Rason Special Economic Zone

The Rason Special Economic Zone, earlier called the Rajin-Sonbong Economic Special Zone,[1] was established in the early 1990s by the North Korean government near Rason to promote economic growth through foreign investment.[2] It is similar to the Special Economic Zones set up by the People's Republic of China and elsewhere to pilot market economics in a designated controlled area. It is near the border with China and Russia and is a warm-water port for both countries.[3][4][2]

Rason Special Economic Zone
Chosŏn'gŭl
라진선봉 경제특구
Hancha
羅津先鋒經濟特區
Revised RomanizationRajin-Seonbong Gyeongje Teukgu
McCune–ReischauerRajin-Sŏnbong Kyŏngche T'ŭkku

Chinese and Russian companies have invested in the economic zone. Mongolia has joined recently, and the use of foreign currency is permitted.[5] Bloomberg reported that ground was broken in June 2011 on a further development stage of the zone.[6] In November 2011, work began on building electricity transmission lines that will provide Chinese electricity supplies in the zone.[7]

Administration

The Rason Special Economic Zone is administered by the Committee for Promotion of External Economic Cooperation (CPEEC).[8] Foreign companies must be invited by the CPEEC to participate in the special zone.[8]

The first joint North-South company, called Chilbosanmeri Joint Company, has been formally established in Rason Special Economic Zone.[9]

Sources conflict over the date the zone was founded, either 1991[10][11] or 1993.[12] Since its creation, laws governing the zone's status have been amended six times, the most recent revision being approved by the Presidium of the Supreme People's Assembly on 3 December 2011.[12]

When Jang Sung-taek was purged in late 2013, the accusations against him included the charge that he had "made no scruple of committing such act of treachery in May last as selling off the land of the Rason economic and trade zone to a foreign country."[13]

Geography
Administrative map of North Korea.

The 746 km2 (288 sq. mi.) Rason Special Economic Zone is on the western side of the Tumen River in North Korea. It is between 42 08'-42 38'N and 130 07'-130 42'E.[8] This location is in the easternmost end of the country, bordering Russia and China.

According to North Korean Economy Watch, the area is surrounded by a 56-kilometre (35 mi) long electrified fence.[14]

Economy

In 1996, 51 foreign businesses invested USD $37.3259 million into the Rason Zone.[15] The UNIDO estimates the investment will increase to $150 million in the future.[15]

In August 2012, an international trade fair was held, offering foreign investors and journalists a look at the work-in-progress. The zone is slated to be a manufacturing, tourism, and transportation hub.[16] However, some analysts think the special zone is more of a project for North Korea to experiment with the capitalist economy rather than use it as basis of transforming North Korea's economy.[17]

Foreign investments
  • Pipa Tourist Hotel[18]
  • Ra-Son Economic Co-operation Company
  • Foreign Economic Co-operation Corporation
  • Korea Joint Venture Group
  • Samgwang Trading Company
  • Korea Machinery Trading Company
  • Korea Daesong B Trading Corporation
  • Opalsam Trading Company
  • Korea Rungra 888 Trading Corporation
  • Korea Ponghwa General Corporation
  • Pyongyang Aluminium Products Factory
  • Korea Osoksan Trading Company
  • Light Industry Products Trading Company
  • Korea Samtaesong General Group
  • Korea Pyongchon Trading Corporation
  • Golden Triangle Bank[19]
  • Yanbian Tianyu International Trade Company[20]

History of foreign business legislation

From 1993 to 2012, there was one single law titled 'Law of the Democratic People's Republic of Korea on the Rason Economic and Trade Zone', which did not mention specific details of business environment, leaving foreign investors with many questions. The first Rason SEZ Law launched in 1993 contained chapters of Fundamentals, Duties and Rights of Operation Committee, Guarantee of Economy Activities, Customs Duties, Currency and Finance, Guarantee and Preferential Treatment and Settlement of Disputes. The basic framework was continued until 2011, when it made modifications on Development and Management of the Zone, Establishment of Enterprises, Economic and Trade Activities and Incentives and Preferential Treatment, providing more details of the environment for foreign-invested companies. However it still did not cover all basically required details for foreign-invest companies such as regulations of labor, tax, or financial management.[2]

From 2014 on, NK started to acknowledge the necessity of a more complex and comprehensive legal framework. North Korea adopted more specific regulations regarding certain legal fields such as Labor Regulations for Foreign-invested Businesses and Regulations of Financial Management of Foreign-invested Businesses. Furthermore, bylaws for Taxation and Establishment and Operation of Businesses appeared. According to the latest Rason SEZ law published in 2016, there are total 16 regulations included in the collection of laws, with at least 3 additional regulations enacted.[2]

In October 2013 and May 2014, international conferences on special economic zones took place, and the concept of many provincial economic zones was considered. However from 2019 these possibilities have diminished, partly out of a concern of excessive foreign influence on North Korean society.[21]

Transport

Chinese investors have renovated a road from Rason to China,[22][1] and Russian railway workers have renovated the railway from Rason (which is on the Pyongra Line) to Russia, from where it continues onto the Trans-Siberian Railway.[10][23][1]

There are three ports in the area: the Rajin Port (handling capacity of 3 million tons), the Sonbong Port (handling capacity of 2-3 million tons), and the Chongjin Port (handling capacity of 8 million tons).[8]

Chinese companies operate two piers at the Rajin Port for coal export and containers. A Russian company operates a third pier.[24]

See also

References
  1. Ruediger Frank (16 December 2014). "Rason Special Economic Zone: North Korea as It Could Be". 38 North. U.S.-Korea Institute, Johns Hopkins University School of Advanced International Studies. Retrieved 29 December 2014.
  2. Yoon, Yeobin; Kopp, Philipp (April 5, 2017). "Overview of Legislation Development in Rason SEZ, DPRK" (PDF). Hanns Seidel Foundation / North Korean Economic Watch. Archived from the original (PDF) on April 16, 2017. Retrieved April 15, 2017.
  3. Khanna, Parag (September 17, 2012). "Typhoon tourism: One week in North Korea". CNN. Retrieved 8 April 2013.
  4. http://nkfood.wordpress.com/2014/03/27/energy-generation-in-rason/%7C%5B%5D recent report from BDSec Joint Stock Company for HBOil reveals that one of the newcomers to Rason is Mongolia. While China and Russia have rented out the piers in the Rajin portion of Rason, HBOil seems more interested in Seonbong and the energy scene.
  5. nk.chosun.com Archived 2004-08-30 at the Wayback Machine
  6. "NKorea opens int'l trade fair at economic zone". Bloomberg Businessweek. August 22, 2011. Archived from the original on November 2, 2012. Retrieved August 24, 2011.
  7. Andray Abrahamian (24 February 2012). A Convergence of Interests: Prospects for Rason Special Economic Zone (PDF) (Report). Korea Economics Institute. Retrieved 5 May 2012.
  8. "Information on Entry & Investment into Rajin-Sonbong District". North Korean government. Archived from the original on 29 August 2012. Retrieved 5 November 2012.
  9. Kim, Seong-Jin (2010-01-19). 北, 라선특별시에 첫 남북합작 기업 승인. Yonhap News Agency (in Korean). Retrieved 2010-01-27.
  10. John Kim and Andray Abrahamian (22 December 2011). "Why World Should Watch Rason". The Diplomat. Retrieved 5 May 2012.
  11. Banks, Stacey (2005). "North Korean Telecommunications: On Hold". North Korean Review. 1: 88–94. doi:10.3172/NKR.1.1.88. ISSN 1551-2789. JSTOR 43908662 – via JSTOR.
  12. Bradley O. Babson (2 May 2012). "Will North Korea's Plans for Foreign Investment Make It a More Prosperous Nation?". 38 North, School of Advanced International Studies. Johns Hopkins University. Retrieved 5 May 2012.
  13. Alastair Gale (12 December 2013), What North Korea Said About Jang Song Thaek The Wall Street Journal
  14. nkeconwatch.com-2008-07-25
  15. "Introduction:Pipa Tourist Hotel". North Korean Government. Archived from the original on 20 May 2011. Retrieved 5 November 2012.
  16. "NKorea's economic zone remains under construction". Associated Press. South Carolina. The State. August 22, 2012. Archived from the original on August 23, 2012. Retrieved August 23, 2012.
  17. By Scott Snyder, April 25, 2010, Rajin-Sonbong: A Strategic Choice for China in Its Relations with Pyongyang
  18. "Local Companies". North Korean Government. Archived from the original on 29 August 2012. Retrieved 5 November 2012.
  19. "Introduction: Tokyo-Rason Tour". North Korean Government. 17 December 1979. Archived from the original on 7 April 2012. Retrieved 5 November 2012.
  20. WONG, EDWARD; Jonathan Ansfield; Jonathan Ansfield (October 12, 2011). "Tending a Small Patch of Capitalism in North Korea". The New York Times. Retrieved 8 December 2012.
  21. Carlin, Robert; Minyoung, Rachel Lee (21 December 2022). "Understanding Kim Jong Un's Economic Policymaking: Rolling Out Economic Development Zones". 38 North. The Henry L. Stimson Center. Retrieved 10 January 2023.
  22. "Archived copy". Archived from the original on 2010-04-19. Retrieved 2010-06-10.{{cite web}}: CS1 maint: archived copy as title (link)
  23. "Archived copy". Archived from the original on 2010-03-12. Retrieved 2010-06-10.{{cite web}}: CS1 maint: archived copy as title (link)
  24. Andray Abrahamian (September 2011). "Report on Rason Special Economic Zone, Democratic People's Republic of Korea" (PDF). Chosun Exchange. CE2011001. Archived from the original (PDF) on 17 April 2012. Retrieved 5 May 2012.

42°22′00″N 130°25′00″E

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