The government of the Democratic People’s Republic of Korea set up economic development parks and is accelerating their development in its own way to promote external economic relations and improve the people’s living standards.
In establishing economic development parks primary attention is paid to the effort to lay legal foundations suited to the world standard of management of special economic parks.
The Socialist Constitution of the DPRK stipulates in Article 37 that the State shall encourage institutions, enterprises and organizations in the country to conduct equity or contractual joint ventures with foreign corporations and individuals, and to establish and operate enterprises of various kinds in special economic parks.
According to special State laws and regulations foreign-invested business in the economic development parks of Korea receive preferential treatment in their economic activities such as investment, production, trade and service.
The DPRK has laws governing special economic parks, for example, the Law on Foreign Investment, the Law on the Rason Economic and Trade Zone, the Law on Hwanggumphyong and Wihwado Economic Zone and the Law on Economic Development Parks, and assures guarantee for protection of the legal right and interest of the foreign investors through relevant regulations for the enforcement of the laws.
The DPRK levies eight kinds of taxes such as income tax, transaction tax and resource tax, which means it imposes much fewer taxes than those charged by most of foreign countries. The tax rate is also very low.
The enterprise income tax rate is 14% of the net profit, and that in the priority sector is 10% of the net profit. Besides, a lot of preferences are provided in terms of imposition of preferential tariff, preferential treatment in use of land and preferential offer of bank loan.
The enterprises developing infrastructure are specially treated; their property, infrastructure facilities and operation of public establishments are tax-free, and a privilege is given in the matter of acquiring the right of tourism, hotel and other businesses.
Typical of the special economic parks in the DPRK are the Rason Economic and Trade Zone, the Wonsan- Mt. Kumgang International Tourist Park, the Hwanggumphyong and Wihwado Economic Zone, the Sinuiju International Economic Park, the Kangnyong International Model Green Park, the Unjong Hi-Tech Development Park and the Mubong Special Park for International Tour.
The Rason Economic and Trade Zone, which is located on the lower reaches of the Tuman River, is bounded by Hunchun City, Jilin Province, China, and by Khassan, Russia. It is playing an important role in the regional economic development of Northeast Asia.
Its development started in Juche80(1991), and now there are a hundred and scores of foreign-invested business including contractual joint ventures, equity joint ventures and wholly foreign-owned enterprises.
The zone is connected to China through a land transportation route starting from Rajin Port, and to Russia by a railway. It also provides international telecommunications, satellite television, Internet and other services for communication.
The foods from aquatic products factories in Rason are in high demand in the international market, and pollution-free bathing resorts are a great favourite with tourists. According to the master plan of the development of the zone, infrastructure projects are now going on in real earnest, bringing proper features to the economic and trade zone.
The Wonsan-Mt.Kumgang International Tourist Park centering on Mt.Kumgang, a celebrated mountain of Korea, has many unique tourist attractions, so it is called pearl in the East Sea of Korea coast.
Based on the tourist potentialities the park will become a model for development of tourist parks with a complex of curiosities-sea, mountain, ravine, lake and urban community. It will bring a great economic profit to those who invest in the development.
The Hwanggumphyong and Wihwado Economic Zone (Hwanggumphyong and Wihwado are islets in the lower Amnok River, on the boundary between Korea and China) has emerged as a new arena of economic cooperation in the Northeast Asian region, and is drawing the interest of investors for its prospect of development as a base of processing trade and freight distribution.
The inauguration ceremony of the development project was held in June Juche100(2011), and the construction of the office building of the zone management committee was completed. At present the development project is in full swing.
The development of Sinuiju, a border city in west Korea, is aimed at constructing a complex economic development park for tourism, trade, hi-tech industry, bonded processing, finance and the IT industry.
For its advantageous physiographical position facing Dandong, Liaoning Province, China, across the Amnok River, Sinuiju is drawing the interest of foreign investors. A joint venture corporation was established for the development of the park, which is now leading development projects.
The green environment-oriented Kangnyong International Model Green Park is under development in Kangnyong County, South Hwanghae Province, which has rich marine resources, favourable marine conditions for trepan and abalone farming, and a clean ecological environment of the sea.
In the science park of Unjong District, Pyongyang, is the Unjong Hi-Tech Development Park whose main job is to research and develop science and technology.
The economic development parks in all provinces, which have been set up in areas with favourable conditions in accord with provincial features, topographical conditions and economic development foundations, in particular, are hopefully expected to become areas for international investment and render a unique service to improve the local living standard and develop the local economy.
Great efforts are channeled into the campaign for economic development parks, attracting interests of investors. Typical of the parks are the Amnokgang Economic Development Park in North Phyongan Province, which is comprised of islets in the upper reaches of the Amnok River across from Dandong City, Liaoning Province, China; Jagang Province’s Manpho Economic Development Park which is worth developing as base of international tourist and trade service and modern green farming, and the province’s Wiwon Industrial Development Park whose main enterprises will be processing of mineral resources, wood and agricultural produce and manufacture of mechanical facilities; the Chongnam Industrial Development Park in South Phyongan Province with the focus on manufacture of mining machines and production and export of chemical products made from coal; the Hyondong Industrial Development Park in Kangwon Province which is to support development of the Wonsan-Mt.Kumgang International Tourist Park by dint of IT and light industries and production of souvenirs for tourists; the Hungnam Industrial Development Park in South Hamgyong Province which comprises Hungnam Port and giant bases of chemical and machine-building industries; the Chongjin Economic Development Park in North Hamgyong Province which is proud of rich deposits of iron ores and marine resources and a large-scale ferrous metallurgical industrial base; Nampho City’s Waudo and Jindo export processing parks which are next to a trade port and rely on advanced development and operation techniques; the Songnim Export Processing Park in North Hwanghae Province; the Pukchong Agricultural Development Park in South Hamgyong Province; the Orang Agricultural Development Park in North Hamgyong Park in South Phyongan Province.
A stable socio-political environment, multifarious economic and technical foundations and potentials, an infrastructure which can fully support business activities, topographical conditions for access to large consumer markets, productive labour force, training of capable businessmen and professionals, a smaller number of tax kinds and a lower tax rate, and rich natural resources- these come as main factors of security of foreign investment and larger profits.
At present many investment businesses are engaged in the development projects with keen interest.
The DPRK government will remain committed to the ideals of independence, peace and friendship, expand and develop the relations of good-neighbourliness, friendship and cooperation with those countries championing independence.