasting Station (KCBS) announced on December 16 that the North Korean Supreme People’s Assembly Standing Committee has revised the North’s Real Estate Management Law, the Commodities Consumption Level Law, the General Equipment Import Law, and other laws related to economic management. This on the heels of the November 30th announcement, when authorities announced across-the-board currency reform measures, apparently in an attempt to regain control of the country’s market economy.

The KCBS reported that the Real Estate Management Law “regulates fundamental issues of real estate registration and inspection, use, and payment of user fees,” but offered no further details.

Since 2006, North Korean authorities established new offices in each city, county, and region throughout the country. These offices were responsible for surveying property, occupied and vacant, claimed by organizations and businesses, as well as recording the size of each structure on these lands.

In the mid-1990s, with the onset of serious food shortages, food rations to workers were halted and North Korean authorities from every branch and level (including the military, railway, business enterprises) were encouraged to distribute foodstuffs in ways more beneficial to themselves. These authorities planned to resolve food distribution issues through agricultural moves.

The new Real Estate Management Law appears to be aimed at labeling land used for private purposes as strategic nationalized land and strengthening the state’s ability to collect real estate taxes. However, the broadcaster failed to explain in detail how this restructuring would occur.

By enacting the Commodities Consumption Level Law, North Korean authorities can control the basis at which goods are injected into each production sector. This appears to be in preparation for taking cost-reduction measures for enterprises related to production in each region. The broadcaster explained that there were legal demands for the enactment and enforcement of regulations on the level of consumption.

The General Equipment Import Law newly regulates import plans, contracts, and the use of goods by factories, schools, hospitals, ships and broadcasters in an effort to control quality. In each sector, the measure prevents double-investment and controls consumption competition.

As these economic control measures are focused on factories and other bases of production along with importers, it appears that, in conjunction with the recent currency reform, North Korean authorities are attempting to control production quality on all levels. For example, as the North is suffering ongoing supply difficulties due to a lack of materials, the law on consumption levels is an attempt to restrict goods by forcefully managing demand. The law on imports appears to be in an effort to regulate general-use goods in light of the increased reliance on foreign equipment.

Posted in Commodities Consumption Level Law, DPRK Policies, General Equipment Import Law, Institute for Far Eastern Studies, Law on Land Leasing, Real estate, Real Estate Management Law, Statutes, Supreme Peoples Assembly | Comments Closed

Kaesong exports grow, labor shortages worsen

Monday, November 23rd, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No.09-11-23-1
11/23/2009

Companies in the inter-Korean joint Kaesong Industrial Complex (KIC) have recorded a growth since North Korea abolished restrictions on traffic to and from the complex, as well as on the number and length of visits by South Korean workers.

According to the South Korean Ministry of Unification, companies in the KIC recorded September exports worth 3.42 million USD, 21.5 percent higher than the 2.82 million USD-worth of goods exported in September 2008. From May 2008 to July of this year, KIC exports were lower than the previous year every single month, but finally showed a 29% jump in August, the first time in 15 months. The increase in the value of the complex’s exports was helped by exports of machinery and household electrical appliances now being produced there.

There are currently 116 companies operating in the KIC, but according to the Ministry of Unification, at the end of September there were only 40,848 North Korean laborers working there, and the problems revolving around hiring more workers are clouding future prospects for the complex. As there are only around 40,000 North Korean workers living in Kaesong City and the surrounding area, it appears that the KIC cannot currently accommodate any new businesses. This poses a dilemma for the 18 construction projects currently underway, and puts on hold another 105 projects that have been allotted land within the KIC, but have not yet begun construction of any factories.

Furthermore, despite the fact that managers in the KIC are trying to maintain a sense of stability in order to attract further orders, if the North decides to close the door on friendly policies, the beginning of next year could see a reversal of the growth. The KIC is, at best, enjoying an ‘uneasy peace.’

KIC officials say that the primary issue at the moment appears to be whether roads to and from the complex will be constructed and whether the inter-Korean agreement reached during the Roh Moo-hyn administration to provide dormitories for 15,000 workers will be implemented. According to a survey of businesses, companies already in operation and/or under construction want to hire an additional 26,000 workers. However, with the current government closely linking the North Korean nuclear issue with inter-Korean relations, the road and dormitory construction, which would cost tens of millions of dollars, would have to be based on progress toward denuclearization, the likelihood of which, at this point, is cloudy.

The incumbent government also seems to put more weight on maintaining the current, relatively stable state of things in the complex than on further developing the group project. One problem they are working to solve is that officials managing the KIC are now prepared to rent out space in one ‘apartment-style factory’ in which many different companies operate production facilities under one roof, but are having difficulties finding willing clients, while current tenants complain about close quarters and a lack of space.

Posted in Kaesong Industrial Complex (KIC), Labor conditions/wages, Real estate, RoK Ministry of Unification, Special Economic Zones (Established before 2013) | Comments Closed

Hyesan getting a facelift

Friday, November 20th, 2009

Kangsong Taeguk 2012 comes to Hyesan! According to the Daily NK:

According to an inside source, the North Korean authorities have, at the behest of Kim Jong Il, been using the “Mt. Baekdu Tourism Fund’ for improving areas in and around the city of Hyesan in Yangkang Province.

The source relayed the news in a phone conversation with The Daily NK on the 11th, saying, “Recently, many changes have been taking place in Hyesan. At the General’s suggestion, the ‘Mt. Baekdu Tourism Fund’ was channeled to the city, and has been used to dramatically improve the road to and beautify the area around the Samsu Powerplant, as well as creating parks around the Kim Jong Suk Performing Arts Theater.”

In May 2007, after five years under construction, the North Korean authorities held a ceremony for the completion of the Samsu Powerplant. Subsequently, in preparation for an onsite inspection by Kim Jong Il, the beautification of the area around the plant was completed and a new, 24km section of the No. 1 Road running from nearby Wangduk Station (one of a number for the exclusive use of Kim Jong Il) up to the powerplant was constructed.

Construction of the road was apparently extremely difficult, involving removing mountainsides and filling in streams to facilitate the construction of the road, part of that which connects Hyesan with Samjiyeon.

North Korea mobilized around 100,000 people in the period between January 2007 and May 2008 for the work, including 30,000 members of the June 18th Shock Troop, workers from a nearby collective farm, Hyesan Factory and other enterprise laborers.

The construction funds, said to be in the region of $800,000, were sent directly, in cash, to the Party Provincial Secretary and the Provincial Trading Bureau in 2007. They even brought in iron rods, gasoline and diesel fuel from China.

It is apparently difficult for even the vehicles of officials to pass down the No. 1 Road due to the existence of an Escort Bureau checkpoint.

The source also explained about other projects, “Separate from this construction, the project to renovate the road which goes around Wangduk to the Chundong district of Hyesan (where the No. 10 Army Corps Headquarters is located) also began recently (in 2009), and $80,000 has been invested in a beautification project in the area around the Kim Jong Suk theater.”

The road construction project connecting Wangduk and the Samsu Powerplant and the project to repave the existing road from Wangduk Station to the No. 10 Army Corps Headquarters in Chundong were both completed between May 2008 and the end of the “150-Day Battle” in preparation for Kim Jong Il’s inspection of army units in the area.

The beautification of the area around the newly constructed Kim Jong Suk Theater is also noteworthy. The surrounding area contains the No. 7 and No. 8 apartments, which until recently were extremely worn out. Additionally, when an 8-floor apartment next to the No. 7 apartment collapsed in July 2007, some 30 people are said to have lost their lives.

The authorities, while remodeling the No. 7 and No. 8 apartments in an effort to clean up the area, renovated dilapidated apartments and even started a project to lay down Chinese paving blocks in the area.

The Daily NK’s source could not be sure what the original source of the funds was, but confirmed in particular that “it was first tapped under the General’s instructions. Most officials are aware of this.”

On a related note, work on the incomplete Mt. Baekdu-Samjiyeon Railway has still not resumed since its interruption in May. This would seem to indicate that even the Mt. Baekdu Tourism Fund was insufficient for the work.

Read the full story here:
Intensive Public Works Reported in Hyesan
Daily NK
Lee Sung Jin
11/20/2009

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Art, Construction, Real estate | Comments Closed

Rising cost of narcotics in DPRK drives up home, market prices

Friday, November 20th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No.09-11-20-1
11/20/2009

The recent hike in narcotics prices in North Korea appears to be due to rising prices on homes and in markets.

According to Daily NK, “Recent narcotics prices have grown considerably,” and, “If narcotics prices rise, market prices rise across the board.”

As North Korean officials crack down on narcotics production and distribution, the availability of Philopon and other narcotics has been sharply reduced. This reduction in supply is driving up prices.

Drug prices in North Korea first jumped sharply in February of last year, as officials began cracking down on production centers in Hamheung and Pyeongseong.

These raids were said to sharply reduce narcotics production, and in the same month the price of one kilogram of “Ice” shot up to 1,000 won (approx. 2,700 USD), and then again to as much as 2,000 won in April. As soon as narcotics prices rose, housing prices also increased and the price of all factory-produced goods in markets went up. It is as if inside North Korea, the rise in narcotics prices causes the price of everything to increase.

As late as fall 2007, a kilogram of Philopon ran for 5 million won, and could be easily found by those who were looking. By 2008, however, as officials cracked down harder on Philopon producers and dealers, the price had risen exponentially.

Another factor impacting drug prices in North Korea is the sharply growing number of users in China. Despite the efforts of Chinese police, they have been unable to curb the growing flow of narcotics across the border and into the border regions.

In October 2009, one kilogram of Philopon ran from between 50-70 million won, depending on the quality. When smuggled into China, the drugs bring between 150-200 thousand yen (80-100 thousand DPRK won), which when exchanged for ROK currency equals between 30-40 thousand won.

In North Korea, drugs determine housing prices, with the most expensive house in an average city going for the price of one kilogram of Ice. Rising housing costs drive up prices in markets, so that now a kilogram of rice sells for 2200 won.

The price of rice generally falls after the harvest season, but this year remained relatively unchanged. In April of last year, food prices shot up from 2000 to 3000 won for a kilogram of rice, and while this was also related to food shortages, the rising cost of narcotics played a large role.

The reason narcotics prices have such an impact is due to the particular nature of drug sales in North Korea. Drug peddlers deal in cash with narcotics producers, but as cash can be hard to come by, these dealers put up houses as collateral before taking the drugs to China.

In addition, most Chinese renminbi and U.S. dollars circulating in North Korean markets are from the cross-border drug trade, and the fees charged by money-handlers in North Korean markets drive prices up considerably.

Posted in Black markets, Drug smuggling, Illicit activities, Price liberalization, Real estate | Comments Closed

Friday grab bag

Thursday, November 12th, 2009

North Korean defector poetry: I am personally not a big fan of poetry, but some poetry written by North Korean defectors has been translated into English and published. Read it in Radio Free Asia.

North Korean Leadership Compounds: We have pretty much located all of the “easy to find” leadership complexes in North Korea on Google Earth. However, not all of them are visible with high resolution imagery. Here are a few I have recently taken care of:

1. Sinchon Compound (written about by Keji Fujimoto)

Click image for larger version

Download Google Earth overlay here.

2. Island getaway: For the leader who has everything

Click image for larger version

Download Google Earth overlay here.

3. Sugnam

Click image for larger version

Download Google Earth Overlay here

Eight Scenic Views of the Songun Era:

1. Sunrise over Mt. Paektu. (See here)

2. Snow Covered Tapak Sol guard post in Mangyongdae. (See here – Actually not sure where the guard post is, but this is Mangyongdae)

3. Royal Azaleas on the Chol Pass. (See here)

4. Illuinated night view of the Jangja River in Kanggye. (See here)

5. Ulim Waterfall. (See here)

6. Rezoned Handre (Handure) Plain on the Unhung Cooperative Farm in Thaechon County. (See here)

7. Potato flowers in Taehongdan. (See here)

8. Poman-ri fish farm. (See here)

A Song was even written about these places.

Posted in Construction, Google Earth, Real estate, Songun | 2 Comments »

10,000 apartments under construction in Pyongyang

Wednesday, November 11th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-11-10-1
11/10/2009

North Korea is pouring all efforts into the construction of 10,000 family homes in Pyongyang by 2012. Whether this construction plan can be completed within the next three years will weigh on the success or failure of the regime’s goal of establishing a ‘Strong and Prosperous Nation.’

An article run on November 4 in the Chosun Sinbo, a newspaper of the Jochongryeon, the pro-Pyongyang Korean residents’ association in Japan, stated, “Currently, the construction of 10,000 family dwellings is underway in Pyongyang, and the efforts poured into this over the next 3 years will show the strength of the country.” It was also reported that “North Korean authorities are devising policies to concentrate all efforts into the construction area in order to see this through.”

The article also confirmed that the apartment construction project was part of the “effort to open the door to a ‘Strong and Prosperous Nation’,” and that completion of the project “would mean the complete solution of the people’s housing problems in Pyongyang.”

The newspaper claimed that the project is the largest project ever undertaken by the North. In the 1980s and 1990s, 5,000-unit apartments were built along Kwangbok Street and Unification Street over 4 to 5 years, but the current project is twice as large. The aim is to complete the project in 3 years. Each unit is said to be 100 square meters.

North Korean authorities are reportedly pledging that the ‘Strong and Prosperous Nation’ will not just be reflected through economic statistics or increased production, but that they are putting all efforts into increasing the standard of living for the people.

In order to meet the expected increase in demand for electricity, a hydroelectric power plant is being built in Huicheon, Chagang Province, and is expected to be complete by 2012.

It is expected that it will be difficult for the North to complete 10,000 apartments in the next 3 years, and so authorities are also conducting campaigns to repair and upgrade old production lines in factories and companies in order to meet the demand for materials. As well, Preparations are also underway to create a system of factories and businesses to produce needed materials within Pyongyang. The construction project has meant the removal of some military barracks in the area, causing some conflicts between soldiers and civilians.

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Chongryun, Construction, Real estate | Comments Closed

Reconstruction of Ryongchon

Wednesday, October 28th, 2009

UPDATE 3 (2014-4-4): Here is the Red Cross report on the Ryongchon explosion (PDF).

UPDATE 2 (2004-4-22): Apparently these buildings have not aged well.

UPDATE 1 (2009-11-6) : This post was picked up by Yonhap:

N. Korea’s Ryongchon blast site reborn with Soviet-era complexes
Yonhap
Sam Kim

ORIGINAL POST (2009-10-28): In 2004 much of the town of Ryongchon was tragically destroyed in a large explosion. Here is the Wikipedia page on the disaster if you would like a quick reference.

I compiled a couple of images to construct this “before” picture of Ryongchon: