North Korea has granted independent trading authority to major trading companies and first-class enterprises under various ministries and central government agencies.
According to a Daily NK source in Pyongyang recently, “The Ministry of External Economic Affairs issued a directive in late March to trading companies and first-class enterprises under various ministries and central agencies, instructing them to independently develop and pursue trade activities according to their own circumstances starting this month.”
The source explained that the core of this directive is to allow these entities to engage in foreign currency earning activities with minimal state intervention in their finances, while also granting them authority to independently establish joint ventures and collaborative projects.
The directive emphasized that these trading activities can be conducted not only with China and Russia but also with certain third countries classified as “friendly nations.”
Notably, North Korea has significantly relaxed restrictions on sending business negotiation teams abroad. The directive states that “it is possible to dispatch teams of around 10 people to foreign countries, and to invite foreign business representatives for negotiations within North Korea.”
“The size of negotiation teams has been a strictly controlled matter for security reasons,” the source said. “This directive has made the formation of trade negotiation teams much more flexible, leading to comments that it’s ‘equivalent to removing the handcuffs from officials’ wrists.’”
The directive applies only to trading companies directly under ministries and central agencies, along with first-class enterprises. Lower-level general trading companies and enterprises still cannot conduct business independently.
However, the source noted that “in practice, a system of ‘indirect collaboration’ with lower-level units that can supply products or labor may flourish. Trading companies and first-class enterprises under ministries and central agencies that are skilled in earning foreign currency will take the lead, securing negotiation rights, import-export rights, and profit shares.”
Some have expressed concerns that provincial-level trading companies might engage in unfair practices by imposing unreasonable conditions on lower-level entities or taking most of the profits.
Regarding this, the source said, “Officials at lower-level trading companies are complaining that this directive only benefits privileged organizations, while subordinate units must still rely on higher authorities to survive.”
Meanwhile, the source added, “Although it appears the state has completely delegated authority to trading companies and first-class enterprises under ministries and central agencies, their every move—including personal information, travel routes, and communication methods—remains under direct surveillance by security agencies. This hasn’t changed from before, creating a cautious atmosphere among officials.”
The source further revealed that “this directive is actually an attempt to secure funds for the party. Trading companies under Room 39 have already initiated practical contacts with Russia and the Middle East, and some have established joint ventures for medium to long-term business projects in foreign countries.”
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