A Roll of the Dice: North Korea's Economic Reform Gamble  (Page 2 of 3)

Attempts to attract investment from China, the North Korean economy’s main life-support system, have had mixed results.

Although Pyongyang has recently rejuvenated efforts to develop Chinese-style special economic zones on the border in places like Rason, in August, Zhou Furen, founder of mining company Haicheng Xiyang, said his company’s $45-million iron ore investment had been seized by North Korean police.

“Doing business in North Korea is a nightmare,” Zhou concluded on his verified Weibo account, a Chinese micro-blogging site.

Other recent efforts to generate much-needed investment interest and foreign exchange have had more success.

Output at the Kaesong Industrial Complex where South Korean investors employ cheap North Korean labor just north of the DMZ recorded a 23-percent rise in output in the first half of the year to more than $235 million.

Although the majority of South Korean firms continue to register net losses at the site, the North is reaping the rewards. North Korean workers at Kaesong climbed above 52,000 by the end of August, the same month Pyongyang initiated heavier taxes on South Korean companies operating there, according to Yonhap News Agency.

The salary of each North Korean worker at Kaesong is remitted to the North Korean state which takes a large cut for itself, a mechanism the Stalinist state is also employing in places like Siberia where workers are increasingly sent to generate rising inflows of foreign currency.

In a report due to be presented next week in Tokyo, Seoul-based NGO North Korea Strategy Center says as many as 65,000 North Koreans are currently working overseas – perhaps double the number compared to five years ago – generating between $1.5 billion and $2.3 billion for Kim’s regime this year.

Most workers are based on construction sites and on timber-felling operations with as much as 80 percent of their salaries retained by the North Korean state, according to Kang Chol-hwan, a defector who heads NKSC.

“Sometimes more money is taken out with the government saying it needs contributions for building better infrastructure and other needs for the country,” adds Kang, one of the few prisoners to escape Yodok concentration camp in North Korea.

As Kim’s regime sends ever larger numbers of people overseas to work, inbound tourism appears to be booming, at least by meager North Korean standards.

Comments
2
Michael
December 10, 2012 at 13:10

They do – because North Korea is a totalitarian state. Thankfully, the United States is not.

Gonzalo Vergara
December 8, 2012 at 13:59

Along the same lines, the United States Congress is talking about electoral reforms.  I suspect that North Korean economic reforms may have a slight better chance of success.

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