- The Washington Times - Friday, March 25, 2005

SEOUL — Karaoke parlors, 24-hour convenience and wholesale stores contributed to a 9.8 percent growth in North Korea’s retail business in 2003 despite the country’s overall gloomy economics, according to a South Korean government report released this week.

The North Korean government is ceding more control to farmers, instructing them to grow rice but allowing them to choose what other crops to grow, according to the Korea Institute of National Unification, a think tank under the Unification Ministry.

The group released a four-page summary of its new book on North Korea’s economic reforms.

Previously, farmers had to give 80 percent of their crops to the government, but that figure has been reduced to 50 percent to 60 percent in an effort to allow them to earn more income.

Because of North Korea’s lack of food, the government seems resigned to letting the market settle the problem, the report said.

Government food rations were cut from slightly more than 1-1/2 pounds to a little more than 10 ounces per day in January 2004.

Food is first provided to military, party and government officials, then Pyongyang residents and eventually the rest of the country, the report said.

North Korea has continually fallen short in food production, relying instead on foreign aid to feed its 22 million people.

While private business ownership is banned, beer bars, karaoke parlors and Internet cafes have started operating, some in cooperation with Russian and Chinese merchants, a sign that China’s market reforms may be rubbing off on the isolated nation.

Earlier this week, North Korean Prime Minister Pak Pong-ju traveled to China, reportedly visiting Shanghai to discuss economic reforms and growth.

In July 2002, a salary system was introduced. Workers also are seeing pay raises; at a fabric factory in Songyo, North Korea, salaries increased three to five times, said the report, quoting a North Korean magazine published in Japan.

Government officers now take a civil service test on politics and economics rather than being selected through interviews and recommendations. Younger workers in their 40s are being placed in key positions to create a more professional atmosphere in trade banks and on committees, according to the report.

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