[New Focus] NK eyes Vietnam’s economic reform model


North Korea has taken the Hanoi summit between US President Donald Trump and its leader Kim Jong-un this week as an apt opportunity to express its interest in Vietnam’s market reform policy, “doi moi,” amid divided opinions among experts here whether the economic model “fits the mold.”

Vietnam, a socialist nation, is often remarked for its economic development, after it successfully promoted a slew of market-oriented reforms in the 1980s and 1990s, recuperating from the damages of the 1954-75 Vietnam War. It managed to recover its diplomatic and economic ties with the US, while maintaining a communist dictatorship — which is likely what Kim Jong-un is aiming for.

As Kim geared up for his meetings with Trump, the first of which was scheduled Wednesday afternoon, a team of North Korean officials, including O Su-yong, reportedly in charge of the Workers’ Party of Korea’s economic affairs, traveled to Hai Phong, a major port and industrial city in northeastern Vietnam. The officials were expected to inspect businesses run by Vingroup, a Vietnamese conglomerate, and the factories of VinFast, a key automotive manufacturer in the country. 

North Korean leader Kim Jong-un receives a warm welcome from Vietnamese citizens upon his arrival in Hanoi on Tuesday. (KCNA)

North Korea is known to have established more than 20 special economic zones in recent decades but has been struggling to attract the interest of foreign investors.

Also in line with the summit, the North’s state-run daily Rodong Sinmun released an article early in the day, titled “Vietnam pushing for economic development,” lauding the Southeast Asian nation’s capability of facilitating the simultaneous growth of socialism and its national economy.

“Today, Vietnam’s ruling party and the government are elevating its role (within the nation) while striving for economic reform and strengthening the socialist regime simultaneously,” it said in Korean.

It noted that Vietnam has overcome the economic aspect of being heavily reliant on the agricultural sector and is pursuing a slew of industrial projects that will complete its economic balance.

However, despite North Korea’s hopes and dreams of creating a virtuous cycle between its socialist dictatorship and economic growth, several experts have cast doubt on doi moi as a plausible option for the isolated nation.

“On the surface doi moi may seem like what North Korea wants, but the model promotes opening up its market to capitalism — which could break down the current regime,” Kim Byung-yeon, a professor of economics at Seoul National University, told The Korea Herald.

Analysts like Kim Byung-yeon have pointed out that the doi moi model was pursued following the reunification of Vietnam in 1975, claiming the opening up of the market could increase the risk for the North of “reunification of absorption” by South Korea.

People ride motorcycles outside VinFast, automotive startup manufacturer, with flags of North Korea, left, and Vietnam in Haiphong, northeastern Vietnam, Wednesday. (AP)

The Seoul-based expert also raised the possibility that the North may be merely trying to showcase its interest in the reform model, as an attempt to alleviate layers of sanctions standing in the way of its economic development. Trump has been nudging Pyongyang to denuclearize by citing Vietnam’s economic prosperity as a path it could take in return.

“North Korea has been studying the doi moi model for decades — it’s not a new subject for them to study and there is a chance that it may be making such visits to showcase their willingness to listen to the US’ thoughts,” he added.

With sanctions continuing to stand in the way, the main item on the agenda of the Trump-Kim meeting will be the negotiations on denuclearizing the North, which are more directly related to the isolated nation’s goal of lifting sanctions, analysts noted.

“It seems Kim Jong-un is more focused on preparing for the meeting at the moment, but there is a chance he may visit economic zones and facilities after the summit,” said Shin Beom-chul, a senior fellow at the Asan Institute for Policy Studies.

Inter-Korean economic cooperation

Though Kim Jong-un has yet to visit a Samsung Electronics factory in Vietnam’s Bac Ninh province, expectations persist that he may soon visit a factory or other facilities in the vicinity that are run by South Korean companies.

Inter-Korean economic cooperation has failed to make dramatic progress in recent months, despite a test-operation of cross-border railways running along both the east and west coasts of the Korean Peninsula, late last year.

A poll by research firm Real Meter on Tuesday, conducted on 505 adults across South Korea, showed that 33 percent picked the reconnection and modernization of inter-Korean railways as a key cross-border project that the Seoul government should pursue.

There was a surge in share prices of North Korea-related businesses on the Seoul bourses on Wednesday, with the stocks buoyed by the Vietnam summit.

Analysts are anticipating that the possible alleviation of sanctions as a result of a deal reached the summit could create momentum for inter-Korean business.

“There is a chance that local businesses might enter the North Korean market if a successful result is reached at the summit and could create momentum for such projects,” Lim Eul-chul, a professor at Kyungnam University, said.

By Jung Min-kyung (mkjung@heraldcorp.com)

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