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Will North Korea's latest investment agency last to 2015?

(August 2014) Construction continues in Rason, at the oldest North Korean Special Economic Zone, with the help of the Chinese

(August 2014) Construction continues in Rason, at the oldest North Korean Special Economic Zone, with the help of the Chinese

In March last year, DPRK approved a new Special Economic Zone (SEZ) policy that saw the designation of multiple SEZs across the country. This was unveiled to Western press with relative fanfare through a conference organized in Pyongyang in October that year. Supposedly spearheading this initiative was the new State Economic Development Commission (SEDC). As of early this year, it still remains uncertain how exactly the institutional setup for SEZ management will look like, with multiple layers of institutions and authorities claiming some affiliation with zone management and investment attraction for the zones. For an excellent summary of SEZ initiatives in DPRK, check out Brad Babson’s piece in 38North.

The SEDC appears to be a mishmash of several departments that were moved over from the Joint Venture & Investment Commission (JVIC), alongside the repurposing of a body under the Cabinet known as the State Economic Development Bureau. The SEDC Chairman is reportedly Kim Ki Sok, who previously was a vice-Chairman at JVIC.

Given the fluid institutional basis for many of the new economic institutions in North Korea, it is even possible that the SEDC and JVIC could be merged again at some point in the future.

From a policy standpoint, it is not immediately obvious that a separate and new organization should manage SEZs. After all, if JVIC is pitching itself as a one-stop shop for investors, investors should have access to information on all the potential investment avenues. Was the SEDC carved out of JVIC because investment amounts attracted by JVIC did not match up to expectations? Did ambitious individuals, who decided they could carve out their own economic fiefdom, set up the SEDC, or was it founded based on a conscious policy of strengthening development initiatives and empowering investment attraction efforts? Should efforts focus on strengthening existing investment attraction bodies, rather than the constant reshuffle and establishment of new entities? These are key questions that we need to study to understand the trajectory of North Korea’s economic initiatives. Both JVIC and SEDC, alongside many other entities, claim overlapping jurisdictions over investments into these new zones.

Supposedly, the SEDC has undergone significant management changes since Jang’s purge. Jang Sung Taek was rumored to be closely affiliated with the SEDC’s formation. Was this true? And if so, did his execution permanently impair this new entity? What does this mean for the future of SEDC? Will a new team take over its management and be given significant powers, or will SEDC be winded down or reabsorbed back into JVIC?

Let’s see what 2014 brings for this latest contender in the investment game. The field is often filled with high-profile contenders who have often faded into obscurity. Remember the Taepung group?

Star Cluster - the Cheese Place

There is a pretty darn good fondue place in Pyongyang - Cafe Pyolmuri (Star Cluster, in English). OK, so this isn't exactly news, in the sense that it isn't new or important in any grand sense, but it is both of those things to us, because sometimes when you're in-country for awhile, all the restaurants start to look the same. 

"A Group of Stars", not red, not five-pointed.

"A Group of Stars", not red, not five-pointed.

Pyolmuri has been around for awhile, we'd just not heard of it. Indeed, TASS reported on fondue back in 2011

And apparently, Adra, an aid organization run by Swiss Adventists, opened a Swiss café a few years ago, serving cheese fondue. We're not sure if this is the same place, but since this restaurant has plenty of booze, we'd have to guess that maybe it isn't an Adventist joint.

The genial owner, who has business cards in English claiming an Italian restaurant specializing in dairy foods, told us that Italian chefs had trained the local staff. Indeed, their pizza was pretty tasty, though not as good as the fondue. (Still, pine nut, mushroom and spinach is a pretty cosmopolitan option.) One of our Swiss trainers on our last trip to Pyongyang was even allowed to poke around in the back to see how they do it. He was particular about fondue, but gave his official stamp of approval - "It's not home, but pretty good for what they have to work with."

Something in common with regional friends - see the  Pictures of Asians Taking Pictures of Food Tumblr

Something in common with regional friends - see the Pictures of Asians Taking Pictures of Food Tumblr

They use a white wine base (no Kirsch around these parts) and a blend of imported and local goat's cheese, which had that pleasant 'goaty' tang to it. We're not sure where the goat's cheese comes from as there are several goat farms in the country. The DPRK began focusing on goat husbandry in the early 2000's to provide dairy, inspiring the "All Families Should Extensively Raise Goats" campaign. A decade ago, GRS started work on a goat farm, too. 

As part of the campaign, Kim Jong Il made numerous visits to goat farms in the 2000s. Here's a video about about a 2008 visit, in case you are not very busy for the next 11 minutes:

Whatever one thinks of the 'extensively raise goats campaign', the cheese sold at Star Cluster to take home is quite good, if not cheap: 17 USD per kilo.

Rason and Beyond: SinoNK's Tumen Triangle Project

2013 was the first year that we did not visit the Rason International Trade fair, not out of a lack of interest, but when invitations go out barely 3 weeks before the event... Indeed, trade fair promotion, integration beyond the borderlands and investor expectations are issues on which we'd like to work with Rason officials and business people.

As Geoffrey puts it in the most recent edition of SinoNK's Tumen Triangle Project, "local officials there argued that they were at the forefront of knowledge and experimentation in this area, given their long-history as a special zone." Yet, as with so many other projects in the DPRK, "despite agreements to start programs, nothing ever happened."

This trip also featured CE enjoining locals that in the future we should work together and these proposals met with positive responses. Rason's Yanji rep, at the very least, "was excited at the prospect of training, and at our focus on young professionals. He said, 'you are young. I am young. We should be working together!'"

This edition of the TTP also includes fascinating contributions from a variety of sources. Of particular interest is an article by two longtime UK diplomats, Warwick Morris and James E. Hoare, who describe a trip Yanbian in 1990 at a time when Britain "neither recognized the DPRK nor had any form of diplomatic relations with it."

Pop-Up Pyongyang: Training Locals through Small-Scale Projects

(This is part 2 of a two part series by Calvin Chua. The first part can be found here.) Apart from delivering basic infrastructure, such as smooth roads, constant electricity and water supply, leaders in the DPRK need to rethink whether large-scale physical projects, especially for the tourism and service sector, are the only way to achieve their grand visions.

Instead of looking at fulfilling big quantitative targets, perhaps it is time they look towards small-scale quality interventions within the existing city as a possible alternative. These small projects could include short-term pop-up spaces that could host restaurants, cafes and exhibitions, common elements within the developed world but currently absent in North Korea.

Journey to the East: Strange Encounters with Shower Villas

(This is part 1 of a 2-part report. The concluding portion will be published next week)The final months of 2013 in North Korea saw a strange concoction of visionary economic targets and political purges. Although such major events do have an impact on the feasibility of projects, but they do not reveal the problems in the way projects are carried out by local leaders, mainly the lack of a technical and qualitative understanding in delivering a project.

Coming Feb 6 - 2013 Annual Report

On February 6, we will be publishing our 2013 Annual Report. The report describes the major milestones accomplished last year, focusing on our Women in Business program in particular. The Women in Business program has been great fun to implement in North Korea, despite the usual frustrations of working in the country. The young and energetic female audiences were enthusiastic, entrepreneurial and incredibly capable. At the same time, access to opportunities for females in the business sector is under-focused on in North Korea.