DPRK banks’ role strenghtened to increase security of personal holdings

September 4th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-9-4-1
9/4/2009

The latest issue of the Kim Il Sung University newspaper (2009, no. 2, April) acknowledged the international society’s sanctions against North Korea, and in a bid to encourage a self-determinant resolution to the country’s economic problems, the paper called for “the utmost circulation of dormant cash,” emphasizing the role of the bank.

The paper stressed that strengthening the role of the bank was a crucial part of ensuring the country’s socialist system continued to operate. It also stated that elevating the position of the bank and circulating currency were essential elements of ensuring that North Koreans were not reliant on foreign assistance, and that they were able to solve their problems independently.

In the article encouraging currency circulation, it was stated that “the oppressive isolation policy of the imperialists grows worse every day,” but that by maximizing capital circulation, domestic economic problems could be resolved and the North could complete its bid to create an economically strong nation even more quickly.

The article reflects the DPRK government’s attempt to encourage spending of Won, Dollars, and Euros by institutions, enterprises and even individuals in an attempt to ease economic woes even in the face of international sanctions. Jung Yeon-ho, a researcher with the Korea Development Institute (KDI), reported in 2003 that North Koreans were sitting on as much as 600,000-1,000,000 USD. Since 2003, North Korean authorities have been trading US dollars for Euros due to sanctions from Washington, so now many in the North also have considerable amounts of Euros stashed away, as well.

Kim Il Sung University, through its paper, insisted that banks needed to strengthen their role in currency circulation and lending, and to ensure that their services were in line with the demands of the times. It noted that banks were taking note of the needs of individuals and enterprises, and catering to their demands in order to more appropriately respond to their issues and not only meet their needs, but to encourage their continued use.

Some North Koreans have had bad experiences with banks, not being able to withdraw previously deposited funds or not earning expected interest. This has led some to avoid banks in order to guarantee their savings.

After the North’s July 1st (2002) Economic Management Reform Measure, an attempt to make policy reflect reality in the North, the government began selling 10-year ‘People’s Lifestyle Bonds’. In early 2006, North Korea’s banks began offering savings accounts, loans, and other services to individuals and enterprises in order to encourage spending.

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Felix Abt’s advice on starting JV company in the DPRK

September 3rd, 2009

German Asia-Pacific Business Association
Ausgabe 3/2009
Download the full publication here (PDF)
Download Mr. Abt’s article here (PDF)

North Korea – doing business in a demanding environment
Despite political obstacles within the system and internationally, it is possible to set up successful business in North Korea, says Felix Abt. Identifying partners and exploring market potentials are difficult tasks. Having completed them, one can count on a dedicated workforce.

The Right Local Partner: The Most Important Requirement to Succeed First, you need a Korean partner for your business as you cannot do any business without one and, second, you do have to find the right one if you want to succeed. When you start with your fact finding mission you come across people who want to introduce you to a specific business partner or they want you to do business with themselves. Of course, they have a vested interest and, most likely, they will not introduce you to alternative and potentially more suitable business partners. But you need to know that in every industry there are companies of different sizes, competence, ranges of products, competitiveness etc.

Read the rest of this entry »

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See Mass Games more affordably this year

September 2nd, 2009

UPDATE 9/2/2009: According to the Koryo Tours newsletter, the mass games will be extended to the 10th October–so an extra 2 weeks for Americans to visit DPRK this year.  Also, a quick mass games tour for 850 Euros will be repeated Sept. 24-26. Finally, Koryo Tours is resuming a tour of Turkmenistan this November.  I took this trip and recommend it.  Learn more about travel to Turkmenistan here.

ORIGINAL POST: Koryo Tours sent out  a newsletter highlighting an affordable trip to see the Mass Games in Pyongyang this year:

Following on from the success of our first ever mini-break, we are pleased to be able to offer you a re-run of the most affordable trip we have ever run to North Korea. This is an amazing opportunity to experience the Arirang Mass Games as well as the highlights of the capital city of Pyongyang, see what all the fuss is about this August on a journey we guarantee you will never forget. Koryo Tours has been running trips to North Korea for over 16 years now and is the only expert in the field.

-only 850 Euros all inclusive from Beijing
-3 days in North Korea
-package includes return flights from Beijing, deluxe accommodation, transportation in North Korea, entry fees, guides services, etc
-2 opportunities to see the Arirang Mass Games, literally the most amazing spectacle you will ever witness
-full itinerary in Pyongyang city, including the Juche Tower, Korean War Museum, Kim Il Sung Square, Pyongyang Metro, and much more
-meals in local restaurants
-US citizens welcome to join this tour also
-accompanied by our expert British staff and the best Korean guides available
-the maximum experience for the minimum cost
-discounts available for students, children, and groups of 3+ booking together

This tour will take place from September 24th – 26th and the deadline for booking is Monday September 14th, please get in contact if you are interested in being part of this journey of a lifetime to the country that makes the most news but still has only a trickle of western visitors per year. See it for yourself a mere 90 minutes from Beijing by plane. A fascinating, safe and unique experience is guaranteed.

Check out Koryo Tours’ web page here.

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Trade & Investment Mission to North-Korea

September 2nd, 2009

GPI Consultancy
Sept 19-26, 2009
1820 Euros

“In the current financial and economic situation, companies face many challenges. They must cut costs, develop new products and find new markets. In these fields, North-Korea might be an interesting option. Inspired by the economic successes of its neighbouring country China , North-Korea has since a few years opened its doors to foreign enterprises. It established several free trade zones to attract foreign investors and there are several sectors, including textile industry, shipbuilding, agro business, logistics, renewable energy, mining and Information Technology, that can be considered for trade and investment.

North-Korea is competing with other Asian countries by offering skilled labor for very low monthly wages and by offering tax incentives. Last year, North-Korea’s exports rose with 23 percent and its imports with 32 percent. Do you want to explore new business opportunities for your company? Then join us from 19 – 26 September 2009 on our trade & investment mission to North-Korea. The program includes individual matchmaking, company visits, network receptions and dinners. Furthermore, we will visit the annual Autumn International Trade Fair in Pyongyang. We will also meet European business people who are working and living in North-Korea.

The mission is meant for entrepreneurs from various business sectors; tailormade meetings will be arranged by our local partner, the DPRK Chamber of Commerce. The program of this unique mission has been attached and we can be contacted for further details. In case you want to participate: please register as soon as possible, so we can start the visa-application procedure.”

Some examples of investment opportunities in North-Korea:
1. http://www.gpic.nl/invest(hungsong).pdf
2. http://www.gpic.nl/invest(clock).pdf

GPI contact information:
Paul Tjia, Senior Consultant
GPI Consultancy, .O. Box 26151, 3002 ED Rotterdam, The Netherlands
E-mail: [email protected] tel: +31-10-4254172 fax: +31-10-4254317 Website: www.gpic.nl

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Orascom financial report includes Koryolink information

September 2nd, 2009

UPDATE:  According to Business Monitor International:

koryolink, North Korea’s sole mobile service provider has reported strong subscriber demand. The joint venture (JV), which is 75% controlled by  Orascom Telecom of Egypt and the remainder held by state-owned  Korea Post and Telecommunications Corporation (KPTC), saw its subscriber base rise by 149.2% quarter-on-quarter (q-o-q) in Q209 to end with 47,863. The operator stated it had encouraged interest in its services through further cuts in connection fees, the introduction of free SMS for the first time and the revision of free minutes to satisfy customer requirements.

Almost all of the operator’s subscribers are based in the capital Pyongyang. This is due to the prevalence of two retail outlets based in the downtown area, in addition to three KPTC shops, which sell koryolink services, while the level of network coverage is significantly higher in the capital than anywhere else in the country. Although calls can be made outside of Pyongyang, the reception is often poor, suffering from weak service quality and dropped calls.

Mobile penetration rates, based on Pyongyang’s population are estimated at 1.4%, which is significantly lower than the 30% cited by cellular-news sources. Demand for mobile in the capital has been led not by government officials and foreign ownership but by ordinary citizens. State employees and foreigners are prohibited from owning mobile handsets, which has been deemed a security risk, with authorities wishing to control information from being circulated outside. This was a primary reason for the decision to ban mobile services in the country following the explosion in the northern Ryongchon train station in April 2004, which was said to have been a failed assassination attempt on North Korean leader Kim Jong-il, who had passed through the station several hours before the explosion. A state of emergency was subsequently declared, and the country cut all telephone and mobile lines in order to stop news from getting out

While the two most likely market segment groups able to afford and own mobile handsets have been barred from usage, this has not impacted mobile revenues. Indeed, koryolink announced that its Q209 revenues had risen by 179.7% q-o-q to US$12.472mn, based on strong subscriber growth and ARPUs of US$22.8.

Meanwhile, there are plans to create a national mobile network across the country, according to the North Korean Central Broadcasting Station, as cited by state news agency Yonhap News. Fibre-optic cables are also being laid to link the capital with all provinces with the intention of supplying digital services. The automation and digital capacity of the country’s data networks are said to have already risen by some sevenfold over the last 16 years.

ORIGINAL POST: Download Orascom’s financial report for the first half of 2009 (here in PDF).  The information on Koryolink is on page 24.  Here is the text:

Being the first full fledged operator to serve DPRK offering attractively priced services and utilizing state of the art technologies, Koryolink was met with very positive market reception. The first of its kind mobile fair in the history of DPRK was launched during the last two weeks of March.

In order to capitalize on the subscriber growth momentum, in the second quarter of 2009 Koryolink introduced further reduction in connection fees as well as free SMS for the first time. Additionally, the mix of free minutes was revised to satisfy customer requirements. Such changes resulted in even more positive demand.

Throughout the second quarter, demand on Koryolink services remained strong and the subscriber base at the end of Q2 ended just short of 50K representing an increase of 149% in subscriber base compared to Q1. Koryolink subscriber base stood at 47.85 thousand by the end of Q2.

Koryolink retail network currently consists of 2 large sales shops strategically located in downtown Pyongyang with 3 additional scratch card sales outlets located within KPTC post office shops. Koryolink plans to expand the indirect sales network through the inauguration of 6 more outlets within KPTC shops. A separate after sales service shop is planned for Q3.

According to the report, at the end of the second quarter of 2009 Orascom reported that Koryolink’s mobile subscriber base reached 47,863 (this was apparently leaked earlier in the year so no surprises there), up from 19,208 three months earlier. During Q2 MOU rose to 199 per month, but ARPU fell to USD22.8, compared to USD24.7 in the first quarter of 2009.

And according to Yonhap:

Orascom reported that its operating profit from North Korea reached US$2.49 million in the April-June period, soaring about eight fold from $312,000 for the previous quarter.

Second quarter sales for Koryolink, a 75-25 percent joint venture between Orascom and North Korea, amounted to $8.01 million, with its profit margin reaching 31 percent, up substantially from the 7 percent for the previous three months, according to Orascom.

Read more Koryolink stories here.

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Nosotek

September 2nd, 2009

UPDATE 2:  The Nosotek staff have produced a short video of the staff at work on their computers.  You can see it on YouTube here.

UPDATE 1: Here is a list of Nosotek’s services and prices.  Click here to read in PDF.

ORIGINAL POST: Nosotek is the first western IT joint-venture company in the DPRK.  According to their web page:

nosotek.JPGIn DPRK, software engineers are selected from the mathematics elite and learn programming from the ground-up, such as assembler to C+, but also Linux kernel and Visual Basic macros.

Among them, Nosotek has attracted the cream of local talent as the only company in Pyongyang offering western working conditions and Internet access.

In addition to the accessible skill level Nosotek was set-up in DPRK because IP secrecy and minimum employee churn rate are structurally guaranteed.

Nosotek sells direct access to its 50+ programmers jointly managed by western and local managers.

Services can be invoiced through a Hong Kong or Chinese company.

Benefit from North Korea’s opening, outsource to Nosotek

Our special application development service offerings include:

1. Tailor-made eBusiness solutions
2. Integrated Content Management solutions
3. Application Development
4. Research & Development
5. Special Component Based Software Development
6. Videogame Development

Interestingly, Nosotek has a YouTube channel where you can see demos of the videogames being produced in the DPRK for mobile phones.  Check out their video demos here.

Here are some intereviews with the company’s directors: Volker Eloesser, Ju Jong Chol

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Association No. 2 – North Korean loggers in Russia

September 2nd, 2009

tynda-bbc.JPG

The BBC ran an interesting video story on North Korean loggers felling trees in Russia.  Of course this has been going on for a long time. However, this is the first video footage of the logging facilities that has appeared in the Western media.

According to the video, North Korea’s logging concessions are managed by a company called “Association No. 2,” which is housed in a compound in northern Tynda, Russia.  According to the story, Association No. 2 receives 35% of proceeds of logging (appx $7m) some fraction of which is repatriated to the DPRK’s Ministry of Forestry.  Using the video, I located the Association No. 2 compound on Google Earth. Here is an image:

assn2.JPG

(Click on image for larger version.  You can see it in Google Maps here.)

Additional Notes:

1. I have not been able to locate the other North Korean logging camps in Russia.  If any readers can find them, please let me know.

2.  The DPRK appointed a new Minister of Forests last October.

3. Bertil Lintner on North Koreans working in Russia.

4. Andrei Lankov on the loggers.

5. Claudia Rosette on the loggers.

6. YouTube video on NKs in Russia.

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NKoreans on quiet US trip on food aid

August 29th, 2009

According to the AFP:

North Korean officials quietly visited Los Angeles last week to talk about resuming food aid, which the impoverished state cut off five months ago during a standoff, participants have said.

The move comes as tensions gradually ease with North Korea, which stunned the world by conducting a nuclear test earlier this year but in recent weeks has made overtures for dialogue.

Five North Korean officials received special US permission to visit Los Angeles where they met representatives of non-governmental organizations that provide relief worldwide, according to the groups.

Richard Walden, president of Operation USA, said the charity picked up the North Koreans at the airport as a goodwill gesture and took them on a tour of its warehouse stocked with medicine and medical equipment to be sent overseas.

“They were very open, very nice and very cordial,” Walden told AFP. “They looked like they were from any other aid ministry in any country.”

he delegation, which also met with other relief groups, included four members of the Korea-US Private Exchange Society, the North Korean body charged with handling relief goods from US non-governmental organizations.

A fifth delegation member came from North Korea’s mission at the United Nations and received special permission to travel beyond the New York area, Walden said.

I also read the North Koreans made a pit stop in Los Vegas

Read the full story here:
AFP
NKoreans on quiet US trip on food aid
8/29/2009

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DPRK rocket tests benefit Rusian military interests

August 29th, 2009

Although the foreign policy implications of US missile defense plans with regards to Russia lie outside the scope of this blog, it is worth pointing out that the Russian government has very cleverly found a way to use North Korean rocket and missile tests to its strategic advantage–by claiming that the North Korean missile tests pose a potential danger to citizens of Eastern Russia.  The potential North Korean threat gives political cover for a build up of the Russian military capacities near Vladivostok where not only the Russian military but also the US, South & North Korean, Japanese, and Chinese forces are also strategically positioned.  According to the Times of London:

The Kremlin ordered troops to deploy Russia’s most advanced missile defence system, the S-400, to intercept any threats from North Korea’s nuclear programme. General Nikolai Makarov, the head of the Russian army, said that a mobile battery of 32 surface-to-air missiles had been put into operation in anticipation of any Korean tests.

“We are taking these preventative measures as a security guarantee against faulty launches of the missiles and to guarantee that fragments of these missiles never fall on Russian territory,” he said. “We are concerned by the fact that the site in North Korea where it carries out its nuclear tests is located quite close to the Russian border.”

A senior Russian senator said that use of the S-400 system could not be ruled out, but he rejected any comparison between Moscow’s actions and the decision by the United States to build a missile defence shield in Eastern Europe. The US argues that the shield is necessary to deter attacks by rogue nations such as Iran and North Korea, but Russia has denounced the plan as a threat to its national security.

Mikhail Margelov, chairman of the Federation Council’s International Affairs Committee, said that the US was responding to “non-existent” dangers, while Russia was defending against “the emergence of real sources of threat”.

Russia’s Far Eastern city of Vladivostok is just 93 miles from its narrow border with North Korea. Six missiles test-fired by North Korea in 2006 reportedly fell in Russian waters in the Sea of Japan.

North Korea fired 11 short-range rockets with a range of up to 500km in two separate launches last month, defying a United Nations ban on ballistic missile activities linked to sanctions against its nuclear programme.

The regime in Pyongyang carried out a second underground nuclear explosion in May at the same time as it test-fired another series of short-range missiles. It also test-fired a long-range missile in April that is said to be capable of reaching Britain and the US.
[…]
The S-400 “Triumph” system has a range of up to 400km and is said to be capable of bringing down cruise and tactical missiles as well as aircraft using stealth technology.

Who will move next?

Read the full story here:
Russia deploys missiles along border with North Korea
Times of London
Tony Halpin
8/29/2009

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Why dictators love kitch

August 27th, 2009

UPDATE: It seems the painting represents the struggle of DPRK to keep itself independent and the strength required to do so.

 kji-bc.jpg

There is an interesting article in the Wall Street Journal this week analyzing the rather tacky painting in the background of the above picture of Bill Clinton and Kim Jong il.

On the one hand, a run-of-the-mill seascape, the kind of visual elevator music one finds in public spaces the world over, where the aim is to decorate but not offend. Yet there was something about the picture that wasn’t quite right and that kept drawing me back to it. For one thing, there was its vast internal scale. The waves were bigger, even, than the figures posing for the photograph, and they so dominated the foreground as if ready to break out and drown the assembled dignitaries.

Then there was the picture’s bizarre disunity. Two opposing visions of nature are combined, a benign one (the luminosity and fluttering birds), and an angry, violent one (the heaving seas and crashing waves). Just as strange, the painting’s various elements seem at war with each other. For instance, the rhythm of the breaking waves leads our eye from left to right, yet at the bottom right-hand corner—just to the right of the woman in the official party wearing a white jacket—a flock of birds, facing to the left, abruptly halts and reverses that momentum. A more accomplished artist would have found a way to integrate the various elements more harmoniously and lead our eye around the canvas more smoothly.

Then I realized: This is no ordinary painting but art with a purpose. What seem to our eye as limitations are the result of deliberate intent. It’s a piece of political propaganda. As such it belongs to a subspecies of kitsch known as totalitarian kitsch, where art’s sole raison d’etre is to bolster a dictatorial regime and glorify its leader.

The message of the painting, located in what appears to be the presidential palace [NKeconWatch: I think it is actually the Paekwawon Guest House], is a simple one: Kim Jong Il’s regime as a force of nature. The painting has a split personality because it aims to convey two distinct messages simultaneously: The soft light and gamboling birds conjure up thoughts of a natural paradise, an allusion to the “paradise” such regimes believe they are creating for their subjects. The crashing waves are a metaphor for the overwhelming power of the state and its Great Leader ready to crush all enemies.

No surprise there as to the painting’s purpose, but the author went on to elaborate on the style and its origins in the Soviet Union, borrowing heavily from Art Under Control in North Korea:

Totalitarian kitsch puts those ideas in the service of the state. It is the official art of authoritarian governments, aimed at extending state control through propaganda. Totalitarian kitsch exists to glorify the state, foster a personality cult surrounding the dictator and celebrate ceaseless and irrevocable social and economic progress through images of churning factories and happy, exultant workers. It does so using the corrupted language of academic realism—heavily muscled supermen and women and colossal scale. Pyongyang’s “Monument to Party Foundation” consists of three hands each emerging from a circular platform and holding, respectively, a hammer, a hoe and a brush. The hands alone are over 150 feet tall.

Such art isn’t produced by the proverbial starving artist in a garret but on an assembly line, like Mansudea Studio in Pyongyang.

“Mansudea is an ‘art-creation company’ as they call it, and it has over 3,000 workers in it,” says Jane Portal, author of “Art under Control in North Korea” and chairwoman of the department of Asian, Oceanic and African art at the Museum of Fine Arts in Boston. “They create with great speed. Artists at the Mansudea produce on average two paintings a month.”

Totalitarian kitsch got its start in the Soviet Union in 1934 when the First All-Union Congress of Soviet Writers ratified the principles of what became known as Socialist Realism. The first decades of the century saw the greatest innovations of modernism through Europe, and in Russia, artists such as Kazmir Malevich, Vladimir Tatlin and Alexander Rodchenko made seminal contributions to the language of Cubism and abstract art.

But under Stalin, the Party decreed that art must serve the cause of revolution, and it could only do so with imagery that was universally and easily understandable and possessed of a didactic purpose. So in 1934 modernism was banned as bourgeois and reactionary (Malevich, who died the following year, spent the remainder of his days painting bland pictures of peasants) and artists began churning out heroic images of Stalin and the proletariat, a classic example of which is Vera Mukhina’s 1937 “Worker and a Kolkhoz Woman.” A statue some 80 feet tall (currently being restored), it shows two strapping figures, a man and a women, breasting the wind as they surge forward, hammer and sickle held high.

In the decades following, Socialist Realism became the style of choice for dictatorships. The Nazis adopted it, as did Mao Zedong and Saddam Hussein. Mr. Hussein’s main artistic legacy is the 1989 “Hands of Victory” in Baghdad, consisting of enormous hands emerging from the ground holding swords that cross. It’s a classic of totalitarian kitsch, part personality cult—the hands are based on casts of Mr. Hussein’s forearms—and Orwellian doublespeak. They were erected to commemorate Iraq’s “victory” in the Iran-Iraq war, which, after eight years and hundreds of thousands of casualties on both sides, in fact ended in a draw.

According to Ms. Portal in Boston, while North Korea’s version of Socialist Realism is typical—“The Kim cult is based on the Mao cult and the Stalin cult—personality cults where they’re regarded as gods,” she says—there are differences.

“One of the interesting things is women,” she says. In Soviet and Chinese art, women are shown shouldering as heavy a burden as men. In North Korean art, women aren’t shown working, and they wear makeup and dresses. “You never see them in pants,” says Ms. Portal. “This comes from Neo-Confucianism, which is traditionally Korean and very male chauvinist,” she says.

To an artist in a democratic country living the customary hand-to-mouth existence, working as a state employee might seem like a boon, even if it does mean doing the same thing day after day. But it too has its perils. Dictators fall and regimes go out of business. Worse than simply being unemployed, the artists might find themselves outcasts, symbols of a discredited ideology.

Some years after the collapse of Communism, I asked a Russian art critic what had happened to all the Socialist Realists in his country. He said they were still earning a living making other kinds of art, but that the transition hadn’t always been seamless. He cited the case of a painter whose stock in trade had been portraits of Lenin. The man was now earning his living churning out religious subjects. But, my friend added, so ingrained were his earlier habits that every time he painted the face of Jesus, he wound up with a likeness of Lenin.

Read the full article here:
Why Dictators Love Kitsch
Wall Street Journal
Eric Gibson
8/10/2009

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