Methods of investment in North Korea
Wealth is seemingly increasing in North Korea thanks to the emergence of the informal market. But in communist North Korea, where can one invest their money?
It is common knowledge that for North Korean citizens, investment is next to impossible. North Korea’s economic structure makes investment, where legal, highly unprofitable. To add, most North Koreans don’t report their assets to the state.
North Korea’s banks are mere veneers. This hasn’t always been so; up until the early 90’s, North Koreans used them to deposit and withdraw their savings. The banks are desolate now; some banks in rural provinces go days without having even one visitor.
Why don’t North Koreans use their banks?
People who get their money through selling in the market or smuggling never deposit their money into their bank accounts, since there is no guarantee that they would get it back. Once the money goes into the bank, it is almost impossible to withdraw that money to use later. It goes without saying that banks never, or very rarely, offer interest rates, credit loans, or anything of the sort. So what can North Koreans invest their money in?
One answer is foreign currency. Most of the money that North Koreans own is exchanged for the Chinese yuan or the American dollar.
One example of an ideal investment opportunity is buying Chinese-made electronic appliances in bulk, and retailing them to North Korean buyers. The further the buyers are located from the border, the more profitable the sale becomes. Profits can be double the cost price depending on the location of the buyer. Refrigerators, laundry machines, televisions, sewing machines, and fans are among the most popular items.
One refugee, who prefers only to be identified as Jang, testified that only those who consolidate ties with State Security Department officials or the Prosecutor’s Office by bribing them beforehand can do this type business. “Without bribing them, it would be impossible. Products that come in from China in that manner are considered illegal. The worst thing that can happen is confiscation of the entire lot.”
Investment can come in the form of real estate, also. Another refugee, Park, explained how North Koreans can invest in property: “The first thing you need to know about making money in North Korea is that there is no legal way to do it. You need to find a forest protection ranger or the head official of a housing management office and bribe them. The person will then have the rights to buy land, as well as construct buildings atop them.”
However, counter-claims from other testimonies show that investment in North Korea is not as easy. One refugee named Lee, from Musan, said, “This is only possible in certain areas where enforcement is lenient. In North Hamkyung Province, I’ve only heard of one or two people investing in land. Rural regions close to the border are constantly being checked by officials from land management departments, so it would be unwise for people to take risks there.”
That is, of course, unless they have a great deal of wealth. Opportunities for growing one’s wealth through investment are limited for ordinary North Koreans, even if the methods are black market.
Reporting by Park, Ju-hee.
Read in Korean.