Rason Special Economic Zone Explained

Hangul:라진선봉 경제특구
Hanja:羅津先鋒經濟特區
Rr:Rajin-Seonbong Gyeongje Teukgu
Mr:Rajin-Sŏnbong Kyŏngche T'ŭkku
Context:north

The Rason Special Economic Zone, earlier called the Rajin-Sonbong Economic Special Zone, was established by the North Korean government at Rason, bordering China and Russia, in 1991 to promote economic growth through foreign investment. It is similar to the special economic zones of China and elsewhere, set up to pilot market economics in a designated controlled area. Foreign currency may be used in the zone.[1] Chinese and Russian companies have invested in the special economic zone, and Mongolia joined in about 2013.

The Rason Special Economic Zone is administered by the Committee for Promotion of External Economic Cooperation (CPEEC).[2] Foreign companies must be invited by the CPEEC to operate in the zone.[2]

Geography

The 746 km2 (288 sq. mi.) Rason Special Economic Zone is in the north-eastern part of North Korea. It includes the easternmost point of the country. Its eastern boundary is the Tumen River, which is also North Korea's border with China and Russia. Rason has the northern-most port in Northeast Asia that is ice-free all year, and so the port is used by the two neighbouring countries.[3] [4] The zone is between 42 08'-42 38'N and 130 07'-130 42'E.[2]

According to North Korean Economy Watch, it is surrounded by a 56km (35miles) long electrified fence.[5]

History

The zone was founded as the Rajin Free Economic and Trade Zone in December 1991.[6] [7] [8] It was expanded to become the Rajin-Sonbong Free Economic and Trade Zone in September 1993.[6] 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.[9]

By the end of 1996, US$37.3259 million had been invested into the zone by 51 foreign businesses.[10] The UNIDO estimated the investment would increase to $150 million by the end of 1997.[10]

In August 2012, an international trade fair was held, offering foreign investors and journalists a look at the work-in-progress. The zone was slated to be a manufacturing, tourism, and transportation hub.[11] However, some analysts thought it was more a project for experimenting with a capitalist economy, rather than using it as a basis for transforming the economy of North Korea.[12]

The first North-South joint venture company in Rason Special Economic Zone, called Chilbosanmeri Joint Company, was approved in 2010.[13]

Bloomberg reported that ground was broken in June 2011 on a further development stage of the zone.[14] In November 2011, work began on building electricity transmission lines that will provide Chinese electricity supplies in the zone.[15]

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."[16]

History of foreign business legislation

From 1993 to 2012, there was a single law titled 'Law of the Democratic People's Republic of Korea on the Rason Economic and Trade Zone', which did not include specific details of the 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-investor companies, such as regulations of labor, tax, or financial management.

From 2014, North Korea started to acknowledge the necessity of a more complex and comprehensive legal framework. It adopted more specific regulations regarding 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.

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.[17]

Transport

Chinese investors have renovated a road from Rason to China,[18] [19] 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.[7] [20] [19]

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).[2] Chinese companies operate two piers at the Rajin Port for coal export and containers. A Russian company operates a third pier.[21]

Foreign investments

See also

External links

42.3667°N 130.4167°W

Notes and References

  1. News: Foreign-exchange coupons out of sight . Kang Chol Hwan . 13 September 2001 . NKchosun.com . dead . https://web.archive.org/web/20040830030732/http://nk.chosun.com/english/news/news.html?ACT=detail&cat=10&res_id=4988 . 30 August 2004.
  2. Web site: Information on Entry & Investment into Rajin-Sonbong District. North Korean government. 5 November 2012. dead. https://web.archive.org/web/20120829035746/http://www1.korea-np.co.jp/pk/014th_issue/97102203.htm. 29 August 2012.
  3. News: Khanna. Parag . Typhoon tourism: One week in North Korea . 8 April 2013 . CNN . September 17, 2012.
  4. Web site: Energy generation in Rason . Scott . LaFoy . 27 March 2014 . Rice & Iron . 22 June 2024 . A 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. Web site: Rajin SEZ electrified perimeter on Google Earth . 25 July 2008 . North Korean Economy Watch . 22 June 2024 . live . https://web.archive.org/web/20230607012936/https://www.nkeconwatch.com/2008/07/25/raijin-electrified-perimeter-on-google-earth/ . 7 June 2023.
  6. Book: Hughes, Christopher W. . Tumen River Area Development Programme: Frustrated Micro-Regionalism as a Microcosm of Political Rivalries . 2000 . Centre for the Study of Globalisation and Regionalisation, University of Warwick . CSGR Working Paper No. 57/00 . 18 . 22 June 2024.
  7. Web site: Why World Should Watch Rason . John Kim and Andray Abrahamian . The Diplomat . 22 December 2011 . 5 May 2012.
  8. Banks. Stacey. 2005. North Korean Telecommunications: On Hold. North Korean Review. 1. 88–94. 10.3172/NKR.1.1.88. 43908662. 1551-2789. JSTOR.
  9. Web site: Will North Korea's Plans for Foreign Investment Make It a More Prosperous Nation? . Bradley O. Babson . 2 May 2012 . . Johns Hopkins University . 5 May 2012.
  10. Web site: Introduction:Pipa Tourist Hotel . North Korean Government. 5 November 2012. dead. https://web.archive.org/web/20110520081618/http://www1.korea-np.co.jp/pk/018th_issue/97111905.htm. 20 May 2011.
  11. News: NKorea's economic zone remains under construction . Associated Press . August 22, 2012 . The State . August 23, 2012 . South Carolina . dead . https://web.archive.org/web/20120823065244/http://www.thestate.com/2012/08/22/2408642/nkoreas-economic-zone-remains.html#.UDZf_qBOi1k . August 23, 2012 .
  12. Snyder . Scott . 1 April 2010 . Rajin-Sonbong: A Strategic Choice for China in Its Relations with Pyongyang . . China Brief . 10 . 7 . 21 June 2024.
  13. News: Seong-Jin . Kim . ko:北, 라선특별시에 첫 남북합작 기업 승인 . North Korea approves first inter-Korean joint venture in Rason Special City . 19 January 2010 . https://www.yna.co.kr/view/AKR20100118152700014 . . 22 June 2024 . ko .
  14. News: NKorea opens int'l trade fair at economic zone . https://web.archive.org/web/20121102103446/http://www.businessweek.com/ap/financialnews/D9P92P1O0.htm . dead . November 2, 2012 . Bloomberg Businessweek . August 22, 2011 . August 24, 2011.
  15. A Convergence of Interests: Prospects for Rason Special Economic Zone . Andray Abrahamian . Korea Economics Institute . 24 February 2012 . 5 May 2012.
  16. Alastair Gale (12 December 2013), What North Korea Said About Jang Song Thaek The Wall Street Journal
  17. Web site: Understanding Kim Jong Un's Economic Policymaking: Rolling Out Economic Development Zones . Carlin . Robert . Minyoung . Rachel Lee . The Henry L. Stimson Center . . 21 December 2022 . 10 January 2023.
  18. Web site: Archived copy . 2010-06-10 . dead . https://web.archive.org/web/20100419010733/http://www.nkeconwatch.com/2010/04/13/bridge-on-china-north-korea-border-being-renovated/ . 2010-04-19 .
  19. News: Rason Special Economic Zone: North Korea as It Could Be . Ruediger Frank . U.S.-Korea Institute, Johns Hopkins University School of Advanced International Studies . . 16 December 2014 . 29 December 2014.
  20. Web site: Archived copy . 2010-06-10 . dead . https://web.archive.org/web/20100312080254/http://www.nkeconwatch.com/2008/08/12/russia-inks-deal-connecting-rajin-to-trans-siberian-railroad/ . 2010-03-12 .
  21. Web site: Report on Rason Special Economic Zone, Democratic People's Republic of Korea . Andray Abrahamian . Chosun Exchange . CE2011001 . September 2011 . 5 May 2012 . dead . https://web.archive.org/web/20120417055346/http://chosonexchange.org/wp-content/uploads/2011/09/Choson-Exchange-Rason-Report-August.pdf . 17 April 2012 .
  22. Web site: Local Companies. North Korean Government. 5 November 2012. dead. https://web.archive.org/web/20120829035746/http://www1.korea-np.co.jp/pk/014th_issue/97102203.htm. 29 August 2012.
  23. Web site: Introduction: Tokyo-Rason Tour. North Korean Government. 5 November 2012. 17 December 1979. dead. https://web.archive.org/web/20120407131030/http://www1.korea-np.co.jp/pk/022nd_issue/97121501.htm. 7 April 2012.
  24. Web site: Wong . Edward . Tending a Small Patch of Capitalism in North Korea . The New York Times. 8 December 2012 . Jonathan Ansfield . Jonathan Ansfield. October 12, 2011.

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