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 2 WFZO Index cards - North Korea 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 © Sébastien Piantoni - Conception: François Bost EA 2076 Habiter - University of Reims - 2017 Map Projection: WGS 1984 3 WFZO Index cards - North Korea 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 legiti- mate 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). 4 WFZO Index cards - North Korea 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 5 WFZO Index cards - North Korea 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 eco- nomic 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