Rason Economic and Trade Zone (Rajin-Sonbong)

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Contract signed for Onsong Economic Development Zone

Friday, December 13th, 2013

Pictured above (Google Earth): The approximate location for the North Hamgyong Provincial Onsong Island Tourist Development Zone

According to China’s Global Times:

A contract has been signed between North Korea and a Chinese border city to develop a special economic zone in North Hamkyung Province, one day after North Korea removed Kim Jong-un’s once all-powerful uncle from his post.

North Korea on Monday signed the contract for Onsong Economic Development Zone with Tumen, a Chinese city under the administration of Yanbian Korean Autonomous Prefecture in Northeast China’s Jilin Province, South Korea’s JoongAng Daily reported Thursday.

On Sunday, North Korea dismissed Jang Song-thaek, widely considered the second-most powerful figure in the country, and expelled him from the Workers’ Party of Korea. Jang was accused of “anti-party, counter-revolutionary factional acts” and womanizing.

Considered an economic reformist, Jang led a delegation to China in August last year to discuss the development of two economic zones in Rason City and the Hwanggumpyong and Wihwa islands near the Chinese border.

An official from Tumen said the city government expressed concerns regarding possible postponement of the contract signing due to Jang’s ouster, but North Korea requested they sign the contract as scheduled, according to the daily.

“Jang’s involvement in economic projects had been diminished significantly this year, so his purge would not have much impact on the speed of economic reform in North Korea,” Kim Kyu-chol, head of non-government Forum for Inter-Korean Relations, a Seoul-based group monitoring inter-Korean business relations, told the Global Times on Thursday. “Actually economic reform will speed up next year as North Korea will focus on the economy next year, the third of Kim Jong-un’s rule.”

North Korea was in the process of forming the new National Committee for Economic Development earlier this year, which technocrats who had prior experience with the nation’s former economic development bureau, will have joined, Kim Kyu-chol said.

North Korea also reached an agreement with China on Sunday over a 380-kilometer high-speed railway to connect Sinuiju, the city across the border from Dandong in Liaoning Province, through to Pyongyang and Kaesong, South Korean Democratic Party lawmaker Hong Ik-pyo told a seminar at the National Assembly.

Pyongyang’s insistence on inking the contract sends a signal that its economic ties with China will not be affected by Jang’s dismissal and that North Korea wants to strengthen cooperation with China, said Jiang Longfan, a North Korea expert at Yanbian University.

“Kim wants to consolidate his absolute authority through purging Jang, but in the meantime the commitment to economic development has to be maintained to win people’s support,” Jiang said.

Sinuiju Special Zone located at the estuary of the Yalu River is expected to see the ground-breaking of a major project in February next year, with backing from Hong Kong. North Korea also signed a contract with investors from Singapore, Hong Kong, and the Chinese mainland to invest in the Kangryong Green Development Zone in South Hwanghae Province in mid-November, Tongil News reported on Tuesday.

The Onsong Economic Development Zone is one of the 14 special economic zones North Korea has designated this year to attract foreign investment.

North Korea planned to develop the zone into a tourism resort that includes a golf course, swimming pool, horse racing, and restaurants to attract foreigners, said Jin Hualin, an expert on North Korea economy at Yanbian University.

“But the exact development agenda hasn’t been set as Tumen will invite investors to make their decisions,” he said.

He is optimistic about the economic prospects for the zone, which, located in mysterious North Korea, will be attractive to foreigners, he said.

Next year, North Korea aims to host 1 million foreign tourists and thus further tourism projects are expected to be announced, Kim Kyu-chol said.

Some 250,000 foreign tourists, more than 90 percent of whom were Chinese, visited North Korea last year, Kim said.

Read the full story here:
N.Korea inks border town economic deal
Global Times
Sun Xiaobo and Park Gayoung
2013-12-13

Posted in China, Economic Development Zones (2013), Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Kangryong International Green Model Zone, North Hamgyong Provincial Onsong island tourist development zone, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Sinuiju International Economic Zone, Special Economic Zones, State Economic Development Commission (SEDC), Tourism, Transportation | Comments Closed

Jang’s purge to affect HGP and Rason economic Zones

Friday, December 6th, 2013

The Asahi Shimbun reports on the Hwanggumphyong SEZ (2013-12-19):

The execution last week of Jang Song Thaek, North Korea’s de facto No. 2 leader, has taken its toll on a joint project with China to develop Hwanggumphyong island across the border from this city in Liaoning province.

Jang, uncle of North Korean leader Kim Jong Un, was believed to be in charge of relations with China and overall economic affairs. His purge could continue to have further ramifications on economic cooperation with and investment from China.

Hwanggumphyong island is an 11-square-kilometer swath of North Korean territory in the Yalu river that defines the border with China. A bilateral joint development venture there, kicked off by a ground-breaking ceremony in June 2011, was halted temporarily after North Korea insisted on having its troops stationed on the island.

But both sides agreed to rejuvenate the project and set up a joint steering committee when Jang visited China in August 2012. Beijing committed to investing 80 million yuan (1.4 billion yen, or $13 million) and has since been laying the groundwork on the island.

The North Korean official in charge of the venture, however, was recalled immediately following Jang’s purge, and construction work was also halted around the same time, sources in the steering committee said. A Chinese member of the steering committee reported to the central government in Beijing that quick changes in North Korea made it difficult to achieve the initial goal for attracting firms to Hwanggumphyong island.

The steering committee has touted the advantages of being able to rely on cheap North Korean labor in a bid to attract 30 firms from China, Taiwan and elsewhere before the year is out, but only a handful of companies have come forward with decisions to set up shop on the island amid widespread concern about investments associated with North Korea.

The purge of Jang, who was the main contact for joint China-North Korea ventures, has probably alienated most decent investors, said an embittered Chinese official in the steering committee.

North Korea has also been calling for Chinese investment in the Rason Economic and Trade Zone in the country’s northeast. But Pyongyang sent investors into panic when it accused Jang of an “act of treachery” in “selling off the land of the Rason Economic and Trade Zone to a foreign country” during his trial. He was also accused of attempting “subversion of the state.”

North Korea has sought to rehabilitate its moribund economy by attracting foreign capital to specially designated economic zones. It released an ordinance in late November, for example, to designate “economic development zones” in its various provinces.

It is believed there will be no change to that policy line, which has received Kim Jong Un’s endorsement.

Many observers believe Premier Pak Pong Ju, who has been engaged in practical aspects of economic management under Jang’s supervision, will take charge of overall economic affairs.

“Pyongyang will probably expand the role of Pak, who is believed to be an economic reformist, so as to reassure investors,” said one diplomatic source.

But investor confidence is expected to remain weak in the short term, because Jang’s execution was undoubtedly perceived as an “investment risk” in the eyes of Chinese and other foreign investors.

“It is by no means easy to regain the confidence of private-sector capitalists who were shaken up by the purge,” said one Chinese investment adviser who visits Rason frequently. “It will take time before concerns are quelled.”

The JoongAng Daily reports on the Rason SEZ (2013-12-6):

The Rason Special Economic Zone, which was headed by Jang Song-thaek, the once-powerful uncle of North Korean leader Kim Jong-un, has been left as a ghost town after Jang’s purge, and several North Korean officials who worked in the zone are under questioning, a source in China said.

“On Nov. 3 to 4, I visited the Rason economic district,” the source exclusively told the JoongAng Ilbo, “but I couldn’t meet with the two main officials in charge of the zone’s development because they were both sent to Pyongyang.

“The two officials were in the inner circle of Jang Song-thaek and they were in charge of developing economic zones of North Korea,” the source said.

The Rason Special Economic Zone is one of the most ambitious attempts by North Korea at limited economic reforms. The district has been developed since Jang visited China in August 2012.

In August 2012, North Korea and China’s [Jilin] provincial government launched a DPRK-China Rajin-Sonbong management committee for full-fledged development of the zone, according to the source. The [Jilin] government dispatched about 50 Chinese officials, while Pyongyang sent about 30 to the committee.

With the purge of Jang, most of the Chinese officials have left the zone, and the North Korean officials are scheduled to return to Pyongyang soon. All activities at three piers in Rason’s port have stopped with the downfall of Jang. The first pier, run by a Dalian-based Chinese company, suspended its transportation of coal, and the construction of a second pier has been halted. The construction of a third pier by a Russian builder was also suspended.

“Last year, the development of the Rason district seemed very dynamic,” said another source knowledgeable about North Korea.

“But most Chinese businessmen did not trust North Korea’s polices, and the Chinese government did not offer guarantees on investment in the district so, in fact, there wasn’t much progress.

“Despite the fact that development was slow, Jang’s aides invited some girls to the district and held a big soiree at a floating restaurant, which could be one of the reasons for Jang’s purge,” the source said.

Read the full story here:
Jang’s execution halts China-N. Korea joint venture, alienates investors
Asahi Shimbun
Koichiro Ishida
2013-12-19

With purge, Rason zone is ghost town
JoongAng Daily
Hoi Hyung-Kyu, Kim Hee-jin
2013-12-6

Posted in China, Economic reform, Foreign direct investment, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

Recent developments in Rason

Wednesday, November 20th, 2013

A new article in Forbes updates us on some of the changes in Rason:

Tomas Novotny has been in North Korea two days, and he looks frazzled. It was a long journey from Prague, and standing on the street in downtown Rajin, his government minder by his side, he can already see that doing business in the DPRK’s remote northeast will present an unusual set of challenges.

…

Novotny is here because of that railway line. A brewing technologist with the Czech firm Zvu Potez, he has come to set up a brewery. All the equipment and materials were transported by train–from Prague to Moscow, through Siberia and onto the branch line of the Trans-Korean main line.

“We’re still building the brewery. Come and see it,” says Novotny. The two containers that brought the Zvu Potez equipment from Prague lie 50 meters from the brewery. It’s a great location by the sea in Rajin’s main park. The business is a joint venture between the Czech firm and the Rason regional government, says Novotny, and will target tourists and foreigners. There are about 300 Western tourists–including Russians–a year and about 20,000 Chinese visitors to the country’s northeast.

“When they’ve finished building,” he says, shouting over the drilling, “I’m going to teach three or four locals how to brew. I hope they can speak English. If they can’t it will be interesting.”

He expects to be in Rason for six months establishing the business, but already he misses home and his young son. “I won’t get to speak to them until I go home at Christmas,” he says.

North Korea’s telecommunications challenges are a headache for business, too. Foreigners are able to get 3G on their phones, but it is expensive. International calls are possible but equally pricey.

“When telecommunications become a little more open that will indicate the seriousness of purpose,” says Andray Abrahamian, who directs Choson Exchange, a Singaporean nonprofit that focuses on business and legal training for young North Koreans in the DPRK.

Abrahamian has been watching North Korea for a decade and visited Rason several times. He says things are finally moving, a result of legal changes made in 2010 that helped make Rason more autonomous. Further legal changes two years ago were intended to harmonize Rason’s economic laws with those of China, he says.

…

“The degree to which [Pyongyang] will allow autonomy to the regional decision makers or local planners has yet to be seen. That’s a key issue for Rason–how autonomous are these places really?” asks Abrahamian, 36.

…

“Chinese small and medium-size enterprises, from Jilin Province but also Heilongjiang Province, are continuing to come in–Rason is experiencing growth,” says Abrahamian.

Not all the factories are new. The Rajin Garment Factory was built in 1958, long before talk of special economic zones. In the early days it produced school uniforms for North Korean students. After 1991 it took orders from China and today employs 180 staff.

The factory manager stands on the front steps. It’s early evening, and he’s watching a staff volleyball game in the car park. Has business improved since Rason was made a special economic zone?

He shrugs and says: “It’s hard to say. It’s different. For every school uniform we used to get paid 800 won and a 1,200-won government subsidy. Now there is no government subsidy.”

The workers, nearly all women, are given housing and paid 600? to 700 won a month, plus overtime, he says. Inside the factory, on the first floor, close to 100 women are clocking overtime. Wearing blue uniforms and matching head scarves, they are sewing puffer jackets, hurrying to complete a big order. The final step of the process is to sew in the label: “Made in China.”

The tag is written in English, and the woman packing the jackets doesn’t understand the visitors’ raised eyebrows. Apparently this is a common practice.

It’s noisy on the factory floor. The popular all-girl band Moranbong blasts out of speakers, drowning out the whir of sewing machines. It’s impossible to hear the drone of the generator, switched on after yet another power failure, a regular feature of life in the DPRK.

There is a deal in place to bring power from Jilin Province, but the Chinese have been holding it up using the pretext of an environmental impact study.

More Chinese power can’t hurt, says researcher Melvin, “but there are many more substantive problems the North Korean must overcome before serious large-scale investment can move into the country. The DPRK cannot currently credibly commit to any policy–no policy stability, rule of law–and has a poor record of honoring its agreements and impartially enforcing contracts. No independent company will risk serious capital in this environment.”

Another matter is fuel. Joseph Naemi is director of HBOil, an oil trading and refining company based in Ulaanbaatar, Mongolia. HBOil grabbed a few headlines in June when it was reported the firm had acquired a 20% stake in Sungri oil refinery in Rason. That was premature, says Naemi: HBOil has 20% of a state-dominated joint venture called Korean Oil Exploration Corp. International, and a formal commitment with Sungri has yet to be made. Another option is to invest in a refinery on the west coast of the DPRK.

“The easy option is Sungri oil refinery because it’s based on Russian technology and because of its location in terms of the dynamic state of affairs in Rason Special Economic Zone. We are conducting engineering assessment of the refinery to determine the various phases of upgrading and expanding–it’s a work in progress,” says Naemi.

Describing Rason officials as well educated and smart, he says they understand issues of foreign investment protection, taxation and the need to not only be fiscally transparent but also to offer attractive terms to investors.

“I know a number of Mongolian companies, all privately owned, that are at various stages of either investing in North Korea or finalizing their joint ventures so that they can invest. There is a robust relationship between Mongolia and North Korea,” says Naemi.

…

For anyone doing business, there will be surprises. Standing on the terrace of the new brewery, Novotny looks out at the recently planted lawn. The seeds have been planted in rows, five centimeters apart, all the way down to the sea. Come summer and the warmer weather, the grass should have taken. It stands to be a great spot for a bar.

“Yeah, if we’re still open,” says Novotny and laughs. He drops his voice and out of earshot of his minder adds: “Look at the grass, see how it grows in such straight lines. Things are different here.”

Read the full story here:
Things are Brewing in North Korea’s Rason Zone
Forbes
Kate Whitehead
2013-11-20

Posted in Alcohol, Economic reform, Energy, Foreign direct investment, Joint Ventures, Mongolia, Oil, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

DPRK revises law to boost railway cooperation with foreign nations

Wednesday, October 30th, 2013

According to Yonhap:

North Korea has revised a law to help the isolated country expand railway cargo cooperation with foreign countries and attract investment, a report said Wednesday.

According to the report by the Korea Transport Institute (KOTI), Pyongyang changed its international railroad cargo law in December 2011 that regulates contracts, damage claims, fares, restrictions and dispute settlements.

The North had created its first railway law in 1987, but this revision marks the first related to cooperation with foreign countries, it said.

“The changes in particular are noteworthy because it outlines investment protection and pledges that the government will legally uphold the rights of investors and their interests,” the transportation institute said.

Pyongyang will take administrative and legal actions against people who obstruct international rail traffic, and promises to take disputes that cannot be settled through negotiations to court or through a binding arbitration process, it added.

The think tank, meanwhile, said that the changes were primarily made to transform the port of Rajin near the Chinese and Russian borders into a regional logistics hub.

Last month the North announced the reopening of a railway service linking Rajin with the Russian city of Khasan. Work on the railway line took five years to complete.

In addition to the railway law, KOTI said Pyongyang has shown interest in attracting foreign investors who will carry out so-called built-operate-transfer contracts, aimed at modernizing the country’s dilapidated infrastructure.

“The move by the North to emphasize profitability reflects signs that the country is becoming more open to the outside world compared to the past,” said Chang Yong-seok, senior researcher at the Institute for Peace and Unification Studies at Seoul National University.

He said such changes aim to entice much needed foreign investment by offering actual profits.

Read full story here:
N. Korea revises law to boost railway cooperation with foreign nations: report
Yonhap
2013-10-30

Posted in Economic reform, Foreign direct investment, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Transportation | Comments Closed

Russia – Rason railway (RasonKonTrans)

Tuesday, September 24th, 2013

Pictured above (Google Earth): A map of the Khasan-Rajin Port rail service.

UPDATE 15 (2014-4-30): According to a new article in Yonhap, the new railway line is not really being used:

Russia appears to be preparing for a test operation of its newly renovated railway linked to North Korea, but the economic feasibility of South Korea’s joining the logistics project remains to be seen, a Seoul diplomat said Wednesday.

…

“I have been sensing that Russia is preparing to export its coal through the Rajin-Khasan railway in the near future as part of an experiment,” Lee Yang-goo, council general in Vladivostok, told reporters. “But it seems that there is no substantial demand for the rail line now.”

The project is part of Russia’s ambition to set up a rail road linking Asia to the Eurasian region. Last year, South Korea agreed with Russia to extend the track to South Korea.

Seoul officials said that they may be able to finish linking the rail to South Korea’s southern port city of Busan and put it into operation as early as next year, but experts have said feasibility of the plan remains to be seen.

Several factors, including economic and technological ones, should be taken into account before South Korean firms can join the logistics project, the council general said. “The economic feasibility should be reviewed foremost.”

UPDATE 14 (2014-4-9): Russians test coal shipment to Rason. According to the International Railway Journal:

RUSSIAN Railways (RZD) has commenced testing of freight traffic on the reopened link from the Khasan border station of the Trans Siberian Railway in western Siberia to the port of Rason, North Korea.

Two freight trains consisting of 65 wagons containing Kuzbass coal are taking part in the trials, which are intended to test the recently redeveloped railway infrastructure, as well as customs practices and freight handling at the port.

The project is being carried out by the RasonKonTrans joint venture, which was formed in 2008, and is held by RZD Trading House (70%) and the port of Rason (30%). Work involved the reconstruction of the Tumangang – Rason railway in North Korea, which included the introduction of 54km of dual-gauge (1520mm and 1435mm) track, as well as the reconstruction of 18 bridges, 12 culverts, and three tunnels with a total length of more than 4.5km.

The railway was officially opened on September 22, 2013, and was funded through RasonKonTrans’ authorised capital and loans. The joint venture has also invested to improve capacity at the port, including the addition of connecting tracks, dredging and construction of a new quay wall.

RZD says the project will attract additional traffic to the Trans-Siberian Railway, with around 4 million tonnes of freight expected to use the Khasan – Rason link per year.

According to the Moscow Times:

Russian Railways has put to use the North Korean port it helped to upgrade recently.

The state-owned railway operator said Tuesday it had started carrying Siberian coal to the port of Rajin, in what may be the first attempt to utilize the harbor after it reopened in September.

“The company has started to provide a full suite of services to ship coal through Rajin to Asia-Pacific countries,” said a statement from Russian Railways logistics subsidiary, RZhD Logistika.

A joint venture between Russian Railways and the North Korean Ministry of Railways has rebuilt one of the port’s wharfs and a rail link connecting it to Russia in a rare example of foreign involvement in the economy of the isolated dictator state. The joint venture, RasonKonTrans, where Russia holds 70 percent, sought to relieve the congestion at Russia’s Pacific ports.

Coal miner and steelmaker Mechel is the sender of the coal consignments, according to Nadezhda Malysheva, chief editor of port industry portal PortNews.

Both Mechel and RzhD Logistica spokespersons declined to comment.

Russian Railways chief Vladimir Yakunin traveled to Rajin for a grand opening of the rail service and the wharf in September. The company invested 9 billion rubles ($250 million) to upgrade both. Russian engineers supervised the work, while Koreans largely contributed with unskilled labor.

The Russian terminal at Rajin, Asia’s most northerly all-year ice-free port, will at first handle just coal freight from Russia to ship it further to China’s eastern and southeastern provinces. Further plans are to equip it to be able to provide container services.

RZhD Logistika loaded a total of 9,000 metric tons of coal on two freight trains of 130 cars each to carry to Rajin at the end of last month, it said in the statement. The cargo will next go to China’s ports of Shanghai, Lianyungang and Guangzhou.

Current load capacity of port Rajin is 4 million tons of coal a year.

Russia’s biggest coal export port, Vostochny, which sits on the Pacific coast, has the capacity to handle 18 million tons a year, Malysheva said. It and the other key coal port of Vanino operate at the top of their capacity, as exports of the fuel to Asia have increased, she said.

Coal remains the principal fuel for electricity generation at power plants in China. But its coal price declined 10 percent last year because of strong rivalry among Russian suppliers and competition from Australia, the RZhD Logistika statement said.

Even so, the government last week backed a plan to boost development of the coal-mining industry in the country’s Far East to cater to Asian markets. The idea is to have a shorter transportation leg for the shipments, compared with the distance that the coal travels from Siberia.

This Russian-language source has additional information.

Read the full story here:
First Russian Coal Heads to North Korean Port
Moscow Times
Anatoly Medetsky
2014-4-8

UPDATE 13 (2014-4-8): Business organization information. According to the Moscow Times:

A joint venture between Russian Railways and the North Korean Ministry of Railways has rebuilt one of the port’s wharfs and a rail link connecting it to Russia in a rare example of foreign involvement in the economy of the isolated dictator state. The joint venture, RasonKonTrans, where Russia holds 70 percent, sought to relieve the congestion at Russia’s Pacific ports.

…

Russian Railways chief Vladimir Yakunin traveled to Rajin for a grand opening of the rail service and the wharf in September. The company invested 9 billion rubles ($250 million) to upgrade both. Russian engineers supervised the work, while Koreans largely contributed with unskilled labor.

UPDATE 12 (2013-9-23): Rajin-Khasan Railway Section Opens for Service. According to KCNA:

The Rajin-Khasan railway section has been successfully rebuilt in line with the DPRK-Russia Moscow Declaration, signed in August 2001. The section was opened for service on Sunday.

Its opening serves as a landmark in promoting the friendly and cooperative relations between the DPRK and Russia, strengthening the economic and cultural ties in the Asia-Pacific region and ensuring the common prosperity of regional countries.

In the first year of the new century, historic meeting and talks were held between Kim Jong Il, leader of the Democratic People’s Republic of Korea, and V.V. Putin, president of the Russian Federation, resulting in the adoption of the DPRK-Russia Moscow Declaration.

The declaration expressed the will of the two countries to make every possible effort to carry into practice a plan for opening railway transit linking the DPRK, Russia and Europe. Such plan was the first phase for wide-ranging cooperation between the two countries, which came under spotlight of the world.

At that time some forces criticized the plan as a “daydream”, displeased with significant cooperation between the two countries as well as peace and prosperity of the Korean Peninsula.

However, the project plan went into practice in October 2008 on the eve of the 60th anniversary of the establishment of the bilateral diplomatic relations thanks to the unshakable will of the two countries and the active cooperation of their railway workers.

At the ground-breaking ceremony for the project, which was held in front of the DPRK-Russia Friendship Pavilion in the area of Tumangang Railway Station in Rason City, V. I. Yakunin, president of the Russian Railways Company, said that the world would soon witness the longest railway transit, extending more than 10 000 km, through which 100 000 containers would be transported annually from 2013.

At last, the Rajin-Khasan railway section has been successfully rebuilt this year marking the 65th anniversary of the establishment of diplomatic relation between the DPRK and Russia. This would bring a large-scale cooperation project between the two countries into practice, ensuring their and regional development and interests.

The railway section from Rajin to Khasan will be helpful to the economy, transport service and people’s wellbeing of the two countries. It can also develop into an international transit between Asia and Europe.

The facts show the vitality of cooperation documents of the two countries, including the DPRK-Russia Moscow Declaration, and the noble idea carried in them.

The friendly and cooperative relationship between the DPRK and Russia will grow stronger with the geopolitical importance of Northeast Asia.

Choson Exchange offers additional detail and other news from Rason here.

UPDATE 11 (2013-9-22): It appears that Russia – Rajin rail service has been launched (again). According to KCNA:

Rajin-Khasan railway section has been successfully rebuilt and opened for service with due ceremony in Rajin on Sunday.

The opening of the section will greatly contribute to developing the friendly and cooperative relations between Russia and the DPRK.

Present at the ceremony from the DPRK side were Jon Kil Su, minister of Railways, O Ryong Chol, vice-minister of Foreign Trade, Ri Chol Sok, vice-chairman of the State Commission for Economic Development, Jo Jong Ho, chairman of the Rason City People’s Committee, Im Chon Il, consul general of the DPRK to Nakhodka, officials in the field of railways and people in Rason City.

Present there from the Russian side were V. I. Yakunin, president of the “Russian Railways” Company, Alexei Tsijenov, vice-minister of Transport, Sergey Sidorov, first vice-governor of the Maritime Territory Administration, Alexandr Timonin, Russian ambassador to the DPRK, Vyacheslav Tsupikov, consul general of Russia to Chongjin, and Russians including those concerned with the railways.

Diplomatic envoys to the DPRK also attended.

V. I. Yakunin in the opening ceremony said the section has opened for service under Russia-DPRK Moscow Declaration signed by the top leaders of the two countries in 2001.

To press for the renovation of the railways running through the land of Korea will be of great contribution to the development of economic cooperation in the Asia-Pacific region in the future, he stressed.

Minister of Railways of the DPRK in his speech said that the plan of linking DPRK-Russia railways serves as a model of wide-ranging bilateral cooperation which meets the common progress and interests of the two peoples.

He expressed the conviction that the operation of the opened railways section will be successful as it was made on the principle of mutual respect and cooperation between the railway transportation fields of the two countries.

There were congratulatory speeches.

The ceremony ended with the playing of national anthems of the two countries. It was followed by a reception.

According to Yonhap:

After years of work to directly connect railway tracks between Russia and North Korea, a 54-kilometer section linking border areas of the two countries reopened Sunday with a ceremony in Rason, a special economic zone in northeastern North Korea.

A special train carrying a group of reporters arrived at Rajin Port in Rason from Khasan in the Russian Far East, making it the first train to travel between the two countries without changing bogies at the border.

Trains had traveled on the section since the Soviet era. But given differences in track width between the Russian side and the North Korean side, workers had to change bogies every time a train crossed the border.

With the end of overhaul work, North Korea appears poised to promote the development of its special economic zone, while Russia seeks to revitalize the Trans-Siberian Railway by linking it, in the future, to a railway system that would run through the Korean Peninsula.

In 2008, the two countries started work to lay Russia-sized railway tracks from the Russian border area to Rajin Port after Russian President Vladimir Putin and then North Korean leader Kim Jong Il agreed in August 2001 to directly connect the two railway systems.

Moscow shoulders 70 percent of 8.3 billion ruble, or 25.8 billion yen, in costs to lay the new tracks and build the North Korean port, while Pyongyang covers the remainder.

The two countries conducted a trial run on the section using a freight train in October 2011. They initially planned to launch commercial runs in autumn last year, but the plan was delayed until now.

Bloomberg adds the following data:

Initially, the 54-kilometer (33-mile) line will transport Russian coal to markets in the Asia-Pacific region, OAO Russian Railways Chief Executive Officer Vladimir Yakunin said at the ceremony in Rajin. The second phase of the project will involve the construction of a container-handling facility and potentially an oil terminal at the North Korean site, he said.

“Our common objective is for this link and port to be a pilot scheme for the restoration of a single transport system in North and South Korea that would link the peninsula to countries that gravitate to this region, to Europe via Russia,” Yakunin said. The CEO said he hopes the plan will help promote peace between the two Koreas, which remain technically at war following the conflict 1950-53 that divided the countries.

The route is part of a larger project, dubbed the Iron Silk Road, that would connect Russia’s Trans-Siberian Railway to South Korea via the North for an overland route cutting transportation costs to Europe. Success depends on improved ties between South Korea and its isolated Communist neighbor.

Reuters adds the following data:

Yakunin said the railway and container terminal, a project worth 9 billion roubles ($283 million), would work at a capacity of 4 million metric tons a year within two years.

Here is some additional background information:

Practical implementation of the project began in 2008, when RZD and North Korea’s Ministry of Railways signed a cooperation agreement. In October of that year, Tumangan station saw the ceremonial laying of the first link of the rails and sleepers that marked the beginning of the reconstruction of the Khasan – Rajin railway section.

In 2009, a joint venture, RasonKonTrans, was set up by Russian Railways Trading House, a subsidiary of RZD, and the port of Rajin, in order to implement the project. RasonKonTrans has in turn concluded a 49-year leasing arrangement of the railway line between Tumen – Rajin with the Donghae company of North Korea’s Ministry of Railways. The work was financed from RasonKonTrans’ share capital, as well as by funds the joint venture was able to borrow based on the project’s business plan. More than 5.5 billion roubles had been invested in the reconstruction of the Khasan – Rajin railway line and 3.5 billion roubles in the port terminal.

The final construction phase to create a universal intermodal exchange terminal at the port of Rajin has now begun, including a range of measures ranging from dredging, building a new quay wall and equipping storage yards, through the construction of industrial and office buildings and facilities to laying railway lines within the terminal itself. Yakunin continued:

“The port is designed to handle transhipment volumes of 4 million tonnes of cargo, but that is not the limit. We are confident that the cargo base will expand and that containers will be shipped through the port. The construction of the port terminal is almost complete, and we are already seeing interest from international customers and partners.”

Officials from both countries say they are working together to finalise the timetable and the joint regulations which will govern the movement of trains on this section. To ensure the interoperability of the new line with both North Korea’s railway network and the Russian rail network, there are plans to create a single control centre with the participation of experts from the RasonKonTrans joint venture and the Donghae transport company of North Korea’s Ministry of Railways.

DPRK’s Minister of Trade releases information on recent foreign economic cooperation at forum in China

Thursday, September 12th, 2013

Institute for Far Eastern Studies (IFES)
2013-9-12

After North Korea’s launch of a long-range rocket in December 2012 and third nuclear test in February 2013, China endorsed UN sanctions against North Korea. Consequently, North Korea appears to be increasing its economic cooperation with Mongolia and Russia.

On September 6, the 7th annual Northeast Asia joint high-level forum was held in Changchun (Jilin Province), China. Ku Bon Tae of the DPRK Ministry of Trade is reported to have been present and to have delivered a presentation on North Korea’s recent economic cooperation activities.

Ku stated, “Currently, cooperation between North Korea and Mongolia is making positive progress,” and “the international freight transport coordination issue and Mongolian corporate investments, telecommunications and other cooperation issues at the Rason Special Economic Zone are at the final stages of agreement.”

He added, “We hope more Northeast Asian nations will actively take part in the Rason Special Economic Zone.”

In May, a Mongolian oil companies HB Oil JSC acquired 20 percent stake in North Korea’s state-run Sungri oil refinery. In July, the two countries signed an agreement on information and communication cooperation and exchanges. In addition, Mongolian experts in the field of livestock are said to be involved in North Korea’s Sepho tableland (Gangwon Province) reclamation project, which seeks to create a large stockbreeding complex.

As for economic cooperation with Russia, the Khassan–Rajin railway — part of an international container rail transport line connecting Russia and North Korea and linking Northeast Asia to Europe — has its opening ceremony scheduled for this month after having received extensive reconstruction. Russia also has a long-term lease on Rajin Port’s pier No. 3. Russia has been renovating the pier, and renovations are expected to be completed by the end of this year.

North Korea and Russia plan to develop Khassan–Rajin rail line and Rajin Port in order to transport cargo from Asia to Europe: as containers arrive at Rajin Port, they are moved to the Khassan-Rajin railway and then transferred to the Trans-Siberian Railway (TSR), headed for Europe.

Ku further added, “After the projects are completely finished friendly cooperation between Russia and North Korea and international transport pathway will be opened connecting Asia to Europe through the development of economic and trade relations between the two countries.”

In Ku’s speech, the public economic cooperation with regards to China was covered briefly, and exclude the recent progress made. He commented only on the establishment of Joint Management Committees in Rason and Hwanggeumpyeong economic zones and that banks of the two countries are in the process of negotiating the usage of Chinese renminbi as the currency of trade.

Ku emphasized, “As with our past, our Republic hopes to promote independence, peace and friendship between Northeast Asian countries in the future, based on our foreign policy and will make every effort to further develop and expand this friendly cooperative relationship.”

The 9th China–Northeast Asia Expo opening ceremony was also held (in Changchun) on the same day as the forum. Political and business leaders from China, South and North Korea, Russia, Japan, and Mongolia were present at the event.

Posted in Energy, Foreign direct investment, Gasoline, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), International trade, Ministry of Trade, Mongolia, Oil, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Russia, Transportation | Comments Closed

North Korea’s minister of trade releases information on recent foreign economic cooperation at forum in China

Thursday, September 12th, 2013

Institute for Far Eastern Studies (IFES)
2013-9-12

He added, “We hope more Northeast Asian nations will actively take part in the Rason Special Economic Zone.”

In May, a Mongolian oil company HB Oil JSC acquired 20 percent stake in North Korea’s state-run Sungri oil refinery. In July, the two countries signed an agreement on information and communication cooperation and exchanges. In addition, Mongolian experts in the field of livestock are said to be involved in North Korea’s Sepho tableland (Gangwon Province) reclamation project, which seeks to create a large stockbreeding complex.

Posted in Agriculture, Ministry of Trade, Mongolia, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Russia | Comments Closed

Collection of DPRK laws and regulations

Wednesday, March 27th, 2013

A much-appreciated colleague has sent me a PDF document published by the DPRK’s Committee for the Promotion of External Economic Cooperation in 2003. It that contains hundreds of pages of DPRK laws and regulations.

Click here to open the PDF document

Here is a list of the contents:

1. The Law of the Democratic People’s Republic of Korea on Foreign Investment

2. The Law of the Democratic People’s Republic of Korea on Equtiy Joint Venture

3. Regulations for the Implementation of the Law on Equity Joint Venture

4. The Law of the Democratic People’s Republic of Korea on Contractual Joint Venture

5. Regulations for the Implementation of the Law on Contractual Joint Venture

6. The Law of the Democratic People’s Republic of Korea on Foreign Exchange Control

7. Regulations for the Implementation of the Law on Foreign Exchange control

8. The Law of the Democratic People’s Republic of Korea on Foreign-Invested Bank

9. The Law of the Democratic People’s Republic of Korea on the Leasing of Land

10. The Law of the Democratic People’s Republic of Korea on Foreign-Invested Business and Foreign Individual Tax

11. Regulations for the Implementation of the Law on Foreign-Invested Business and Foreign Individual Tax

12. The Customs Law of the Democratic People’s Republic of Korea

13. The Law of the Democratic People’s Republic of Korea on the Protection of Environment

14. The Insurance Law of the Democratic People’s Republic of Korea

15. The Law of the Democratic People’s Republic of Korea on External Economic Arbitration

16. The Law of the Democratic People’s Republic of Korea on External Civil Relations

17. The Notary Public Law of the Democratic People’s Republic of Korea

18. The Civil Proceedings Act of the Democratic People’s Republic of Korea

19. The Law of the Democratic People’s Republic of Korea on Processing Trade

20. The Law of the Democratic People’s Republic of Korea on Bankruptcy of Foreign-Invested Enterprises

21. The Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone

22. The Law of the Democratic People’s Republic of Korea on Wholly Foreign-Owned Enterprises

23. Regulations for the Implementation of the Law on Wholly Foreign-Owned Enterprises

24. Regulations on the Financial Management of Foreign Invested Enterprises

25. Regulations on the Introduction of Latest Technologies by Foreign-Invested Enterprises

26. Regulations on the Naming of Foreign-Invested Enterprises

27. Regulations on the Registration of Foreign-Invested Enterprises

28. Labor Regulations for Foreign-Invested Enterprises

29. Regulations on the Resident Representative Offices of Foreign Enterprises in the Rason Economic and Trade Zone

30. Regulations on Entrepot Trade in the Rason Economic and Trade Zone

31. Regulations on Contract Construction in th Rason Economic and Trade Zone

32. Regulations on Forwarding Agency in the Rason Economic and Trade Zone

33. Regulations on Statistics in the Rason Economic and Trade Zone

34. Regulations on Tourism in the Rason Economic and Trade Zone

35. Regulations on Financial Management of Foreign-Invested Enterprises in the Rason Economic and Trade Zone

36. Regulations on Foreigner’s Immigration Procedure and Stay in the Rason Economic and Trade Zone

37. Customs Regulations For the Rason Economic and Trade Zone

38. Regulations on Finding in the Rason Economic and Trade Zone

Posted in Economic reform, Foreign direct investment, International trade, Law on the Rason Economic and Trade Zone, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | 3 Comments »

Rason – China – USA sea food trade

Tuesday, March 5th, 2013

According to the New York Times:

At the Red Sun restaurant, a short-order joint on Crab and Beer Streets, live crabs with plump legs wriggle in a cooled tank, fresh from the North Korean coast just two and a half hours away by road.

The cook and owner, Jin Yuansheng, douses the prized crabs in boiling water and adds them to the steaming platters of sea cucumbers, shrimp and squid, also from North Korean waters, that he brings to the table.

This border town in China’s cold and poor northeast abuts North Korea along the icy Tumen River, where a bridge serves as the gateway for a lively commerce in shellfish plumbed from the Sea of Japan off North Korea. It is an exotic niche business in the more than $11 billion annual trade between North Korea and China, which is dominated by China’s purchases of cheap North Korean iron ore and coal.

…

By encouraging trade with North Korea, China aims to prevent North Korea’s government from collapsing, an outcome that could result in a Korean Peninsula allied to the United States. And business with North Korea serves a domestic goal: it helps employment and incomes in needy Jilin Province, where an estimated two million ethnic Koreans live.

That is where the crabs come in. Scooped from 3,000-foot-deep waters by trawlers crewed by North Korea workers, they are first taken to the North Korean port of Rason, a special enterprise zone serving foreign investors and largely financed by China. The crabs are trucked in ice to the Chinese border town of Quanhe, and then brought to the market in Yanji, or flown to cities across China as a delicacy for the affluent.

“Getting the crabs here is a delicate operation,” said Mr. Jin. “If they are too hot en route, they can die, and if they are too cold, they can freeze to death.”

…

For Chinese traders, importing crab is a lucrative business. They sell not only to upscale restaurants around China, but also to banquet organizers. The sales pitch stresses what is called the purity of the waters around impoverished North Korea compared with the more polluted seas around industrialized Japan and South Korea.

“The fishermen capture the crab deep down, so it is high quality,” said Qu Baojie, whose company imports crab from Rason. “South Korea and Japan can’t compete.”

His crab, branded as Crab Earth, Crab Heaven, is featured at the buffet of the Golden Jaguar, a fashionable Beijing restaurant, and is sold in red boxes suitable for business gifts, he said.

The fishing operations in Rason, an ice-free port that gives year-round sea access to China’s northeastern provinces, work fairly smoothly, Mr. Qu said. Fishing trawlers equipped with South Korean gear ply the waters at night, returning to shore about 4 a.m.

Their catches are then transferred to a state-owned plant where some crabs are packed live and others are processed, he said. About 300 North Korean workers are employed during the peak September to December fishing season. Fishing during the breeding season of June to September is banned, he said.

His crab business flourishing, he recently bought a new processing factory in Yanji, Mr. Qu said.

Some of the crab meat was vacuum packed in clear plastic, and sold to other Chinese traders, who in turn dispatched it to the United States, he said. The brand name of North Korean crab meat sold in the United States? “They slap on their own brands,” he said of the American buyers.

Read the full story here:
Caught in North Korea, Sold in China, Crabs Knit Two Economies
New York Times
Jane Perlez
2013-3-4

Posted in China, International trade, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

Nuke test does not deter China’s economic interests in the DPRK

Thursday, February 28th, 2013

According to Reuters:

While Beijing has not made clear whether the test would disrupt its investment plans for the Rason economic zone, an official at the zone’s joint management office told Reuters that all previously announced Chinese projects for the zone remain on track, including a power line from China to ease acute electricity shortages there.

“All the people of the management office are still here working as usual… If there is any major impact (from the nuclear test), do you think we would still be here?” he said by phone from Rason, which lies near where North Korea, China and Russia converge. “All works are proceeding as planned.”

There are about 60 Chinese and North Korean people working at the management office, and the number may grow with the launch of more projects, said the official, who declined to be identified as he was not authorized to speak to the media.

China and North Korea jointly set up the Rason management committee in October to handle the planning, construction and development of the zone, also known as Ranjin-Songbong, one of the country’s highest profile economic projects.

…

“China has normal relations with North Korea. We will conduct normal trade and economic exchanges with North Korea,” Hua Chunying, China’s foreign ministry spokeswoman, said when asked whether China would continue to work with North Korea to develop its special economic zones after the nuclear test.

…

Led by China’s commerce ministry, Chinese firms, including State Grid Corp, Jilin Yatai (Group) and China Railway Construction Group and other state enterprises, have indicated interest in investing in power, building materials, transport and agriculture projects in the zone.

Yatai, a Shanghai-listed cement and coal producer, signed a framework agreement last year with the North Korean government to construct a 500,000-square-metre building materials industrial park, including a cement plant, in Rason.

State Grid finished the final review of the feasibility study of the 97.8-kilometre power line early this year, but has not started construction as it has not yet won all approvals, the official and a source close to the plan said.

The planned line would cut through a Siberian tiger natural reserve, and State Grid is awaiting a green light from China’s National Development and Reform Commission and coordinating with various other authorities, the source told Reuters.

There is no timetable for the project as State Grid is unsure when it would receive government approvals, he added. State Grid was not immediately available for comment.

Jilin Yatai may delay its cement project in Rason — which is critical to the construction of other projects such as the railway there — due to “issues on the North Korean side,” said an official at Yatai’s securities office.

But the likely delay of the project was not related to the nuclear test, the official said by phone from Changchun, capital city of Northeast China’s Jilin province, which borders North Korea. He declined further comment.

In a filing with the Shanghai bourse in August, Yatai said it planned to complete the construction of its first cement plant in North Korea by September this year only if there is sufficient power capacity available.

Read the full story here:
China moves ahead with North Korea trade zone despite nuclear test
Reuters
2013-2-28

Posted in Automobiles, China, Coal, Economic reform, Electricity, Energy, Foreign direct investment, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013), Transportation | Comments Closed

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