One of the most striking features of Kim Jong Un’s North Korea has been the recent construction boom.
For nearly three decades North Korean cities remained essentially unchanged, but between 2008 and 2010 work began again, and began to speed up after 2011 when the new leader came to power.
The visible results of this boom are the new residential districts in Pyongyang, including the much publicized Ryomyong Street.
For outside observers, true believers in the power of sanctions, it is often difficult to admit that the economic situation in North Korea is improving: the construction boom in Pyongyang, too large to be denied or unnoticed, is frequently described as a sui generis, a unique case – perhaps the result of the regime’s willingness to make massive investments for propaganda purposes.
But construction is not limited to the capital. Furthermore, while Pyongyang projects are indeed often used for propaganda purposes, subsidized by the state, and are, predictably, sometimes of dubious practical value, the situation in the countryside is different.
The countryside is experiencing a construction boom, too, but because this is driven by private money and market demand, the resultant buildings are of much smaller scale, but definitely livable – and certainly profitable for their owners.
I interviewed Mr. Suh (not his real name), a man who once worked on construction sites in the North Korean countryside. He is one of (actually, very rare) people whose defection to the South was not a result of some accident but was carefully planned and well thought out.
Since his teens, Mr. Suh had listened to South Korean radio, and came to entertain deep suspicions about the future of North Korea as well as his own future in this society. So, he began to plan an escape very carefully and systematically. At one stage he moved to a town relatively close to the border to work in construction and in order to make money and also gather intelligence for his future escape. He spent two years there.
The construction boom in Pyongyang, too large to be denied or unnoticed, is frequently described as a sui generis
Technically, Mr. Suh was a college student, and this eased his life when it came to dealing with police bureaucracy: it was assumed that it was normal for a student to live with relatives or even friends while on leave from school.
Mr. Suh came to the town and found accommodation with a local family, renting out a room in their house. Three meals a day were provided as well – and these were good meals, since the town, located relatively close to the border and a center of legal and illegal trade with China, is one of the richest in North Korea. Thus, Mr. Suh was given rice gruel three times a day (still a luxury in other parts of the country), and pork dishes were even provided on weekends, while fish could be cooked every second day or so.
Given the quality of food, and size of the room, one should not be surprised that the accommodation was costly: 200 Chinese yuan (roughly USD$35) per month.
And one should also not be surprised that the price was cited in the Chinese currency: after the 2009 currency reform debacle, nobody in his or her right mind would trust local notes, so North Korean money in the region was used only for small transactions. At any rate, it was a noticeable part of Mr. Suh’s income which, as we will see, was good by local standards.
Mr. Suh found employment in a small interior design company. Since houses were being built in large numbers, business was booming. The company had six-seven permanent workers and also hired some additional workforce when necessary.
Needless to say, the small company where Mr. Suh worked did not officially exist. All employees and employer formally had other jobs – all within the state economy, of course.
But they did not show up at their official workplaces, and in most cases paid so-called “August 3rd money,” a contribution to the budget of the company they were registered with but did not actually attend. In essence, this is the price to be paid for being legally unemployed or, rather, employed outside the state economy.
As an important additional benefit, “August 3rd money” gives the purchaser the right to skip boring and time-consuming indoctrination meetings all North Koreans are required to attend.
START FROM SCRATCH
North Korea (like, say, present-day Russia), is a country where newly built flats are completely devoid of anything: no wallpaper, no paint, no water heating or storage equipment, and often no sinks or showers – just unpainted cement or brick walls.
It is assumed that once the flat is sold, the necessary arrangements will be done by the owners, who will decide what they will make of it depending on their tastes.
The managers and workers of independent work teams, like the one where Mr. Suh was employed, along with the owners, first perused Chinese catalogs and magazines, and then made decisions how the interior should look.
The new owner of a flat does not receive any property recognition, but rather a residence certificate
It was quite common, say, for a rich local couple to buy not one, but two flats on the same floor, and then have them connected and redesigned as one extra-large living space.
In some cases, patrons or designers even traveled to Beijing to study the newest trends in the Chinese architectural fashion and interior design – China, no matter what the official propaganda says, is seen as an embodiment of good modern taste and high fashion.
However, the building has to be erected first. In the countryside town, there was no need for high-rises and, of course, they are not particularly profitable economically: five to seven floors are the norm nowadays.
On paper, the new building belonged to the state. One had to be a government agency or state-owned enterprise in order to be eligible for a permit to build a house. However, agencies or factories nowadays have neither the money nor, often, the expertise, and hence have no choice but to find local rich people to act as investors.
The construction projects Mr. Suh worked on were jointly operated of state enterprises and private capital. A government institution or a state-owned enterprise (like, say, a factory) sorted out all legal issues, hired architects and also handled relations with the municipal authorities. Private investors paid money which allowed them to buy construction material, hire workers, rent the heavy equipment. Usually, it took a year or a bit more to have a building completed.
Technically North Korea does not recognize the private ownership of houses
Once the major work was done, Mr. Suh and his colleagues moved in, to paint and plaster, and install water heating and water tanks. After another couple of months, the building was ready to house its first inhabitants.
The profits were divided. The agency or factory which did the paperwork (and, technically was the sole owner of the entire project) got its cut in the shape of a certain number of flats. These flats were used to house their workers, but some were given to the state which would then allocate living space to people considered worthy.
The remaining flats were to be sold, and profit would go back to the private investors. By their standards, it was a good investment: not particularly profitable (30-50% profit was the norm), but also relatively safe from political risk.
Since technically North Korea does not recognize the private ownership of houses (with minor exceptions which are irrelevant to our story), sales are unofficial. The new owner of a flat does not receive any property recognition, but rather a residence certificate, undistinguishable from the certificates which were issued to those lucky who got the state-distributed flats free of charge.
However, it did not bother them in the least: it was universally assumed that the ownership rights and residence rights are not that much different.
This might sound strange to Western readers, who are too used to strictly defined legal obligations, but yours truly, being a former Soviet citizen, does not see much problem with such arrangements: this is how similar things were dealt with in the late Soviet era, when the real estate trade was beginning to spread but fictions of the universal state ownership still existed.
Mr. Suh has no clue how many flats in a typical new building was allocated to the state agency, and how many went to the private investor – he was a humble worker, of course, and given the semi-legal and grey nature of the entire arrangement, he was in no position to know. Nonetheless, he believes that private investors received well over half of new flats.
Mr. Suh came as a novice, and for a few months he did unskilled work, paid 400 yuan a month. Then, he gradually learned the craft, and in the final days of his employment, his monthly salary was 600-700 Chinese yuan – slightly over USD$100. The best-paid people in his brigade regularly brought home 1200 Chinese yuan, or nearly USD$200 a month.
Even by the standards of a booming border town, it was a good income, even though the workers had to work long hours to earn that much (a 12 hour work day was seen as the norm).
As we know, Mr. Suh was not going to stay at this job for too long: he acquired some money and learned what he needed to know, and one day he was gone: in due time he was in China, working his way to South Korea.
Edited by Oliver Hotham
Featured image: Rodong Sinmun
Join the influential community of members who rely on NK News original news and in-depth reporting.
Subscribe to read the remaining 1681 words of this article.