Haggling over fiscal policy training

I just visited Pyongyang to check in on ongoing training programs, and to start preparing our partners for a major ramp-up of programs in 2013 and the conversion of our Beijing presence (i.e. Peter) into a full-time office. Program frequency and size continues to increase, and we are expanding coverage of topics and organizations. We will also be launching our flagship Women in Business training program targeting female entrepreneurs and managers. The most amusing training discussion award goes to the incredibly tenacious but good-humored negotiator from the Ministry of Finance. Typically, we try to keep workshops inside the DPRK short and focused, with a one-week session covering a specific topic in-depth. Short sessions in the initial phase help us understand what the learning needs are before we commit more resources to a topic area or organization. There are also budget reasons for keeping programs short. In terms of good topic areas, there was no shortage of them as the Ministry had a well-prepared list of areas that they wanted us to focus on. This was the easy part.

Our partner (rightly) insisted that longer sessions are much more effective. Our discussions became a see-saw battle in which I pushed for short sessions on a specific topic at this phase while he kept pushing for programs ranging upwards of 2 months and stretching to 9 months. When we had agreed that the majority of participants would be under 40 and moved back to discussing the program length, he mentioned that short programs would be suitable only for more senior people and we ended up discussing the participant ages again. It seemed like whack-a-mole as issues kept popping back up even after I thought I had resolved them.

Not wanting to commit to something without having had time to think it over and discuss it with the team, I explained that we might explore doing something in middle of 2013 with them, but that we are not ready to commit to anything yet. Our partner, who was enjoying himself, good-naturedly suggests that it was alright not to commit to anything yet, as this would be the first of many discussions. Perhaps next time Andray will get to enjoy negotiating with this partner!

First ever positive mention of "entrepreneurs" in North Korean press?

Three years ago, I worked with some North Koreans to have some candidates sent to a highly-prestigious conference overseas. The theme for the year was “entrepreneurship” and that partner told us that the theme was not suitable for North Koreans as it was a socialist economy. Given our focus on business innovation and talent in North Korea, entrepreneurship is always a cornerstone of our programs and we are launching an education program specifically focused on female entrepreneurs next year. We have a team in Pyongyang, that includes some very successful entrepreneurs and venture capitalists, running some programs this week . I am also visiting Pyongyang next week to discuss a venture capital idea we have been mulling over for more than a year, and we have been placing young North Koreans at start-up incubators overseas for internships.

However, I still do not know how North Koreans understand the term “entrepreneurship” or how they would react to it. Past mentions of the word in KCNA have either been neutral, used in reference to situations in external countries, or negative. Hence, I almost did a double-take when I saw the term “entrepreneur” on the front-page of Rodong Sinmun’s website recently:

Favor Shown to Small Entrepreneur

 

Immediately after the liberation of Korea from the colonial rule of Japan, Kim Jong Suk, woman General of Mt. Paektu, was engaged in revolutionary activities in Kyongsong County to arouse the people to the building of a new society. One day, a brewer came to see Kim Jong Suk.

 

Kim Jong Suk kindly greeted him.

 

After hearing out his career and present difficulties, Kim Jong Suk said: "Now, some people are finding fault with small entrepreneurs, labeling them as objects of overthrow or bourgeoisie. But, their accusation is an idle talk made by factional elements who act contrary to the will of General Kim Il Sung. From the period of the anti-Japanese armed struggle, Kim Il Sung trusted not only in small entrepreneurs and tradesmen, but national capitalists. In the liberated country today too, he believes in them as ever. You should more positively turn out in nation building for the country".

 

Keeping her instructions deep in his heart, he urged his fellow businessmen in the Kyongsong area to turn out in the construction of the country. A few days later, Kim Jong Suk called on the brewer at his house. Learning about his business in detail, she said; "Only when you run your enterprise for the country and people, can you be highly trusted by General Kim Il Sung and enjoy the respect of the people."

 

She went on to say: "General Kim Il Sung shows deep trust to small entrepreneurs and tradesmen who render cooperation to nation building. No matter who may say what, you should not vacillate at all, but trust and follow the General. He does not discriminate those who love the country and nation". In this way Kim Jong Suk implanted an unshakable faith in his mind.

 

Thanks to such a great loving care and trust of Kim Jong Suk, the brewer who was wandering at the crossroads in his life found out the path of a new life and turned out together with his colleagues in the general ideological mobilization movement for nation building. Afterwards, he was elected a deputy to a local power organ.

 

Paek Yong Mi

So remember, the President wants you to go forth and be entrepreneurial. Now if only policymakers chip in with policy changes that help make life easier for entrepreneurs. You might also be interested in this interview I gave at Knowledge@Wharton on entrepreneurship in North Korea.

Is "reform" talk too late and too muddled?

We have been mentioning since early last year that North Korea has a renewed focus on economic development which marks a break from its rhetoric of belt-tightening and self-sacrifice for the good part of the decade. We said that and still say it because it was mentioned consistently in government rhetoric and triangulated well with the policies, which we knew from our programs, that were being debated and considered. Hence, all the recent talk about “reform” seems rather belated. . That said, I dislike the word “reform” as it conflates too many issues. At the broadest level, it conflates changes in the political with those in the economic sphere. While there are issues with disentangling changes in both areas, it seems that talking heads tend to use changes or the status quo in one area to argue that similar things are happening in the other area. Some refer to the “status quo” political system or a tightening of border security as a sign that economic “reform” does not exist. Or some would link economic “reforms” with North Korea “opening up”, which carries connotations of a sort of rapid political change which may not happen at the same rate as the economic changes.

But at least people are starting to pay attention to the idea that top-down change can happen in North Korea. CE advisor Andrei Lankov, long a vociferous opponent to the idea that the North Korea’s elite will institute any form of economic “reform”, might actually be the canary in the coal mine. We like his work because he is close to the action in the North, willing to look at evidence and make a call even if it goes against everything he has said before.

The term “reform” is also conflated with a linear process. Critics of the idea of North Korea instituting economic “reform” point to contradictory policies or to non-performance as signs of non-reform. There is a tendency to conceptually link all market liberalizing actions as “reform” and to see greater state involvement in some areas as a sign of “non-reform”. Each policy on its own does not indicate a direction – there can be simultaneous moves to increase the role of the markets in some areas, while strengthening state supervision in others and policy mix matters.

Also, “reforms” can fail. Intention does not imply capacity. But that does not mean an attempt was not made. Both China and Vietnam had to feel their way through in their transitions (or as the Chinese described it “feeling one’s way across the river by touching the stones”). And just because they have done it does not mean that North Korea policymakers are fully aware of how it was done, or that the experiences of those countries are fully transferrable to North Korea.

From a practitioner point of view, if there is an intention in place to focus on economic development, there is a need to increase Choson Exchange efforts to reap a higher return from our education programs (yes! we do believe passionately in our mission). This month, we are making two trips to North Korea specifically to track workshop and global internship programs we have in place this year, to discuss expanded programs in business and economics training next year, and most importantly, to prepare our partners for the increased frequency of programs that will come as we convert our part-time Beijing office into a full-time office next year.

No More Bangapsimnida in Amsterdam

This was pointed out to us by Hamel, who 6 months ago guest blogged about Pyongyang's first foray into the European restaurant scene. Well, it turns out the Noord-Koreaans restaurant failliet. Accusations and counter-accusations abound: the Dutch partner says the restaurant was drained of money by the Koreans so they could start over without him, the Koreans say the Dutch guy didn't pay his share, including wages. Indeed, a court ruled yesterday that the employees are owed ​​payment by the Dutch company.

Whatever the cause of this messy divorce, we're going to go ahead and make a lazy joke suggesting that the Dutch partners were too high to run a business.  Wait, no we won't.

In a more significant conflict, JVIC responded to charges recently made by a Chinese mining company that North Korea had illegally kicked it out of the country and broken their contract. It was unusual for Xiyang - the Chinese company - to so publically air its greivences in the first place, especially while criticizing its own government's Korea-policy. For North Korea to respond is also highly unusual. Disputes like this should be resolved in international, public fora - hopefully soon it will be through arbitration rather than the media.

H/T to Hamel.