The continuing international sanctions on North Korea are causing difficulties for the country’s traders, who are having trouble finding items not on the sanctions list to sell as well as having to pay “loyalty payments” to the state and bribes to government officials.
“Traders are saying that the business environment in North Korea is poor and that they have a lot of difficulty importing materials from China that don’t violate the sanctions. Even if products clear Chinese customs without a problem, traders face issues in North Korea […] North Korean customs agents demand bribes and the traders say they’re left with nothing,” a source in North Hamgyong Province told Daily NK.
“The customs officials demand bribes and justify their demands with excuses like ‘The state is building this or that project so be a patriot and hand over the money’ […] Traders don’t have much choice, so they just pay the bribes.”
The North Korean authorities have recently increased penalties for corruption, and this has led customs agents to indirectly ask for money using the excuse that the money is going to “state construction projects.” North Korean leader Kim Jong Un emphasized his administration’s crackdown on corruption in his 2019 New Year’s Address and North Korean state media is promoting the campaign.
Traders are faced with being branded “anti-socialist” and punished if they refuse to contribute money for so-called state construction projects.
Government officials ultimately decide whether such payments really go to state construction projects or are accepted as personal bribes. Some of the customs officials may be sending some of the money to state coffers while keeping the rest for themselves.
It is not only imports of contract-manufactured materials imported from China that are facing difficulties. Traders who manufacture products in North Korea and export them to China also face demands from customs officials for bribes.
“Customs officials demand bribes when products manufactured in North Korea are exported to China,” a source in North Pyongan Province said. “They generally ask for medicine, alcohol and other things like that. Traders, of course, find it difficult from a financial standpoint to continue to provide these things.”
The continued international sanctions on North Korea have impacted cashflow for the government and citizens alike. Government officials who rely on trade for extra money have been particularly hard hit by the fall in trade due to sanctions.
Government officials have increased the amount of money they typically demand from local market merchants too. Daily NK found that in early May, merchants in South Pyongan Province were paying market fees at twice the normal rate. The North Korean authorities also doubled the fees for distributors last month, according to sources in the country.