North Korean State Enterprises, Handed Over to Individuals with Fee

[imText1]The North Korean defectors The DailyNK met recently unanimously reported that “the government of North Korea is hading over the actual management of the state enterprises to the individuals with a lot of money by receiving tax from them.” Although they remain state enterprises on the documents, on the practical level, government officials or party cadres are transfer management to the individuals.

Furthermore, it is said that the government is actively supporting this system, that iin case of a legal “contract,” the state will secure the management of the business, and will not forcefully confiscate investments or stakes of the business.

Investment Contracts, Secured by the Government

Such a phenomenon of changes in sate enterprises which Mr. Kang, (00 District Planning Manager, Hamkyung province) whom we met in China described was in short, “privatization.”

“After the 7.1 Economic Measurement, the worker’s official wages did increase but since the state enterprises ceased production and they could not pay the workers. The cadres of the factories tell us (the workers), “Live on your own. If you pay the factory, we will check the attendance for you and also give you the food tickets.” Since this is the reality, the state is actually encouraging the people with money for management of these enterprises to revive them.”

Those people who participate in the management of the city, town, district enterprises are mainly Korean Japanese, Chinese borns with North Korean citizens, and the businessmen who do trade businesses between North Korean and China. They are given the opportunity because they have “dollar mobility.”

“There were few cases where state enterprises received investment money from individuals but many of the managers or cadres took them away and nobody wanted to make such investments anymore. So now, the government is trying to making a promise that they will be guaranteed according to the contract.”

Active Private Fishing Industries

Where the individuals invest varies. However, where much investment is made is known to be fishing industries around the coasts. The fishing industries not only lease vessels, fishing grounds as well as necessary tools. They estimation is that about 90% of the fishing vessels are run by the private individuals.

According to Mr. Song, a former fisherman of Shinpo Fishery located in South Hamkyung province who defected last October and currently resides in China, you need about one million North Korean won to manage a small fishing vessel.

“Currently, it would not be wrong to say all the vessels owned by the sated are run by the individuals. It costs about 200,000 North Korean won to rent a wooden vessel size of 6m-7m in length and 1.5m in width. If you put a diesel engine on the vessel, then it costs about 350,000 won.”

Close coast fishing costs about 500,000won per rental. Considering that monthly wage for an average worker in North Korea ranges from 2,500 to 3,500won, this is an incomparably large cost.

Of course even if you invested more than a million won, the vessel does not become yours. All the vessels are still state owned properties. Each vessel has sign on it to make known which fishery owns which vessels. The fisheries also rent this signs to the vessels, which costs over one million won per month (just for the sign rental).

Recently, the fisheries are under constraints due to the sudden decrease of export to Japan. There are rumors that the Central Worker’s Party will conduct a general inspection, and the people currently involved in the fishing business feel anxious that the state could once again take back the fishing rights.

The States Sells Rights to do Business

Furthermore, individuals are able to buy “right to manage state owned restaurants” from the food distribution management departments of each region. The sate owned restaurants are controlled by the according regional food distribution management departments. It is known that the departments are selling the right of management for the purpose of “opening more state owned restaurants for the people.” The people who have such rights run the restaurants legally and pay part of the profits they make the government.

Koh Myung Geun who lives in Kim Chek City in North Hamkyung province whose cousin runs a photograph development place describes the situation like this.

“In the case of photo development business, individuals bring the machine from Japan or China and open the photo development places. Legally they are state run enterprises but if you pay the government you can easily buy the right to do the business. Once your right is secured, you you’re your family members and relatives. They are hired as photographers, managers, and other things, so basically they all work together with the money of their relatives. Since an individual alone cannot start such a business, if one person manages to obtain the “right of management” the whole family can survive from that.”

City, Town, District Stores Lease Stalls

Yoon Su Young, who lives in Hyesan, Yankangdo says that recently, the state owned stores started to lend stalls of the store to the people.

“Currently, if you pay the state owned stores, you can rent its stall. Basically, you pay the rent for the land. First you pay for the stall, and when you start to make profit, you pay tax. There are still official “sellers” at the store. However, since the state enterprises are able to produce, they cannot even secure the products to sell. Since the stores are empty and make no profit, they lend the stalls to earn money from the people from the rents.”

The People’s Lives Still Difficult

The economic situation in North Korea reported from the North Korean people pictures a rather handicapped phenomenon. The first level production drying up and all the people entirely survive on business.

Park Moo Young who lives in Sae Byul district of North Hamkyung province describes such business as, “it would not help people’s daily life by much.”

“The party cadres or government officials must know what being hungry is so they realize, “oh, we cannot continue like this.” However, they receive foreign aids from above, and collect tax from below, so they have no devotion for the nation. All they think about is “how could we collect more tax?” Only the people do not have suffer the most.”