Free market activity in North Korea has continued its upward trend in 2017, due in part to a growing number of transportation and delivery services available to merchants and consumers. While international sanctions have caused fuel prices to fluctuate in the country, transportation fees are showing a more heavy reliance on customer demand than fuel costs.
Competition between businesses vying for customers has led to improvements in bus, taxi, motorbike, and other transportation services offering convenient and comfortable options.
For example, bus services now charge customers according to the weight of supplies they wish to carry, making it a more attractive option to traders. Personal taxi services offer “express” options to customers willing to pay an extra charge. People can even catch a ride or have their goods delivered by bicycle.
The downside, however, is that all of these options cost at least 100 times more than the national train service. The price for a ticket along the “business-use train” route from Rajin (North Hamgyong Province) to Sariwon (North Hwanghae Province) costs only 3,500 KPW (~$0.40 USD), while a personal taxi from Pyongsong (South Pyongan Province) to Hyesan (Ryanggang Province) costs about 200 Chinese yuan ($30).
But while these new services may be expensive, the benefits outweigh the costs for many. While a personal taxi is much more expensive than the train, it’s also around 7 times faster. Time is money, even in North Korea, and market veterans believe that the time saved makes the extra cost worthwhile.
A new service has also sprung up in rural areas offering small farm cultivators for rent, which is proving very popular among residents and farmers. Some people use the English term “tractor” to refer to the machine, while others use the name “montraji,” a morphed word referring to the process of importing and distributing the items from China.
A source in Musan, North Hamgyong Province, told Daily NK on December 19, “The montraji are better for harvesting grain than the oxcarts used on state farms, and also make it much easier to cultivate the narrow rows of land between apartment buildings.”
Another source from Hoeryong said, “My husband is still living in North Korea and requested money to purchase a montraji so that he could use it to earn money. So I sent him 20,000 yuan ($3,045). We are seeing a shift back to a time where men can make more money than women due to their use of vehicles and equipment to start businesses.”
A source in South Pyongan Province said, “Unlike taxis and buses, you don’t need a license to operate these Chinese-made ‘hand tractors,’ so you can avoid government taxes and earn a lot of money using them. As a result, they have become even more popular in the cities than in the villages. They can tow huge loads – up to 1 ton – and the charge is typically about $12 (100,000 KPW) per 2 km travelled, regardless of the weight of the goods transported.”
Due to the machine’s ease of operation, women have also been seen driving and offering montraji services outside the Pyongsong Market, where many wait to transport their goods. These operations are now competing for customers with porters using manual wheelbarrows.
Despite Chinese customs restricting exports of the tractors, they are still being smuggled into the North. New models are sold for $900-$1,000, while used models cost $400-$500.
The price of a small bus on the North Korean market, as recorded in South Pyongan Province this year, is anywhere from $5,000-$10,000 USD. A 25-ton capacity truck can be purchased for $40,000-$60,000, a taxi for $8,000-$20,000, and a motorbike for $600-$800.
The authorities are implicitly allowing transportation businesses to grow, as foreign currency can be earned by controlling the import and sale of these vehicles. Individuals trying to get into the transportation business must give up a portion of their profits to the government in exchange for official permission. The practice has evolved into a new kind of tax system for the government.
While individuals operating a business using a motorbike do not need to register in this way, they must still acquire a driver’s license, which involves a bribe of around $500.
The diversification in transportation and delivery services has also translated into accelerated development in other market sectors, including a rise in car wash services, repair shops, parts vendors, and fuel stations.
Although women in North Korea have come to be known as the breadwinners due to the expansion of the markets over the last twenty years, recent growth in the transportation sector has presented more opportunities for men to find work, leading to domination of the vehicle distribution business. Companies that hire male taxi and bus drivers are often owned by females, but it is usually men who sell the vehicles to the transportation service owners.
In another revelation, state-owned freight (rail) cars have been found operating illegally near the Chinese border. Despite efforts by authorities to prevent defections through a crackdown on movement in the border regions, train operators are charging bribes to use their train cars. For example, the charge is approximately 50,000 KPW ($6) for a short route (~55 km) between Paekam and Hyesan near the border, which is a considerably higher fee than the state rail company typically charges.
Further market developments and the expansion of various sectors can be expected in 2018 if the government continues to allow growth. Merchants and consumers in North Korea are likely relieved to see that the market is advancing, even in the face of international sanctions.
