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North Korea Impressions

By Aron Harilela
The Harilela Group

There seems to be an oft-repeated mantra in Asia since the Asian Financial Crisis hit the region. That mantra is:

It is the countries that swallow the bitter pill of reform that will emerge from the crisis sooner and more robust.

I was completely in the dark when it came to the North Korean economy and could only imagine that, like other Communist and Socialist economies, it was primarily driven by agriculture and state run enterprises dealing in heavy industry. Furthermore, despite claims of self-sufficiency, no country has to date achieved it in practice and therefore self-sufficiency is an economic dream never to be realized in our present state of economics. Hence I deduced that North Korea had to have some trading partners. And I thought that is was the diminution of this trade, whether it was barter or driven by the market economy, that had put the Democratic Peoples' Republic of Korea in a position in which the bitter pill of reform was necessary for the economic stabilization of the country. Logically, one would think that this is the start of the opening of the economy, similar to what has happened in China.

However, there was one mistaken assumption in this apparent tautology - and that is that the North Korean Government does not appear to want to reform. It does not want to join the international economic arena even at its own pace. What it wants is Foreign Direct Investment; Foreign Currency for the short term. It wants investors to come in and to invest. The DPRK Government will then use that money to stabilize their industry and their economy both of which have suffered immense blows as a result of the collapse of barter trade as a consequence of the collapse and reform of Communist and Socialist economies in the former USSR and in China. The DPRK Government will furthermore invest that money in feeding its populace and to position North Korea to its former isolationist splendour.

The big question on all of our minds is 'what will become of the investment that supposedly will poured into North Korea after the economy has been stabilized and that isolationist splendour has been re-gained and the FDI is not needed anymore?' I suppose all investments will be ostracized to the economic zone of Rajin Sonbong, in the Northern and Eastern Uppermost of the Country. This is the impression I had of the intentions of the Government.

Do I believe this will happen?

No I do not.

Trade and the economic prosperity that accompanies it is contagious. The State Run Enterprises that will be trading with foreign companies will start to understand the fundamentals of trade and international commerce. This has a dizzying effect and the longer international companies stay in North Korea, the longer and more encompassing the arms of trade become. I believe that what has happened in China will happen in North Korea. I do not believe though that this change will take place overnight but I do believe that it will take place over the next 10-20 years.

The obvious question, if one were to follow such an argument, is whether North Korea would be prosperous in the future. This is a multi-faceted question.

One element is the internal soft and hard infrastructure that must be put into place to support a market-driven economy. The Government has already has already put together a system of laws to govern economic activity in the special economic zone of Rajin Sonbong. This must be supported by the software that is required to sustain an environment in which international companies would want to invest. At this time, there was a general consensus in our delegation that if a dispute flared, the North Korean entity would inevitably win without even a fight. This is to be expected in any country that has had no foreign contact. This must, however, change. Common law and Company Law must exist. But it takes time and a general willingness to accept and to learn from the foreign legal and business systems.

Another major element in the possible prosperity of North Korea is its trading partners. North Korea is surrounded by Asia’s giants, most of whom are looking for more and more routes to increase the flow of equity capital and decrease the existence of debt capital. There are many other factors but all in all, I believe North Korea has a fighting chance if it decides to take it.

From a more personal point of view, it is one of the most eye-opening trips I have been on. Customs was a long and drawn-out affair. We handed over our passports, various forms that we filled out and our mobile phones which were retained for the duration of our stay. We arrived in the Hotel Koryo, a hotel that was seemingly a relic of the 1950s and 1960s. I asked one of our guides when it was built. He answered with a look of pride in his face, that it was built in the early 1980s. The architecture of Pyongyang was homogenous. Most buildings were of a brown-grey coloured cement and looked as if they were built only for their functional value and with no thought given to any aesthetic value. There was also a 105 storey hotel, the construction of which was stopped because of a lack of funds which now still stands like an enormous pyramid and eye sore in the middle of Pyongyang. This could only happen in a country like North Korea, I thought to myself.

Our first sight we were taken to was an enormous statue of Kim Il Song. The statue must have been at least 10 metres tall, flanked on both sides by 15 metre long relics depicting the Korean people overcoming the Japanese Occupation on one side and the creation of the DPRK on the other side. As we stood there and looked in amazement, people came and worshipped the statue, put down flowers while school children swept the ground in an organized row. What became evident over the next couple of days, was that the whole country as well as the whole society is built around the thoughts of freedom from the Japanese Occupation and Western Imperialism and the Creation of the Democratic Peoples’ Republic of Korea. Even today, people are mindful of these events, building their every action and thought around the building up of their country. To me, what was even more shocking was that I found it to be one of the quietest societies I have ever been to. The school children swept in silence. People walked on the streets and did not seem to talk to each other. When some of us took a walk around the streets at night, people were sitting in the parks talking to one another in hushed tones. Maybe people were so quiet because before the turmoil that is happening now, there were no contradictions in North Korean society. Everything was made to plan. Everything was in order.

We were not starred at or pointed at. People did not seem to care about the outside world. Surprisingly we were not stopped from walking anywhere in the streets. It was only when we attempted to enter a train station at night, the same one we entered the afternoon after without obstruction, that a lady dressed in very well ironed khakis, an arm band and a hat impeded our path and started rambling in Korean without stopping for a breath or a second thought to the fact that none of us had any idea what she was saying. The only other place we were stopped from entering was a restaurant frequented by locals. We were emphatically turned away and told us to go to our hotel to eat. I still do not know whether they did not want us to see how the locals Koreans lived or whether they did not want the locals to fraternize with the capitalist foreigners. I found this rather peculiar because when we did communicate with some locals, they were very happy to exchange smiles and gestures.

By our hosts we were treated royally. We were taken to see government official in ostentatiously Communist-styled governmental buildings situated in larger than life Tian An Man type squares, which in turn were situated next to a perfectly banked river filled with quiet, ordered school children. Strangely enough, we hardly saw any elderly people. It seemed like the whole of Pyongyang was populated with young people and children.

The trip to North Korea was indeed an eye-opener. Pyongyang was not what I expected to see. I expected a dreary place without life and exuberance. It was far from that. Most of the architecture was drab but the people were hospitable and warm. They went about their business as in any other city in the world. One could see that Pyongyang was once a, and I use this term lightly, prosperous city of splendour and grandeur, rocked only by the collapse of trade. The very discernable difference was that this was a city built without the influence of or exposure to any foreign influence. If one could imagine what HK would look like without any influence from Britain, China or any exterior forces and with a large element of order, I am sure that it would not look very different.

Everyone in North Korea has to wear a badge of either Kim Dong Il or Kim Il Song every day. One cannot buy this in any shop. It is simply not for sale. Foreigners are not supposed to have one. We, however, got on so well with our hosts that at the end of one dinner, we were all presented with one which we wore on our lapels. I wonder whether this is a sign of the opening up of North Koreans to foreigners, a gesture that signified that they were giving to the outside world a little bit of their country as we were looking to give some of ours to them.