N. Korea’s economic moves raise eyebrows
By Kim Young-jin
A pair of possible developments in North Korea including a revision of its foreign investment law is raising eyebrows as the world waits for clues about how the country will handle its troubled economy after the recent death of ruler Kim Jong-il.
Pyongyang’s Korean Central News Agency said earlier this week that the country has amended its law on the registration of foreigninvested enterprises, in an apparent effort to attract more investment. The law deals with the labor conditions, accounting and the fiscal management of investors.
Separately, reports say the communist regime is mulling introducing Internet banking in what could be its latest attempt at modernization.
The reports come amid uncertainty over the direction of the North’s economy under the leadership of Kim’s youngest son, Jong-un. Debate among outsiders has been flaring over whether the new leadership will attempt reforms as its population still suffers from food shortages.
The foreign investment law was established in 1992 and revised in 1999 and 2004.
State media did not detail the amendment but analysts have speculated it could be geared toward Chinese firms. Beijing, which has urged its neighbor to follow its reform path, has broken ground on special economic zones along their shared border.
Economic cooperation between the allies continues to grow, in what analysts say is a partnership keeping the North afloat despite international sanctions for its nuclear weapons program. Data released Tuesday by the Korea International Trade Association showed bilateral trade jumped by 62 percent last year.
Experts say the cooperation is mired by the poor regulatory environment in which Chinese firms struggle to deal with arbitrary changes in rules and a lack of arbitration measures.
Meanwhile, speculation over the possible introduction of e-banking came to the fore following a recent paper published in the newspaper of the Kim Il-sung University that emphasized the need for such services.
The paper said such a move would “reinforce national banking and assure the profits of organizations and businesses” while reducing costs for banks.
The paper also mentioned the use of credit cards, seen as a sign of capitalism. Such services are believed to be restricted mainly to officials.
Though it remains to be seen whether such services will be widely introduced, observers said they would tie in with other moves to modernize in the name of the new leader.
Pyongyang has promised to emerge as a “strong and prosperous” state this year, when it observes the 100th anniversary of the birth of its founder Kim Il-sung.
In line with this drive, efforts have been made to improve the capital city including the building of semi-high rise apartment complexes and refurbishing of department stores. State-sanctioned cell phones are also on the rise.
Some suggest modest reforms are under its push to develop its “Computer Numerical Control,” which has been tied to Kim Jong-un. Computer-aided manufacturing, analysts say, is code for modernization.
Though the North has moved quickly to install Kim as the new head of state, concern lingers over whether the twenty-something leader can steer the nation where millions are estimated to need food aid. Analysts say his ability to convince the populace of economic improvements will have significant bearing on his ability to lead.
Some warn that hopes of reform remain premature, pointing out that such a move would require the country to open up to an increased flow of outside information, a potential risk for the autocratic regime.