Capitalist Experiments Seen Expanding in North
by Jeong Chang-hyun
JoongAng Daily
October 19, 2003

Capitalist experiments are in full swing in North Korea’s capital, Pyeongyang. Markets and mobile phones are particularly tangible signs that the long-isolated and impoverished communist country is slowly adopting capitalist principles to boost its sagging economy. The signs have been particularly noticeable following the economic reform measures that were announced in the North in July last year.

While South Koreans who recently visited the North were asked to leave their cell phones at Pyeongyang Airport during their visits, North Koreans could be seen freely using mobile phones on the street. It was particularly easy to find North Koreans using cell phones in the restaurant, bar and cafe of Pyeongyang’s Koryo Hotel. "Businessmen who frequently travel and trade dealers are mostly using them," a waitress at the Koryo Hotel restaurant said.

Ri Gum-bom, North Korea’s minister of communications, said recently that his ministry would do its best to finish setting up a mobile communication network nationwide. As of now, no official figures are available, but there are about 3,000 mobile phone users in Pyeongyang, North Korean officials said.

Along with increasing numbers of mobile phone users, more and more North Koreans are frequenting newly opened markets in Pyeongyang. By using the markets, the North’s residents are gradually learning about capitalism.

Asked what she thought a market economy was, a female employee of Pyeongyang’s Koryo Hotel recently asked back, "Doesn’t the term ‘market economy’ mean an economy in which people are selling and buying goods at markets?" Because her neighborhood does not have a market yet, she often uses one in Pyeongcheon district in Pyeongyang. "I normally buy vegetables, grain and shoes at the market, because they are scarce at state-run stores," she said.

"In the past, it was difficult to buy goods at farmers’ markets because goods were so expensive," she said. "But we are able to buy various goods at the markets now because the government has increased wages. I was not used to buying goods at the market, but I am getting used to it slowly."

In July 2002, the North Korean government announced an economic reform plan in which wages and prices were raised. More than a year after that plan was introduced, North Korea’s economy is slowly changing. Pyeongyang still argues that all the improvements are progressing within the framework of a centrally planned economy, with the government still having the right to decide prices. But it is apparent that new market principles have slowly been adopted by the North Koreans since the reform plan was implemented.

Two new markets were recently opened in Pyeongyang, and more are expected to open in the capital.

In June, North Korea decided to legalize farmers’ markets. After the decision, modernized buildings were opened for the new markets --  a move that also marked the North’s formal recognition of commercial transactions between individuals. In 1998, North Korea revised its constitution in order to allow individuals to keep profits earned through legitimate economic activities. Thus, recent reform measures are allowing North Koreans to increase personal earnings.

North Koreans have been buying hard-to-find goods at the markets. "I buy cosmetics and other goods at markets," Kim Ok-seong, 20, said.

A North Korean guide said a wide variety of goods, mostly produced by individuals and collective farms, or imported by trade companies, were sold at the markets.

Just like in any traditional market in South Korea, bargaining is an important part of a commercial transaction in a North Korean market. "Prices at markets are normally higher than those in state stores," a North Korean National Reconciliation Council official said. "Private and institutional vendors at a market have to pay fees to the market management committee in return for operating counters."

"Goods produced by individuals are less competitive in price and quality than those produced by collective farms or companies," said Park Seong-il, a North Korean guide. "Expanding markets is still part of moves to improve North Korea’s planned economy."