Archive for the ‘DPRK Policies’ Category

Chongryon headquarters auction

Tuesday, October 22nd, 2013

Pictured above (Google Earth): The Chongryon headquarters building in Tokyo ( 35.697001°, 139.743435°).

UPDATE 6 (2014-3-29): KCNA reports (surprise!) that the DPRK is not happy about the sale of the Chongryun headquarters building. Below are two related articles:

Japanese Authorities Warned of Their Moves to Seize Korean Hall of Chongryon

Pyongyang, March 29 (KCNA) — The Committee for Aiding Overseas Compatriots of Korea made public a statement on Friday denouncing the Japanese authorities for their extremely dangerous moves to stifle the General Association of Korean Residents in Japan (Chongryon) and Koreans in Japan.

On March 24 the Japanese authorities took such fascist action as instigating the Tokyo District Court to make an illegal decision to allow the sale of the land and building of the Korean Hall of Chongryon.

This is a wanton violation of the dignity and existence right of Chongryon and Koreans in Japan and a grave infringement upon the sovereignty of the DPRK, the statement said, adding:

The Japanese authorities are feigning ignorance of the fact, noting that the decision was made by a “judiciary organ” in a bid to evade the blame for seizing the Korean hall. But this is no more than an excuse to cover up their sinister criminal purpose.

It is their sinister political scenario to deprive the Central Standing Committee of Chongryon of the base of its activities and thus weaken the authority of Chongryon, a model of Juche-based overseas Koreans’ movement, and dampen the elated patriotic enthusiasm of Koreans so as to stamp out the movement of Koreans in Japan.

The statement went on:

Now that the Japanese authorities deliberately touched off distrust at a time when confidence-building is required for improving the DPRK-Japan relations more urgently than ever before the DPRK is compelled to take corresponding measures.

If the Japanese authorities persist in their moves to seize the Korean Hall despite the warning of the DPRK, they will be wholly responsible for the consequences to be entailed by them.

Illegal Decision of Tokyo District Court Slammed

Pyongyang, March 29 (KCNA) — The Tokyo District Court made a decision to allow the sale of the land and building of the Korean Hall of the General Association of Korean Residents in Japan (Chongryon) under the backstage wire-pulling of the Japanese authorities. The spokesman for the Democratic Lawyers Association of Korea Saturday released a statement disclosing the illegality of the decision.

The statement says:

The illegality of the decision finds its vivid manifestation in that the court selected a disqualified company as a successful bidder by fraud and swindle.

The Tokyo District Court had delayed the announcement of the results of auction of the Korean Hall of Chongryon, which was made in October of 2013. On March 20, it reopened the tenders for it for no reason all of a sudden and made the decision to allow the sale to the Marunaka Holdings Co. Ltd., Japan.

As far as the above-said company is concerned, it had already been disqualified as it underbid others in October last year and took back bid bond from the court.

In particular, it is a precedent of the Japanese courts that in case the relevant court returned the bid bond to a disqualified company it would not make a decision to allow the sale to it.

Therefore, it was a crude violation of the law in every aspect that the court chose the above-said company as a successful bidder.

The illegality of the decision of the Tokyo District Court is also evidenced by the double-dealing attitude of the Resolution and Collection Corporation, a creditor.

When the issue of the Korean Hall presented itself, the Corporation made a hostile and discriminating demand that Chongryon should repay a total amount plus interest though it has settled issues with other debtors in a friendly manner.

But the Corporation kept mum about the decision of the Tokyo District Court to sell the Korean Hall at a price less than half the actual one.

The Japanese authorities has long regarded the Korean Hall of Chongryon on which the flag of the DPRK is fluttering as a thorn in their flesh and run the whole gamut of plots to seize it.

That was why the Tokyo District Court staged an unprecedented farce in disregard of the Japanese law, precedents of the courts and practices of the basic procedures for tenders

The Democratic Lawyers Association of Korea categorically rejects the decision of the Tokyo District Court and declares internally and externally that the illegal decision is invalid, the statement says.

The Japanese authorities had better halt their moves to seize the Korean Hall, though belatedly, if it thinks of its face as a “law-governed state” even a bit and has real intention to improve the relations with the DPRK, the statement concludes.

UPDATE 5 (2014-3-24): A Japanese estate agency has been approved to buy the property. According to  NTD:

A court ruled Monday that a Japanese estate agency could buy the Tokyo property that serves as North Korea’s de facto embassy, after an earlier bid fell through.

The decision from the Tokyo District Court drew an immediate and angry reaction from Chongryon, the organisation that represents North Korean interests in Japan in the absence of diplomatic ties.

“This is an unfair decision. We cannot accept it,” said an organisation spokesman, adding that an appeal would be lodged.

The site — a 2,390-square-metre (25,725-square-feet) plot and 10-storey building occupied by Chongryon — was put up for auction after it was seized by authorities over unpaid debts.

Monday’s ruling gave real estate firm Marunaka Holdings the right to buy the building for 2.21 billion yen ($22 million), after a winning bid from an obscure Mongolia-registered company fell apart.

The Avar Limited Liability Company had won an auction in October with a bid of 5.01 billion yen, beating Marunaka’s offer. But the court disqualified the offer several months later reportedly due to flawed documentation amid questions over whether the firm had links to Pyongyang.

Japanese law bars an organisation forced to sell assets from taking part in an auction of them.

The Japanese firm is planning to remove the North Korean-linked organisation from the property, reports said, but it was unclear if it still planned to go through with the purchase following the judgement.

Hundreds of thousands of ethnic Koreans live in Japan, mostly a legacy of those who emigrated or were forced to move to Japan during its 1910-1945 colonial rule of the Korean peninsula.

About 10 percent are believed to be affiliated with Chongryon, which charges that the community is persecuted by authorities and harassed by right-wing activists.

UPDATE 4 (2014-1-23): NK News reports that the mysterious Mongolian firm has been blocked from purchasing the former headquarters building.

A Japanese court has blocked a Mongolia-based company’s bid to buy the Tokyo headquarters of the main pro-North Korea organization in Japan, Chongryon.

After months of screening, the Tokyo District Court announced on Thursday that due to purchase irregularities it would not allow the Ulan Bator-based Avar Limited Liability Company to purchase the property, which still serves as the headquarters for Japan’s main pro-North Korea organization.

The Mongolian firm, which had previously won an October 2013 auction for the building with a 5.01 billion yen (U.S. $48 million bid) bid, was rejected by the court because a certificate it submitted to support the purchase appeared to be a color photocopy and did not bear the official seal of the Mongolian government.

“It is a company on paper,” Hideshi Takesada, an expert on regional security at Takushoku University in Tokyo, told NK News on Thursday.

“With the bid tendering highly unlikely to be successful, Chongryon will be able to stay at the headquarters building and use the land. In a sense, the Japanese government is doing a favor for North Korea,” Takesada said. Takesada is a former executive director of the National Institute for Defense Studies in Tokyo, the Japanese Ministry of Defense’s think-tank.

UPDATE 3 (2013-10-22): Apparently funding fell through for the Buddhist group, and the building was put up for sale again. A Mongolian firm stepped forward to buy the building, but this was halted over fears that the new firm was a front for North Korean interests. According to the South China Morning Post:

The Tokyo District Court acted yesterday in response to a petition for an injunction on the sale filed by Ken Kato, director of Human Rights in Asia. Kato’s request pointed out that would-be buyer Avar was registered at an address in Ulan Bator, but the company apparently had no presence there.

When a Japanese television team arrived at the Mongolian address to ask about the purchase of the 10-storey building that is now occupied by Chongryon, the organisation that represents North Korean residents of Japan, and the prime plot it occupies in Chiyoda Ward, they were met by a bemused woman.

She told the TV crew her family had been living in the apartment for seven years and had never heard of Avar.

“I told the court that this was a typical case of money laundering and that the court cannot permit the transaction to go ahead,” Kato told the South China Morning Post. “The address is fake and the registration of the company must therefore be illegal.”

No deadline has been set for the court to make a decision on whether the transaction will go ahead, but Kato is confident any investigation will lead back to the North Korean leader. “Kim Jong-un wants to save face and not lose this property and I’m sure the decision to pay more than the market value is a case of a dictator’s whim,” he said.

The minimum price for bidders for the property was set at 2.13 billion yen (HK$168 million), while a previous deal to buy the building in May for 4.52 billion yen fell through when the buyer, the chief priest of Saifukuji Temple, was unable to raise the funds by the deadline. Kato said it was therefore curious that the latest sale price was 5.01 billion yen.

“The buyer could have got it for a lot less than that and I believe they offered so much in the hope no answers would be asked and the real purchaser could remain anonymous,” he said.

That was always likely to be a vain hope, given the interest in the property, which was put on the market in March by the government-backed Resolution and Collection Corp. in an effort to recoup loans of 62 billion yen that it extended to the residents’ association after the collapse of a number of financial institutions for North Korean residents of Japan.

The involvement of a Mongolian firm also raised eyebrows in Japan, as no Mongolian firm has ever purchased a building in Tokyo and there are very few Mongolian companies with enough cash to carry out such a deal.

As well as the suggestion that Avar is a front company for the North Korean regime, there has also been speculation that the Mongolian government might be involved as part of the burgeoning relationship between the two regimes.

UPDATE 2 (2013-3-27): A Buddhist order on good terms with the Chongryun won the property auction and will allow the Chongryun to remain on the premises.  According to the Japan Times:

The Kagoshima temple offered ¥4.5 billion, the highest among four bidders, to acquire the land and the Chongryon building.

“We will keep the building as it is and make it a base of harmony among ethnic groups in Asia, including North Korea,” said Saifuku Temple leader Ekan Ikeguchi.

“The function of our headquarters will be maintained for the time being, at least,” a Chongryon official said. “We feel relieved.”

The government-backed Resolution and Collection Corp. put the premises out to tender to recoup loans of about ¥62.7 billion it made to Chongryon.

UPDATE 1 (2013-3-13): The Wall Street Journal’s Japan Real Time reports that the auction has finally begun on the Chongryun’s headquarters building in central Tokyo. According to the article:

Bidding has begun for the repossessed central headquarters of the General Association of Korean Residents in Japan, North Korea’s de-facto embassy in the country. It’s an attempt by the Japanese government to get back some of the ¥62.7 billion owed by the pro-Pyongyang group, also known as Chongryon, and comes as the reclusive regime faces a new round of sanctions and international condemnation following its third nuclear test.

Built in 1986, the 10-story office building has two basement floors and is situated on a 2,390 square-meter piece of land in a prime location in central Tokyo. The Tokyo District Court said in its assessment of the building that some portions of it showed signs of age-related deterioration as well as damage incurred during the massive 2011 earthquake that shook northeastern Japan.

Analysts say that as the auctioneer’s hammer falls, so falls the fortunes of the once-influential group.

“Losing its central headquarters is symbolic of Chongryon’s decline,” said Hajime Izumi, Professor of International Relations at Shizuoka University. “While the organization will survive, I expect it to face increasing difficulty maintaining itself,” he said.

Founded in 1955 as an organization representing the pro-North Korean members of Japan’s ethnic Korean minority, Chongryon has been responsible for pumping out North Korean propaganda and has been operating banks, a newspaper and numerous schools for Korean residents in Japan.

The group has also been a reliable source of hard cash for Pyongyang, with members sending back a large portion of revenue accumulated through numerous “pachinko” gambling parlors and real-estate businesses operated across the nation.

But Yoshifu Arita, an upper house lawmaker in Japan’s parliament, said the organization faced severe head-winds in 2002 when the late Kim Jong Il admitted during a meeting with then-Prime Minister Junichiro Koizumi that North Korean agents had kidnapped Japanese nationals in the 1970s and 1980s.

“This led to a massive public backlash toward North Korea as well the organization,” he said. “It led to many disillusioned members leaving Chongryon as pressure on them mounted.”

Chongryong’s debt stems from a network of credit unions for pro-North Korean residents of Japan that collapsed and had to be bailed out by the government-backed Resolution and Collection Corporation in the late 1990s and early 2000s. The debt has been transferred to Chongryon, which has been sued by the RCC for repayment.

A 72-year-old South Korean businessman living in Kobe, who used to be affiliated with Chongryon, added that the younger generation of Koreans in Japan also felt less of a link and patriotism toward Pyongyang. And with Japan’s long economic malaise following the burst of its debt bubble in the early 1990s, “pro-Pyongyang supporters don’t have the cash or the will to lend a hand to the organization, even when its headquarters are about to be sold off,” added the businessman, who asked not to be identified.

Bids for the building, which began Tuesday, will be accepted through March 19. The winner of the auction, which Chongryon cannot participate in, is expected to be decided on March 29.

ORIGINAL POST (2012-7-26): The Atlantic has a great piece on recent developments with the General Association of Koreans in Japan (Chongryong or Chosen Soren):

In late June, a Japanese court ordered Chongryon, a business, education, and banking organization formally representing pro-North Korean members of Japan’s ethnic Korean minority, to auction off its ten-story office building in downtown Tokyo, effectively ending its mission of bringing money into North Korea and pushing propaganda out. The group’s problems are essentially financial: Chongryon owes the Japanese government nearly $750 million for a late-90s emergency bailout that rescued the group’s network of credit unions, which were rapidly de-capitalized because of remittances to North Korea during the country’s devastating mid-90s famine, an economic and humanitarian catastrophe that killed up to 2 million people.

As with just about anything regarding North Korea, even the surface-level truth belies deeper and darker realities. If it weren’t for the chronic economic crisis and resulting famine that gripped North Korea in the 1990s, as well as a rising anti-North Korean strain in Japanese politics, then the criminal enterprises, communal bonds, and official connections that made Chongryon such a formidable political and cultural organization may well have remained intact. It took economic collapse, regional crisis, and domestic political upheaval to bring Chongryon to its knees.

North Korea has no official embassy in Japan, so the Pyongyang-linked Chongryon acts as an unofficial representative of a government that has kidnapped Japanese citizens and fired long-range missiles in the island nation’s direction. It runs banks, a newspaper, dozens of schools, and a university named after Kim Il Sung, North Korea’s “eternal leader” and the current despot’s grandfather. In the 1980s, Chongryon’s business and criminal enterprises, which included off-book pachinko parlors, pubs, prostitution rings, and real estate, reportedly produced over a billion dollars a year in revenue — much of which, according to Michael J. Green of the Center for Strategic and International Studies, was sent back to Pyongyang. As late as 1990, its banking system was capitalized to the tune of $25 billion.

Because North Korea has few exports and is under severe international sanctions, unofficial currency-gathering enterprises like this one can be crucial. And the group also serves as a propaganda outlet, pushing out the DPRK party line to ethnic Koreans. It would be unimaginable for North Korea to own a K-Street high-rise, and South Korea officially bans any expression of support for its northern neighbor. But Japan has allowed its enemy’s outpost to remain, and even thrive.

The full story is well worth reading here.

Here are previous posts on the Chongryon including a post from 2010 when the Japanese Supreme Court ruled that the headquarters could be seized.

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DPRK Economic Development Commission

Friday, September 6th, 2013

UPDATE 5 (2013-10-31): North Korea Opens Fourteen Special Economic Zones Nationwide (IFES):

North Korea announced that it has opened fourteen special economic zones (SEZs) in various provinces this year.

The Rodong Sinmun, official newspaper of the Workers’ Party of Korea (WPK) covered the news about the Pyongyang International Conference on Special Economic Trade Zone held from October 16 to 17, 2013. This conference was convened by the Korean Economic Development Commission.

According to the newspaper, a law professor from Kim Il Sung University, Dr. Kang Jong Nam, presented at the conference and said, “There are four well-known special economic zones in our country: the Rason Economic and Trade Zone, Hwanggumpyong and Wiwha Islands Economic Zones, Kaesong Industrial Complex, and Mount Kumgang International Tourism Zone. But from this year, fourteen new economic zones were established.” However, details on where these fourteen new SEZs are located were not disclosed.

Kang added, “To meet the growing demands for development, operation and management of new economic development zones, increasing legal measures are being taken to reinforce the development with establishment of new laws or amendment of existing laws.”

North Korean leader and Chairman of the National Defence Commission Kim Jong Un made a statement at the WPK Central Committee meeting in early March, saying that economic development zones be established in each province, taking into consideration the special characteristics of each region.

Experts confirmed that North Korea has officially announced its plans to develop Wonsan and Chilbosan as tourism zones this year. SEZ development of Kangryong District in Southern Hwanghae Province began from last July.

In addition, the Korean Central News Agency announced on October 17 that ‘Kaesong High-Tech Industrial Park’ will be jointly developed by North Korea and foreign consortium, and this is likely to be one of the new fourteen SEZs built this year.

North Korea is actively hosting international forums targeted to attract foreign investment into the country, with experts from Canada, Malaysia, the United States and other foreign countries attending.

The Rodong Sinmun also quoted Director Choe Hyon Chol of the Korean Association of Economic Development: “It is crucial to educate and train experts to work in the economic zones and this will be the next step for the development of SEZs.” He also said that “We are willing to participate in various functions such as international forums, investment briefings, and exhibitions to encourage more international investment and cooperation.”

Meanwhile, on October 21 the KCNA reported on the extended cabinet plenary meeting. At the meeting, reports were given on the performance of the third quarter of the national economic plan and measures to successfully implement the plans for the fourth quarter. The central agenda for the last quarter is increasing production of coal and steel products and improving agricultural and light industries to resolve the shortage of food and consumer goods for the people. In addition, improvement in education, health services, and sports sectors were named as imperative areas to recover the country’s status as a powerful socialist nation. Specific tasks and strategies of the fourth quarter were presented at the meeting for the implementation of the national budget.

UPDATE 4 (2013-10-31): Rodong Sinmun follows up on the Economic Development Commissions’ conference on Special Economic Zones:

On Oct. 16 KCNA reported that the Pyongyang International Conference on Special Economic Zone (SEZ) development opened. Many foreign sources conveyed the news, each with their own comments.

Economic experts from without were not many in number, but each of the attendants was a specialist who had either been involved in successful development of SEZ in Asia and the rest of the world or rich in relevant research experience.

Among the organizers of the conference was Prof. Kyung Ae Park, director of the Center for Korean Research, University of British Columbia, who played a big role in inviting experienced specialists and scholars to the conference.

The first foreign speaker on the first item on the agenda was professor of the Chinese University of Hong Kong.
Exchanged at the conference were experience on SEZ development in Vietnam, Malaysia, India and many other Asian countries.

Economists and specialists from Canada and the U.S. also spoke at the conference.

Many speakers expressed their unusual feeling of having the opportunity of academic exchange on SEZ development in the city of Pyongyang.

Impressions on Pyongyang were in some points common to all. They said in one voice that Pyongyang, the capital of the DPRK, is beautiful and peaceful, and that Korean economists and specialists were very sincere and enthusiastic in their attitude to the SEZ development.

All the attendants of the conference, both from within and without, expressed thanks to the Korean Economic Development Society, the sponsor, and Kyung Ae Park, organizer, of the conference, which was conducive to seeking a new way of economic development that suits the needs of the 21st century.

UPDATE 3 (2013-10-24): North Korea Launches New Economic Development Organizations (IFES, 2013-10-24)

North Korea announced that it had installed the State Economic Development Commission to oversee the national economic development.

The Korean Central News Agency (KCNA) reported on October 16 that preamble to raise the existing General Bureau for State Economic Development to State Economic Development Commission was adopted at the recent Presidium of the Supreme People’s Assembly. Details for appointment of officials and function of the commissionareyet to be announced.

The bureau was established in 2011 to design and carry out the 10-year plan for the development of the national economy. The elevation of this institution from bureau to commissioncan be interpreted as increasing emphasis on economic development.

In particular, the State Economic Development Commissionis likely to serve as the control tower, overseeing the development of special economic zones and the 10-year economic plan.

The KCNA also reported on the establishment of a non-state organization called the Korean Economic Development Association. As the news explained, this organization was installed for the purpose of “attracting interests of economic, business, and academic communities from abroad in special economic zones (SEZs)” and “to promote SEZs to companies and organizations of other countries to draw investments for development in these areas.”

The association is expected to organize and provide support services to foreign investors and coordinate debates, conferences, exhibitions, economic information exchanges, and provide advisory services, in accordance with government mandates and investment agreements. Essentially, the association’s chief focus is to attract foreign investments into SEZs and provide various services to assist their activities in the economic zones.

The news reported the first project of the association was the organization of the “Pyongyang International Conference on Special Economic Zones (SEZ) Development,” held at the Yanggakdo International Hotel. The conference brought together economic experts from North Korea, the United States, Canada, India, and Malaysia. The association’s contact information (phone and fax numbers;email address)were also released.

The launch of a non-state organization for the promotion of SEZs is a first for North Korea. This is considered as a follow-up measure to the Law on Economic Development Zones, which was enacted in June 2013.

UPDATE 2 (2013-10-23): Rodong Sinmun follows up on the Economic Development Commissions’ conference on Special Economic Zones and reports that there will be 14 Economic Development Zones:

An International Conference on Special Economic Zone (SEZ) Development was held in Pyongyang, the beautiful capital of Juche Korea on Oct. 16 and 17 under the sponsorship of the Korea Economic Development Association. It proceeded in an amicable atmosphere with the participation of competent economic professors and experts of Canada, Malaysia, U.S., Vietnam, India and China, economists and researchers of the Korea Economic Development Association, Kim Il Sung University, University of National Economics, Wonsan Jong Jun Thaek University of Economics and Academy of Social Sciences and officials of various fields who were striving to develop regional economy in Rason City and other areas.

The conference heard first the speeches of Vice-chairman of Korea Economic Development Association Ri Chol Sok and Prof. Kyung Ae Park from University of British Columbia, who was the organizer of the conference. It discussed 6 themes. The matter of primary concern at the conference was the actual situation and prospect of special economic zone development in the DPRK and the legal system related to it. Officials of the Korea Economic Development Association and professors of Kim Il Sung University spoke of this matter.

Thanks to the measures of the DPRK government, Rason Economic Trade Zone, Hwanggumphyong-Wihwado Economic Zone, Kaesong Industrial Zone and Mt. Kumgang International Tourist Special Zone have already been created and this year witnessed the establishment of 14 economic development zones. In conformity with this, legal measures for development, management and operation of the special economic zones were newly taken and the existing laws are being revised and supplemented.

At the session held on the theme “Next Steps for DPRK Economic Zones” held prior to the closing ceremony, Choe Hyon Chol, director of the Korea Economic Development Association, explicated the prospects for development of the special economic zones in our country and hoped for broad and positive international cooperation.

The Pyongyang International Conference on Special Economic Zone Development held under tense situation was an important occasion showing the peace-loving stand and policy of the WPK and DPRK which are concentrating efforts on the development of economy and improvement of people’s living standard.

Here is coverage of this report in Yonhap.

UPDATE 1 (2013-10-17): In September, IFES reported the creation of the DPRK’s Economic Development Commission” (See original post below). It appears that KCNA has finally announced its creation. According to KCNA in two different articles:

General Bureau for State Economic Development Renamed

Pyongyang, October 16 (KCNA) — The DPRK decided to rename the General Bureau for State Economic Development the State Economic Development Commission.

A decree of the Presidium of the DPRK Supreme People’s Assembly was promulgated on Wednesday in this regard.

And…

Economic Development Association Organized in DPRK

Pyongyang, October 16 (KCNA) — The Economic Development Association was organized in the Democratic People’s Republic of Korea.

As a non-governmental organization, it helps foreign businesses and entities to get a better knowledge of special economic zones in the DPRK and to make investments in them.

It is also working to assist business activities of foreign investors in the zones.

As part of its first work, it hosted the Pyongyang International Conference on Special Economic Zone (SEZ) Development in Pyongyang starting from Wednesday, attended by economists from Canada, Malaysia and the United States.

The details to contact with the association are as follows:
Tel: 00850-2-381-5912
Fax: 00850-2-381-5889
E-mail Address: sgbed@star-co.net.kp

Here is the Korean version of the articles:

국가경제개발총국을 국가경제개발위원회로 하기로 결정

(평양 10월 16일발 조선중앙통신)조선에서 국가경제개발총국을 국가경제개발위원회로 하기로 결정하였다.

이와 관련한 조선민주주의인민공화국 최고인민회의 상임위원회 정령이 16일 발표되였다.(끝)

조선경제개발협회 조직

(평양 10월 16일발 조선중앙통신)조선경제개발협회가 조직되여 자기 활동을 시작하였다.

협회는 다른 나라의 기업들과 단체들이 조선의 특수경제지대들에 대하여 잘 알게 하고 그 진출을 협력해주는 민간급단체이다.

조선의 특수경제지대개발에 도움이 되는 투자토론회, 상담회, 전시회, 경제정보교류, 자문봉사, 정부의 위임에 따르는 투자합의, 투자가들의 기업활동방조 등 다양한 봉사를 제공하고있다.

협회는 앞으로 조선의 특수경제지대개발에 관심을 가지거나 투자에 참가하는 여러 나라 경제계와 기업계, 학계의 광범한 인사들의 리익을 도모하기 위해 자기의 역할을 끊임없이 높여나가게 된다.

조선경제개발협회는 첫 사업으로서 카나다와 말레이시아, 미국을 비롯한 여러 나라의 경제전문가들을 초청하여 16일부터 특수경제지대개발에 관한 평양국제토론회를 주최하고있다.

협회는 전화 00850-2-381-5912와 확스 00850-2-381-5889, 전자우편 sgbed@star-co.net.kp로 기업, 단체들과 련계하고있다.(끝)

I am unsure of the difference between the “Economic Development Commission” and the “Economic Development Association”, but they appear to be the same organization. The same name difference is apparent in the Korean articles as well: 조선국가경제개발총국, 조선경제개발협회. I also assume this is the same “Economic Development Commission” reported by IFES in September and posted below.

The first high profile event of the Korea Economic Development Association/Commission was an event: The Pyongyang International Conference on Special Economic Zone (특수경제지대, SEZ) Development. Below are articles on the event:

KCNA (2013-10-16):

International Conference on SEZ Development Opens in DPRK

The International Conference on Special Economic Zone (SEZ) Development opened at the Yanggakdo International Hotel in Pyongyang on Wednesday, with economists from the Democratic People’s Republic of Korea, Canada and other countries in attendance.

In this regard, KCNA met Ri Chol Sok, vice-president of the Korea Economic Development Association.
Ri said:

The conference takes place at a time when the DPRK is paying deep attention to developing special economic zones in local areas, as the Rason Economic and Trade Zone.

The conference deals with present-day situation and prospect of the special economic zones in the DPRK and its laws for SEZs, characteristics of special economic and exports processing zones in China and Vietnam as well as the experiences gained in developing them.

It also introduces the roles the zones play in the economic development in each country.

The DPRK has constituted a series of laws for ensuring free business activities in the zones.

Meanwhile, the country is making efforts to improve economic management methods, while consolidating the socialist economic system.

This conference will mark a good occasion in promoting international exchange and cooperation and in developing the economy of the country.

Xinhua:

The Democratic People’s Republic of Korea (DPRK) said Wednesday it would establish special economic zones open to investment from “any country.”

Ri Chol Sik, deputy head of the Korea Economic Development Association (KEDA), told the first international conference on Special Economic Zone (SEZ) development here that the DPRK was preparing to open many SEZs at provincial level, with legal protection and preferential policy already set up.

“Policies and regulatory environment and their implementation are critical to the success of SEZs,” said Bradley Babson, chair of the DPRK Economic Forum at the U.S.-Korea Institute at John Hopkins School of Advanced International Studies.

A DPRK professor with Kim IL Sung University told Xinhua the seminar was “a great opportunity for our people to learn from other countries’ successful experience on SEZs.”

The seminar, sponsored by KEDA and co-hosted by Park Kyung Ae, director of the Canada-DPRK Knowledge Partnership Program (KPP) at the University of British Columbia, Canada, was attended by DPRK scholars and officials and dozens of foreign economic specialists from countries such as the United States, Canada, China, Vietnam, India, and Malaysia.

Park told Xinhua it was a chance to exchange ideas and promote cooperation between DPRK and the outside world. She has been engaging for years in a KPP academic exchange program, which sends DPRK professors to study and do research in Canada.

KEDA, a newly formed non-government organization, aims to support activities by foreign businesses and scholars interested in the country’s special zones, said KCNA, DPRK’s official news agency.

The non-governmental association, the first of its kind in DPRK, arranges meetings, supports business activities and offers information and consulting to prospective investors.

Also on Wednesday, the National Economic Development General Bureau was renamed the National Economic Development Committee, KCNA said.

And from KCNA on 2013-10-17:

Ri Chol Sok, vice-president of the Korean Economic Development Association (KEDA), said in his closing address at the Pyongyang International Conference on Special Economic Zone (SEZ) Development that other countries’ experience would be helpful to the DPRK seeking to create economic development zones in its localities.

The conference was held at the Yanggakdo International Hotel on October 16-17, with the attendance of KEDA officials, professors of Kim Il Sung University, University of National Economy, Academy of Social Sciences and other related institutions and economists of the DPRK and experts of academic and economic circles of different countries, including University of British Columbia in Canada, Chinese University of Hong Kong, University of Delhi in India, Planning & Economic Research in Malaysia and University of Wisconsin in the United States.

It focused on such matters as the features of SEZ planning and the study of its examples, management and investment in SEZ and development course of SEZ.

Its participants presented papers on experience and lessons of some countries and valuable propositions and exchanged their views on the prospect of SEZ development in the DPRK and international cooperation in this respect.

Professor Pak Kyong Ae of University of British Columbia in Canada recalled that the conference was conducive to establishing and putting into practice the strategy of comprehensive economic development including the creation of SEZs.

The professor hoped that the good ties forged between the participants through the conference would lead to continuous exchange.

And from Xinhua (2013-10-17):

The Democratic People’s Republic of Korea is hosting an international conference to explore ways of developing its economy. Earlier this year, the country announced a new law governing new economic zones.

A sign of new climate in economic development, thirteen foreign academics and experts from countries including the US, Canada, India, China, Malaysia and Vietnam gathered in Pyongyang on Wednesday for an international economic conference.

They joined about 60 economists from the Kim Il Sung University, the Academy of Social Sciences, and other local institutions.

The conference comes as economic zones are starting to be created all over the country. On June 5th, the DPRK’s state news agency KCNA announced a new law governing special economic zones. Foreigners can now invest in the new economic zones with preferential conditions for land-use, employment and tax.

The DPRK has experimented with special economic zones for years. In the early 1990s, the DPRK set-up the Rason Special Economic Zone in the far northeast, but it made little progress until recently being reinvented as a joint project with China.

Another DPRK-China joint economic development project on the border between the two countries at Hwang-gum-pyong is still at a much earlier stage of development.

The joint industrial zone with South Korea at Kaesong has not long reopened after a months-long shutdown earlier this year due to tensions on the peninsula.

The new law on special economic zones is one of a number of signs that the DPRK may be seeking to speed up its economy.

Here is coverage in Yonhap (2013-10-16):

North Korea has established a private organization to develop special economic zones, its media said Wednesday, following toughened business sanctions slapped on the communist country for its nuclear weapons test earlier in the year.

The organization, dubbed the Korean economic development federation, aims to support activities of foreign businesses and scholars interested in the special zones in North Korea, the Korean Central News Agency (KCNA) said.

The regime’s news wire added that the organization will arrange meetings, support business activities and offer consulting and information to prospective investors.

As part of its first official activity, the federation arranged an international conference attended by United States, Canadian and Malay economists that kicked off earlier in the day in Pyongyang, the KCNA said.

North Korea observers said that the creation of a civilian entity to manage a handful of special zones is a first for the communist country and that it follows the revision of related laws in late May aimed at fueling growth and attracting more foreign investors.

“The federation seems to be a copy of similar private sector organizations in capitalist countries and shows the importance placed on pulling off economic growth by the Kim Jong-un government,” said Lim Eul-chul, a research professor at Kyungnam University in South Korea.

Other experts said with the toughened sanctions from the United Nations, the North may be seeking to circumvent the existing business and trade restriction by creating a private body.

Here is coverage in the Daily NK:

According to an October 16th report by Chinese news agency Xinhua’s correspondent in Pyongyang, Yoon Yong Suk, who is in charge of the Chosun Economic Development Committee, recently spoke at the “Pyongyang International Symposium on Special Economic Zone Development,” held at the Yanggakdo Hotel. He said, “We are actively preparing to establish special economic zones in all provinces and introduce foreign capital.” Chosun Economic Development Committee is a “non-state” institution established for the purpose of developing special economic zones.

He explained, “At the Central Committee meeting last March, it was decided that special economic zones should be established in each province, and tourist areas, too, in order to invigorate the tourist industry, and bring about greater diversity in international trade. Currently, each province is moving forward with the establishment of development zones and the task of attracting foreign currency, in accordance with the plan.”

“It is the consistent policy of our country to develop the Rason Special Economic Zone, the Hwangguempyeong and Wihwa Island areas, Mt. Geumgang International Tourist Area, and economic development zones in each province,” he added. “We will find practical and logic means by which to expand economic, trade and scientific exchanges, as well as enhance understanding, exchanges and contacts with governments, private industry, and private groups.”

On October 1st, Daily NK reported that economic officials in provincial areas of North Korea had been ordered to formulate plans for the designation of two candidate cities for development, and that legal and systemic modifications were being investigated, in order to try and ensure interest from foreign capital.

According to Daily NK’s information, the profit derived from joint ventures would be shared 50-50; owever, foreign companies would only have to cover the cost of land use and wages.

Naenara, one of the DPRK’s official web portals, has also posted lots of content on the meeting. See here, here, here, here, here, and here. I have compiled all these articles into this PDF.

Read full story here:
N. Korea sets up civilian body for special economic zones
Yonhap
2013-10-16

ORIGINAL POST (2013-9-6): On May 29, the Presidium of the Supreme People’s Assembly promulgated the “DPRK Law on Economic Development Zones“. Now it appears they have named a body to administer the law. According to the Institute for Far Eastern Studies (IFES):

DPRK Economic Development Committee launched: Special economic and tourism zones to be named (IFES)

In the wake of normalizing the Kaesong Industrial Complex (KIC) agreement, North Korea has announced that it had installed the Economic Development Committee and named special economic and tourism zones, as well as newly appointed officials in charge. In the near future, North Korea has plans to announce specific special economic zones in Sinuiju, Nampo, and Haeju, along with tourism zones in Mount Baekdu, Wonsan, and Chilbosan. The head and director-level executives for the Economic Development Committee are likely to be appointed from the Joint Venture Investment Committee. The head of the Tourism Development is reported to be the former director of Korea Tourism Administration.

Meanwhile, North Korea has released the preamble of the economic development law adopted at the recent Presidium of the Supreme People’s Assembly held on May 29. As inter-Korean relations are progressing with the plans of restarting the Kaesong Industrial Complex and the reunion of separated families moving forward, North Korea’s economic development law is drawing attention once again.

In principle, the selection process for the special economic zones must possess these following elements: Area must 1) be in a favorable location for foreign economic cooperation and exchanges; 2) contribute to the economic and science and technology development; 3) be at a fixed distance from the residential areas; and 4) be at a location that does not intrude in the state protected areas (Article 11). This can be interpreted as the North’s effort to segregate the existing residential areas with the special economic zone similar to the Kaesong Industrial Complex so as to minimize the political and social impact of these zones.

The newly confirmed information for the new Economic Development Law is the list of development activities. “Investors from other countries are permitted to develop economic zones either alone or in collaboration after obtaining state approval (Article 20).” Evidently, North Korean institutions and enterprises may also develop economic zones after receiving approval from the state.

In addition, the law granted comprehensive property rights to the development companies. It states that “Companies have the right to sell, re-lease, bequeath, or transfer the ownership of the buildings and land lease” and “the selling or re-lease price shall be determined by the development company” (Article 29).

As for recruitment of workers, there is a provision that states “our country’s labor force must be given preferential consideration” (Article 41), and “the minimum wage for the employees of the Economic Development Zone shall be determined by central guidance organization of special economic zone” (Article 42). This poses some concern as the employee wage at the Economic Development Zone could be compared to that of the KIC, which could lead to wage disputes after the KIC begins to implement its internationalization process.

Another noteworthy change is the currencies permitted at the zone: “currency for circulation and payment must be Korean Won (KPW) or other specified currency” (Article 46), suggesting that other currencies such as the US dollar and euro will be allowed.

Furthermore, the Act specifies that “Companies in the economic development zone will decide on the commodity and service prices, and all the prices in the Economic Development Zone between institutions, enterprises and organizations shall be determined by the international market price based on agreement of all the parties” (Article 43). This suggests that the products produced in the zone may be traded domestically in North Korea.

In this Act, corporate income tax rate was set at 14 percent of profits and “Economic Development companies that operate for more than 10 years will be considered for a tax cut or exemption from the corporate income tax.” Article 58 grants “communication guarantees” for the usage of mail, telephone, and fax services, but did not include the use of the Internet.

Posts on the DPRK Law on Economic Development Zones can be found here.

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North Korea enthusiastically promoting tourism industry to attract foreign investments

Thursday, August 29th, 2013

Institute for Far Eastern Studies (IFES)
2013-8-29

The Korean Central News Agency reported on August 24 that a tourism briefing session was held in Pyongyang for the purpose of attracting foreign investment.

The state-run Korea International Travel Company (KITC) opened a briefing session at the Yanggakdo International Hotel to explain the preferential treatment for foreign investments. Officials from various embassies, along with Chinese, English, and German travel agency representatives were present at the briefing session.

Cho Song Gyu, president of Korea International Travel Company, said that “tourism districts will be operated as special tourism zone and all management activities such as customs, tax, communication, and investment protection will be guaranteed in accordance with the special zone law and international standards.” It was said that investments of foreign owned enterprises and joint venture companies are to be given priority.

President Cho added, “There are plans to invite foreign experts to improve other special tourism zones such as Wonsan and Mount Chilbo districts.”

North Korea recently disclosed plans of developing mountains Baektu, Kumgang, and Chilbo, with plans of constructing ski resorts in these areas.

In addition, North Korea’s tourism policy is rapidly changing and significant ease on restrictions can be observed on foreign tourists. Unlike in the past, tourists are now allowed to travel to North Korea at any time of the year, with fewer date restrictions.

Meanwhile, North Korea’s economic journal is attracting attention as it argues for the diversification of foreign investment. This call for diversification might reflect a North Korean concern about China’s growing investment in North Korea’s resource sector.

In the current issue of Kyongje Yongu (Economic Research, July 30 issue), North Korea’s quarterly economic journal, it was stated that “Foreign companies in our country are heavily concentrated in joint ventures with domestic companies in the collection industries and their main interest is in developing natural resources.”

The article analyzed that investments by foreign companies are largely concentrated in natural resources development, as they are trying to secure raw materials necessary for production activities. In addition, the article called for improvements in the method and diversification of foreign investment as it stressed that without any intervention, the situation could lead to negative results.

Most of the foreign investment in North Korea is known to be from China. Last year, gold mining companies and Chinese enterprises signed joint venture agreements one after another, displaying Chinese companies’ growing interest in North Korean mines.

Here is the story from KCNA:

Tourism-related Explanation Session Held in DPRK

Pyongyang, August 24 (KCNA) — A tourism-related explanation session, sponsored by the International Travel Company of the DPRK, took place at the Yanggakdo International Hotel here Saturday.

Present at the session on invitation were staff members of foreign embassies in DPRK and representatives of travel companies from China, Britain, Germany and other countries.

Addressing the session, Jo Song Gyu, head of the International Travel Company of the DPRK, referred to the development of tourism in the DPRK and its policy on tourism.

Mts. Paektu, Kumgang and Chilbo, Wonsan City and other scenic spots and areas in the country have turned into recreation grounds and tourist resorts and a brisk drive is being conducted to further develop them, he noted.

The tourist resorts will be run in the form of special zone for tourism and all the management activities such as passage through boundaries, customs, taxes, communications and investment protection will go by the DPRK’s relevant law on special zones as well as the international rules, Jo said.

He further said that businesspersons and investors of any countries and regions interested in tourism of DPRK would be welcomed and preference be given to private and joint-venture and collaboration businesses.

He also mentioned a plan to invite foreign experts needed for the development and management of the tourist resorts in various parts of the country including Wonsan City and Mt. Chilbo.

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Report: Korean Workers’ Party sets up Economy Department

Friday, July 12th, 2013

According to Radio Free Asia:

The party has created a centralized department with branches throughout the nation to formulate and oversee policies ranging from appointment of top economic officials to approval of companies and implementation of foreign exchange controls, a source from Jagang province, near the border with China, told RFA’s Korean Service.

The Party’s Department of Economy was set up last month.

“From last June, each [Party] committee in the provinces and cities established a [a branch of the] Department of Economy,” the source said on condition of anonymity.

“It will further strengthen the control and management of the Party,” he said.

The move by the Workers’ Party Central Committee was part of a shakeup within the Party and led to several branches of existing departments being transferred to the Department of Economy, he said.

A source in Yanggang province, also along the Chinese border, told RFA that the newly-formed department would wield as much power as the Department of Organization Management, which oversees the entire Workers’ Party.

“From now on, all officials in charge of economic matters have to be approved by the Department of Economy, while all companies also require approval from the department when they are established, shut down, or merged,” the Yanggang source said.

The Department of Economy also has the power to punish and appoint officials in charge of economic matters, he said, adding that he expects it to become “the strongest department in the Party.”

Even if the North Korean military, judicial agencies, and the Cabinet—or executive branch of the government—seek to establish new units for earning foreign currency or production, they are required to obtain permission in advance from the department, he said.

“Establishing the Department of Economy is related to the so-called ‘reformed economic management system,” the source in Yanggang province said, referring to a new policy announced in June last year which grants individuals greater authority in the distribution of goods.

“It means the Party never wants to lose its control over the economy, even though the ‘reformed system’ takes place everywhere,” he added.

The source said that the lack of central control had led to situations in which bogus companies and organizations were running businesses and generating foreign currency revenue without reporting them, creating a need for the Party to more efficiently oversee these groups.

For example, he said, several companies and restaurants which were established under the guise of being welfare organizations to feed and clothe the poor are really generating foreign currency for the North Korean Cabinet.

But he noted that even as the Department of Economy sought to rein in these businesses, it would inevitably generate conflict within the Party as it grew in power, leading different factions to jockey for control.

“[Some of] the functions of [the Party’s] Department of the Executives and Department of Organization Management were already taken away by the Department of Economy, and also the Department of Administration has seen interference from the department as well,” the source said.

“In the future, the scope of Department of Economy’s activity will surely conflict with other departments of the Workers’ Party.”

Read the full story here:
North Korea’s Workers’ Party Takes Economic Control
Radio Free Asia
Sung Hui Moon
2013-7-12

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DPRK reportedly experiencing problems with new policy roll-out

Friday, July 5th, 2013

According to the Daily NK:

Experimental farm policy changes are set to fail in the Hyesan region of Yangkang Province, Daily NK has learned, after totally unsuitable areas were designated for the experimental farming and some new tenets of agricultural policy stalled on the drawing board.

A source from Hyesan in Yangkang Province told Daily NK on the 5th, “Some areas of Hyesan were designated as places to implement the farm management improvement policy on an experimental basis, and additional manpower was brought in for those areas. However, the areas are on steep slopes or in places where the soil is full of rocks, so farming there is impossible.”

“Soldiers and shock troops are mobilized daily to do the farming work, but tractors and agricultural equipment can’t be used on the experimental fields, so it is just making everyone angry.”

“Despite the fact that things are like this, the [authorities] just keep going on about nothing being impossible if we attain the Marshal [Kim Jong Eun]’s ‘masikryeong speed’ and how we must fulfill the annual plan,” the source went on.

Sources say that the authorities have set in place the basis of a new agricultural management method, one that involves smaller work units (from 10-25 people down to 4-6 people) and a 70-30 split with the state in the distribution of output. Creating experimental areas for the implementation of the plan can be seen as marking the launch of the so-called ‘June 28th Policy.’ However, while farmers were excited by the plan in the beginning and harbored great expectations, the passing of time has undermined their interest.

The source said, “Initially, farm workers welcomed the fact that they would get paid out of production by the cooperative farm. They wanted to work hard. However, now everything has returned to how it used to be. The number of people losing hope for this cooperative farm is growing with the passing of time.”

Meanwhile, the idea of leasing land to non-farmers to cultivate has also fallen by the wayside. According to the source, “They don’t even mention that any more. Some cadres claim, ‘We’re going to do that from next year for sure,’ but nobody believes a word of it.”

Additional information:

1. You can read previous posts about the June 28 economic adjustment measures here.

2. This CanCor report contains additional helpful information.

Read the full story here:
Agricultural Madness Angers Farmers
Daily NK
Lee Sang Yong
2013-7-5

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Pyongyang seeking to build 100,000 housing units [on hold]

Monday, July 1st, 2013

UPDATE 6 (2013-7-1): The Daily NK reports the effort to construct 100,000 homes in Pyongyang has come to a complete halt. According to the article:

A troubled prestige project to build 100,000 new homes in Pyongyang has been brought to a complete halt under the rule of Kim Jong Eun, and buildings in some areas have fallen into a state of disrepair.

A source from the North Korean capital revealed to Daily NK on July 1st, “The 100,000 homes project has been at a complete halt since Kim Jong Eun took power, and on the outskirts of the city some buildings are half-built and collapsing into a state of disrepair.”

“In this area, people were evacuated in October 2009 so that the construction could commence,” the source went on. “But in many areas those buildings that were begun at that time are still not above the first floor.”

Homes planned as part of the project, which, according to state propaganda, was to form part of celebrations for North Korea’s becoming a “strong and prosperous state” by the 100th anniversary of Kim Il Sung’s birth in April 2012, were expected to feature in propaganda vis-a-vis Kim Jong Eun’s greatness.

However, the project has been plagued by electricity and material shortages from the beginning, sources say, and ultimately could not be completed. In some areas, the construction that did go ahead was poorly done and buildings have subsequently collapsed, which has caused deaths.

The source commented, “From Kim Jong Eun’s perspective the project was promoted so that he could say he was improving the people’s lives. But there were no raw materials and no power, and this caused poor construction; so ultimately it has just been abandoned.”

The North Korean authorities are only genuinely concerned about projects that offer short-term opportunities for public propagation of results, such as water parks and exercise facilities in downtown Pyongyang, the source went on to claim.

Meanwhile, the direct suffering caused by the failed project is falling primarily on those who were moved out of their homes in order for construction to start back in 2009. “In a number of cases, the Party ordered families to move out and live with others temporarily, and here we are, four years on, with multiple families living under one roof,” the source said, adding that the indignity of this is being compounded by mobilization orders calling on people without homes of their own to take part in downtown beautification and cleaning schemes.

I have have posted quite a bit of material on construction in Pyongyang in recent years.  Here are some of the more relevant articles:

1. Mansudae Area Renovation No. 1

2. Mansudae Area Renovation No. 2 

3. Kumgang Street

Read the full story here:
100,000 Homes Project Stopped Dead
Daily NK
Lee Sang Yong
2013-7-1

UPDATE 5 (2011-11-03): The Institute for Far Eastern Studies (IFES) reports on the status of Pyongyang’s residential construction effort.

North Korea Pushing Forward with the Project of Constructing 100,000 Housing Units in Pyongyang

In order to celebrate Kim Il Sung’s centennial birthday next year on April 15, 2012, the plan to build 100,000 private homes in Pyongyang is quickly underway. North Korea has announced its intension to upgrade Pyongyang into a city with over 100,000 homes. Pyongyang’s district of Mansudae is to build over one thousand units of high-rise apartments (77 stories), theaters, parks and other recreational facilities.

The KCNA reported on October 11, “For the next Day of the Sun, Pyongyang will be completely transformed.” The news added, “The construction of private homes has been in progress for five months and is at 70 percent completion. Mansudae District is rapidly changing with skyscrapers and high-rise apartments appearing throughout the city. Construction of theaters and service facilities are also in development.”

Facing Mansudae is [East] Pyongyang [area], another area in Pyongyang under enhancement and has secured over 17,400 square meters of land for multi-purpose service facilities and 9,660 square meters for a public outdoor ice rink. The KCNA elaborated, “The multi-purpose facilities encompass bathhouses, beauty salons, and other latest facilities of convenience. In the public outdoor ice rink, circular ice rink, bleachers and cultural recreational facilities will be built to provide necessary environment for people to enjoy various ice sports.”

Rungrado Recreation Ground is also reported to be rejuvenated with a variety of amusement rides and multipurpose water park. The water park will be equipped with wave pools, waterslides, and health pools.

In addition, Pyongyang is focusing on gardening and exterior beautification projects for private homes and public buildings, including installation of colorful tiles and paints as well as bright neon signs in the streets.

“The Development Project of 100,000 Housing Units in Pyongyang” went into effect since 2009 but talks of reducing the project to 20,000 homes surfaced when it was faced with funding difficulties. However, the original plan of building 100,000 homes has not faltered and appears to be in full swing.

Early this year on January 3, a public rally was held at the Kim Il Sung Square with over 100,000 people present. At that time, the homebuilding project of Pyongyang was announced in which “Pyongyang City will be equipped to enter the era of strong and prosperous nation in all sectors.”

In July 2008, the General Bureau of Capital Construction began a large-scale redevelopment project. Completed a year later on September 2009, 600 old homes mostly built in the 1960s were demolished and in their place an apartment complex with over 800 homes went up. This project received undivided attention from Kim Jong Il, Chang Sung-Thaek, administrative director of the Worker’s Party of Korea, among many other top officials of North Korea.

For North Korea, “The Development Project of 100,000 Housing Units in Pyongyang” has become a symbol of building a strong and prosperous nation.

Additional information:
1. Previous posts on the DPRK’s “2012 Kangsong Taeguk” policies can be found here.

2. Previous posts on “Construction” can be found here.

3. The Pyongyang’s university students are (mostly) involved in construction projects.

4. See photos of the construction by Ray Cunningham here.

UPDATE 4 (2011-7-23): Housing unit construction revised down?


Pictured above (Goole Earth): New housing construction in Rakrang-guyok

For several years, the DPRK has been touting that it will build 100,000 new housing units by 2012. See here, here, and here for background.

This week, many South Korean news outlets reported that the DPRK had significantly downsized that number.  According to Yonhap:

North Korea has dramatically cut its goal of building 100,000 houses by next year, a government source said Monday, amid the North being economically squeezed by the international community for its nuclear and missile programs for years.

After the North started the project in Pyongyang in 2009, as part of its plans to achieve a strong and prosperous country by 2012, the North cut the number of planned houses by 75 percent to 25,000. The year 2012 marks the centennial of the birth of Kim Il-sung, the country’s late founder.

The North, however, is continuing to repair a towering bronze statue of Kim and renovate around the Kumsusan Memorial Palace, where his embalmed body lies, the source said on condition of anonymity, citing policy.

Kim is the father of current leader, Kim Jong-il. The Kims are the subject of a massive personality cult that pervades almost every aspect of North Korean society.

Still, the North has embarked on a project to demolish buildings and facilities in central Pyongyang to make room for high-rise apartments, a theater and a park for senior officials.

The North has begun interior work on one of its landmarks, the 105-story Ryukyong Hotel, which stood unfinished in downtown Pyongyang for nearly 20 years due to a lack of capital.

In 2008, the North resumed construction of the skyscraper, but it appears unlikely for the project to be completed next year. It is believed, however, that the North will finish some floors for use.

The last time that KCTV mentioned the 100,000 housing unit goal was on May 26, 2011…nearly a month ago.  I will keep up to see if it is ever mentioned again.  I would not hold my breath waiting for a lower number to be announced, however.

Using satellite imagery of Pyongyang, I can see appx 200 residential buildings under construction.  They are mostly concentrated in Hyongjesan-guyok.  On average, each of these buildings would have to contain 500 housing units to reach 100,000.  This is not possible given the dimensions of the buildings we can see. Additionally, most of these facilities are a long way from being completed.  With a goal of 25,000, that would mean new buildings on average would only need to contain 125 units…a much more reasonable number.

In terms of residential construction, the government now seems to be focusing its efforts primarily on completing the second phase of the Mansudae Street renovations in time for Kim Il-sung’s 100th birthday. See here and here.

The prestigious units (visited by Kim Jong-il) that have been completed are all in Pyongyang’s Central District: Near the Potong Gate (Google Maps), Near Haebang Hill (Google Maps), and behind the Central Market (Google Maps).  I should point out, however, that these are not the only buildings to be completed.  Other less-prestigious buildings have been completed and occupied.  Also, many villages (ri, 리) outside the capital are being upgraded and provided new facilities.  I am not sure what the procedure is for deciding which villages receive new homes, but it can’t be random.  Being located next to a major highway seems to be an important variable (keeping up appearances).  I am also unsure what the DPRK does with all of the displaced residents. Are they going somewhere else to live with their families?  Are they living in temporary shelters?

The Daily NK and Choson Ilbo also covered this story.

UPDATE 3 (2011 -7-5): Several days ago, Yonhap reported that the DPRK had quietly reduced its goal of building 100,000 housing units by 2012. So of the 200+ buildings that are currently under construction, which projects are priorities? Mansudae Part II for sure (see here and here).  But what else? There are many construction sites that were launched well before the second renovation of the Mansudae area was begun, and the deadline for completion is rapidly approaching.

Well North Korea recently broadcast a propaganda television show touting Pyongyang’s housing construction (along with quite a lot of singing).  I was able to match up this North Korean television footage with satellite imagery of Pyongyang construction sites to help answer this question.  Given the amount of propaganda being used to promote these particular developments, I would say the following three are also 2012 priorities:

Ryongsong-guyok, Chonggye-dong (룡성구역, 청계동)

Click on images for larger versions.  See in Google Maps here.

Hyongjesan-guyok, Sopho-2 Dong (형제산구역, 서포2동)

Click on images for larger versions.  See in Google Maps here.

Rakrang-guyok, Tongsan-dong (락랑구역, 동산동)

Click on images for larger versions.  See in Google Maps here.

The DPRK also recently hosted an architecture expo in Pyongyang. I have uploaded a video of the event to YouTube, and you can watch it here. I was able to match up some of the projects (though not all) with current satellite imagery. Aside from the renovation of the Ryugyong Hotel, there is no publicly available satellite imagery showing that these projects have been launched.

Hyoksin Area (혁신)

Ryugyong Area (류경)

Additional Informaiton

1. So Marcus Noland was right.  They want tall buildings.

2. For several years now I have been tracking construction in Pyongyang.  See hereherehere, herehereherehere, and here.

UPDATE 2(2010-7-28): According to the Daily NK the construction has come to a halt:

The construction of 100,000 homes in Pyongyang has been put on hold due to a lack of cement. According to a Daily NK source, the project is around 40 percent complete.

The year’s aim is to finish 35,000 households out of the total 100,000 planned for construction. Work is due for completion by 2012.

The North Korean authorities had planned to construct 20,000 houses along the railroad from the Ryongseong-district via Seopo in the Hyeongjesan-district to the Ryeokpo-district and 25,000 houses in the center of the city. The schedule for laying the foundations has been set for September this year with plastering and interior works running until the end of the year.

The frame work of the houses, expected to finish by September, have been suspended due to lack of cement and other materials. A source commented that, “It was planned that general construction of frame works would finish in September but exterior construction has been halted due to a lack of materials.”

The North’s authorities have attempted to supply materials through the Sangwon Cement Complex, the Chollima Steel Mill Complex and other factories across the country. Annual production of cement in North Korea amounts to 6.4 million tons, approximately 12 percent of South Korea’s. However this is not enough to fuel general construction of key facilities such as social infrastructure and military facilities.

Large scale power plant constructions such as the Heecheon Power Plant combined with the building of 100,000 houses in Pyongyang have meant the shortage of cement is particularly acute.

Last year the North established the Pyongkeon Development Investment Group, attracting 320 million dollars of foreign capital. According to the plan submitted by the Group, 300,000 tons of cement are needed for foundation work in March alone.

Chosun Shinbo, the publication of the Chongryon (General Association of North Korean Residents in Japan), reported the construction of 35,000 houses was started in September last year. Since then, old houses in the districts have been torn down and neighborhoods rezoned. In March, the foundations of the houses were laid and the exterior frame work was built but construction has made little progress throughout June due to low cement levels.

The 100,000 household construction project in Pyongyang has been led by Jang Sung Taek, Director of the Ministry of Administration of the Workers’ Party, later appointed as the Vice-chairman of the National Defense Commission earlier this year at the Supreme People’s Assembly.

A source reported that, “Jang Sung Taek ordered foreign currency earning organizations to procure cement and that even selling coal should be considered.”

North Korea launched the state project to construct 100,000 houses in Pyongyang as a symbol of completion of the strong and prosperous state as part of a three-year campaign. Additionally, this project has been advertised as an achievement of the successor, Kim Jong Eun. If the plan fails then it will be a blow to the succession. If construction is suspended completely in advance of the Delegates’ Conference, happening in September, the image of Kim Jong Eun could be damaged.

UPDATE 1 (2010-5-2): Pyongyang’s 2012 renovations

Barbara Demick, Los Angeles Times correspondent and author of the very interesting and enjoyable Nothing to Envy, was the first western journalist to write about Pyongyang’s construction boom and the DPRK’s goal of achieving a strong and prosperous nation  by the time of Kim Il-sung’s 100th birthday in 2012.  The article is a bit dated, but I thought it would be fun to go back and point out all of the construction projects she mentioned in Pyongyang (plus a few more).

Below are some blurbs from Demick’s article supplemented with satellite imagery:

Blurb 1: “Yet these days, high-rise apartments in shades of pink are taking shape near the Pueblo, the American spy ship captured in 1968 and still anchored in the river. A tangle of construction cranes juts into the skyline near Pothong Gate, a re-creation of the old city wall. About 100,000 units are to be built over the next four years.”

I have already blogged about the new housing near the Potong Gate (see here).  Here is the housing near the Pueblo (click on images for larger versions):

pueblo-housing-4-6-2005.JPG  pueblo-housing-11-12-2006.JPG  pueblo-housing-1-28-2009.JPG

The dates of the pictures are 4/6/2005, 11/12/2006, 1/28/2009). The original Los Angeles Times story had a picture of the completed building but that does not appear to have been archived.  Kernbeisser got a photo of the building under construction.

Blurb 2: “But South Korean companies and individuals have mostly ignored the political chill. Among the biggest players here are a unit of the Hyundai conglomerate, which operates the resort where the shooting occurred, and companies affiliated with the Rev. Sun Myung Moon’s Unification Church, which also runs a car assembly plant in North Korea [Pyonghwa Motors]. The church last year completed work on what it calls the World Peace Center, behind the Potonggang Hotel, also owned by church affiliates.”

You can see a satellite image of Pyonghwa Motors plant near Nampo here.

Here is an image of the Potonggang Hotel.

Here is the World Peace Center.

Blurb 3: A Chinese company, meanwhile, is renovating the No. 1 Department Store in the heart of downtown.

Here is an image of Department Store No. 1.

Blurb 4: The Taedonggang Hotel, where Soviet dignitaries stayed in the 1960s and which burned down in 2002, is being restored as a five-star hotel. The Pyongyang Grand Theater, which stages revolutionary operas, is under renovation. The oldest and most elegant of the city’s movie theaters, the Taedongmun Cinema, was restored over the summer and used for screenings at the Pyongyang International Film Festival, which opened here last week.

Here are satellite images of the Taedonggang Hotel reconstruction:

taedong-hotel-8-6-2005.JPG taedong-hotel-11-12-2006.JPG taedong-hotel-12-26-2006.JPGtaedong-hotel-1-28-2009.JPG

Kernbeisser offers a great visual contrast between the hotel’s past and future. Click the links for images.

Here is an image of the Pyongyang Grand Theater under renovation.

Of course these places only scratch the surface of construction work in the DPRK in the last few years. I started to make a list of construction and refurbishment projects, but it got very long very fast.  Since I have other things to do on this lovely Sunday afternoon you will have to wait for me to get around to it at a later date.

ORIGINAL POST (2009-10-20): According to KCNA:

General Secretary Kim Jong Il went round newly-built apartment houses in Mansudae Street.

Saying that the newly-built apartment houses of new styles in the street are the most modern ones which fully reflect the plan and intention of the Party to provide the people with the best living conditions, he added that those apartment houses in the street serve as a model and standard for building dwelling houses to be used by all the people in a great prosperous and powerful nation.

He said that it is necessary to build in Pyongyang modern flats for 100,000 families, houses similar to those apartment houses standing in Mansudae Street, in a matter of a few years as an immediate task.

He expressed great expectation and conviction that all builders of the capital city would create new “Pyongyang Speed” in the era of Songun in the construction of the capital city and usher in “an era of prosperity of Pyongyang” in the new century just as the people created the world-startling “Pyongyang Speed” in the 1950s by building a flat for a family in just 14 minutes true to the Party’s policy of prefabricated construction after the war and as the people in the 1970s and the 1980s opened up “an era of prosperity of Pyongyang” by building many modern streets and great monumental edifices in a matter of 15 years and thus demonstrate once again to the whole world the revolutionary spirit of the service persons and people of the DPRK, successors to the great history and tradition.

 

The goal of constructing 100,000 flats has been repeated in KCNA since then: December 5, 2009, January 22, 2010, February 6, 2010, March 18, 2010.  In KCNA they have been careful not to declare a specific deadline for completion, but (thanks to a reader) in the monthly magazine Korea they have set Kim Il-sung’s 100th birthday in 2012 as the date.

I have blogged about and mapped the construction on Mansudae Street.  You can see the inside and outside of these buildings here.

So where will all these flats be located, and what does the construction look like? Below I have posted a GeoEye satellite image from Google Earth which highlights the residential construction areas (in yellow).

 

100-thousand-housing-overview-thumb.jpg

Click image for larger version

So it looks like the majority of the residential construction will be located in Hyongjiesan-kuyok (형제산 구역) in the north and Rakrang-kuyok (락랑 구역) in the south.

According to the June 7, 2010 DPRK evening news, it looks like soldiers are involved in the construction.  No surprise there.  It is unclear how many are involved.  Based on the image below I will let the “professionsals” determine which brigades are involved in the work:

 

construction-worker-2010-6-7.jpg

According to the same evening news broadcast, it looks like the workers have reached the second floor of at least one of these construciton areas.

As with the post-explosion reconstruction of Ryongchon (see images here),  the North Korean government is tearing down traditional, single-family houses and building “modern” high-rises in their place.  At this point the status of the former residents is unclear. Have they been moved into temporary housing (assuming they will get new flats once they are completed) or have they been permanently relocated to make room for the 100,000 lucky families?  (This method of residential development reminds me of Ceauşescu’s Romania.)

4-10-2009-py-housing-thumb.jpg

12-20-2009-py-housing-thumb.jpg

Click images for larger versions.  Top: April, 10, 2009  Bottom: December 20, 2009

Looking at the urban geography of the area I get the feeling that Jane Jacobs would be very disappointed.

 

hyongjiesanhousing-2009-thumb.jpg

Click image for larger version (rotated 90 degrees  –  so “north” is on the right, “south” on the left)

It seems like the new residents of the northern part of Hyongjiesan will be de facto residents of Sopho even though the railway line makes them separately distinct neighborhoods.  Sopho offers the closest train station and market. Residents at the southern end of the Hyongjiesan housing project will need to use a smaller market near the Sopyong Train Repair Factory (See satellite image here) and the West Pyongyang Railway Station.  Although the railway line defines the eastern border of Hyongjiesan District as of today there are only two places where commuters may cross over the tracks—at the West Pyognyang and Sopho Railway Stations. The distance between these two railway crossings is 3 miles (4.82 kilometers).

As of now, it appears there is little industry and few schools this far out of the city, so it is probable that most of the residents will be commuting into town.  However, none of the new housing is metro accessible.  Sopho receives bus service and the West Pyongyang Station receives bus and tram service. However the bus from the West Pyongyang Station to the Sopho Station lies to the east of the new housing and is separated by three miles of railway.  Adding more bus stops between the two stations and providing more railway crossings from the east side to the west side of the tracks would be very helpful in reducing the amount of walking residents would need to take. Somehow, I do not think that will happen.

As for the buses, with only one line to service 100,000 families look for them to be crowded.  It is possible that a commuter rail-line could easily transport workers to the center of town (like in Hamhung), but that might be wishful thinking at this point.

And finally, although the 100,000 families that do end up living in these homes will theoretically enjoy newer, higher-quality housing, their movements in and out of the buildings can be more easily monitored by inminban (인민반) than those in the single-family homes. In the traditional single-family homes there are multiple avenues to enter and leave the neighborhood, but when everyone uses the same door to enter and leave, residents’ activities can be more easily monitored.

So why not build more high-rises in the center of town where people actually work? These kinds of planning snafus are reflected in most socialist cities and are (unfortunately) predictable. To learn more about the urban economics of planned cities, I recommend not just  Jane Jacobs but also “The Urban Dimension of the North Korean Economy: A Speculative Analysis” by Bertrand Renaud.  Read his full chapter here.  Lots of good stuff from them.

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Wonsan Special Economic Zone

Thursday, June 27th, 2013

The JoongAng Ilbo claims to have a North Korean document called “General blueprint for the Wonsan District”. This document has not been made public, so I cannot vouch for its authenticity or content. However, as reported in the paper, the contents seem fairly congruent with established facts.

According to the article:

According to a document entitled “General blueprint for the Wonsan District” obtained exclusively by the JoongAng Ilbo on Tuesday, North Korea is in the process of constructing three special districts in Wonsan: a financial district, an entertainment and sports area and a tourist destination.

The report says Kim is planning to develop Songdowon Beach in Wonsan into a holiday destination for summers and a ski resort on Mount Masik for winters. Mount Masik is about 20 kilometers (12.4 miles) from Wonsan.

Sources in Seoul say the plan to develop the eastern naval city was actually his father’s.

In fact, in the transcript of the 2007 inter-Korean summit that was declassified Monday, Kim told former South Korean President Roh Moo-hyun that “Wonsan is a holiday destination,” rejecting Roh’s proposal to develop the city into an industrial park like the Kaesong Industrial Complex.

“Wonsan is a bay,” Kim said. “Waste comes into the bay and it can’t be properly managed because of Masik Mountain behind the city. So we will shut down all of the factories and shipyards in Wonsan right away.”

Sources said Jong-un might have decided to turn the city into a tourist resort based on the Kumgang resort, which was jointly run with the South but has been closed since July 2008.

“In Wonsan, there are a series of heavy industry factories, such as automobile plants and shipyards,” a source said. “But North Korea has a plan to close the aging factories and turn the city into a resort.”

Sources told the JoongAng Ilbo in March that North Korea appeared to have moved their MiG jet fighters from an airfield in Wonsan to a frontline unit in Kuup. They also reportedly shut down some factories in the city.

Still, the plan obtained by the JoongAng Ilbo didn’t elaborate on the length of construction or the cost.

“North Korea is hoping to lure investment of more than $1 million from a company in Singapore [for the project],” the source said. “Completion of the project relies on whether they attract foreign investment.”

North Korea has already started construction at Mount Masik, starting with a ski slope, three lifts, an office for ski rentals and a hotel. In phase two, it will build a larger slope, a gas station and a golf course.

Additional information:

1. Check out previous posts on the DPRK’s “Law on Economic Development Zones“.

2. You can read about the DPRK’s plans for a new Wonsan International Airport in this and this (with James Pearson) article in NK News.

3. I also wonder if this old story is involved.

Read the full story here:
North is building ski, beach resorts in Wonsan
JoongAng Daily
2013-6-27

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DPRK Law on Economic Development Zones Enacted

Monday, June 24th, 2013

UPDATE 4 (2013-9-6): On May 29, the Presidium of the Supreme People’s Assembly promulgated the “DPRK Law on Economic Development Zones“. Now it appears they have named a body to administer the law. According to the Institute for Far Eastern Studies (IFES):

DPRK Economic Development Committee launched: Special economic and tourism zones to be named (IFES)

In the wake of normalizing the Kaesong Industrial Complex (KIC) agreement, North Korea has announced that it had installed the Economic Development Committee and named special economic and tourism zones, as well as newly appointed officials in charge. In the near future, North Korea has plans to announce specific special economic zones in Sinuiju, Nampo, and Haeju, along with tourism zones in Mount Baekdu, Wonsan, and Chilbosan. The head and director-level executives for the Economic Development Committee are likely to be appointed from the Joint Venture Investment Committee. The head of the Tourism Development is reported to be the former director of Korea Tourism Administration.

Meanwhile, North Korea has released the preamble of the economic development law adopted at the recent Presidium of the Supreme People’s Assembly held on May 29. As inter-Korean relations are progressing with the plans of restarting the Kaesong Industrial Complex and the reunion of separated families moving forward, North Korea’s economic development law is drawing attention once again.

In principle, the selection process for the special economic zones must possess these following elements: Area must 1) be in a favorable location for foreign economic cooperation and exchanges; 2) contribute to the economic and science and technology development; 3) be at a fixed distance from the residential areas; and 4) be at a location that does not intrude in the state protected areas (Article 11). This can be interpreted as the North’s effort to segregate the existing residential areas with the special economic zone similar to the Kaesong Industrial Complex so as to minimize the political and social impact of these zones.

The newly confirmed information for the new Economic Development Law is the list of development activities. “Investors from other countries are permitted to develop economic zones either alone or in collaboration after obtaining state approval (Article 20).” Evidently, North Korean institutions and enterprises may also develop economic zones after receiving approval from the state.

In addition, the law granted comprehensive property rights to the development companies. It states that “Companies have the right to sell, re-lease, bequeath, or transfer the ownership of the buildings and land lease” and “the selling or re-lease price shall be determined by the development company” (Article 29).

As for recruitment of workers, there is a provision that states “our country’s labor force must be given preferential consideration” (Article 41), and “the minimum wage for the employees of the Economic Development Zone shall be determined by central guidance organization of special economic zone” (Article 42). This poses some concern as the employee wage at the Economic Development Zone could be compared to that of the KIC, which could lead to wage disputes after the KIC begins to implement its internationalization process.

Another noteworthy change is the currencies permitted at the zone: “currency for circulation and payment must be Korean Won (KPW) or other specified currency” (Article 46), suggesting that other currencies such as the US dollar and euro will be allowed.

Furthermore, the Act specifies that “Companies in the economic development zone will decide on the commodity and service prices, and all the prices in the Economic Development Zone between institutions, enterprises and organizations shall be determined by the international market price based on agreement of all the parties” (Article 43). This suggests that the products produced in the zone may be traded domestically in North Korea.

In this Act, corporate income tax rate was set at 14 percent of profits and “Economic Development companies that operate for more than 10 years will be considered for a tax cut or exemption from the corporate income tax.” Article 58 grants “communication guarantees” for the usage of mail, telephone, and fax services, but did not include the use of the Internet.

Posts on the Economic Development Commission can be found here.

UPDATE 3 (2013-8-30): In August, the Pyongyang Times issued the following information on the DPRK’s Law on Economic Development Zones:

New law friendly towards investment

The law on economic development zone was enacted and promulgated in the DPRK on May 29.

The Pyongyang Times staff reporter Kim Rye Yong interviewed Kang Jong Nam, PhD and researcher at Law College of Kim Il Sung University, about the law.

What is the difference between this law and other laws that are in force in such special zones as Rason Economic and Trade Zone, Hwanggumphyong and Wihwado Economic Zone and Kaesong Industrial Park?

The recent law is applied to economic development zones to be newly established.

According to the law, an economic development zone is the area where investors receive preferential treatment in their economic activities in line with the legislation specially laid down by the state. Such a zone includes industrial, agricultural, tourist, exports processing and cutting-edge technology development areas. It is a principle to establish such a zone in the area which is favourable for external economic cooperation and exchange, conducive to the development of the country’s economy, science and technology and somewhat distant from residential areas and reserves.

Foreign investors may develop the zone singly or jointly and DPRK institutions and enterprises may be developers.

The zone shall be invested by foreign bodies corporate, individuals (natural persons) and economic groups and overseas Koreans.

The law defines that the investors’ rights, interests, properties and lawful profits are under protection by law. The state shall not nationalize or expropriate their properties. Should unavoidable circumstances make it necessary to expropriate or temporarily use their properties for the public good, it shall inform them of this in advance and make a full and timely compensation for this.

The personal safety of investors is also protected by law. Without legal grounds they will not be subjected to detention or arrest and their residences will not be subjected to search.

Where there are treaties concluded between the DPRK and foreign countries as regards personal safety, they shall prevail.

How is an economic development zone managed?

It is managed by the economic development zone management body under the guidance and with the assistance of the central special economic zone guidance organ and the people’s committee of a relevant province or a municipality directly under the central authority.

The management body carries out assignments given by the central organ and the people’s committee including the formulation of rules of the development and management of the zone, creation of investment environment and invitation of investment, licensing of the establishment of enterprise and its registration and the licensing, supervision and cooperation related to the construction, management and operation of project.

The law stipulates that an investor can lease land for a maximum of 50 years and, if need be, continue to use the land by renewing the contract before the expiry date.

The enterprise income tax rate shall be 14 per cent of settled accounts profits and that in encouraged sectors 10 per cent, a very low rate. An enterprise that operates in the zone for over ten years shall enjoy the benefit of exemption from or reduction of taxes. Where an investor reinvests profits to increase registered capital or sets up a new enterprise to operate it for over five years, he shall be paid back 50 per cent or 100 per cent of the income tax.

Tariff in the zone is preferential.

The prices of goods and services dealt between enterprises in the zone and those of goods dealt between the enterprises in the zone and the Korean economic organizations outside the zone shall be fixed by mutual consent between the parties proportionate to international market prices.

UPDATE 2 (2013-6-24): The Institute for Far Eastern Studies (IFES) offers information on the new law:

North Korea passes economic development zone law
Institute for Far Eastern Studies (IFES)
2013-6-14

Since the start of Kim Jong-un regime, internal economic management measures continue to be established. Recently, a new law was enacted for the establishment of economic development zones.

The KCNA reported on June 5 that a law for economic development zones was adopted and “in this regard, ordinance of the DPRK Supreme People’s Assembly’s Standing Committee was promulgated at the session on May 29.”

This legislation is a follow up to the decision reached on April 1 this year by the Supreme People’s Assembly for the creation of economic development zones.

The legislation is composed of 7 chapters and 62 sections, which cover matters such as configuration, development, management, conflict resolution, and so forth.

The report added that “Economic development zones, in accordance with the regulations set forth by the state, are entitled to various privileges as special economic zones.”

In addition, “Foreign corporations, individuals, economic organizations, and overseas Koreans are able to invest in the economic development zones, and can freely engage in economic activities including establishment of businesses, branches, and offices.” It also indicated that “the state will provide preferential terms to investors in areas such as land usages, recruitment, and tax payments.”

The details of the rights granted to investors were expounded, emphasizing that economic development zone is a special zone, and provides legal safeguards to protect the rights, investment properties and legitimate profits of foreign investors.

According to the KCNA, the economic development zones will include various economic and science and technology sectors such as industrial development, agricultural, tourism, export processing, and high-tech development zones.

Chairman Kim Jong-un delivered a speech at the WPK’s Central Committee Meeting entitled “Economic Development Zones Must Be Created in Every Province Reflecting the Regional Characteristics,” hinting at the state’s policy to attract more foreign investment to accelerate the development of the economic zones.

In particular, investments in infrastructure construction, state-of-the-art science and technology sector, and production of goods highly competitive in the international market were especially encouraged.

The management of these economic development zones will be separated into local-level and central-level zones, indicating that economic development zones will be established in all parts of the country.

However, this law does not apply to the preexisting economic and trade zones in Rason, Hwanggeumpyeong, Wihwa Island, Kumgang and Kaesong. The new legislation indicates that North Korea is committed to economic development regardless of the tense relations on the Korean Peninsula.

UPDATE 1 (2013-6-23): Yonhap offers new details of the legislation not published by KCNA:

North Korea will offer a maximum 50 year lease on land for the economic development zones it wants to set up across the country to spur outside investment, an analysis of a propaganda magazine monitored in Seoul showed Sunday.

Close examination of the May 29 edition of the Tongil Sinbo, a weekly magazine that highlights activities taking place in the isolationist country, revealed the lease system.

The 50-year scheme for development zones is on par with land lease favors offered by Pyongyang to businesses operating in the Kaesong Industrial Complex and the Rason Economic and Trade Zone. The plan can offer assurances to investors, which can be a critical incentive.

Kaesong is on the west coast just north of the demilitarized zone, while Rason is located in the country’s northeastern region near the border with China and Russia.

In addition, the weekly said companies will be able to freely buy and sell rights on buildings and land in the economic zones and even hand over property deeds with a clause being fixed that can allow the present rights holder to release it to a third party.

Development of land leased can be assisted by North Korean state organizations and companies.

The weekly said Pyongyang has set corporate tax rates for these zones at 14 percent of earnings after the settlement of accounts, with the government pledging the safety of all foreigners in the special zones under North Korean law.

In regards to where the development zones will be set up, the weekly said the North will give priority to areas that can trade easily with the outside world, a region that can contribute to the advancement of the national economy, and a location that is separate from local residences.

The report said that all authority for the new development zones will be given to a centralized economic oversight organization to make it easier for investors to talk to authorities and receive administrative assistance.

Read the full story here:
N. Korea to offer max 50 years lease on land in economic development zones
Yonhap (via Global Post)
2013-6-23

ORIGINAL POST (2013-6-5): According to KCNA (2013-6-5):

DPRK Law on Economic Development Zones Enacted

Pyongyang, June 5 (KCNA) — The DPRK enacted a law on economic development zones.

A decree on the law was promulgated by the Presidium of the Supreme People’s Assembly of the DPRK on May 29.

The law has seven chapters (62 articles) and additional rules (two articles).

The law deals with fundamentals of the law, establishment, development and management of economic development zones, economic transactions in the zones, their encouragement, preference and settlement of complaints and disputes.

According to the law, economic development zones are special economic zones in which preference is granted as for economic activities under the laws and regulations specially provided for by the state.

The economic development zones include industrial development zone, agricultural development zone, tourism development zone, exports processing zone, ultra-modern technological development zone and other development zones in the fields of the economy and science and technology.

The state will assort the economic development zones into local-level economic development zones and central-level economic development zones and manage them according to their affiliations.

Foreign corporate bodies, individuals and economic organizations and overseas Koreans can invest in the economic development zones and also set up businesses, branches and offices and conduct free economic activities.

The state shall provide investors with conditions for preferential economic activities regarding the use of land, employment of labor, payment of taxes, etc.

The state shall specially encourage investment in the fields of infrastructural construction and ultra-modern science and technology and in the field producing goods with high competitiveness in international market in the economic development zones.

Rights granted to investors and investment properties and legal income are protected by law in the zones.

The law on economic development zones and regulations and rules for its enforcement will be applied as for economic activities like development and management of the economic development zones and the operation of businesses.

This law is not applied to the Rason Economic and Trade Zone, Hwanggumphyong and Wihwado economic zones, Kaesong Industrial Zone and Mt. Kumgang Tourist Special Zone.

Here is the Korean version of the article from KCNA (2013-6-5):

경제개발구법 채택

(평양 6월 5일발 조선중앙통신)조선에서 경제개발구법이 채택되였다.

이와 관련한 조선민주주의인민공화국 최고인민회의 상임위원회 정령이 5월 29일에 발표되였다.

법은 7개의 장(62개조)과 부칙(2개조)으로 구성되여있다.

경제개발구법의 기본, 경제개발구의 창설, 개발, 관리와 경제개발구에서의 경제활동, 장려 및 특혜, 신소 및 분쟁해결에 대해 서술되여있다.

법에 의하면 경제개발구는 국가가 특별히 정한 법규에 따라 경제활동에 특혜가 보장되는 특수경제지대이다.

경제개발구에는 공업개발구, 농업개발구, 관광개발구, 수출가공구, 첨단기술개발구 같은 경제 및 과학기술분야의 개발구들이 속한다.

국가는 경제개발구를 관리소속에 따라 지방급경제개발구와 중앙급경제개발구로 구분하여 관리하도록 한다.

다른 나라의 법인, 개인과 경제조직, 해외동포는 경제개발구에 투자할수 있으며 기업, 지사, 사무소 같은것을 설립하고 경제활동을 자유롭게 할수 있다.

국가는 투자가에게 토지리용, 로력채용, 세금납부 같은 분야에서 특혜적인 경제활동조건을 보장한다.

경제개발구에서 하부구조건설부문과 첨단과학기술부문, 국제시장에서 경쟁력이 높은 상품을 생산하는 부문의 투자를 특별히 장려한다.

경제개발구에서 투자가에게 부여된 권리, 투자재산과 합법적인 소득은 법적보호를 받는다.

경제개발구의 개발과 관리, 기업운영같은 경제활동에는 이 법과 이 법에 따르는 시행규정, 세칙을 적용한다.

라선경제무역지대와 황금평, 위화도경제지대, 개성공업지구와 금강산국제관광특구에는 이 법을 적용하지 않는다.

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North Korea making visible progress towards economic reforms

Friday, June 7th, 2013

Institute for Far Eastern Studies (IFES)
2013-6-7

Under the new leadership of Kim Jong Un, North Korea has been making gradual changes with new economic measures. Last year, task force was installed at a state level to configure new economic measures and details are being released one by one.

Details confirmed thus far include the authorities of the administrators of cooperative farms and enterprise are being expanded, which include surpluses can be disposed at the discretion of the administrators of individual organizations. This means voluntary incentives can be now paid to workers to increase production.

The North’s key industries of agricultural and industrial sectors were first to implement such change. The AP reported on April 1, the administrators of cooperative farms and factories were granted the discretionary rights for the promotion of production.

Specifically, the cooperative farms installed smaller work units and each unit of the organization are directly responsible for all the harvest. Whereas all the harvest were required to be sent to the state in the past, surpluses are now can be stored, sold, or exchanged with other goods.

In the case of factories and enterprises, worker’s wages were strictly controlled by the state but after the change, each factory and enterprise can now pay incentives to workers depending on the production results.

Professor Ri Ki Song at the North Korea’s Academy of Social Sciences stated, “individual workers are able to work more to earn more,” and “such policy decision was enforced from April 1 after a period of trial operation.”

New economic measures by the cooperative farms, factories and enterprises that granted each organizations the rights to freely dispose its surpluses is analyzed as an effort to increase production by granting incentives to workers. Increased production is expected to attract active participation of the people in the new economic measures, to achieve a ‘virtuous cycle’ in production.

The increase in goods exchanged between people is changing the existing distribution structure. North Korea is making efforts to ease the planned economy structure in commercial and distribution sectors. In other words, the number and variety of products distributed domestically is increasing and the state is intervening to amend the existing distribution system and strengthen the discretion rights of commercial and industrial institutions.

North Korea’s release of this information regarding the new economic measures to AP and other foreign media after it gained the confidence to properly manage the new economic measure from the successful pilot projects of the new economic measures. However, information released to the foreign media is still limited and changes in other areas including banking and finance sectors remain unknown.

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DPRK seeks to alter commercial distribution system

Sunday, June 2nd, 2013

According to Yonhap:

North Korea is pushing to give greater autonomy to its distribution sector, a senior Pyongyang official said, in what is seen as another sign of the communist country loosening its tight grip on the planned economy.

In an interview with a monthly magazine published by the pro-Pyongyang General Association of Korean Residents in Japan (Chongryon), Oh Young-min, a director of the North’s Ministry of Commerce, said the ministry will overhaul the way wholesalers distribute consumer goods.

“Wholesalers will offer information on all goods — those manufactured under a government plan, surplus products and unplanned goods — and deliver them after receiving orders from unspecified retail networks,” Oh said in the June edition of the magazine obtained by Yonhap News Agency on Sunday.

The ministry is drawing up a detailed plan to revolutionize the commerce and distribution network in order to meet the needs of the new century, the official said, adding that an order system should be implemented thoroughly in order to boost the efficiency of the distribution sector.

In a planned socialist economy, an order system refers to one where goods are produced and distributed based on the amount of orders from users.

The North’s push is widely deemed a follow-up on the country’s new economic management system, which was announced in late June last year.
“In line with the June measure, North Korea appears to be seeking a change of course by granting individuals greater authority in the distribution of goods,” said Cho Bong-hyun, an analyst at the IBK Economic Research Institute.

The move to overhaul the distribution system also comes two months after North Korea reportedly gave greater leeway to managers of cooperative farms and factories in an effort to boost production.

Last year’s reform drive is seen as a step forward from the country’s similar reformist efforts in 2002, when wages and rice prices were sharply lifted to match market levels. Increased money supply following the wage and rice price hikes triggered severe inflation, causing the reform drive to fail, according to experts.

Read the full story here:
N. Korea seeks to ease state grip on distribution
Yonhap
2013-6-2

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