Three years into the pandemic, Choson Exchange thrives with online programmes in North Korea
It's hard to find the opening hours to the DPRK embassy in Beijing if you search the web. These are the opening hours as of 2014:
Monday and Friday - 9:30-11:30 a.m., 2:30-5:30 p.m.
Tuesday, Wednesday, Thursday - 9:30-11:30 a.m.
Photo by Felix Glenk
Rumors have it that the embassy's consular section is sometimes open on Saturday morning, but not always.
The embassy's consular section is located in Cao Fang Di, between the Utown and Parkview Green malls.
"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."
Short answer: we think this is a good thing. Investor agreements, 'exclusive' rights and attraction need to be streamlined to prevent multiple 'exclusive' rights being sold. While this can bureaucratize the investment process, things really can't get more bureaucratic than it is now in North Korea.
The news:
Pyongyang, June 18, 2014 20:58 KST (KCNA) — The DPRK decided to reorganize the Ministry of Foreign Trade as the Ministry of External Economic Affairs of the DPRK by merging the Joint Venture and Investment Commission of the DPRK and the State Economic Development Committee of the DPRK with it.
The Presidium of the DPRK Supreme People's Assembly promulgated a decree in this regard on Wednesday.
The recent collapse of a building in Pyongyang’s Phyongchon District has drawn attention to North Korea’s design and construction industry. The industry has undergone significant changes which may signal a long-term trend towards global norms.
Two days after the building’s collapse, Ma Won Chun, a reputable North Korean architect with experience in finance, was appointed to lead the new ‘Designing Department’ housed within North Korea’s National Defence Commission (NDC).
While it remains to be seen who will be punished for the building’s collapse, Pyongyang’s media response surprised many outside observers — the admission of fault was unusual. The official Korean Central News Agency (KCNA) broadcast self-critical apologies by North Korean officials. With something of this magnitude, the authorities had to get ahead of the story domestically. Rumours can spread nationwide and failing to address the outrage of the most important constituency — Pyongyang — could have been risky.
But the government’s response to the building’s collapse also seems to fit with a wider trend. Pyongyang appears to be strategically aligning its design and construction industry with global trends and norms. Ma’s appointment can also be seen as part of this trend. Some commentators have remarked that Ma’s appointment together with the creation of the new Designing Department could have been a direct response to the incident. If so, that would be an incredibly rapid response.
"Civilized Socialist County" - Construction Projects have feature prominently under Kim Jong Un
The organisational structure of the Designing Department, which consolidates the design and construction process and controls teams of soldier builders, is similar to the design-build project delivery system — a globally popular construction delivery method. This system calls for the management of design and construction by a single entity, which, in principle, can result in greater efficiency and better integration between different stakeholders in the project.
Other attempts at improving coordination in construction are apparent in organisational and technological changes.
The dissolution of the Capital City Construction Commission in April, though believed to be politically motivated by Jang Song Thaek’s purge, has been important in removing the organisation’s overlapping functions with existing ministries.
Also, according to an architect during a Choson Exchange visit, the design and construction industry is experimenting with the process of Building Information Modelling (BIM), a tool for integrating construction information between different stakeholders of the project.
There is also a growing interest in design, as witnessed in the development of landmark projects, such as the Masikryong Ski Resort and Munsu Water Park. Another example is the elevation of Pyongyang University of Architecture to a ‘general university’ in November 2013, making it the fourth university in the country to enjoy this status. Several designers educated abroad have also been exposed to new design tools and knowledge that can be applied in North Korea.
So, what do these general trends and the appointment of Ma Won Chun as the leader of the Designing Department in the NDC mean for North Korea?
First, having a central authority preside over design and construction units in the country may reduce inter-ministry rivalry and improve the coordination, efficiency and quality of construction projects. This is especially important within the context of attracting foreign investors to develop North Korea’s new special economic zones. Perhaps more than political shifts at the top, what these investors are concerned with is the smooth delivery and quality execution of projects. This requires reliable, efficient and well-coordinated local partners on the ground.
Second, with the state´s increasing desire to develop tourism products, devoting more attention to design is important for creating a suitable environment and ‘experience’ for tourists, which are lacking in current resorts. The new department in the NDC seems to signal the growing importance of design at a strategic level. However, the success of its strategic goals will also need to be complemented bytraining and exposure to global design standards for people on the ground.
Although the Designing Department in the NDC is too new to be accurately evaluated, its creation and the appointment of Ma Won Chun seem to reveal that things are at least starting to move in the right direction for North Korea’s design and construction industry.
This article originally appeared on the East Asia Forum Website.
Do you like Czech beer? Do you like Russian food? Well, by golly, then Rason is the place for you!*
Two new (as in, within the last year) dining establishments are now lighting up the Rason restaurant scene, serving European treats. This is a welcome break from the Sinified Korean food that has dominated Rason since...a long time ago. (Indeed, one CE workshop leader who had previously fallen in love with Pyongyang style hot-plate tofu was regularly disappointed to find Chinese-style tofu appear whenever we attempted to order it.)
The Russian Place
We're not sure what this place is called, as we don't speak Russian, but let's temporarily dub it "Mustachioed Construction Worker", after the several muscular and mustachioed Russian laborers we saw working on the Russian-leased pier at Rajin port. Indeed, their constant presence over the last several years as the rail link and then the pier were developed is the impetus for the founding of this restaurant. And while they would likely be the main clientele, the restaurant does have a Chinese/Korean food section as well.
Mustachioed Construction Worker (Probably)
The bread and cheese is a highlight here, as well as Russian dumplings, which were quite good but were probably imported frozen.
Dumplings
Tables less fenced off than in normal Northern restaurants
Mokran Video (the state video distribution company) seems to be releasing more and more Russian material these days. With some Slavic tunes in the background, the ambiance does serve to transport one away for a spell.
The Chesko Beer Place
Some strange interior features
following the northern rendering of 'Czech', "Chesko Beer Place" is what everyone calls this restaurant. No wonder the generic name, as they don't have any signage. They do serve beer, however. It seems a Czech gentlemen was under contract to train the staff to make beer, but recently left.
It is situated in Rajin on the edge of a city park overlooking the sea and they don't mind you dragging a seat out in the afternoon to enjoy the leafy view. This is a significant improvement on the interior, which has a weird plastic jungle/orchard vibe.
The food menu is not terribly Czech, or really Czech at all - it features the pretty standard Chinese-Korean mismash.
Freshness
What kind of beer do you have, asked I. Chesko, said they.
The beer itself is also not terribly Czech, its flavor profile having been made a bit softer and lighter for local palates. It is very drinkable and smooth, though: its so fresh and bright, it makes a nice beer for summer. It's competitively priced with other restaurants, with a 500cc glass going for 10 RMB and a 300 cc glass going for 8 RMB.
*some caveats apply
Choson Exchange, in cooperation with Hanns Seidel Foundation, just conducted the first ever economic workshop in Rason. More on that soon.
For now, another first (at least as far as my google-fu can reveal): we can announce the dates of the 2014 Rason Trade Fair, set for August 18th to 21st. Interestingly, this was among the many issues we covered when it comes to investor relations during our two-day program: people need more than 6 weeks to prepare for a trade fair. Six weeks! That's tough enough to plan travel, much less plan a decent booth.
Regardless, hot off the presses is their flyer, reproduced below. Feel free to print and fold accordingly.
Front and Back
Delicious Filling
Our regional representative, Ryan Russell, an international lawyer, recently posted a compiled set of North Korean (DPRK) investment laws. This was published before North Korea's Special Economic Zone (SEZ) policy was announced, and it is likely that incremental changes will be made to existing investment laws to reconcile it with the latest zone guidelines. Contents at Ryan's blog include:
PART I – FOREIGN INVESTMENT
01 – Law of Foreign Investment
02 – Law on Equity Joint Venture
03 – Law on Contractual Joint Venture
04 – Law on Wholly Foreign-Owned Enterprises
05 – Law on Foreign-Invested Banks
06 – Law on Registration of Foreign-Invested Businesses
07 – Accounting Law for Foreign-Invested Businesses
08 – Law on Financial Management of Foreign-Invested Enterprises
09 – Labour Law for Foreign-Invested Enterprises
10- Taxation Law for Foreign-Invested Businesses and Foreign Individuals
11 – Bankruptcy Law for Foreign-Invested Enterprises
12 – Law on the Rason Economic and Trade Zone
13 – Law on the Hwanggumphyong and Wihwado Economic Zone
14 – Regulations on Establishing and Operating Foreign-Invested Law Offices
15 – Regulations on the Naming of Foreign-Invested Enterprises
16 – Audit Regulations for Foreign-Invested Businesses
PART II – EXTERNAL ECONOMIC MATTERS
17 – Law on External Economic Contracts
18 – Law on External Economic Arbitration
19 – Law on External Civil Relations
21 – Law on Compensation for Damage
23 – Inheritance Law [Succession Law]
26 – Law on Health Quarantine on the Border
27 – Law on Quarantine Inspection of Animals and Plants on the Border
28 – Law on Foreign Exchange Control
30 – Law on the Prevention of Money Laundering
35 – Law on the Chanmber of Commerce
36 – Law on the Origin of Exports
37 – Law on the Inspection of Export and Import Commodities
41 – Law on Industrial Designs
42 – Law on the Name of Origin
43 – Law on the Protection of Computer Software
44 – Law on the Protection of the Environment
45 – Law on Environmental Impact Assessment
46 – Law on the Prevention of Seawater Pollution
PART III - MT. KUMGANG SPECIAL ZONE FOR INTERNATIONAL TOURISM
47 – Law on the Mt. Kumgang Special Zone for International Tourism
48 – Tourism Regulations in the Mt. Kumgang Special Zone for International Tourism
50 – Customs Regulations in the Mt. Kumgang Special Zone for International Tourism
52 – Taxation Regulations in the Mt. Kumgang Special Zone for International Tourism
53 – Insurance Regulations in the Mt. Kumgang Special Zone for International Tourism
Our volunteer Peter, an international lawyer with experience in China, has previously analyzed on DPRK investment laws.
Following Foreign Ministry talks in Sweden, North Korea has agreed to reinvestigate the cases of Japanese abductees, and Japan has pledged to remove some sanctions and offer humanitarian aid conditional on progress on the issue. While official talks were only announced on March 20, you can be sure that Japanese negotiators have been steadily working on the issue for the last 2 years ever since Shinzo Abe assumed the Premiership (and maybe even before). It also seems that Japan has been waiting for North Korea’s intelligence arm (Ministry of State Security) to reach out, to be assured that North Korean negotiators in Sweden have the authority to conclude a deal.
Given that the Japanese have been trying to untangle this issue for more than a decade, what continues to stand in the way, and why are things moving now? 3 Ps are important in understanding the issue:
Process
The last visit fell apart when Kim Jong Il admitted that kidnappings happened, apologized and offered to allow some of the abductees to visit their relatives (being assured that they would return to North Korea). The abductees never returned, and among the remaining abductees that North Korea admitted to, North Korea claimed that they had passed away. The Japanese public rejected the deal with North Korea, and both Koizumi and Kim Jong Il walked away from a failed process. Both sides took significant risks to make a deal happen. For North Korea, the admission splintered their supporters in Japan.
Both sides recognize that the next deal has to be the last deal on the issue, in that the Japanese public has to be certain that all abductees are accounted for, or the negotiations will collapse again. This is not a trivial obstacle. First, there is the question of verifying and confirming if the abductees claimed to be dead are truly dead. Second, there is no agreement on both sides on the true number of abductees. Third, it has to be assumed that any abductees (and their families) must be given the option of moving to Japan.
To placate the Japanese public, a process has to be created to ensure that the issue is addressed conclusively. There might even be a need on both sides for an ‘honest broker’ who can mediate between rival claims. As yet, neither side has seen the need to draw in a third party. Internally, North Korea will run up against vested interests in its investigation, as people could be made to assume responsibility for the kidnappings. Or maybe they could just lay that responsibility on some recently deceased uncle…
Price
North Korea seeks reparations for its colonization by Japan. In the case of South Korea, Japan has paid reparations for its colonization period. While both sides dance around the amount, using a mix of principles and figures raised in past negotiations in their arguments, this will at the end of the day be a realistic and necessary lever to get North Korea to agree to a resolution on the abduction issue.
For a North Korea beginning to think more about economic development, Japanese aid and investment is critical. Rapprochement with Japan could also pressure South Korea to engage more with North Korea. In fact, North Korea’s significant state investment in tourism facilities in Kangwon province (think Wonsan beach resorts, Sinphyong, Masikryong ski resort…etc.) seem strategically positioned to attract Japanese and South Korean tourists in the event of rapprochement. Perhaps a Japan-DPRK summit in Kangwon province (Masikryong or Wonsan), could be a good way to kick-off a potential epicenter of DPRK-Japanese grassroots and economic interactions in the future.
Priorities
Why are things moving under Shinzo Abe? Aside from the stability of his government, Shinzo Abe has been at the forefront of the abductee issue for more than a decade. Traditionally, abductions, North Korea’s missile program, and nuclear program, form an unholy trinity of obstacles between Japan and North Korea. Abe’s personal identification with the abductions, and drive to resolve it, has pushed abductions ahead of other DPRK-Japan issues.
For Japan, putting all three issues on the same level does not make sense, as the missile and nuclear issues cannot be solved bilaterally without US and South Korea at the table; both allies have at times considered Japan’s obsession with abductees an idiosyncratic or at least peripheral complication in past negotiations. At the same time, there could be constituents in Japan who worry about how a bilateral deal deprioritizing the nuclear and missile program could affect the US-Japan alliance.
Politically, its clear how there is an opening for North Korea with regards to Japan. What is more opaque is how and whether domestic politics in North Korea is creating a reciprocal opening for Japan in North Korea. Either way, a deal can be in both countries’ interests, and more broadly beneficial to regional peace and security.
Someone explain to me who put the windmills in Suzhou Industrial Park?
Last month, we ran a workshop on Special Economic Zones in Wonsan, with people from 5 provinces attending. Workshop leaders were practitioners, focusing on the nuts and bolts from an investor perspective, rather than on academic theories on SEZs. One such practitioner, a British with over 15 years of experience investing in North Korea, shared Singapore’s experience developing the Suzhou Industrial Park (SIP) in China. He was a big fan of the project, and called it the “go-to place for businesses looking to set up in China.” He also spent considerable time explaining Irish SEZs, which he also recommended as another model for North Korea to study.
The $30B SIP generated significant controversy in Singapore in its early years. Local Chinese officials undermined the project by building a competing park next door. From a financial point of view, the project lost money in its early years. But as a special zone, it established its reputation as a good location for businesses.
Perhaps in Singapore, lessons from this experience laid the foundation for future projects. The experience definitely did not deter Singapore from getting involved in developing a string of industrial parks, high-tech zones and other SEZ-type projects in India, Vietnam and China. SIP is more relevant to North Korea than Shenzhen, given that the sizes of the proposed SEZ corresponds more to an industrial park than to an entire region.
Singapore’s experience from these projects will be highly relevant as North Korea continues to focus on developing its SEZs. A Singaporean friend who visited North Korea in 2009 mentioned how the government officials he met had studied SIP and quizzed him about Singapore's experience developing it. It is this practical knowledge, good managers, and strong political support that is very much needed to ensure SEZs in North Korea stand a chance of taking off.
We hope to see more efforts by North Koreans to send their SEZ managers overseas for extended training and research and would like to support them in doing so. We have often pressed our partners on the need for DPRK policymakers to focus not just on the short-term, but understandably urgent, goal of attracting investments, but also on laying a proper foundation by ensuring that their managers are well-equipped with international knowledge and experiences. Frequently, we fail to recruit the best managers for long-term scholarships, as their organizations need them for more immediate projects. At the national level, we have yet to see significant efforts made to ensure the process for sending people abroad for programs is more easy, efficient or transparent.
And the best part of the workshop last month? A workshop leader who was terribly cynical about the SEZ effort felt he was self-censoring. He did not think the investment conditions or infrastructure was anywhere near ready for foreigners, but did not want to be brutally honest. We brought his concerns to a young Korean partner, who told us that workshop leaders should be direct and honest in replying to questions. “People are here to learn,” he said.
Update: Calvin, our resident urban planning expert, adds:
The main learning points for SIP are strong leadership, good management, strategic implementation in phases. Physical scale wise, SIP is almost a city / region actually, much larger than other typical industrial parks developed by Singapore and even Kaesong.
SIP: 8000ha
Bintan: 270ha
Wuxi: 340ha
Batam: 320ha
Kaesong: 300ha approx.
Calvin previously wrote a post comparing Rason and SIP.
In our last post, we dated a propaganda shift to 2012, but, after further thought, we wonder if perhaps 2009 is another notable moment related to the coverage this tragic building collapse. That might be the first time that decision-makers realized that Pyongyang's citizens needed to be kept (somewhat) in the loop and that policies need to keep them happy - having the last functioning remnants of the PDS isn't good enough. The needs and aspirations of Pyongyangers now needs to be taken into account. There is a feedback mechanism through which their opinions filter upwards fairly quickly and the authorities need to decide how to respond to public opinion - especially the opinions of Pyongyangers - on particular issues.
This release of information about the collapse , vague and delayed though it was, reflects that awareness on behalf of the leadership. This understanding was birthed in the firey rage of the Pyongyang middle class that felt betrayed in 2009 after the sudden currency reform seriously damaged the savings of so many people. Pyongchon is central Pyongyang, they can't be aloof, especially on something so symbolic: housing is one thing that the central government still supplies and controls, despite an emerging property market.
Remember, five days is pretty rapid for the North Korean system. Once they realized that they needed to control the narrative on an event that is clearly going to get around not only town, but the countryside as well, they did take action. The article took five days to come out, once the preliminary story was set, though it wasn't front page news and they don't appear to be following up in the media. The story doesn't appear to have made an appearance on TV.
Regardless, the authorities want gossipers to be saying, "they've done a really good job fixing this tragedy." Their messaging, not just from this weekend, but in the days and weeks going forward will be interesting to watch.
Will there be ongoing coverage of firings of officials and heroic rescuer's tales? Will Kim Jong Un visit and show the human touch that has characterized his public image? Will they decide they don't know what to do about it and leave it at a single news release?
Don't be surprised if any of those things happen - the authorities will be keeping an ear to the ground, no doubt, deciding how the message should evolve. Though perhaps we shouldn't read too much into it if there isn't much more coverage - our news environment has conditioned us to expect wall-to-wall coverage. North Koreans don't have the same expectations, even the middle class, with their TVs and tablets.
North Korea’s state media, Rodong Sinmun, recently reported on “a serious accident in the construction site in Phyongchon District, Pyongyang on May 13,” and on subsequent rescue operations. Senior public officials were cited by name and took responsibility for the accident. This article (or “Phyongchon-gate”) is unusual in that North Korea media rarely reports publicly on errors attributed to the government. Even more rarely has it publicly attributed these errors to specific government officials.
Some commentators link this to an attempt by North Korea to contrast its efforts against South Korea’s Sewol Ferry Disaster, while others claimed that North Korea couldn’t hide the accident from foreigners, and needed to seize the media initiative. Of course, the fact that the accident happened on May 13 (5 days earlier), and is only known to global media through North Korea’s announcement, calls into question the latter claim.
Instead, people are missing out on broad shifts in North Korean propaganda over the last 3 years. The propaganda narrative, and this specific Phyongchon-gate article, captures fairly dramatic shifts in the context of State-Grassroots relations in the country. Accidents and mistakes do happen in North Korea, as in any other country, but have traditionally been glossed over in domestic media. In the past, problems highlighted in public media were attributed to foreign causes (e.g. saboteurs, spies and sanctions) or natural disasters (e.g. droughts). Phyongchon-gate reflects a new propaganda style, where the government acknowledges a mistake, have senior-level officials or party cadres assume responsibility, and highlight corrective measures.
This shift started in 2012, when North Korea publicly admitted that its attempted rocket launch in April did not succeed. North Korea mentioned at that time that its scientists were assessing what caused the failure. Kim Jong Un followed up on this narrative when he castigated officials for failing to properly maintain Mangyongdae funfair in May that year, pointing to the funfair’s dilapidated state, even pulling weeds from the ground himself. Last month, Kim Jong Un during a military exercise, “severely criticized the [artillery] sub-unit for failing to make good combat preparations.” It is the public nature of such criticism and the blame attributed to government officials that should draw our attention.
Phyongchon-gate and similar stories reflect a government trying to portray itself as accountable and responsive to its grassroots. The top leadership acknowledges public concerns, and shows that it is standing with the grassroots by holding middle- or senior-level management responsible. This message is not just reactive. It is also proactive. Economic development is an area where the leadership is assuming responsibility for progress, by saying it is possible despite sanctions. In the past, sanctions were blamed for a stalled economy. This style also appears to have filtered down to the grassroots. Younger participants in Choson Exchange's workshops ask us to be more blunt with our advice on economic or business issues, even though they might reject or argue with our criticisms.
Skeptics might argue that this propaganda shift is a belated acknowledgment of a richer information environment in which the government has to defuse potential public dissatisfaction by taking the initiative, and that the shift is focused more on optics than action. A more hopeful assessment includes rising government accountability, tied to a shift in the basis of political legitimacy to government performance. We highlighted the shifting basis of legitimacy back in 2011 in the Harvard International Review, focusing on economic performance.
North Korea is changing its public image, domestically, and this approach is a defining trait of the new leadership team under Kim Jong Un.
