Provincial Governments Tap Wealthy Traders to Donate for Regional Development

The propaganda poster of the DPRK reads, “‘The 20×10 Regional Development Policy’: The People’s Army should be the flag bearer and protagonist in the struggle for regional industrial development!” Image via KCNA.

SEOUL – Provincial governments are conducting a donation campaign targeting wealthy merchants to fund local development projects, according to sources in North Korea.

NK Insider has spoken to residents in the northern provinces of Yanggang, North Pyongan and North Hamgyeong who say authorities there are raising money for the Kim Il Sung and Kim Jong Il Loyalty Fund. Originally set up to raise money overseas to promote North Korea internationally, the fund in recent years has found ways to raise money within the country for domestic projects.

The ruling Workers’ Party announced a five-year economic plan last June that includes regional development. What is new this time is that the government has a specific “20×10 Regional Development” goal to build manufacturing facilities in 20 cities and counties every year for the next 10 years. More importantly, Kim Jong Un put his weight behind the regional development plan in a speech to the Supreme People’s Assembly on January 15. 

The fundraising drive comes after Kim criticized cadres and highlighted “severe imbalance and huge gaps” between rural and urban areas and instructed the Central Committee members to individually be responsible for the economic development of a specific city or province. 

“His criticism of cadres is a way of avoiding responsibility,” said a resident of the border city of Hyesan. “But I’m still glad to see that it was decided by the Party and emphasized in the Supreme People’s Assembly to restore the rural areas.”

The North’s Korean Central Broadcasting Station reported on February 3 that regional parties and government bodies were busy organizing teams and holding meetings to implement the 20×10 Regional Development Policy.

The emerging class who have made money working in the jangmadang markets – referred to as “donju” – have become increasingly important. They are known to have intervened in the economic policies and represent a new force in trade and finance, real estate and distribution.

According to many residents along the border with China, local governments have set up policies to actively make use of the donju for regional economic strategy. Rather than simply extorting funds, they offer incentives to them to invest in state enterprises. They offer management positions or otherwise make deals that appeal to them. To attract individual capital, regional governments mobilize the judicial power of the Ministry of State Security and the Ministry of Social Security to protect certain monopolies enjoyed by individuals, or to track, inspect, and suppress illegal funds.

North Korean defectors and economists who have worked in regional industries confirm that the funds needed to implement the 20×10 plan will be shared by the central government and the regions. 

They expect that respective municipal Party Committees and People’s Committees will be in charge of project implementation, construction, organizational and work planning, and schedules. Local governments will receive support from the central government for areas that they are unable to manage on their own, such as human resource support planning and requests for important production equipment. 

It is not clear to what extent the central government will actually fund the regional projects or, indeed, whether it will actually invest at all. 

North Korea reportedly received $5 billion in funding and promises of full economic cooperation from Russia in exchange for weapons. This and the fact that Kim has highlighted the 20×10 plan makes citizens in the provinces hopeful. On the other hand, the news that the state is picking their pockets and looking for donations is not encouraging.

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