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North Koreans getting a taste of market economy

A huge crane sits idle on top of a 105-storey building splitting the sky over Pyongyang, the North Korean capital. The picture has become a familiar one for locals, unchanged for over a decade.

Kim Il-sung, the late, long-ruling founder of the Communist North still affectionately called the "Great Leader," had big visions for the structure.

In 1987, he ordered it built in the shape of a pyramid, to serve as a hotel with 3,000 rooms and several revolving restaurants and bars. It was to be the world's 25th tallest building.

Just three years later, however, construction came to an abrupt halt due to a dearth of funds and raw materials -- a direct result of the fall of the Soviet Union, North Korea's key financial backer.

The partially complete building now stands tall, but without windows or visitors.

North Koreans are loath to believe the Ryugyong Hotel project has no future without foreign aid. Their leaders have always preached Juche, or self-reliance, a symbol of which stands as a 170m tower near the incomplete building.

But with the economy virtually collapsed and many of its 22 million citizens believed starving, the secretive state is showing small signs of opening up its rigidly controlled market and adopting Western-style work ethics.

The Tone Dae Won factory, which produces and exports men's clothing to Japan, Hong Kong and Germany, for example, has recently introduced a merit-based wage system for its 1,300 workers.

"All workers here at our company compete with each other. The better you perform, the more money you can earn," said Choe Yong-nam, a senior official at North Korea's top apparel maker.

"Some of our workers make up to 210 won (US$94.50) a month, much higher than the national average." He said the factory's workers take home an average 160 won a month, compared with the national average of 150 won.

The company, founded in 1958, has also invited several Japanese engineers in recent years to supervise operation of cutting and sewing machines bought from Japan.

"Productivity has risen sharply and sales have been growing by 10 percent annually," Choe said, adding the firm sold US$2 million worth of goods last year.

The factory's workers, most of whom are women, said they were happy with the change which embraces the principle of market economy. "When it comes to competition, I don't feel any pain at all," said 22-year-old Ko Yong-ae.

"It is enjoyable and honorable to work here and please General Kim Jong-il," she said of Kim's son and successor. Choe, however, conceded it hasn't been easy to meet the high quality standards set by the Western world after having done business all those years mostly with just the Soviet Union.

"We have never had such experience with Socialist countries," he said.

Nevertheless, Choe said he wants to seal business ties with other Western countries, although he is aware of the hurdles his country faces in forming such ties with the US, the world's biggest economy.

"Whether or not we can do business with the United States hinges on the resolution of issues between [North Korea] and the United States," he said.

The two nations never formed diplomatic ties, and relations hit rock-bottom this year when President George W. Bush labelled North Korea part of an "axis of evil" along with Iraq and Iran.

Hopes for an improvement were reignited last week, however, when North Korea agreed to resume talks with the US, South Korea and Japan. North Korea needs all the help it can get. The Korea Institute for International Economic Policy, a state-run think tank in Seoul, estimates it would need at least US$5 billion in foreign direct investment to pull its economy out of poverty.

The Communist state also needs extra cash this year to celebrate the 90th anniversary of the birth of the "Great Leader" with a two-month-long festival that runs till June 29.

While North Korea's leadership may have other uses in mind with any aid it might get, residents of Pyongyang are optimistic the Ryugyong Hotel project will see completion soon, reluctant to see it become a symbol of North Korea's economic demise for good.
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