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North Korea’s Economic Diplomacy with Southeast Asia


By Sarah K. Yun

After the failed April 13 rocket launch, North Korea seemed to be headed towards increased isolation from the international community. The United Nations Security Council tightened the sanctions regime, while the United States canceled the 24,000 metric tons of food aid that had been part of the “Leap Day” Agreement. However, within just a few weeks there were signs of active economic diplomacy by North Korea. While Pyongyang’s diplomatic efforts with Southeast Asia and China are particularly visible, what are the implications of North Korea’s attempts to rekindle old relationships?

From May to August, North Korea began kicking its diplomatic outreach into high gear. In May, Kim Yong-nam, Chairman of the Presidium of the Supreme People’s Assembly, traveled to Indonesia and Singapore. While no official agreements resulted from the meetings in Singapore, Kim’s meetings with the Indonesian President Susilo Bambang Yudhoyono and Foreign Minister Marty Natalegawa resulted in cooperation in communications, information technology, and economic/trade issues, while increasing the exchange of visits between government officials and journalists. Additionally, on June 1 Indonesia agreed to send $2 million in aid to North Korea.

The following month Cambodian foreign minister Hor Namhong visited North Korea to discuss security issues and bolster bilateral ties, while Kim Yong-il, Secretary and Director of International Affairs of the Korea Workers Party, visited Laos, Vietnam and Myanmar. In return, Lao and Vietnamese government officials visited Pyongyang in July. Also in July, North Korea’s foreign minister Park Ui-chun visited Cambodia to participate in the ASEAN Regional Forum and engage in side meetings mostly focused on trade and investment.

From August 5 to 10, Kim Yong-nam visited Vietnam and Laos to try to yield concrete results from the previous trips. On August 6, President Truong Tan Sang of Vietnam said that the “Vietnam-DPRK relations of friendship will grow stronger in mutual interests amidst the deep concern of the top leaders of the two countries.” Vietnam agreed to donate 5,000 tons of rice to Pyongyang as aid towards North Korea’s recent heavy floods. In Laos, the two countries completed four cooperation agreements to include issues of cultural exchange, information and technology, economic cooperation, education and sports.

Despite the fluctuating trade volume between North Korea and Southeast Asia, what are the incentives for countries to engage with each other at the current juncture? For North Korea, there is a significant need to diversify its trading partners. According to South Korea’s Ministry of Unification, inter-Korean trade decreased from $1.9 billion in 2012 to $1.7 billion in 2011. Even then, the figures are largely dependent on the output from the Kaesong Industrial Complex. On the other hand, while estimates vary, North Korea has become increasingly dependent on trade with China where bilateral trade increased 62.4% from 2010 to 2011. With mounting pressure to diversify its trading partners, Southeast Asia is a viable candidate given its geographical proximity and economic growth. According to the IMF, Myanmar, Singapore, and Thailand were eighth, ninth and eleventh respectively as North Korea’s import partners. While Myanmar, Singapore and Thailand were North Korea’s tenth, fourteenth and fifteenth largest trading partners.

Additionally, there are many lessons that could be learned from the Southeast Asia’s development experience. Singapore could be a model for attracting foreign direct investment and managing special economic zones. As Vietnam’s economy grows, the country could provide an alternative model besides the Chinese development model. Indonesia could be a case study on natural resource management. For the purposes of information gathering and political control, North Korea could benefit from engaging with Laos, Myanmar and Thailand. There are also historical ties in Southeast Asia, which creates a less threatening relationship. Many Southeast Asian countries, such as Indonesia, the Philippines and Singapore, were involved in the Non-Aligned Movement, which influenced North Korea’s foreign policy framework after the Korean War.

Southeast Asia also identified opportunities in engaging with North Korea. As ASEAN tries to take a more active role in the regional security and economic structure, North Korea could become an example of ASEAN’s symbolic politics and global role to create an alternative space for engagement. With China’s continuing rise, North Korea’s diplomatic outreach also represents an opportunity for ASEAN to balance China’s growing role in the region to an extent. Indonesia, as the largest country in the region, may have a vested interest in playing an alternative mediator role, particularly on non-nuclear issues.

Beyond Southeast Asia, there have also been other internal and external developments which may hint at the prospect for further engagement and opening on the part of North Korea. It has been reported that on June 28 Kim Jong-un announced a new development plan which includes the downscaling of work units in cooperative farms, allowing increased autonomy to enterprises and factories, and transferring economic projects from the military to the cabinet. In August, North Korea sent a 50 person delegation to China, including Jang Sung-taek, vice chairman of the National Defense Commission. During the summit, the two sides agreed to actively develop the Rason special economic zone and the Hwanggumpyong/Wihwa Island economic zone. Moreover, North Korea and Japan will hold high-level talks to discuss various issues including the abductee issue.

To be sure, indications of reform should be measured with the realities of North Korea. The Kim Jong-un regime will still want to maintain a considerable amount of market control to balance external engagement. The execution and level of genuine reform, including labor market reform, still remains untested. Furthermore, the Kim regime would have to resolve the inherent conflict between the legacy of juche ideology vis-à-vis reforms and opening to the outside world.

Although many are observing North Korea’s growing diplomatic efforts in the Asia Pacific with much interest, it is too early to assess true reform. However, this could serve as an opportunity for the United States, South Korea and their friends. By introducing non-traditional players such as Indonesia, Vietnam, and Singapore, North Korea’s interests and trading partners could be diversified. This could create additional entry points into the new Kim regime. This model might hold the potential to be employed on projects in developing industries in North Korea, such as technology, communication, infrastructure, education, and culture/entertainment. These efforts could potentially de-couple the technocrats from the Kim royal family. In response to North Korea’s increasing relationship with their northern neighbor, China could serve as a platform for small and medium enterprises to invest in the northeastern provinces to build greater ties with North Korea. Such projects would take place in anticipation of Rason’s rapid development.

Cooperation between the United States, South Korea, Southeast Asia, as well as China, could induce North Korea to undertake economic reform and ultimately reduce tension. On one hand, the changing circumstances in North Korea mean that the U.S. and South Korea’s close coordination is crucial in understanding internal debates and foreign policy developments within the Kim regime. On the other hand, changing the current dynamic in the region with new players and creating incentives for economic development could induce change in the North Korean society.

Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.

Photo from Mac Coates photo stream on flickr Creative Commons.

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  1. […] With North Korea having already spent much of its late spring and summer reaching out to nations in … as well as talking to Japan, this trip was watched to gauge the status of China-North Korea relations under the new regime. Jang was sent to China as the head of the DPRK-China Joint Guidance Committee to discuss cooperation in the economic zones of Rason and the Hwanggumpyong and Wihwa Islands. His other meetings in China also focused on investments and cooperation around the economic zones. All told, his delegation consisted of about 50 people, including Ri Chol, an executive officer for North Korea’s Joint Venture and Investment Committee, which is a newly formed government office in North Korea tasked with attracting and regulating foreign investment into the DPRK. Moreover, the Committee has responsibility the Rason SEZ. […]


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The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.