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North Korea Establishes Banks in Charge of Extending Loans to Businesses

North Korea Establishes Banks in Charge of Extending Loans to Businesses

Posted October. 08, 2002 23:04,   


North Korea, which took a series of steps to improve its economy starting on July 1, is reported to try to spread the concept of competition to individuals in order to raise productivity.

Pyongyang has decided to run commercial banks that will select companies with higher productivity and lend money to those companies starting early next year.

According to Donga Ilbo’s report on the North, the Gubin-ri livestock cooperative in Gangdong-gun, Pyongyang, which was designated as a model livestock farm in 1996 subdivided its previous milk production units (20-50 households) into individuals.

The cooperative distributed she-goats to each individual and keeps track of milk production amount of each individual everyday. According to each individual’s production records, it distributes its incomes.

People at this farm, which got aid from Good Neighbors, a South Korean social welfare organization, in forms of goods, bred goats for milk production all together at the initial stage of the cooperative, but the farm introduced competition among production units – villages in 1999.

Farm manager Im Gui-nam, 44, said, “Most villagers try to work hard, because if they do not, they get less money.”

It is reported that nowadays companies and stores in the North started to compete against each other.

A North Korean official, whom this newspaper met in Pyongyang said, “Pyongyang authorities are considering a plan to make companies compete within each industry, select some with higher productivity and creativity, and offer these companies special treatments such as government support or foreign capital.”

This plan hints at Pyongyang authorities’ intention to focus on best companies chosen through competition and performances.

In addition, companies in need of money can get loans from commercial banks that will be established earlier next year, and they will also deposit money with these banks.

Meanwhile, the differences between prices in state-owned stores and those of farmers’ markets have narrowed, and North Korean authorities have taken a tight control over the farmers’ markets, the kinds and amount of goods traded in these markets have decrease sharply.

Suk-Ho Shin kyle@donga.com