DPRK cracks down on informal transportation market

According to the Daily NK:

The People’s Safety Ministry has declared war on the use of vehicles for private gain, according to a source, raising fears that another period of social upheaval is on the cards.

Vans, buses and trucks have been in use as so-called “servi-cha” (service cars) in North Korea since the late 1990s, after the authorities became unable to provide regular electricity to the railroads. Since then, this alternative transportation system has become a core means of distribution and domestic movement.

However, a source from North Hamkyung Province reported on Sunday, “A crackdown on sedans, vans, and 1.5 to 2-ton trucks belonging to individuals has begun under a decree handed down by the People’s Safety Ministry on the 18th. Now, all traffic safety agents are checking car registration documents, vehicle licenses, car permits and driver’s licenses on the streets.”

The source explained, “The PSM intends to confiscate all kinds of vehicles apart from those registered for cadres and businesses in the Traffic Office database in each province. Even those vehicles belonging to military-owned foreign currency-making enterprises have been targeted for inspection, but the military police will deal with them.”

According to the source, the North Korean authorities have divided the crackdown on the servi-cha system into two steps: the first is to be carried out until the end of this year, and the second by late April, 2011. First, for the next six months, the PSM will investigate vehicle ownership in government organs, companies and factories, inspecting all vehicles on the streets and confiscating those found guilty of illegality. In the second phase, the PSM will move on owners of private vehicles.

Vehicle management in North Korea is the work of the Traffic Department of the People’s Safety Ministry. The Traffic Department has a Traffic Office under each municipal or provincial People’s Safety Ministry which is in charge of monitoring vehicles within that region. Vehicles belonging to the military are managed and monitored by the rear guard unit of each corps, division or regiment; punishment, monitoring and crackdowns are military police duties.

The operation of a “servi-cha” requires the collusion of three parties; the car’s real owner, a driver and a cadre from an organ or enterprise.

A used car arrives from China or Japan, whereupon the cadre, who has close relations with the smuggler of the car, registers it in the name of his organ or enterprise, since all vehicles must belong to a group, not an individual.

Then, the car owner hires a driver and operates the vehicle as a bus or delivery truck.

Gains are divided between the cadre and the owner, who also pays the driver’s salary. The cadre extracts some of the profits for himself and records the rest as company income.

Under this mechanism, almost every organ, company, factory and even collective farm has at least one “servi-cha” in its name; profits are used to cover other losses, since there is no support coming from Pyongyang anymore.

This system is probably the most decisive influence on the growth of the jangmadang in North Korea. Thanks to the “servi-cha”, volumes of commercial traffic and personnel migration have increased and products smuggled in across the Tumen and Yalu Rivers from China are able to reach remote southern provinces such as Kangwon and Hwanghae.

Since the late 1990s, when the operating ratio of the railroad dropped to as low as 40%, the servi-cha system spread as an alternative to the collapsing public transit network. As permanent markets emerged in 2004, demand from people for migration and the distribution of goods increased drastically, and thereafter the system became the core transportation tool.

Considering the dominant influence of the “servi-cha” in the daily lives of the North Korean people today, if the crackdown is long and/or successful over a long period, other serious effects may be felt in North Korean society, where the aftershocks of the currency redenomination have only just dispersed.

This measure is being interpreted as part of a series of struggles for the eradication of what the North Korean authorities see as “anti-socialist elements”. Additionally, it seems to be an attempt not to ignore the abuse of loopholes in the system by cadres.

From the authorities’ perspective, the wide-spread usage of the servi-cha represents a loss of control over the society, because the movement of goods and people naturally incorporates the circulation of information.

The obvious problem is that any crackdown on the servi-cha industry will cause instability in the markets.

The source said, “Getting rid of ‘servi-cha’ is the same as letting us starve to death,” adding, “If they eliminate ‘servi-cha’, it won’t just be a problem for companies; any life tied up in markets including wholesaling and retailing will hit a brick wall.”

He explained further, “The measure will be a blow to cadres in the middle and lower levels, who are in collusion with traders. Therefore, lower cadres are likely to resist the measure first.”

Therefore, it is very much open to question whether the measure will be a success or a failure, just like previous crackdowns over markets and the currency redenomination.

Read the full story here:
War Declared on the Servi-Cha
Daily NK
Im Jeong Jin


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