[Focus] State of North Korean defense industry

North Korea started to earnestly promote its war industry in the 1960s with the catch phrase of self-reliant national defense, with the deterioration of relations between the United States and the former Soviet Union and Cuba's missile crisis as the turning point.

In line with the policy, in the 1970s, the North developed a series of up-to-date weapons in the course of manufacturing heavy arms such as tanks and self-propelled guns; in the 1980s, the development of Scud missiles and others; in the 1990s, and assembling and production of long-range missiles such as the Rodong 1 and Taepodong 1, and MIG fighters.

Now, the North has completed a self-supply system for almost all weapons, except for some ultra-modern items.

Under the North Korean Defense Commission, the highest organ in charge of the war industry, the Second Economy Committee takes charges of planning, manufacturing and distributing all munitions, as well as external trade, under the leadership of Kim Man-Chol and Jon Byong-Ho, both members of the Workers Party Central Committee and the Defense Commission.

The Second Economy Committee is located in Kangdong-gun, Pyongyang, and eight bureaus and 190 munitions factories under the control of the committee are secretly operated under serial numbers or bogus names. The seven bureaus are in charge of the following tasks, namely, the general affairs bureau dealing with overall planning of the munitions industry; the first bureau, machine engineering, small arms and ammunitions; the second bureau, tanks and armored cars; the third bureau, multi-stage rockets; the fourth bureau, guided missiles; the fifth bureau, nuclear and biological weapons; the sixth bureau, battleships and submarines; and the seventh bureau, production and purchase of war planes.

The committee has installed a camouflaged trading company and is engaged in secret arms exports, so as to procure funds and materials. As the arms exporting agency in the military, the Maebong Trading Company controlled the businesses of trading firms in the military units and until 1986. But in 1995, the North Korean People's Army set up the 44th department exclusively tasked for earning foreign exchange. The department is authorized to work out plans for foreign exchange earning and hand down its directions to the trading firms, and also to supervise the implementation of the plans and evaluate the results of the business.

For the present, the First Economy Committee, in charge of civilian or private industries, accounts for only 20 to 30 percent of the total national industries, while the war industry occupies about 60 percent of the total. In addition, the two divided industrial sectors are separated without mutual supplementation. Due to severe power shortage and economic difficulty, the electricity and materials are supplied to the military industrial sector with priority.

For that reason, a major factor leading to the North's economic woes is attributed to the military industry-dominant economic structure and distorted distribution of materials. Hence, in order to explore ways for the North's economic revival, the roles and functions of the Second Economy Committee need to be diminished, while private industries encouraged and expanded with the promotion of export industries including light-industry, in particular.