Dear leader wants his visa : are recent developments in the finance sector a sign that North korea is coming out of its shell? - card - Finance - North Koreans may be opening up to the rest of the world - Brief Article

Business Asia, June, 2002 by Angela McFeeters

As North Korea finds itself increasingly marginalised in world affairs, significant reforms in its banking sector are starting to take place which may foreshadow a radical change of economic and social policy in the hermit kingdom.

Moves at the Koryo Commercial Bank show the North Koreans may be opening up, albeit glacially, to the rest of the world, and plans to issue credit cards to its citizens could be the beginning of the much needed reform process inside the beleaguered nation.

Shut off from much of the world, the directors of Koryo Commercial agreed to be interviewed by Asian Banking & Finance, sister publication of Business Asia, in an attempt to bypass the many restrictions imposed on them and reach out to the international banking community through the media.

Credit check

Koryo Commercial is one of a handful of state owned banks (there are between four and 12, depending on whom you talk to) and is one of the principal banks engaged in foreign exchange and settlement in North Korea. It has 150 employees and 10 branches, and is one of the largest operators of tourist class hotels for foreigners in the country.

Koryo Commercial president Han Yong Nam said the main reason he and his team visited a Singapore banking exhibition recently was to learn about the credit card business and try to secure a meeting with Visa so that Koryo Commercial could begin accepting Visa card payments at its hotels.

"We expected several years ago that future customer business would be based on credit cards, but the credit card business in our country is at the premature stage," Han said. "Firstly we are going to accept the credit cards used by foreigners such as Visa and MasterCard. Our bank is now doing MasterCard settlement but not Visa, and we want to become a member bank of any international credit card organisations so the Koryo Commercial Bank can become an issuing bank. Current Koryo MasterCard business must be done through an agent."

Policy shift

Han is also excited by the prospect of credit card carrying North Koreans, a move that would mark the first major development of a sophisticated consumer banking system in the country, and could signal a radical rethinking of economic policy.

"We are planning credit card use for Koreans: this is our future project," Han said. There may be a long march before Dear Leader gets his Visa, but clearly there is a new thinking occurring in some parts of the North Korean leadership which is more in line with the Chinese style socialist-market economy than hard line communism.

With restrictions on travel to and from North Korea from many countries, including Japan and the United States, getting the message out about his bank is one of the priorities for Han, who believes that positive business changes can foreshadow political developments.

"Before politics there should be business. We eagerly want to contact the businessmen and banks in the United States, but the political situation between our two countries is not good at the moment," he said. "The US administration still imposes many restrictions on the country through the international settlement banks. We are planning to establish branches in strategic places in Asia Pacific. There are some legal procedures in opening a bank so we will establish our representative office here in Singapore first. Singapore is a financial centre. Hong Kong is also good."

Banking technology was also in the shopping list for the North Koreans, with plans to introduce ATMs at key locations in Pyongyang. "At present we do not have an ATM for cash but we do have an ATM for soft drinks," added Han.