Rason Visit with Hanns Siedel Foundation

In August this year, we made a trip with the Hanns Seidel Foundation to Rason to explore the need for economic policy and business training. HSF mentions the trip:

...In August 2011, a delegation of Hanns-Seidel-Foundation and Choson Exchange, a Singaporean non-profit that facilitates educational exchange in the fields of economics, management, and business, visited Rason. Besides a visit of the 1st Rason International Trade Exhibition, meetings and talks with representatives of the Economic Department and the associated farm in the area of animal breeding (Chongye farm in Rajin) were the main focus of the trip. With Cha Kyong-Chol, Chairman of the Development Department and Economic Committee of the special city Rason, cooperation through conducting modern business training courses by Hanns-Seidel-Foundation and Choson Exchange has been agreed upon...

Please also read Andray's piece on infrastructure in Rason at 38North.

A bus bumps and bruises its way along the unpaved road, carrying would-be investors to Rason’s First Rason International Trade Exhibition which ran from August 21-25, 2011, in Sonbong. The windows are open, until a crimson humvee barrels past, its powerful suspension dancing on the road, leaving behind a plume of beige dust. The bus windows snap shut, the still air quickly gets hot and more than one of the passengers wishes we were Chinese high-rollers, being whisked to the Emperor Casino and Hotel, which sits beautifully on Korea’s East Sea, overlooking Bipa Island and flanked by lush green mountains and crystal waters...

Consultations with Ministry of Finance and Banking Sector

Picture: Our teammate skateboards in Pyongyang

In early September, we met with the North Korean Ministry of Finance and various banks to discuss joint training on tax reforms, tax policy and financial sector development. As part of these, we agreed on developing workshops in Pyongyang, as well as internships, personnel exchange and scholarships overseas for candidates deemed to have leadership potential.

We also emphasized the need for a transparent and fair process that is able to select high potential candidates for overseas training. We pointed out that provision of candidates that fail to meet our standards would result in us and our partners cancelling future programs as we consider good selection a cornerstone of our programs.

As part of this discussion, we discussed internal promotion schemes at various institutions in order to enable us to work with key partners in helping them identify their top-performers for overseas opportunities.

September Consultations in Pyongyang

Geoffrey and other policymakers and scholars will be visiting Pyongyang on August 31 to follow up on a policy training workshop we just completed for North Koreans overseas. The purpose of the trip is to plan for further educational exchange, and to wrap up programs for this year.

Op-Ed: Economic Performance and Legitimacy in North Korea

Directors Andray and myself have shared our thoughts on North Korea's transition to a somewhat more economic performance-focused source of legitimacy at the Harvard International Review:

...Through our affiliates and our own interaction with investment-seeking arms of the North Korean government, we have noticed that intra-elite competition for investments, with multiple channels backed by different individuals at the highest levels of the North Korean government, has significantly increased in the last two years.

This leads us to speculate that with a leadership transition underway, such competition marks a shift towards increasing reliance on economic performance as a primary source of legitimacy for the North Korean government. This shift is significant as economic development has taken a back seat for the last two decades. If economic growth is to play a greater role in providing legitimacy for North Korea’s government, it will have a lasting impact on their foreign relations...

Chronicle: Why North Koreans Deserve Opportunities to Study Abroad

The Chronicle of Higher Education recently published an op-ed on why we think North Koreans deserve opportunities to study overseas.

In the early 1980s, Theodore Schultz, a Chicago economist and Nobel laureate, visited a China that was just opening up. Impressed by his translator during the trip, he offered the young man an opportunity to attend the University of Chicago's doctoral program in economics. Thirty years later, the young man, Justin Lin, who helped built one of the top economics department in China at Peking University, became the first chief economist of the World Bank from Asia. Without that scholarship, things might have turned out very differently for Justin Lin, Peking University, and the World Bank.

Today, we have North Korea, an isolated country with young people equally curious about business, finance, and economics, and in a system similar to China's in the 70s or 80s. On my first trip to Pyongyang, in 2007, a student from Kim Il Sung University, North Korea's leading university, told me that she wanted to join a trading company to prove that women can be great business leaders. She asked if I could bring economics or business textbooks for her the next time I visited the country. Her example shows there is a hunger for knowledge in the isolated country. And with international-education opportunities, some of these people could become globally integrated and enlightened leaders.

Investment Laws in the DPRK

In June, Choson Exchange took a fact-finding and training needs-mapping trip to Pyongyang.  The main impetus for the trip was to get a better understanding of the legal structure that the DPRK has in place to govern inbound foreign investment. We found a legal structure that draws heavily on  China's experiences. Our full findings are in this report. Key points include:

- Investment projects categorized into encouraged, permitted, restricted and prohibited categories.

- As in China, foreign enterprises require a local business vehicle to conduct FDI; the primary business vehicles available in the DPRK are limited liability corporate bodies and representative offices.

- The JVIC (Joint Venture and Investment Commission) and other government bodies (if applicable) will review the business scope, capitalization and other aspects of a proposed corporate body prior to incorporation.

- Investment in Rason will be particularly encouraged. According to JVIC, corporate bodies established in Rason can also apply to do business elsewhere in the DPRK.

- The operations and governance of DPRK corporate bodies are set out in law, including scope of activities, investment scale, limited liability, location, management, staffing and repatriation of profits.

- Domestic and Foreign arbitration is the primary mechanism for resolving commercial disputes between DPRK and foreign parties.

- Some ambiguities remain. Will laws be enforced uniformly and consistently?

Full report here.

Occasional Update No. 3 (July 2011)

A Needs Mapping and Training Update North Korean Banker: We want to learn about ETFs and Private Equity... CE Consultant: Why do you want to know about ETFs (Exchange Traded Funds)? You are 30 years, at least, away from developing one! North Korean Banker: For curiosity...I read about it in the Financial Times.

- Meeting in Pyongyang (April 2011)

April Needs Mapping - Successfully Identified Priority Needs and “Best-in-class” Partners

In mid-April, Choson Exchange's Executive Director, travelled to Pyongyang with two management consultants to gain a  better understanding of how the North Korean economic landscape is changing,  North Korean institutions we wish to partner for training and to understand in more concrete terms what capabilities our NK partners want to develop in the next 3 to 5 years.

Institutions we met (a self-selected group) expressed a surprising level of openness with regards to the need for learning from development models from abroad, and for skills training overseas. A list of institutions we met and profiled can be found at http://chosonexchange.org/?p=881 and we have selected key partners who expressed strong interest in training and a focus on providing such opportunities to younger members of their organizations. We apologize for only being able to make a limited amount of information public. Photos from the trip can be found at http://chosonexchange.org/?p=889

June Legal Needs Mapping Trip

Geoffrey again accompanied a team member, who is a lawyer based in Beijing. We are currently working on a report on the laws governing foreign direct investment. The legal structure, we found, is similar to the framework employed in China: the issue of building trust by applying and enforcing these laws fairly and consistently remains the unknown commodity.

The report will be on our website soon.

Scholarships - Selected High-Performing Candidates for Year-Long Study and Internship

We also had a chance to interview and select the first batch of candidates for our study abroad program, in which North Koreans under 30 will receive a year of graduate level education in the fields of macro-economics, business and finance. We were able select from a pool of very promising candidates  - we were somewhat surprised that the process for this has become (relatively) less painful.

Unfortunately, the Singapore side of things has hit some roadblocks. The institution which seemed likely to host the students has decided that this year will be impossible to implement such a program. As such we are actively seeking university partners further afield who would be willing to accept North Koreanscandidates. We are especially interested in the UK or Hong Kong. Any advice or assistance would be very welcome. As always, email us at CEteam@chosonexchange.org

In lieu of a full year academic programs, we have decided to bring these candidates out for a policy study trip instead.

Postponed Programs - June Silicon Valley Entrepreneurship Workshop in Pyongyang

June was to see a delegation of Silicon Valley IT entrepreneurs having several days of workshops and meetings with companies and government officials, hosted by the Korea Computer Center. We had hoped for the opportunity to reach out to a segment of North Koreans beyond the economic policy and finance circles we normally work with, but ran into some visa difficulties for US workshop leaders.

Upcoming Programs - August and September Training Sessions

Rason - In association with Hanns Seidel Foundation, we’ll be conducting a training program in Rason, concurrent with a trade/investment fair. We hope to get a better idea of Rason’s administrative structure and training needs in the economic zone on this trip.

In September, we are also working on an economic strategy training workshop in Pyongyang with relevant North Korean government agencies. We will be bringing down policymakers who work on economic strategy to run a 3 day workshop.

We are also preparing to implement two overseas study trips. Details will emerge occasionally on our website.

Looking for Volunteers and Other Resources

We are also looking for companies and organizations (particularly in the fields of business, finance, economics or law) willing to host unpaid or stipend-receiving interns, preferably in Hong Kong, Beijing,  or Singapore.

As we prepare to launch training workshops in July/August/September/October, we are looking for those with an interest to volunteer and support us. For more information, check out our recent recruitment notice at http://chosonexchange.org/?p=883. Also, financial sponsors are most appreciated as we are currently suffering a deficit in our operations.

Contact Us

This occasional newsletter is brought to you by the Choson Exchange team. To contact us, please email CEteam@chosonexchange.org

Please follow us on twitter! We hear that is where things happen these days. @chosonexchange

Photos from June Consultations Up

We have uploaded some photos from our consultations in Pyongyang in June to our Facebook page. Feel free to take a look!

Recruiting Deserving Students

In this 38north.org article, Geoffrey K. See, executive director of Choson Exchange, charts the process through which students from the DPRK might be selected. There are so many reports of negative experiences involving exchange students who underperform, lack interest or seem to have been sent based on political, rather than academic credentials.

But these "negative experiences seem strange to me when Beijing University professors have told me that their North Korean students are routinely top of their classes, in Chinese, at what is one of the most selective and competitive universities in China," he writes.

Choson Exchange has been involved in a study-abroad selection process for the last several months. Through this learning process we have found that selecting good students is possible. See writes that student selection is much like choosing investments:

• Be Selective: Keep in mind that a bigger pool of candidates exist beyond what is often presented and ensure that candidates are chosen not just on individual merit, but also relative to competing candidates
• Be Disciplined: Walk away from candidates that are simply not up to expectation
• Conduct Due Diligence: There is no alternative to having people on-the-ground conducting the interviews

We hope to continue to improve our model for recruiting North Korean students and recognize the limitations CE and other organizations face in doing so.

Read the full article at 38north.org

Rason to follow the Singapore model?

Choson Exchange has been actively promoting in North Korea understanding and knowledge of Singapore's (and other countries') approach to governance and economic/investment policy-making.

According to the Institute of Far Eastern Studies, North Korea's Joint Venture & Investment Commission (a Choson Exchange workshop partner) has said that "Rason will soon become the entrepot port like Singapore, enhancing the lives of North Korean people.”

I look forward to having tasty Singaporean dishes such as char kway teow and Hainanese chicken rice on my next trip to Rason.