GoodFriends: Research Institute For North Korean Society

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North Korea Today No. 459 June 13, 2012

[“Good Friends” aims to help the North Korean people from a humanistic point of view and publishes “North Korea Today” describing the way the North Korean people live as accurately as possible. We at Good Friends also hope to be a bridge between the North Korean people and the world.]
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The Price of Land in Rasun Tripled in Recent Years
Maintenance Work on Wonjongli – Rajin Road to be Completed This Summer
Judicial Leniency towards Foreign Investors
The Families of Anti-Japan Freedom Fighters at the Top of the List for Moving in to 100,000 Residential Housing Complex in Pyongyang
Young CEOs in their 40’s or 50’s are Busy Looking for Chinese Traders
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The Price of Land in Rasun Tripled in Recent Years
     Land prices in North Korea’s Rasun district are reported to have tripled in the past two years. Since last year’s increase in investment by China and Russia, the land price is rising accordingly. In particular, after securing the rights to build docks No. 4, 5 and 6 in Rajin port as well as securing the right to the ports for fifty years, China decided to invest in airports for passengers and freights, a thermal power plant and railways. An official from Rasun says that the rise in land price in Rasun was to be expected given the level of foreign interest in Rasun for investment. “To encourage foreign investment, banks started offering loans using buildings or land as collateral. This is the most welcome news to the people who had invested in Rajin by building factories there.  It is because even after a lot of land purchase, factory building, and investment, the rate of return was not too good and the investors had been suffering from lack of funds. Now, if foreign investors offer land or buildings as collateral, they can get loans from the bank. However, they have to pay up to two-thirds of the collateral’s value as interest.” In Rasun, it is easy to spot restaurants or stores run by Chinese, and people from Russia or other countries are seen occasionally as well.


Maintenance Work on Wonjongli – Rajin Road to be Completed This Summer
     The maintenance work on the road that connects Hunchun, China, to Wonjongli and the port of Rajin is expected to be done by this summer. As of this June, about two-thirds of the work is completed. The North Korean government planned on finishing the work by the end of last year, but it has been much delayed because of bad condition of the road as well as the death of Kim Jong-Il. Furthermore, there are Chinese workers participating in the road construction and sometimes there are conflicts between Korean and Chinese workers. One North Korean manager said, “Korean workers and Chinese workers often have arguments, and then someone loses his temper and hits the other person. The situation sometimes develops into a group fight. Just a short time ago, there were two Chinese workers who got into a fight with a North Korean worker, and the Korean worker was beaten to death. The Chinese workers, terrified, tried to get rid of the evidence by disposing the dead body far away, but they were caught by security officers. Although it is rare that someone dies from these altercations, there are frequent fights, with strong egos clashing with each other. It is true that the Chinese are very proud.” Currently, China is paying all the costs involved in the road maintenance work and re-building of the bridge to Wonjongli - Rajin.


Judicial Leniency towards Foreign Investors      
     Last month in Rasun, there was an automobile accident involving a Chinese citizen and the security authorities were under a lot of duress. It is because a Chinese investor was involved in it. North Korea amended and supplemented the “Act on Rasun Economic Trade Zone” which established provisions for the personal security of foreign investors residing within the area. Article 9 of the Act states that, “A foreign investor may not be imprisoned or arrested without a legal basis and their residence may not be searched. With respect to personal security and criminal matters, the treaty between North Korea and the corresponding nation, if any, will preside.” This legal provision was established to attract foreign investment more proactively so that, in the event of any incident, a foreign investor would not be interrogated, imprisoned, or arrested without an arrest warrant.

However, cases often arise where punishment is waived even though a foreign investor was obviously at fault because of the risk of alienating the foreign investors.  The automobile accident which occurred last month is just one such case.  The automobile accident occurred as an intoxicated Chinese investor was driving a steep mountain road. While attempting to navigate the tortuous mountain path, the driver swerved sharply to avoid an oncoming vehicle, and his car ended up sliding down into the valley.  Also in the car was a Chinese co-worker and two North Koreans; a man and a woman.  All men survived with some injuries but the woman died on the scene.  Since the law prohibits North Koreans from riding a foreigner’s vehicle for personal reasons, the court, after much consideration, found that the Chinese driver would not be held liable for the woman’s death.  Although the local governmental party respected the ruling of the court, it advised the perpetrator to pay a reasonable compensation to the victim’s family as he was morally responsible for the victim’s death.  It was rather difficult to reach a settlement since the Chinese CEO offered $5,000 for compensation but the victim’s family demanded more than $10,000.  The litigants were not able to reach an agreement for a month and the case was finally settled with compensation, in the amount of $10,000, after the governmental party conducted an aggressive arbitration in June. “In the end, the case was settled with a large compensation but, had the party not intervened, the Chinese investor would have been freed without any punitive action.  Something like this occurs frequently because the court is not abiding by the rules but instead tries to avoid antagonizing China.  It seems like this is because China is prosperous and we receive a lot of financial help from China,” said an official in Rasun.


The Families of Anti-Japan Freedom Fighters at the Top of the List for Moving in to 100,000 Residential Housing Complex in Pyongyang
     While the construction is still going on for the 100,000 residential housing complex in Pyongyang, 1,800 households were allowed to move in, with a special consideration from the Central Party, to the model houses. 300 houses were allotted to the families of anti-Japan freedom fighters, and 500 houses were to the families of merits in the Korean Liberation War. Remaining 1,000 houses were allotted to the newly appointed officials of the Kim Jong-Un administration.

A Pyongyang City Party official said that these model houses are under the jurisdiction of the Central Party and not under Pyongyang City, and the electricity supply system is different and the security is very strict. He said, “There is no power failure due to the separate electricity supply system. Also other convenience facilities are safely protected. It’s not possible for outsiders to approach the complex, while residents are not allowed to contact outsiders and security is tight.”

The construction of the 100,000 residential housing complex in Pyongyang was one of the major national projects and was a symbol of beginning of the Strong and Prosperous Nation and to commemorate the 100th year of the Day of the Sun, April 15. The project had drawn the attention of the Central Party and was ordered to be completed by the 4.15 holiday. However, due to the shortage of construction materials as well as financial hardship, only the outside structure has been finished thus far. It is projected that for the general residents, the move would be around the end of this year.


Young CEOs in their 40’s or 50’s are Busy Looking for Chinese Traders
     Many young CEOs in their 40’s - early 50’s who have been recently appointed in North Korea are eager to visit China. Because most of them had been to China with other CEOs as a member of delegations, they rarely have individual relationship with the Chinese traders. They mobilize every method to get to know Chinese businessmen and start trading business with them. The basic approach is to obtain an introduction from their friends or colleagues in Pyongyang. They may even approach acquaintances of friends to get an introduction. However, due to low credibility, Chinese traders were reluctant to deal with new faces that replaced familiar ones. An official who had visited China since last fall describes the difficult situation by saying, “Chinese traders gently say no, refusing to deal with you. Who would trust and open a business deal with a person they just met, who they knew didn't have the ability to pay?” Since a large-scale replacement of officials following the inspection of the Department of Foreign Trade, the situation seems to get harder.
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