After three years of Kim Jong-un, skyscrapers popping up on Pyongyang’s skyline

Posted on : 2014-12-29 12:31 KST Modified on : 2019-10-19 20:29 KST
Moving ahead, for sustained improvement in the economy, Pyongyang will need to show it’s serious about reforms
 statues of deceased North Korean leaders Kim Il-sung and Kim Jong-il in Pyongyang. (Xinhua)
statues of deceased North Korean leaders Kim Il-sung and Kim Jong-il in Pyongyang. (Xinhua)

Three years after Kim Jong-un came to power in North Korea, the streets of Pyongyang look much different. The streets of the city are lined with new 40-floor skyscrapers, and taxis drive down them. Before, they had been dark at night, but now they are illuminated by bright lights, while smartphone-toting women are dressed more smartly than before. The unanimous testimony of recent visitors to Pyongyang is that the North Korean city has doffed its drab garb in favor of a coat of many colors.

“It was my first visit to North Korea in five years, and I was shocked by how much the atmosphere had changed,” Jang Yong-cheol, permanent director for the Isang Yun Peace Foundation, told the Hankyoreh on Dec. 16. Jang was in Pyongyang for five days in October.

“I was surprised to see taxis of various colors not only in front of the Pothonggang Hotel where I was staying but also in every street,” Jang said.

“The economy appears to be moving briskly in Pyongyang these days. What particularly stood out were the large apartment buildings being built in various parts of the city and the bustling activity at the markets. You can really feel how much it’s thriving,” said Jin Zhe, Director of Northeast Asia Studies for the Liaoning Academy of Social Science, who also visited North Korea recently.

Last year, the number of taxis in Pyongyang reportedly surpassed 1,500. Shortly after coming to power in 2011, Kim Jong-un ordered officials to promote the taxi business as a means of developing the tourism industry. A series of joint ventures were established with Japanese and Chinese companies, leading to a rapid increase in the number of taxis. In the past, there had been around 700 taxis in the city.

Not only foreign travelers, but also residents of Pyongyang are freely able to ride in the taxis.

During a recent media interview, Park Chan-mo, former president of Pohang University of Science and Technology and honorary president of Pyongyang University of Science and Technology, said it cost about US$5 to take a taxi from downtown Pyongyang to Pyongyang University of Science and Technology, a journey of about 25km.

The changing appearance of Pyongyang is understood to reflect to some degree the current state of the North Korean economy, which has been showing signs of life since Kim Jong-un came to power three years ago.

Indeed, North Korea has recorded positive economic growth in each of those years. Production of agricultural and industrial goods is on the rise.

Favorable weather has apparently played a role, with North Korea managing to avoid typhoon and flood damage over that period. Under Kim Jong-un, North Korea seems to have been spared the vexing problem of feeding the people, which had troubled the rule of Kim Jong-il during the “arduous march” in the mid- and late 1990s.

Experts largely attribute the growth in the North Korean economy to measures adopted by the government since Kim came to power including the June 28 Plan, which was implemented on a trial basis, and the May 30 Measures, which represented an expansion of June 28 Plan.

His father’s sickness meant that Kim Jong-un had to be groomed for power in only a short time, and for him to consolidate his initially vulnerable power base, he needed to bring about a noticeable improvement in the standard of living. Since the North Korean government lacked the resources to spend on flashy programs, Kim appears to have chosen instead the option of implementing economic reforms to increase productivity.

“The May 30 Measures increased the autonomous management of factories, corporations, farms, local government bodies, economic development zones, and the central bank. Sometime next year, specific measures are likely to be taken to follow up on the May 30 Measures,” said Jin Jingyi, professor at Peking University.

In addition to giving companies and farms more authority to dispose of surplus products, this shift toward independent management has also led to an expansion of the incentive system, which bases workers’ pay on their performance.

In April, the Choson Shinbo, a newspaper printed by Chongryon, a pro-North Korean organization in Japan, ran a report about one factory in Pyongyang that was allowed to manage itself. According to the paper, the introduction of an incentive system spurred workers to work harder, leading to a dramatic increase of productivity. Some workers saw their monthly salary increase 100-fold, the paper claimed.

Similar effects have been seen in the area of agriculture under the field assignment system, which reduces the unit size on collective farms to something akin to a family farm. Thanks to this system, total agricultural production in 2013 increased by around 20%, reports say.

The North Korean economy gets another shot in the arm from infusions of foreign currency. There are from 50,000 to 100,000 North Koreans working overseas who send home around US$300 million a year, while an estimated 300,000 tourists from China and other countries spend foreign currency during their stays. The massive constructions projects that are transforming the skyline of Pyongyang are also thought to be contributing substantially to the boost in domestic demand.

While the circulation of cash has led to a modest improvement in the lives of North Koreans, it is unclear whether the North Korean economy will ultimately return to its heyday in the 1960s and 1970s. The most pressing problem is that North Korea has had trouble convincing foreign investors to set up factories in the five special government-designated economic zones and the 19 economic development zones.

The North Korean authorities claimed to have secured US$1.44 billion in investment from 306 foreign companies, but the actual figure is probably closer to US$400 million of foreign investment, with all of this in the Rason Special Economic Zone.

“Until the North Korean authorities set up the legal and institutional framework that will guarantee the management rights of foreign-invested companies, they will not be able to attract foreign investment to create jobs in the manufacturing sector that can keep the people fed,” said one South Korean government official.

North Korea’s weak infrastructure - it is plagued by chronic power outages, and its transportation and communication equipment is wearing out - is another problem that must be addressed soon. In addition, some North Koreans feel a greater sense of relative deprivation because of the polarization between Pyongyang and the countryside, the increasing importance of the markets, and the growing gap between rich and poor.

“The growth of the markets has reached the level where North Koreans can manage to support themselves through running a business. In order to bring the North Korean economy to the next level, the North Korean authorities need to show that they are serious about improving the system by formally instituting the May 30 Measures and by taking steps to alleviate polarization,” said Cho Bong-hyun, a senior researcher for IBK Economic Research Institute.


By Son Won-je, staff reporter and Seong Yeon-cheol, Beijing correspondent

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