Donju jump bureaucratic hoops to expand taxi services

This is “NK Market Trends,” bringing you
weekly updates on the North Korean economy. This week we sat down with reporter
Seol Song Ah to discuss the latest trends. You might have been wondering just
how long this winter would last, but it appears as though some temperate spring
weather is already upon us. I hope this good news warms the hearts of all our
listeners out there that have been working tirelessly for the “70-day struggle”
Market life has been bustling in the new spring sunshine and today we are
joined by reporter Seol Song Ah to share with us how the jangmadang (market, official or otherwise)
has been doing.*

Thank you. I would like to start off with
the taxi situation. Right now, in major cities like Pyongyang, or the Rason
region of North Hamgyong Province, an established taxi system already exists.
On the other hand, the situation in the more rural areas is far more nascent.
This , of course, then becomes an area of interest by the donju (new monied
class) for investment.

The taxi driving profession has become an
attractive job for men. Using the taxis for commerce distribution or for
transportation services has proven to be very lucrative. As a result, I think
business ventures of this nature will continue to become commonplace in this
“second” de facto private economy.

It’s said that in areas such as Sunchon and
Pyongsong City, South Pyongan Province, men purchasing vehicles and running
these taxi services are seeing strong profits for their efforts. This is of
course different than the situation in Pyongyang where everything is much more

Does this mean that people in rural areas
have more freedom to perform these type of business ventures?

Well first you have to understand that in
Pyongyang, all taxi services are controlled by the Taedong River Passenger
Transport Service Company; in Sunchon and Pyongsong City, however, taxis are
only loosely tied to the Pyongyang Transport Company and have the relative freedom
to make vehicle purchases with private funds. They then use these vehicles to
turn a profit just as in the examples I previously mentioned. But in North
Korea everything is essentially run by the state, so it shouldn’t matter whether
it’s Pyongyang or rural areas, it should be the same.

And yet, that’s not the case. If you
contribute a portion of your monthly profits to a state-run organization in the
rural areas, you are allowed to operate with a fair amount of autonomy. I
believe the Taedong River Passenger Transport Service Company tried to extend
their control nationwide but the changes sweeping this domain indicate that they’ve basically relinquished
operational control of the rural areas to the donju on account of profound and
protracted economic hardships. I suppose you could say that the rural taxis
operate in relative independence when compared to those in Pyongyang, which are
subordinate to the Taedong River Passenger Transport Service Company under a
much more administrative system.

So even though they are being bought by private
funds by the donju, do these vehicles still ultimately belong to the state
though? I’ve also heard of several instances where large freight trucks were
purchased privately. Could you explain a little bit more about private
ownership is a state-controlled environment?

Sure. Firstly, the goal of anyone
purchasing a vehicle is to break into the domain of market distribution and, to a lesser extent, passenger transportation. To this end, someone looking to get into this field must go to a state-run enterprise to first get the vehicle they plan to use registered. The factory
really just acts as a proxy for the paperwork; they know they are going to make
a profit off of said vehicle’s operations and therefore welcome involvement
with anyone able to pay even though they know that this vehicle will be part of
a private business and was purchased privately. After filling out the
registration paperwork, it is then sent to a provincial unit of the State
Planning Commission and subsequently enters the state system “officially.”
Thereafter the vehicle registration and other associated paperwork is then sent
up to the main branch of the State Planning Commission.

If all the paperwork is ratified, the
vehicle’s registration is sent back down to the Ministry of People’s Security (MPS) unit presiding over the purchasing individual’s residential district. A
copy of the finalized paperwork is sent to the provincial MPS office and
another to the provincial level State Planning Commission branch. After all that, you’ll need a license plate. It’s impossible to drive in the North without one, and so it’s at this last step that you’re going to have to prepare some sort
of bribe for the MPS official tasked with issuing a plate for you. Also, just to add something quickly, the license plates in North
Hamgyong Province are manufactured by detainees at a re-education camp in Susong.

You mentioned before that you yourself had
also purchased a private vehicle while in the North. Does that mean there’s
anything resembling some sort of car dealership there?

Yes. Now that’s that it’s fairly easy to
skirt around the limitations the central structure presents, the donju are
really stepping up to purchase vehicles to operate private tax services.
However, it’s quite common for vehicles to be smuggled in because of the high
tax rate slapped on vehicles imported as “official” taxis. Yonmot and Kangsung
Harbors are good examples of where this type of backdoor purchasing takes
place. Kangsung Harbor performs large-scale exporting operations in order to
procure foreign cash for the Party, and they also smuggle in a lot of vehicles.
If a donju would like to get a taxi, he or she (most likely she) would have to
directly work with someone at one of these trading facilities. I suppose you
could consider this type of operation to be a type of underground “dealership” of sorts.

As far as the taxi price goes, it’s going
to run you around $12,000 for a new one and around $6-7,000 for a used model.
Also, don’t forget about that bribe money you’ll need for the license plate.
That will set you back another $500.

It would seem that this type of business
privatization is being used to help the floundering state economy.

Absolutely. I suppose the term “symbiotic
relationship” best describes what’s going on here. We are seeing a shift by the
authorities towards more leniency for these types of private business
practices. In fact, I think the simplest and most accurate description is “public-private partnership,” because really, at its core that’s what it is. at it is as a private-public partnership, because, really, that’s what it is. I say that
because these relationships are major source of income for the state. And as a
result of relaxed regulations, we’re seeing the introduction of other new,
associated businesses and by extension, jobs, spring up. For example, if you’re
bringing more vehicles in, you need people to drive and repair them. This taxi
trend is just the latest example of the dynamic nature of North Korea’s grassroots market economy.

And yet there are still under 100 of these
private taxis in both Pyongsong and Sunchon. Although, when you compare this to
the 400 or so taxis being operated in Pyongyang, you can see how the industry
is just in it’s beginning stages in the rural areas.

How much is the starting meter cost? Is the
fare paid for in U.S. currency? Would you elaborate on the differences we would
see here in the cost of the taxis operating in Pyongyang and of those operating
in the other cities?

Well first off, all taxi fares regardless
of region, are paid for in either U.S. dollars or Chinese Yuan and starts at
$2. Both taxis’ fares would run you about $5 for every 4km of travel, but the
difference is in the take home earnings for the driver. The taxis outside
Pyongyang don’t have processing fees like those associated with the paperwork
in the capital. This along with the ability to conduct interviews and hiring at
the private hiring individuals discretion has lead to a sharp increase of men
in their 30s and 40s trying to work as taxi drivers outside Pyongyang. Also,
taxis operating outside the capital are free to travel anywhere within the
country (with the exception of restricted areas along the border and
Pyongyang). And while these taxis can also get permits for these restricted
areas and travel in the capital itself, Pyongyang city taxis cannot operate
outside the city at all. So it would seem like this would also be more
beneficial to operate taxis outside Pyongyang.

Is there a significant demand for these new
taxis? And are there any female taxi drivers?

Here also you can see a major difference
between those operating within and those operating outside of the capital. It
can be broken down simply like this: taxis are used for short distance
transport in Pyongyang but in the other cities it’s used as a means to move
merchandise to sell at the jangmadang. If someone has a product they need to move
and they’re on a tight schedule, this is when you would call a taxi to come
pick you up to move your goods.

And let’s say that you have to make a
shipment in the middle of the night, you would have to negotiate the price with
the driver and haggle a little. As far as there being female taxi drivers in
North Korea [laughs]… there are none. You can, however, usually see beautiful
young women in their 20s working at various gas stations or car washing

It sure is interesting to hear about how
taxis are quickly becoming a lucrative fixture in North Korea’s informal
private economy. I look forward to discussing more about other private business
ventures. But before we go, we would like to finish with the current jangmadang
market report. Thank you, and goodnight!

We’ll begin by providing a rundown of the
price of rice, the currency conversion rates, and the cost of other goods in
North Korean markets. The price of 1 kg of rice is 5,100 KPW in Pyongyang and
Sinuiju, and 5,2600 KPW in Hyesan. The cost of one kg of corn kernels is 2,160
KPW in Pyongyang, 2,140 KPW in Sinuiju, and 2,300 KPW in Hyesan. The price for
1 kg of pork is 10,900 KPW in Pyongyang, 11,000 KPW in Sinuiju, and 11,200 KPW
in Hyesan. Gasoline 1 kg of is  7,050 KPW in Pyongyang, 7,100 KPW in
Sinuiju, and 7,150 KPW in Hyesan. 1 kg of diesel is 5,350 KPW in Pyongyang,
5,300 KPW in Sinuiju, and 5,350 KPW in Hyesan. Moving along, the USD was
trading at 8,200 KPW in Pyongyang, 8,290 KPW in Sinuiju, and 8,290 KPW in
Hyesan. The Yuan exchange rate rose slightly, 1,330 in Pyongyang, Sinuiju and

*This segment reflects market conditions for the week of February 29-March 4.