Law on the Rason Economic and Trade Zone « North Korean Economy Watch

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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 »

Revisions to the statute governing Rason

Wednesday, September 5th, 2012

Noa Sharabi at the Hanns-Seidel-Foundation Korea office has written up a quick comparison of the 2010 and 2011 Law of the DPRK on the Rason Economic Trade Zone.

You can download a PDF of the comparison here (PDF).

You can download the text of most recent Law on Rason here (PDF).

Here is the original 1993 Law on Rason (in Korean) along with 1999and 2002 revisions (PDF).

Here are previous blog posts on the Law of Rason.

Here is recent coverage of the 2012 Rason International Trade Fair.

Posted in Hanns Seidel Foundation, Law on the Rason Economic and Trade Zone, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

KCNA: DPRK encourages foreign investment

Friday, March 23rd, 2012

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”.

Posted in Economic reform, Foreign direct investment, Joint Venture Investment Committee (JVIC), Joint Ventures, Law on Foreign Investment, Law on Foreign-funded Banks, Law on Hwanggumphyong, Law on the Rason Economic and Trade Zone | Comments Closed

KCNA publishes DPRK SEZ laws

Monday, March 19th, 2012

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).

Posted in Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Law on Hwanggumphyong, Law on the Rason Economic and Trade Zone, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | 3 Comments »

Choson Exchange presents Rason Legal Code (2010)

Wednesday, March 14th, 2012

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.

3. Choson Exchange home page.

Posted in Choson Exchange, Law on the Rason Economic and Trade Zone, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | 2 Comments »

Details on the Rason SEZ (version 2.0) emerging

Tuesday, September 13th, 2011

China has reportedly agreed to provide electricity to the Rason special economic zone, and the minimum wage investors can expect to pay the North Korean government to employ North Korean citizens qill be approximately US$80.

According to the Korea Times:

China has agreed to provide electricity to a special economic zone in North Korea’s northeast, a source said Tuesday.

The agreement to provide power to the Rason economic zone was signed between Jang Song-thaek, vice chairman of the North’s powerful National Defense Commission, and China’s Commerce Minister Chen Deming, during an economic meeting on June 8, the source said.

The source cited Chinese officials familiar with the project.

The project calls for laying high-voltage power distribution lines between the Chinese border city of Hunchun and the North’s city of Rajin as well as building a thermal power plant in Rason, the source said.

Construction for the power lines is likely to begin soon while the two sides are in talks to work out details for the envisioned power plant, the source said.

“Power is an important infrastructure in developing the Rason special economic zone,” said Cho Bong Hyun, an expert at the Seoul-based IBK Economic Research Institute. “China’s agreement to provide power increases the chances of the zone’s success.”

The North designated Rason as a special economic zone in 1991 and has since striven to develop it into a regional transportation hub, though no major progress has been made. (Yonhap)

According to Yonhap:

The minimum monthly wage for workers at a North Korean special economic zone has been set at US$80, a source familiar with the reclusive state said Thursday, a small enough sum that could attract Chinese firms to invest there.

North Korea designated Rason as a special economic zone in 1991 with the aim of developing it into a regional transportation hub. Amid few signs of progress, the country broke ground in June on a joint project to develop it into an economic and trade zone with China. The northeastern port city borders both China and Russia.

“According to a booklet I obtained on the tax policy of the Rason economic and trade zone, the minimum monthly wage for workers is $80,” said the source, who spoke on the condition of anonymity.

Under a North Korean law for the Rason economic zone, revised in January last year, the minimum monthly wage for local employees at foreign firms is set jointly by the employer and the municipal authorities.

The amount is higher than the $63.814 recently set as the minimum wage for North Korean workers at the inter-Korean industrial park in Kaesong, the North’s western city bordering South Korea, but less than the average salary of Chinese workers. According to the South’s state-run Korea Trade-Investment Promotion Agency (KOTRA), Chinese workers are paid a minimum of $167 per month.

Experts say this wage gap could attract Chinese investors to Rason, as they have already started showing signs of relocating operations to Vietnam, Indonesia and other countries with cheaper labor than China.

The booklet also contains details of Rason’s tax policy, including a five-year property tax exemption for buildings purchased through private funds and a corporate income tax rate of up to 14 percent, according to the source.

“The booklet was made by Rason’s tax bureau in July-August to introduce foreigners to its tax policy,” the source said.

And according to the Institute for Far Eastern Studies (IFES):

Hwang also elaborated on the eight preferential policies providing special tax benefits to foreign investors. He asserted, “The government of North Korea will guarantee the investment of the foreign investors by not nationalizing or demanding requisitions. For inevitable cases where such demands occur, proper compensation will be provided.”

The income tax is also at 14 percent, which is 11 percent lower than other areas in North Korea. For companies with business plans over ten years, foreign capital companies will receive three years of tax-free benefit starting from the profit earning year and two years thereon after will receive 50 percent tax-free benefits. According to Hwang, over 100 foreign companies and offices are operating businesses currently in the special economic zone.

Read the full stories here:
China agrees to provide power to NK’s Rason economic zone
Korea Times
2011-9-13

Minimum wage at N. Korean special economic zone set at US$80: source
Yonhap
2011-9-8

Posted in Labor conditions/wages, Law on Foreign Investment, Law on the Rason Economic and Trade Zone, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | 1 Comment »

DPRK revises law on Rason zone and enacts law on coal to attract foreign investment

Wednesday, March 17th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-03-17-1
2010-03-17

Following North Korea’s decision to raise the status of the Rajin-Sonbong region to the ‘Rason Special City’, it has revised the ‘Law on the Rajin-Sonbong Trade Zone’, considerably boosting the likelihood that the region will attract the foreign investment necessary to develop the free trade zone, as the revised law further protects investor activities in Rason.

The Rajin-Sonbong region was designated a ‘Free Economic and Trade Zone’ in 1991, but had very little economic impact. Over the years, North Korean authorities have enacted a few measures to try to keep the project alive, but there has been no significant turnaround. With the revision of the law on Rason, North Korean authorities are again focusing their attention on the region, with the goal of ‘opening the door to a strong and prosperous nation’ by 2012. It is also possible that the regime is eyeing the development of the region as a tool to solidify the transfer of power to yet a third Kim.

In December, 2009, after designating the special economic and trade zone, Kim Jong Il traveled to ‘Rason City’ for the first time in 18 years. Jang Song Thaek, director of the administrative bureau of the (North) Korean Workers’ Party, has also visited the area, leading observers to believe that even working-level preparations are being made following the policy decision to highlight the area.

The law on Rason, revised on January 27, is now made up of 5 chapters and 45 articles. 6 of those articles specifically concern promotion of the investment area and trade with overseas Koreans.

The most eye-catching article is no. 8, which addresses economic and trade activities by overseas Koreans. This type of activity was already protected by the existing law, but the revision reiterates that Koreans living outside of the North are allowed to carry out economic activities and trade in an attempt to snare investments from North Koreans living in China and Japan, as well as other diasporas.

In addition, Article 21 addresses the economic dealings of enterprises, groups and organizations outside of the zone, and stipulates that these groups operating within the Rason Special City would be able to engage in business activities with North Korean businesses in other regions. This essentially legalizes the sale of goods produced in the zone throughout the country.

Article 3, addressing investment opportunities, stipulates that investors are allowed to engage in business regarding manufacturing, farming, construction, transportation, communications, science and technology, tourism, distribution, and finance.

By revising the existing law, North Korean authorities have strengthened incentives for investors.

The latest revision also set the basic income tax of enterprises at 14 percent, while stating that enterprises specifically designated by the government would be taxed at a rate of 10 percent.

Furthermore, Article 2 of the revision emphasizes the tourism and investment roles of the special zone, referring to the zone as one for ‘investment, a transport hub, finance, tourism, and public service,” adding ‘investment’ and ‘tourism’ to those activities stipulated in the original law. The Rason Zone Law has been revised five times since its passing in 1993, undergoing change in 1999, 2002, 2005, 2007 and now 2010.

Authorities also revised the law on coal, which now legally regulates the exploration, distribution and use of coal, by the addition of Chapter 6 Article 76 of the ‘Coal Law’. Article 1 lays out the basis of the North’s law on coal, while Article 2 covers exploration, Article 3, ‘mine development,’ Article 4, ‘coal production,’ Article 5, ‘coal distribution and use,’ and Article 6, ‘management structure regarding the coal industry.’ The new law advocates “expansion of cooperation and exchange with other countries and international organizations on the exploration and mining development, as well as production and use.”

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

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