NK Tightens Control Over Economy, Backtracks on Reform

North Korea in the first half of the year revised laws to strengthen its central economic planning after its spectacular failures in currency revaluation and foreign exchange control, sources said Tuesday.

Pyongyang strengthened its central economic planning by revising the Act on People’s Planning on April 6 this year, the sources said. The communist regime eased a few regulations by revising the same law in May 2001 before it took “July 1 Economic Management Improvement Measures,” a limited form of economic reform released on July 1, 2002, but restored the law back to its original state.

The term “Preliminary Number, Control Number,” or the production planning number reported by companies and output confirmed by the government that are symbolic indexes of North Korea’s planned economy, were eliminated under the 2001 law but have reappeared.

New clauses that allowed individual production entities such as factories and companies to express their opinions in 2001 were removed. Former clauses that mandated orders to be delivered from the top (the central planning organization) to the bottom (individual production entities) were restored.

The revised law also stresses the legal obligation of executing the plan and put priority on “leader funds,” which are financial sources used by North Korean leader Kim Jong Il for procurement in the name of an “important subject.”

“Leader funds,” which are used to procure goods for Kim to be used as political presents to his people, have been cited as making the North’s planned economic mechanism meaningless.

The North also clarified the management principle of national planning for the capital Pyongyang in a city management law revised on March 30 this year. It also added the National Planning Committee, a central government body, and the Cabinet to the People’s Committee, an entity equivalent to a municipal government in South Korea, for management, control and supervision of Pyongyang.

The revised law also requires Pyongyang residents to carry citizen ID cards to strengthen population control.

The North used the expression “The holy land of juche (self-reliance),” “The heart of the Chosun (Korean) people,” and “The face of the nation” instead of “The holy land of revolution,” indicating tightened control over the capital to ensure the power succession.

Given the series of revisions toward a more conservative direction in the North, some say economic reform policies are probably not forthcoming even as the era of heir apparent Kim Jong Un approaches.

kyle@donga.com