North Korea (Democratic People’S Republic of Korea, Dprk)

Index cards by country

NORTH KOREA (DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA, DPRK)

SPECIAL ECONOMIC ZONES, EXPORT PROCESSING ZONES, TOURISM DEVELOPMENT ZONES, INTERNATIONAL ECONOMIC ZONES

Index cards realized by the University of Reims, France Conception: F. Bost Data collected by F. Bost and D. Messaoudi Map and layout: S. Piantoni WFZO Index cards - North Korea

Oicial Terms for Free Zones Year of promulgation of the irst text Special Economic Zones, Export Processing Zones, Tourism of law concerning the Free Zones Development Zones, International 1991 Economic Zones

Possibility to be established as Exact number of Free Zones Free Points 13 No

TABLE OF CONTENTS

General information ...... 4 List of operating Free Zones ...... 5 Contacts ...... 7 Free Zones Web sites selection ...... 7

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11 " Vladivostok RUSSIA

" 01

Fushun Shenyang Ch'ongjin

CHINA

Kanggye

13 "

04 " Sinuiju Hamhung 03 " NORTH KOREA

Wonsan " 05 12 P'yongyang " 08 " " 10 " " 09 07 Sariwon

Haeju Kaesong 02 " Ch'unch'on " 06 Seoul SOUTH KOREA

FREE ZONES IN NORTH KOREA 50 km International borders Elevations (meters) Cities 0 200 500 1000 Free Zones

01 - Rason Special Economic Zone (ex-Rajin-Sonbong 07 - Songrim Export Processing Zone Economic Special Zone) 08 - Nampo City Waudo Export Processing Zone 02 - Kaesong Industrial Complex (KIC) 09 - Jindo Export Processing Zone 03 - Hwanggumpyong and Wihwa Islands Economic SEZ 10 - Wonsan-Mount Kumgang Tourist Zone, 04 - Sinuiju International Economic Zone 11 - Onsong Island Tourist Development Zone 05 - Unjong Science and Technology (High-Tech) 12 - Sinphyong Tourist Development Zone Development Zone 13 - Chongsu Tourist Development Zone 06 - Kangryong International Green Development Zone

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GENERAL INFORMATION

Number of free 13 Free zones: 6 Special Economic Zones, 4 Tourist Development Zones, 3 Export Pro- zones cessing Zones. http://38north.org/2015/11/sez112315/overview-38-north-sez/ http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic- zones-in-the-dprk

N. of act. comp. in No global statistics. Free Zones In April 2013, 123 South Korean companies were employing in the Kaesong industrial park.

Main sectors of Machine Tool Manufacturing, Mining, Bonded Goods, Building Materials, Chemical activity Products, Building Materials, Metal Product.

Total job numbers No global statistics. At its peak in early 2013, Kaesong Industrial Complex (KIC) had attracted 123 South Korean companies employing over 50,000 North Koreans and about 800 South Korean staf.

Distribution of China, Russia, Mongolia, South Korea. investors

Exports and sales No information.

Free zones contri- No information. bution to the nat. eco.

Corporate Tax and “The DPRK investment law, it allows foreigners a 50-year land lease period (article 24) as Incentives well as “the right to buy, sell re-lease, donate or inherit the land use right and building ownership” (article 29)”. “It also speciies a 14 percent net proit tax of companies in an SEZ (rather than 25 percent elsewhere) or 10 percent if the investment is in a priority sector (article 45); and preferential tarifs for investors who build or reinvest proits into the SEZ (articles 56, 54). It also states that “legitimate proits” can be remitted and currency moved in and out of zones freely (article 47). This is troublesome language as the deinition of legitimate is left unclear. The law also ambiguously promises that immigration and customs conditions will be such that “economic activities of the investors may progress smooth- ly” (article 50)”. For a good analyze of the Law and its Ambiguities: http://uskoreainstitute.org/wp-content/uploads/2014/11/Abrahamian-SEZs-14-1118-HQ-Print.pdf (see p. 12-13).

Free Zone law The 2013 Law of the Democratic People’s Republic of Korea on Economic Development Zones http://www.nkeconwatch.com/category/policies/law-on-the-rajin-sonbong-trade-zone/ http://www.nkeconwatch.com/nk-uploads/Compilation-of-laws.pdf

LIST OF OPERATING FREE ZONES Note: The North Korea has diferent types of "zones": Export Processing / Trade Zones; Industrial Development Zones; Agri- cultural Development Zones; Tourism Development Zones; and Economic Development Zones. But all are not “Free zones”. Oicial texts don’t use the term of “Free zones”. The list of Free zones that we propose (to distinguish them with classical "domestic zones", for domestic markets) in- cludes “pre-existing Special Economic Zones” (in partnership with South Korea and China), “Export Processing Zones”, and “Tourism Development Zones” (for Foreign Tourism).

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Best websites for a global view: http://38north.org/2015/11/sez112315/overview-38-north-sez/ http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic-zones-in-the-dprk http://uskoreainstitute.org/wp-content/uploads/2014/11/Abrahamian-SEZs-14-1118-HQ-Print.pdf

List of pre-existing Special Economic Zones: 1 - Rason Special Economic Zone (ex-Rajin-Sonbong Economic Special Zone) Near Rason. Western side of the Tumen River in North Korea. Location Located in the far northeast of the country, near the borders with China (Jilin province) and Russia (Khasansky District in Primorsky Krai).

Surface Area 470 sq/km

Contacts -

Observations Established in 1991, the Rason Special Economic Zone is the North Korea’s irst SEZ. It covers territory of Rajin and Sonbong cities (RAjin + SONbong = RASON). “In 1993, the DPRK designated Rason as a “directly governed city,” and issued laws go- verning foreign investment in the zone. In its irst two decades, Rason attracted only a modest amount of foreign investment – reportedly under $150 million from its establish- ment through 2010, including a Hong Kong-invested hotel and casino catering to Chinese tourists” “The lack of transportation, energy, and communications infrastructure was a major impediment to early investment in Rason, and only recently has this infrastructure deicit begun to be addressed in a systematic fashion”. http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic-zones- in-the-dprk “In the past few years, North Korea has demonstrated a renewed interest in attracting foreign investment to Rason, overhauling its administration and deepening its regional Linkages …/…

“The investment laws for Rason were also revised in 2010 and 2012, granting the zone greater autonomy in attracting and managing foreign investments, and establishing a China-DPRK Joint Management Committee to oversee the zone”. http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic-zones- in-the-dprk

2 - Kaesong Industrial Complex (KIC) Location Near Yalu (Amnok) River. Located just north of the DMZ

Surface Area -

Contacts -

Observations The Kaesong Industrial Complex (KIC), an inter-Korean joint venture, is North Korea’s lar- gest Special Economic Zone (with a status of cooperative between the two Koreas). “At its peak in early 2013, KIC had attracted 123 South Korean companies employing over 50,000 North Koreans and about 800 South Korean staf. The complex was shut down in April 2013 during a period of high tension between the two Koreas, but reopened in September of that year with most South Korean investors returning, and an agreement between the two Koreas to seek international investment in the zone”. KIC has not expanded as originally envisioned. http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic-zones- in-the-dprk

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3 - Hwanggumpyong and Wihwa Islands Economic SEZ Location Yalu River estuary.

Surface Area -

Contacts -

Observations In June 2011, North Korea and China announced plans to jointly develop new special economic zones on Hwanggumpyong and Wihwa islands, two largely undeveloped sites.

4 - Sinuiju International Economic Zone Location Near Yalu (Amnok) River

Surface Area -

Contacts -

Observations For Chinese Investors.

5 - Unjong Science and Technology (High-Tech) Development Zone Pyongyang City. Location The Sunan International Airport—Pyongyang’s main international airport—is only a 30-40 minute ride away.

Surface Area 300 ha.

Contacts -

Observations Unjong is the only SEZ located within Pyongyang city limits, sitting on the border of Pyongsong City. In July 2014, Unjong was designated a Special Economic Zone. The Unjong High-Tech Company has the stated purpose of “commercializing technology.”

6 - Kangryong International Green Development Zone Kangryong County, South Hwanghae Province, across a channel of water from the provin- Location cial capital, Haeju.

Surface Area -

Contacts -

Observations Business priorities : Organic Agriculture, Tourism, Aquaculture, Light Industry) The SEZ covers the coastal areas of Kangryong County.

List of Export Processing Zones: 7 - Songrim Export Processing Zone Location South Hwanghae Province, on the Taedong River between Pyongyang and Nampo.

Surface Area -

Contacts -

Observations In development. Business priorities: Manufacturing, Tourism, Trade.

Songrim has a population of 128,831 and is a steelworks/heavy industrial site.

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8 - Nampo City Waudo Export Processing Zone Location In the far west of Nampo City at the mouth of the Taedong River.

Surface Area -

Contacts -

Observations Business priorities: Manufacturing. Within it are the DPRK’s main west coast shipyard, various factories and three institutes of higher education.

9 - Jindo Export Processing Zone Location Jindo is a neighborhood located in the Waudo District of Nampo City.

Surface Area -

Contacts -

Observations Business priorities: Light Manufacturing. It shares a direct border and port access with the Waudo EPZ. The shipyards are located in Jindo.

List of Tourism Development Zones: 10 - Wonsan-Mount Kumgang Tourist Zone Location Mount Kumgang

Surface Area -

Contacts -

Observations This inter-Korean SEZ has which opened in 1998 with investment from an arm of the Hyundai group. “Over two million tourists, mostly from South Korea, visited the zone, but tours were sus- pended in 2008 after a South Korean tourist was killed by a Korean People’s Army soldier. Beginning in 2011, North Korea coniscated South Korean assets at the resort and began bringing tourists from Rajin port to Mt. Kumgang via ferry, but with little success. More recent discussions between the two Koreas to reopen the resort have yet to bear fruit”. http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic-zones- in-the-dprk

11 - Onsong Island Tourist Development Zone North Hamgyong Provincial. Onsong is a town with a population of 127,000, sits just Location across from Tumen City in Jilin, China.

Surface Area -

Contacts -

Observations Business priorities: Foreign Tourism. The zone has signed a co-development agreement with Tumen in De-cember, 2013.

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12 - Sinphyong Tourist Development Zone Sinphyong is a scenic site of the highway between Pyongyang and Wonsan across from Location Tumen City in Jilin, China.

Surface Area Around 8 square kilometers.

Contacts -

Observations Business priorities: Foreign Tourism, Hiking, Nature Appreciation) Originally a rest stop, it is being expanded to include neighboring moun-tains and valleys as recreation areas. http://uskoreainstitute.org/wp-content/uploads/2014/11/Abrahamian-SEZs-14-1118-HQ- Print.pdf

13 - Chongsu Tourist Development Zone Chongsu Tourist Development Zone will cover areas of the Chongsong Workers’ District Location and Pangsan, Sakju County in North Pyongan Prov-ince.

Surface Area -

Contacts -

Observations Business priorities: Cross-border Tourism. Chongsu Tourist Development Zone intends to draw Chinese day tour-ism, but there are no hotels there as of yet.

CONTACTS National Committee on North Korea Executive Director: Keith Luse 1111 19th Street NW, Suite 650 Washington, DC 20036 Email: [email protected]

FREE ZONES WEB SITES SELECTION • http://www.ncnk.org/resources/brieing-papers/all-brieing-papers/special-economic-zones-in-the-dprk • http://38north.org/2015/11/sez112315/overview-38-north-sez/ • http://38north.org/wp-content/uploads/2015/11/38-North-SEZ-Plans-v-Progress-112315.pdf • http://www.koreakonsult.com/Attraction_Rason_eng.html • http://uskoreainstitute.org/wp-content/uploads/2014/11/Abrahamian-SEZs-14-1118-HQ-Print.pdf