Special Economic Zone laws
Last month KCNA published the laws on the Rason and Hwanggumpyong and Wihwa Island zones. Curtis Melvin at North Korea Economy watch has helpfully posted them in pdf form. They make interesting reading. Well, at least for some of us.
The Rason law gives extraordinary power and discretion to the Rason City People’s Committee, though relative to the previous rules, which according to Andray Abrahamian argues gave more authority to the central government, the localization of decision-making may encourage greater pragmatism.
The Hwanggumpyong and Wihwa Island zone law shows the influence of China on the project: it is considerably more detailed than the Rason law, more clearly delineating the responsibility of the zone’s management committee, the provincial People’s Committee, and the central government, as well as affording foreign investors greater investor rights.
Yet as we observed in an earlier post, China reportedly rejected these initially decreed rules, complaining about problems relating to taxation, accounting, the security of investment, management autonomy, and the remittance of profits, despite the fact that the terms under discussion for Chinese activities in the zones (the right to use Chinese currency and cell phones; the establishment of independent banks; internet access; and the right to lend and sub-lease leased land) compared favorably to either those that exist at the South Korea-oriented Kaesong Industrial Complex or at Rason.