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Rason Special Economic Zone
Chosŏn'gŭl	라진선봉 경제특구
Hancha	羅津先鋒經濟特區
Revised Romanization	Rajin-Seonbong Gyeongje Teukgu
McCune–Reischauer	Rajin-Sŏnbong Kyŏngche T'ŭkku

The Rason Special Economic Zone, earlier called the Rajin-Sonbong Economic Special Zone,^[1] was established by the North Korean government at Rason, bordering China and Russia, in 1991 to promote economic growth through foreign investment.^[2] It is similar to the special economic zones of China and elsewhere, set up to pilot market economics in a designated controlled area. Foreign currency may be used in the zone.^[3] Chinese and Russian companies have invested in the special economic zone, and Mongolia joined in about 2013.^[4]

The Rason Special Economic Zone is administered by the Committee for Promotion of External Economic Cooperation (CPEEC).^[5] Foreign companies must be invited by the CPEEC to operate in the zone.^[5]

Geography

The 746 km² (288 sq. mi.) Rason Special Economic Zone is in the north-eastern part of North Korea. It includes the easternmost point of the country. Its eastern boundary is the Tumen River, which is also North Korea's border with China and Russia. Rason has the northern-most port in Northeast Asia that is ice-free all year,^[6] and so the port is used by the two neighbouring countries.^[7]^[4]^[2] The zone is between 42 08'-42 38'N and 130 07'-130 42'E.^[5]

According to North Korean Economy Watch, it is surrounded by a 56-kilometre (35 mi) long electrified fence.^[8]

History

The zone was founded as the Rajin Free Economic and Trade Zone in December 1991.^[9]^[10]^[11] It was expanded to become the Rajin-Sonbong Free Economic and Trade Zone in September 1993.^[9] Since its creation, laws governing the zone's status have been amended six times, the most recent revision being approved by the Presidium of the Supreme People's Assembly on 3 December 2011.^[12]

By the end of 1996, US$37.3259 million had been invested into the zone by 51 foreign businesses.^[13] The UNIDO estimated the investment would increase to $150 million by the end of 1997.^[13]

In August 2012, an international trade fair was held, offering foreign investors and journalists a look at the work-in-progress. The zone was slated to be a manufacturing, tourism, and transportation hub.^[14] However, some analysts thought it was more a project for experimenting with a capitalist economy, rather than using it as a basis for transforming the economy of North Korea.^[6]

The first North-South joint venture company in Rason Special Economic Zone, called Chilbosanmeri Joint Company, was approved in 2010.^[15]

Bloomberg reported that ground was broken in June 2011 on a further development stage of the zone.^[16] In November 2011, work began on building electricity transmission lines that will provide Chinese electricity supplies in the zone.^[17]

When Jang Sung-taek was purged in late 2013, the accusations against him included the charge that he had "made no scruple of committing such act of treachery in May last as selling off the land of the Rason economic and trade zone to a foreign country."^[18]

History of foreign business legislation

From 1993 to 2012, there was a single law titled 'Law of the Democratic People's Republic of Korea on the Rason Economic and Trade Zone', which did not include specific details of the business environment, leaving foreign investors with many questions. The first Rason SEZ Law launched in 1993 contained chapters of Fundamentals, Duties and Rights of Operation Committee, Guarantee of Economy Activities, Customs Duties, Currency and Finance, Guarantee and Preferential Treatment and Settlement of Disputes. The basic framework was continued until 2011, when it made modifications on Development and Management of the Zone, Establishment of Enterprises, Economic and Trade Activities and Incentives and Preferential Treatment, providing more details of the environment for foreign-invested companies. However it still did not cover all basically required details for foreign-investor companies, such as regulations of labor, tax, or financial management.^[2]

From 2014, North Korea started to acknowledge the necessity of a more complex and comprehensive legal framework. It adopted more specific regulations regarding legal fields such as Labor Regulations for Foreign-invested Businesses and Regulations of Financial Management of Foreign-invested Businesses. Furthermore, bylaws for Taxation and Establishment and Operation of Businesses appeared. According to the latest Rason SEZ law published in 2016, there are total 16 regulations included in the collection of laws, with at least 3 additional regulations enacted.^[2]

In October 2013 and May 2014, international conferences on special economic zones took place, and the concept of many provincial economic zones was considered. However from 2019 these possibilities have diminished, partly out of a concern of excessive foreign influence on North Korean society.^[19]

Transport

Chinese investors have renovated a road from Rason to China,^[20]^[1] and Russian railway workers have renovated the railway from Rason (which is on the Pyongra Line) to Russia, from where it continues onto the Trans-Siberian Railway.^[10]^[21]^[1]

There are three ports in the area: the Rajin Port (handling capacity of 3 million tons), the Sonbong Port (handling capacity of 2–3 million tons), and the Chongjin Port (handling capacity of 8 million tons).^[5] Chinese companies operate two piers at the Rajin Port for coal export and containers. A Russian company operates a third pier.^[22]

Foreign investments

References

^ ^a ^b ^c Ruediger Frank (16 December 2014). "Rason Special Economic Zone: North Korea as It Could Be". 38 North. U.S.–Korea Institute, Johns Hopkins University School of Advanced International Studies. Retrieved 29 December 2014.
^ ^a ^b ^c ^d Yoon, Yeobin; Kopp, Philipp (April 5, 2017). "Overview of Legislation Development in Rason SEZ, DPRK" (PDF). Hanns Seidel Foundation / North Korean Economic Watch. Archived from the original (PDF) on April 16, 2017. Retrieved April 15, 2017.
^ Kang Chol Hwan (13 September 2001). "Foreign-exchange coupons out of sight". NKchosun.com. Archived from the original on 30 August 2004.
^ ^a ^b LaFoy, Scott (27 March 2014). "Energy generation in Rason". Rice & Iron. Retrieved 22 June 2024. A recent report from BDSec Joint Stock Company for HBOil reveals that one of the newcomers to Rason is Mongolia. While China and Russia have rented out the piers in the Rajin portion of Rason, HBOil seems more interested in Seonbong and the energy scene.
^ ^a ^b ^c ^d "Information on Entry & Investment into Rajin-Sonbong District". North Korean government. Archived from the original on 29 August 2012. Retrieved 5 November 2012.
^ ^a ^b Snyder, Scott (1 April 2010). "Rajin-Sonbong: A Strategic Choice for China in Its Relations with Pyongyang". China Brief. 10 (7). Jamestown Foundation. Retrieved 21 June 2024.
^ Khanna, Parag (September 17, 2012). "Typhoon tourism: One week in North Korea". CNN. Retrieved 8 April 2013.
^ "Rajin SEZ electrified perimeter on Google Earth". North Korean Economy Watch. 25 July 2008. Archived from the original on 7 June 2023. Retrieved 22 June 2024.
^ ^a ^b Hughes, Christopher W. (2000). Tumen River Area Development Programme: Frustrated Micro-Regionalism as a Microcosm of Political Rivalries (PDF). CSGR Working Paper No. 57/00. Centre for the Study of Globalisation and Regionalisation, University of Warwick. p. 18. Retrieved 22 June 2024.
^ ^a ^b John Kim and Andray Abrahamian (22 December 2011). "Why World Should Watch Rason". The Diplomat. Retrieved 5 May 2012.
^ Banks, Stacey (2005). "North Korean Telecommunications: On Hold". North Korean Review. 1: 88–94. doi:10.3172/NKR.1.1.88. ISSN 1551-2789. JSTOR 43908662.
^ Bradley O. Babson (2 May 2012). "Will North Korea's Plans for Foreign Investment Make It a More Prosperous Nation?". 38 North, School of Advanced International Studies. Johns Hopkins University. Retrieved 5 May 2012.
^ ^a ^b "Introduction:Pipa Tourist Hotel". North Korean Government. Archived from the original on 20 May 2011. Retrieved 5 November 2012.
^ "NKorea's economic zone remains under construction". Associated Press. South Carolina. The State. August 22, 2012. Archived from the original on August 23, 2012. Retrieved August 23, 2012.
^ Kim, Seong-Jin (19 January 2010). 北, 라선특별시에 첫 남북합작 기업 승인 [North Korea approves first inter-Korean joint venture in Rason Special City]. Yonhap News Agency (in Korean). Retrieved 22 June 2024.
^ "NKorea opens int'l trade fair at economic zone". Bloomberg Businessweek. August 22, 2011. Archived from the original on November 2, 2012. Retrieved August 24, 2011.
^ Andray Abrahamian (24 February 2012). A Convergence of Interests: Prospects for Rason Special Economic Zone (PDF) (Report). Korea Economics Institute. Retrieved 5 May 2012.
^ Alastair Gale (12 December 2013), What North Korea Said About Jang Song Thaek The Wall Street Journal
^ Carlin, Robert; Minyoung, Rachel Lee (21 December 2022). "Understanding Kim Jong Un's Economic Policymaking: Rolling Out Economic Development Zones". 38 North. The Henry L. Stimson Center. Retrieved 10 January 2023.
^ "Archived copy". Archived from the original on 2010-04-19. Retrieved 2010-06-10.{{cite web}}: CS1 maint: archived copy as title (link)
^ "Archived copy". Archived from the original on 2010-03-12. Retrieved 2010-06-10.{{cite web}}: CS1 maint: archived copy as title (link)
^ Andray Abrahamian (September 2011). "Report on Rason Special Economic Zone, Democratic People's Republic of Korea" (PDF). Chosun Exchange. CE2011001. Archived from the original (PDF) on 17 April 2012. Retrieved 5 May 2012.
^ "Local Companies". North Korean Government. Archived from the original on 29 August 2012. Retrieved 5 November 2012.
^ "Introduction: Tokyo-Rason Tour". North Korean Government. 17 December 1979. Archived from the original on 7 April 2012. Retrieved 5 November 2012.
^ Wong, Edward; Jonathan Ansfield; Jonathan Ansfield (October 12, 2011). "Tending a Small Patch of Capitalism in North Korea". The New York Times. Retrieved 8 December 2012.