According to the Daily NK:
Information from inside North Korea suggests that jurisdiction over border security has been moved from the Ministry of People’s Armed Forces to the National Security Agency(NSA), in a special order given by new leader Kim Jong Eun which has seen border security units undergoing an administrative switch to the NSA on April 16.
Read more below:
Click image above to see KCNA video of interview with Yun Yong-sok, vice department director of DPRK Joint Venture Investment Committee
According to KCNA (2012-3-23):
The Democratic People’s Republic of Korea is willing to further improve its environment for foreign investment, Yun Yong Sok, a vice department director of the DPRK Committee for Investment and Joint Venture, told KCNA.
He said:
The nation’s economy is gaining momentum, with many industrial establishments and power stations being built across the country.
It is a consistent policy of the DPRK Government to enhance economic cooperation with other countries, while beefing up its self-reliant national economy.
In December last year, the government amended investment-related laws, including the DPRK Law and Regulations on Foreign Investment, laws on joint venture and joint collaboration and the Law on Foreign-funded Businesses and Foreigners’ Tax Payment, in step with the nation’s developing economy and international practices.
It enacted the law on economic zone on Hwanggumphyong and Wihwa islets in the River Amnok and revised and supplemented the law on the Rason economic and trade zone.
The joint development and management in the two economic zones takes on a new way of cooperation. Now it has been under way in a creditable way, driven by the active efforts of both sides of the DPRK and China.
Contracts on joint venture and joint collaboration have been on increase with the investment environment changing for the better.
Rare earth abundant in the country and infrastructure projects lure foreign investment in the DPRK.
The committee will pay deep attention to ensuring the interests of foreign investors, while invigorating the exchange and cooperation with governments, investors and businesses.
In other news, KCNA has adopted the American colloquialism “beefing up”.
According to Yonhap:
Despite rising cross-border tension, the trade between South and North Korea surged 36 percent from a year ago to US$320 million in the first two months of this year, government data showed on March 16.
The data provided by the Korea Customs Service indicated that the trade via the inter-Korean industrial complex has not been affected by tensions on the Korean Peninsula.
South Korea slapped sanctions on the North in May 2010 in retaliation for the deadly sinking of a South Korean warship earlier that year, though it keeps intact the complex in the North’s western border city of Kaesong.
The complex, a key outcome of the inter-Korean summit in 2000, marries South Korean capital and technology with cheap labor from the North. It is now home to more than 120 South Korean small and medium-sized companies.
Tensions have flared anew in recent weeks as the two Koreas traded militaristic rhetoric against each other over Seoul’s defamation of the dignity of North Korea’s new leader Kim Jong-un and his late father, former leader Kim Jong-il.
Read the full story here:
Inter-Korean Trade Surges 36 Percent This Year
North Korea Newsletter No. 202 (March 22, 2012)
Yonhap
According to Business Week:
Gaeseong, which is within sight of South Korean and U.S. guard posts along the Demilitarized Zone, was developed as a joint special economic zone in 2005 and now employs about 50,000 North Koreans, according to the Unification Ministry in Seoul.
More than 120 South Korean companies, including Daewha Fuel, underwear maker Good People Co. and watchmaker Romanson Co. (026040) paid the North Korean government about $60 million to $70 million last year to cover labor costs for workers, said Park Soo Jin, the deputy spokeswoman at the Unification Ministry. Authorities in Pyongyang then paid the employees in local currency and vouchers, she said.
Trade Minister Bark Tae Ho said on March 14 that he will try to persuade the U.S. and European Union to recognize products made in Gaeseong as South Korean.
Singapore Tariffs
The EU and South Korea have agreed to establish a committee this year to examine the issue, Tomasz Kozlowski, ambassador for the EU delegation in Seoul, said in an e-mailed statement. Aaron Tarver, a spokesman at the U.S. Embassy, said in an e-mail that the trade pact does not include any products from North Korea, including those from Gaeseong, without commenting further.Singapore has reduced tariffs covering more than 4,000 products from Gaeseong under its bilateral trade pact with South Korea, said Lee Sang Mok, Deputy Director at Korea Customs Service. Some products are also covered by agreements with the 10-member Association of Southeast Asian Nations, India, Peru and the European Free Trade Association consisting of Switzerland, Iceland, Liechtenstein and Norway, Lee said via e- mail and telephone.
The value of output from Gaeseong jumped from $14.9 million in its first year to $402 million in 2011, according to the Unification Ministry. During the past seven years, its production totaled $1.5 billion. That compares with $40 billion for North Korea’s annual gross domestic product, according to the CIA World Factbook.
“The U.S. seems to want more progress in North Korean nuclear and human rights issues before including Gaeseong in FTA,” IBK’s Cho said.
…
Yoo of Daewha Fuel Pump said he plans to spend 1 billion won ($885,000) this year to boost capacity in Gaeseong by 50 percent and forecasts sales to jump to 65 billion won this year from 45 billion won in 2011. His company, which also makes parts in plants in South Korea, supplies automakers including Hyundai Motor Co., Honda Motor Co. and Nissan Motor Co., he said.
The minimum monthly base salary paid by companies at Gaeseong is about $64, according to the Unification Ministry’s Park. Yoo, who was speaking at Incheon near Seoul, estimated labor costs would be 20 times higher in South Korea and three times higher in China.
“The security issue is of course a big risk but every business has a risk,” Yoo said. “Gaeseong has survived all the clashes and threats, including the sinking of a warship and the shelling of a South Korean island”.
Read the full story here:
North Korea’s Gaeseong Pushed for Inclusion in FTA
Business Week
Eunkyung Seo and Sangwon Yoon
2012-3-22
Just a few days after Choson Exchange published a PDF copy of the “Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone”, KCNA published laws on both of its recently announced special economic zones along the Chinese border (Rason and Hwanggumphyong). I have posted both laws below in text-recognized PDF format.
Law of the Democratic People’s Republic of Korea of the Hwanggumphyong and Wihwado Economic Zone
Published by KCNA on March 17, 2012
Download PDF here.
Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone
Published by KCNA on March 17, 2012
Download PDF here.
Here is the original 1993 Law on Rason (in Korean) along with 1999 and 2002 revisions (PDF).
UPDATE 1: See Marcus Noland’s comments here.
UPDATE 2: The Institute for Far Eastern Studies (IFES) published the following…
Details Released for the Law on the Hwanggumpyong and Wihwado Economic Zone
Institute for Far Eastern Studies (IFES)
2012-4-4
North Korea recently announced that the Law on the Hwanggumpyong and Wihwado (Islands) Economic Zone, with seven chapters and 74 articles, was approved by the Presidium of the Supreme People’s Assembly (SPA) on December 3, 2011.
On the same day, the text of the amended Law on the Rason Economic and Trade Zone was also released.
The newly passed law on Hwanggumpyong and Wihwado included the details of the management policy stating,“Management and operation of the industrial parks and designated areas of the Zone shall be undertaken by the management committee under the guidance and assistance of the central guidance authority of special economic zones and the North Pyongan Provincial People’s Committee” and asserted, “Other institutions shall not get involved in the work of the management committee.”
The details of the law are as follows:
Article 1 specifies the objective of the zones is to provide strict guidelines that can contribute to the development and expansion of foreign economic cooperation and exchange. Hwanggumpyong and Wihwado Economic Zone was designated as the “special economic zone of the Democratic People’s Republic of Korea,” under the jurisdiction of North Pyongan Province and Hwanggumpyong Island and Wihwa Island districts.
Article 3 states the development of the Zone was to be carried out regionally and in phases, centered around several industries — IT, light industry, agricultural, commerce, and tourism — in Hwanggumpyong Island and Wihwa Island, and will follow the Wihwa Island Development Plans.
In comparison, the Rason Economic and Trade Zone passed on January 31, 1993, was announced as a development area for high-tech industry, international logistics business, equipment manufacturing, primary processing industry, light industry, service business and modern agriculture industries.
Article 6 on the section for “Promotion, Prohibition, and Restriction of Investment,” specifies that the government will encourage investments particularly in the highly competitive sectors in the international market. In contrast, those investments or business activities that can harm the safety, health, and morality of the (North Korean) people or the environment will be prohibited or restricted.
Article 7 stipulates that management and operation of the zone will fall under the central guidance authority of special economic zones and North Pyongan Provincial People’s Committee. Here, it was emphasized that no other organizations can meddle with management and operation of the zone.
Article 8 covers the interests of the investors, in protecting their property, interest and rights. It states, “The property, legitimate income and invested rights of investors in the Zone shall be protected by the law. The State shall not nationalize or expropriate the property of the investors.”
Article 9 provides guidelines for the protection of personal safety, human rights, prohibition of illegal detention and arrest.
Article 13 (Development Method of the Zone) states that the land in Hwanggumpyong will be leased to companies but will be developed and managed comprehensively. The land lease term is set at 50 years from the date of issuance of the land use certificate, with options for renewal.
Chapter 4 (Establishment of Enterprises, Economic and Trade Activities), considered the core section of this law, indicates the specifics of business activities, from establishment, accounting, taxes, wages, employment, and other technical and administrative contents.
Article 36 is particularly eye-catching, which indicates that priority in employment must be given to North Korean residents and the minimum monthly wage will be determined by the management committee.
Lastly, corporate income tax rate set at 14 percent of the profit will be reduced to 10 percent to those businesses in the sectors encouraged by the state (Article 43).
Radio Free Asia published an article on North Korean demand for overseas training. Since the article is only available in Korean, however, a very helpful colleague has translated it for me to post here:
It is noted that North Korea is sending government officials and field specialists abroad for training with the purpose of reconstructing the economy following the inauguration of the Kim Jung-un era. Five North Korean technology inspectors recently visited a coal-chemical factory in Shanxi, China. The inspectors observed the process of creating different chemicals using coal and they showed particular interest in the factory’s systematic settings.
Also, early last month, the Energy Preservation Technology Inspection Team, including director-level officials of Science Technology Committee, underwent field training in China on construction materials and architectural technology to enhance energy efficiency.
Agape International of Switzerland (NGO), which facilitated the training, said North Korean government officials observed a Chinese insulation factory, construction company, etc. over the course of 10 days.
Additionally, a team of 30 North Korean railroad specialists participated in a commissioned training program at a Railroad institution in Russia. Recently there has been a great increase in North Korea’s request for training arrangements mediated by International and Nongovernmental Organizations.
According to a source which wished to remain anonymous, the increase is notable since North Korea has had a reputation for declining or canceling overseas training programs even after they have been arranged.
Whether the recent demand and interest for overseas training in economic fields reflects an attempt to improve the fallen economy or not remains to be seen.
Read the full story (in Korean) here:
북, 김정은 등장 후 해외연수에 적극적
Radio Free Asia
2012-3-14
According to Choson Exchange:
In 2010, the DPRK revised the laws governing Rason Special Economic Zone.
This booklet, scanned into pdf form, sketches out the new laws in both Korean and English (English is in the back half). It was at this time that the authorities removed Rason from provincial administration, giving it more autonomy in some ways, while also giving authorities in Pyongyang a more direct link to planning for the SEZ.
Potentially interesting clauses include:
– Ships regardless of nationality are permitted to port (article 26)
– Business licenses can be revoked if DPRK law is “seriously” violated. (article 15)
– Prices will be set between the buyer and seller, though some basic consumer goods may be fixed by the local government. (article 26)
– Disputes may be resolved by arbitration either in the DPRK or a 3rd country. (article 45)
Additional information:
1. Download a PDF of the full publication here.
2. Previous posts on this topic here.
Pictured above: (L) The location of the new Haedonghwa Center under construction in Pyongyang (Google Earth), and (R) a representation of the building’s exterior
The Korea Pyongyang Haedanghwa Foodstuff Company (조선평양해당화식품회사는) has launched a new web page on the Naenara portal providing content in English, Korean, and Chinese.
This new web site hosts pages of information not just on the company, its subsidiaries, its employees, and its products, but also on Korean food, culture and health. Among the more interesting claims made on the page:
Our service workers come from normal families, and they are not ones grown in the special environment or conditions.
The web page also provides addresses and maps of the subsidiary restaurants and factories in China and the DPRK.
Using information from the web page I was able to locate the position of the Haedanghwa Center (pictured at the top of this post). It is obviously still under construction. The lot on which the center is being built has been empty for the last dozen years and lies directly across the Taedong River from the new construction on Mansudae Street.
According to Yonhap:
North Korea has established an investment insurance firm recently in what is believed to be an effort to attract more foreign investment by reducing risks stemming from uncertainties in the communist nation, a source said Sunday.
The North’s firm is expected to purchase reinsurance from an international company, the source said. The system is similar to an insurance measure that South Korea’s government has been operating to compensate its businesspeople for lost investment in the North.
It marks the first time Pyongyang has introduced such an insurance system for foreign investors.
“For foreign investors, this could ease concerns about investment loss risks stemming from uncertainties of North Korea,” said the source familiar with economic affairs in the communist nation. The source said, however, that it is questionable how effective the measure will be in drawing outside investment.
North Korea has long sought to attract foreign investment to revive its broken economy, but with little success because investors stayed away from one of the most closed nations, which is under international sanctions over its pursuit of nuclear and weapons of mass destruction.
The source also said that the word, “reform,” has been used among North Korean bureaucrats, and that this could signal that Pyongyang may announce a set of bold economic reform measures around April’s commemoration of the 100th birthday of late North Korean founder Kim Il-sung.
“Reform” has been considered a taboo word in the North, along with the term, “openness,” because Pyongyang has rejected international calls for it to reform and open up to the outside world as part of a U.S.-led attempt to topple the autocratic regime.
Should Pyongyang take any economic reform measures, they would mark the first such steps since new leader Kim Jong-un took over the isolated nation after his late father Kim Jong-il died of a heart attack in December.
Read the full story here:
N. Korea sets up insurance firm to attract more foreign investment
Yonhap
2012-3-11
According to Yonhap:
The Unification Ministry said Tuesday it will allow South Korean companies to bring new equipment into their factories at a joint industrial complex in North Korea in an easing of sanctions on the communist nation.
Seoul has banned the establishment of new factories or expanding investment in the industrial complex under economic sanctions slapped on the North in May 2010 in response to its torpedoing of the South Korean warship Cheonan in the Yellow Sea that killed 46 men aboard.
The ministry’s decision, effective from this week, is a follow-up measure after a group of eight ruling and opposition lawmakers last month visited the border city of Kaesong to meet with South Korean company officials and help work out problems with operating factories there.
More than 50,000 North Koreans work for 123 South Korean firms operating in the industrial zone to produce clothes, utensils, watches and other goods. The project serves as a key legitimate cash cow for the impoverished communist country.
According to a survey conducted by the ministry of the 123 firms after the parliamentary delegation’s visit, 15 firms wanted to move 803 pieces of equipment worth 4 billion won (US$3.5 million) out of the complex.
Thirty-two companies had plans to remodel the current factories or facilities, the survey showed.
The ministry is also considering expanding bus routes for North Korean workers to help employers hire more workers living farther away from the complex, officials noted.
Read the full story here:
Seoul eases limits on factories, equipment in Kaesong complex
Yonhap
2012-3-6
