North Korea Implements Identity-Based Vendor System

The growing influence of North Korean marketplaces push the authorities to change market regulations

North Korean markets sprang up in response to the famine and the collapse of the food distribution system, and have been gaining in significance and influence. The North Korean authorities, in responding to retain control, are being pushed to implement a more equitable system.

In 1993, South Korea implemented an identity-based system to curb shady financial activities. This led to a sharp decrease in the number of bank accounts opened under false names.

But in North Korea, where a bank is a bank in name only, people use market stalls as the main platform for banking transactions. And this is where a North Korean identity-based system has been introduced.

North Korean refugee Lee Joo-mi* says she used to be a vendor in the Chongjin marketplace. She explains, “We called the stalls our “seats” and mine was made of cement. Each vendor had a space limit – the width and breadth of a stall had to be not more than 40cm each.

The stalls are so small because more and more people are interested in selling their wares, and the stalls have become smaller to fit everyone in. Of course, that increases the market adminstrators’ income, too. People with money buy multiple stalls under other people’s names and do business on a larger scale.”

Every afternoon, an official patrols the marketplace to collect the stall rental fee from each vendor. In the past, vendors would avoid paying the fee by emptying their stalls when they knew the rent collector was coming.

As people continued to dodge the stall rental fee, the market administrators’ income decreased. The authorities have responded by implementing and administering a “stall vendor card” programme, similar to South Korea’s certificate of residence.

“The vendor has her photo on the stall vendor card and wears it around her neck during business hours. There are regular checks to confirm that the vendor is in fact who she says she is; the vendor is not only verified by her photo, but also, by swiping the card in something like a portable credit card terminal, the verifier can check to see if the vendor has paid for her stall.

If you’re behind on your payments or – as was the custom in the past – you’ve emptied your spot to avoid paying the fee, you will lose your stall. Also, you can only be absent on a certain number of occasions, otherwise you lose your spot,” explains refugee Choi Hee-young*.

It is said that vendors desperate for a stall can bribe the market administrators to secure a spot, and there are still those who get away with operating stalls under a false name. Because of this, some vendors believe the identity-based system was introduced so that the authorities could make extra profit through the bribery that would follow.

In addition, whereas the vendor used to stay put in a stall once she paid his fee and secured a location, now they are made to rotate their spots. This is said to be in response to complaints from other vendors who were discontented with what they felt was a poorly located stall.

In this way, the North Korean authorities have increased regulations on marketplace activities, recognising their increasing importance and potential as a source of profits.

Yet the implementation of the identity-based vendor system and the practice of rotating stall locations suggest that a notion of fairness in regulation is taking root at the heart of North Korean society – not as a matter of deliberate policy from above, but in response to the growing influence and importance of the North Korean marketplace and its grassroots origins.