September 10, 2015 / 9:10 PM / in 2 years

In North Korea, deals on the bus make markets go round

SEOUL (Reuters) - It’s not Amazon or FedEx, but in North Korea’s fledgling market economy a fleet of repurposed old passenger buses is the next best thing for moving trade goods, from rice to textiles and livestock, between far-flung corners of the country.

Known as “servi-cha” - the name comes from “service” and “car” - the money-making buses have been transporting goods in recent years in what satellite imagery shows is an increasingly robust, if still primitive, network.

“In the past you had to deliver stuff in person. Now, buses are the way it is,” said Kim Heung-kwang, a defector who heads the North Korea Intellectuals Solidarity organization in Seoul and maintains links with sources inside his secretive homeland.

“Rice can be sent ... cattle move around with these buses. Raw materials can now be delivered around the country.”

The servi-cha are another example of a growing tolerance for private enterprise within North Korea, where informal markets and small trading firms have burgeoned in recent years alongside a creaking centrally-planned Soviet-style economy.

Trains were long North Korea’s principle mode of transport, but poor electricity supply and ageing rolling stock have left them slow and unreliable.

That leaves a rusty fleet of old buses plying the country’s lightly-trafficked and dusty roads as the most effective means for moving goods between cities and small towns, according to North Korean defectors and experts.

Internal travel remains restricted in authoritarian North Korea and vehicles cannot officially be privately owned, but defectors say goods loaded on buses are off the regime’s radar, especially outside Pyongyang, the showpiece capital.

Entrepreneurs can partner with state organizations to register buses on their behalf and share the profits, according to a 2014 paper from the Korea Institute for Industrial Economics and Trade in Sejong, South Korea.

The report, partly based on interviews with defectors, said servi-cha are often operated by local government bodies, giving them a semi-official status that suits the growing ranks of small traders that use them.

CASH AND CARRY

Some sites used as once-informal drop-off points for buses have had permanent structures built within the last few years, according to Curtis Melvin, a researcher who studies publicly available satellite imagery of the country at the Johns Hopkins School for Advanced International Studies in Washington.

Private markets began taking hold in North Korea following a devastating famine in the 1990s, when the state distribution system broke down.

The size of spaces used as markets has significantly expanded since 2004, Melvin said, as have the bus depots supporting the delivery network.

“This didn’t start under Kim Jong Un, but there’s been a lot of growth under him,” said Melvin, referring to North Korea’s young leader, who took power following the death in 2011 of his father, Kim Jong Il.

Using servi-cha, a rice vendor who needs to replenish supplies when none are locally available can phone a wholesaler in another city and place an order. The wholesaler delivers rice to the local depot, where a bus ships it to the buyer’s town.

To pay for the rice, the buyer visits a small money transfer business, which takes the payment and calls a partner business in the seller’s town - one in 10 North Koreans has a cellphone - who confirms the deal and hands cash to the seller.

By reliably accepting cash in advance, servi-cha have helped foster the concept of trust in business in North Korea, said another defector who stays in touch with family in the North and asked to be anonymous for the safety of her relatives still living there.

“Logistics with buses are like vessels which keep pumping blood around the country and stop people from starving to death,” said Kim, the first defector. “This is something that the planned economy can’t do.”

Editing by Tony Munroe and Alex Richardson

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