[USFK Forums] Capitalist reforms come slowly to North Korea [Reuters]

[C. Y. Lee]

[Uploaded by C. Y. Lee, Monday, October 31, 2005] This is the original report from Reuters. The Korea Times also carried the same in its paper edition of Monday, October 31, 2005:

Capitalist reforms come slowly to North Korea

Thu Oct 27, 2005 8:58 AM BST
[b]By Lindsay Beck

PYONGYANG (Reuters) - North Korea may have a showcase market, but right now it is off limits, officials guiding groups of journalists and tourists say.

Kaesong industrial park, a landmark experiment with market-style reforms for the Communist North that is home to South Korean manufacturers, can be viewed only from a distance. Visiting foreigners are not allowed to enter.

Three years after the government announced a series of economic reforms that recognised profit and allowed businesses to retain earnings, "market", it seems, is still a dirty word.

Small-scale private trade has sprung up at the periphery of the state-planned economy.

But rather than being committed to a reform process like that which transformed economies in China and Vietnam, analysts say North Korea is tolerating only minimal changes, with concerns for its grip on power preventing a more serious structural overhaul.

"The 2002 reforms were just a recognition of changes that had happened already. It's not reform in any meaningful sense, there was just a disintegration of the state," said Andrei Lankov, a North Korea specialist based in Seoul.

"It's not like they're leading a horse, it's more like they're riding a tiger," he said.

The tiger, so far, has remained pretty tame.

In the capital Pyongyang there is an eerie lack of bustle in the broad, tree-lined streets, with few private cars, few shopfronts and no construction cranes that mark the skylines of neighbouring Asian capitals.

BETTER WORK, HIGHER SALARY

But there are signs that market principles, including wage liberalisation, are creeping into daily life.

At a Pyongyang sewing factory, women huddle in rows stitching embroidered landscapes for sale to tourists.

Workers make a base salary of 2,000 won a month but salaries can run up to 30,000 won if the women produce more and better quality work.

The basic pay works out to $13.30 (7.44 pounds) at the official exchange rate of about 150 won to the dollar, but it is only pennies at the unofficial rate, estimated at 2,300 to 2,500 won to the dollar.

Manager Woo Kum-suk says she's never had to let anyone go.

"I could, but it's not necessary, because if somebody does not have enough skills she won't earn enough salary and she would not be able to live," she said.

In Pyongyang, foreign residents say far more goods are available in markets and department stores since the reforms began, the bulk of them from neighbour China.

The most visible sign of private commerce in the capital are small street kiosks selling snacks, drinks and cigarettes.

"They seem to be absorbing a lot of the unemployed or people who were working in factories," said Peter Beck, a Korea analyst with the International Crisis Group.

With the manufacturing sector operating at an estimated 25 to 50 percent of capacity because of problems like fuel shortages and a lack of spare parts, there is plenty of surplus labour to be absorbed.

But if Pyongyang shows only tentative steps toward allowing market activity, analysts say defectors tell them of a far more booming market economy springing up in the hinterland, where the population is not as well provided for by the state.

"The saying goes, 'you're either a businessman or you are dead'," said Lankov.

The World Food Programme, which is granted access to markets around the country, estimates about 150,000 North Koreans work as private traders, though that number could fall since the government banned the private sale of grain and reverted to a state distribution system earlier this month.