DPRK Forum

There are some things that I simply cannot imagine, and one of those things is serious economic reform within the secluded state. While economic reforms changes have been taking place and is one of the key factors for the South’s plan for reunification, it has been slow going and full of red tape. Kim Jong Il loves red tape and having the upper hand. It’s his defining personality. I ran into an interesting article from the BBC regarding a trip to Vietnam.

Since I am not at all familiar with the economy of Vietnam, so I went to Wikipedia to get a basic idea of how it works. I was wondering if Vietnam runs the economy similar to China, so I went and looked at both. I am usually not a fan of citing Wikipedia as a source, but since I am trying to get a basic idea, I guess it should suffice to get a picture of what North Korea is doing to pave the way to reforms (if any). It seems the DPRK has set up some special economic zones similar to China, and more seem to be in the works:

Roh said he mentioned Sinuiju, a northwestern city on the border with China, and Rajin-Sunbong, the North’s first free economic zone located at its northeastern tip near the border with Russia, as possible areas for special zones.

The impoverished and communist North has experimented on a limited basis with capitalism, but foreign investors have shunned the Rajin-Sunbong zone as it lacked infrastructure.

In 2002, North Korea designated Sinuiju as a capitalist enclave, but the project fell through after China arrested Yang Bin, a flower mogul picked to run the special economic zone, on charges of fraud and bribery.

South Korea and North Korea cooperate on two industrial zones in the North — a factory complex located in the border city of Kaesong and a tourist resort at Diamond Mountain on the North’s east coast.

The two joint projects have been a major source of hard currency for cash-strapped North Korea, providing it with at least US$900 million since the late 1990s.

(Emphasis mine) That is one of my major complaints about infusing money into North Korea as it only enriches the regime. While the South wants the DRPK to eventually get in line with the ROK’s economy, I really cannot see that happening as long Kim is in power because there is simply no oversight, is throwing money into a black hole, and I simply cannot see the economic situation getting any better until serious reforms take place without Kim. In my view, until there is a serious uprising of the people in the North for change, nothing will change. It seems to only be a facade and full of corruption.

Now is Kim looking to reforms in the Vietnam style? It seems like the possibility may be there, but until it happens, I am not going to hold my breath. On the other hand, it seems Vietnam is trying to woo the North into trying the market based economy:

But some analysts believe that Vietnam is where the North Koreans are turning for some much-needed lessons in market economy.

“I think there is currently great interest in North Korea in Vietnam’s way of economic reform,” says Hwang Gwi-yeon, a professor in international relations at the Pusan University of Foreign Studies, South Korea.

“The situation in North Korea is similar to that in Vietnam many years ago and Vietnam has provided a very suitable model of development.”

[...]

But the days of centralised economy are long gone, and the Vietnamese are not shy to show the guests from Pyongyang what kind of prosperity economic reforms can bring.

[...]

Vietnam, one of the few remaining communist countries, has certainly drawn an impressive picture of economic development since the doi moi, or renovation, process began in 1986.

With a 9% growth rate projected for 2008, the Vietnamese leadership hopes to take the country off the list of poor nations and make it a mid-income one as soon as next year.

Some analysts believe that the most attractive aspect of Vietnam’s development to North Korea is the way it has maintained political stability and economic growth in a one-party regime.

Is this an inkling of Kim getting his cake and eating it too? If I put myself in the shoes of Kim, this may seem attractive, but that also means the very fabric of the Juche Idea would turn on its head. However, something needs to be done, because the economy of North Korea is anything but stellar. Since regime survival is empirical for Kim, it may be possible for Kim to be forced to look at other models to try and save his crumbling economy. Again, is Vietnam the answer? It seems North Korea is looking into it.

“Vietnam is totally stable. It is a communist state but its economy develops in a capitalist way,” says Prof Hwang.

“Communism and capitalism existing at the same time? Vietnam has proved it can be done.”

That is something North Korea has fought for decades, and if North Korea does indeed reform to something like this, it would be pretty significant. While I do not know of they will embrace these changes, only time will tell if it does happen at all. After all, nobody really knows what plans are in the works within Kim’s kitchen cabinet.

Openness and transparency in the DPRK is non-existent, and from what I understand, market economies require transparency for investors not to be scared off. Again, I do not know how that is going to work when kim is very, very secretive about his country’s pocketbook.

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The Vietnam model seems to be so attractive to the North Koreans that Kim Jong-il himself is said to be considering going to experience it at first hand.

During his trip to North Korea in October, Vietnam’s Communist Party chief Nong Duc Manh extended an invitation to Kim Jong-il to visit Vietnam.

Vietnamese media reported that he “joyfully accepted” the offer.

The Chinese language weekly, Yazhou Zhoukan, based in Hong Kong, quoted the Vietnamese Deputy Prime Minister Pham Gia Khiem as saying that the North Korean PM’s trip is partly aimed at preparing for Chairman Kim’s visit.

While the date for that visit has not yet been disclosed, speculation has already started on how Mr Kim, who is afraid of flying, will get to Vietnam.

Should he wish to travel by train, the only way to reach Hanoi is via China - a trip that would take about 70 hours one-way.

If Kim is going to personally visit Vietnam to see the reforms and the economy first hand, this would be a rarity. Is Kim serious about these reforms? Will he actually open the North to reforms and expand to a market based economy? A change of this magnitude is mind boggling, complex and most likely slow going.

This is something to watch closely, and while changes have been taking place, it is still unclear what the end result will be, I happen to believe it is a little too late for reforms to take place and get the DPRK out of the deep quagmire. However, I have been wrong before, but I simply cannot see any changes of this kind taking place. We shall see though.