North to Announce Real Estate Reforms

North Korea seems to be preparing for new economic reforms centered on real estate reform. According to sources knowledgeable to North Korea, measures that North Korea is about to take contain some dramatic changes, including leasing out state-owned mountains to individuals on a long-term basis, and imposing taxes on state-owned land which is used by factories and businesses.

Other measures include granting rights to develop and operate roads on a long-term basis to local and foreign businesses as well as individuals, and recognizing ownership of new apartments constructed and sold by businesses or individuals.

In addition, North Korea is said to be considering a plan to lease out plots of collective farms to families. The review for the plan was completed early last year, but it has been put on the shelf for a year due to the political situation at home and abroad.

Sources say that the new measures will be implemented by the order of the cabinet starting this April. One source said on yesterday, “For five days starting April 4, the North Korean authorities held working-level meetings that gathered together production unit supervisors in major cities around the country and taught them the new real estate policies.”

According to the source, on the first day of the meeting, the participants were informed that taxes would be imposed on land used by factories and businesses depending on the size of land occupied.

Moreover, it has been recently confirmed that a new department called the “real estate development department” was established inside each people’s committee, which is the North Korean equivalent of a local government. What it means is that real estate, a relatively new concept for North Koreans, has been first introduced into North Korean governmental agencies.

Yang Mun-soo, a professor at the University of North Korean Studies said, “In the past also, North Korea had to inevitably lease out state-owned stores and shops to individuals for national financing. The reform measures that North Korea is about to embark on seem to be in line with that.” He added, “However, what is notable is that the subjects of lease-out have been expanded to state-owned land.”

North Korea demonstrated its will to restore the socialist system when it reinstated the rationing system last October. However, there is an analysis that since the National Defense Committee Chairman Kim Jong Il made a visit to China last July, North Korea has taken a turn toward reforms and opening up once again. In particular, this round of reform measures is expected to further inspire capitalist ways of thinking into North Korean residents, as the Economic Management Improvement Measure announced on July 1, 2002, did.

Meanwhile, the Financial Times reported on April 9, “North Korea will embark on a new round of economic reform measures immediately after the birthday of its late leader Kim Il-sung (April 15).” It said, “The new measures will start quietly.”

Kevin Shepherd, a researcher at the Institute for Far Eastern Studies affiliated to the Kyungnam University, told the Financial Times, “Considering the recent reports from North Korean state-owned media outlets, North Korea seems to be preparing to bring about another round of changes to the North Korean economy.” In particular, he brought to the attention the fact that the North Korean state-owned media outlets recently mentioned ways to improve labor. According to him, the North Korean state-owned media outlets said, it is more desirable for wages to be given to workers on a daily or a weekly basis, rather than on a monthly basis. The Financial Times also reported that for the first time in 10 years, “the national labor planning meeting” was held, and North Korean Prime Minister Pak Pong Ju and a large number of economic officials participated in the meeting.

The Financial Times forecasted that if North Korea takes on additional economic reforms, legal changes would take place so that more authority will be given to supervisors of businesses, and businesses and production units can attract foreign capital more actively.

The Financial Times added, “The financial sanctions of the United States against North Korea also seem to have motivated North Korea into taking on economic reforms. Those who have visited North Korea recently say that it is more difficult than before to gain hold of foreign currencies in North Korea.”

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