North Korea Newsletter 324 (July 31, 2014)

TOPIC OF THE WEEK (Part 2)

N. Korea designates six more economic development zones

SEOUL (Yonhap) -- North Korea, eager to boost its sagging economy, has designated six more economic development zones including ones in the capital city of Pyongyang and a county near the border with South Korea, bringing to 19 the total number of economic zones in the country. The North also renamed a special economic zone in Sinuiju City, North Phyongan Province, an international economic zone.

"It was decided in the DPRK to establish economic development zones in some areas of Pyongyang, South Hwanghae Province, Nampho City, South and North Phyongan provinces," the (North) Korean Central News Agency (KCNA) said in an English-language dispatch on July 23, referring to the country by its official name, Democratic People's Republic of Korea.

The capital Pyongyang will host the Unjong technology development zone while an eco-friendly zone, export processing zone, tourism development zone, industrial development zone and agricultural development zone will be set up in other areas, according to the KCNA report.

"The sovereignty of the DPRK will be exercised in the zones," it said, adding that relevant decree of the Presidium of the Supreme People's Assembly (SPA) was promulgated on July 23.

The KCNA said Unjong cutting-edge technological development zone will be set up in some areas of Wisong-dong, Kwahak 1-dong and Kwahak 2-dong, Paesan-dong and Ulmil-dong in Unjong District, Pyongyang.

Kangryong international green model zone will be set up in some areas of Kangryong township in Kangryong County, South Hwanghae Province while Jindo export processing zone will appear in some areas of Jindo-dong and Hwado-ri, Waudo District, Nampho City, the KCNA said.

Chongnam industrial development zone will be set up in some areas of Ryongbuk-ri, Chongnam District, South Phyongan Province. Sukchon agricultural development zone will appear in some areas of Unjong-ri, Sukchon County and Chongsu tourist development zone in some areas of Chongsong Workers' District and Pangsan-ri, Sakju County, North Phyongan Province.

The news agency said in another dispatch that the communist country decided to rename the Special Economic Zone in some parts of Sinuiju City Sinuiju International Economic Zone, and the sovereignty of the DPRK will be exercised in the Sinuiju International Economic Zone. The relevant decree of the Presidium of the Supreme People's Assembly was promulgated on July 23.

The latest decision is in addition to the country's announcement in November that it will designate 13 economic development zones in areas including the Amnok River.

"North Korea is showing its intention to focus on such economic development zones in order to push for national economic development," Im Eul-chul, a research professor of Far Eastern Studies at Kyungnam University, said.

North Korean leader Kim Jong-un has repeatedly declared the country's two-track policy of simultaneously pushing for economic development and growing its nuclear arsenal.

Development of the 13 economic zones North Korea designated in November has progressed little after blueprints for the development were unveiled. That Pyongyang added six more economic zones with the development of the existing economic zones being in the doldrums means North Korea once again declared its intention to develop economy through the invitation of foreign investment.

Of the six new economic zones, the Unjong technology development zone and Kangryong international green model zone deserve special attention.

Inclusion of the economic zones in the capital and Kangryong, a military foothold near the northern limit line (NLL), an inter-Korean maritime border, shows the North's acute hope to induce foreign capital, experts said.

North Korea last month launched the Ministry of External Economic Affairs by merging the Joint Venture and Investment Commission and the State Economic Development Committee with it, giving added power to the agency that handles foreign capital inducement. The SPA Presidium promulgated a decree in this regard on June 18.

Chang Yong-suk, a researcher at the Institute for Peace and Unification Studies at Seoul National University, said it has been clearly revealed that North Korea is seeking to make a breakthrough in economic development via economic cooperation with foreign countries while maintaining a tough intransigent position on the nuclear issue.

Experts speculated that the renaming of the Sinuiju special economic zone an international economic zone revealed Pyongyang's intention to invite foreign countries other than China which has showed a lukewarm attitude in investing in North Korea recently.

Professor Im said the renaming of the Sinuiju economic zone to international economic zone can be interpreted that North Korea moves to raise the level of opening of the zone while offering initiative of development to the hands of foreign firms.

Meanwhile, a Chinese expert on Korean affairs said on July 25 he is pessimistic about the prospects for North Korea's new economic development zones, citing "no clear policy to guarantee investors' interests" in the North.

Jin Qiangyi, a professor of Korean studies at Yanbian University, told the state-run China Daily that the move by North Korea is apparently aimed at breathing new life into its moribund economy.

"Many Chinese companies still feel daunted by doing business in the country because there is no clear policy to guarantee investors' interests," the newspaper quoted Jin as saying.

However, another Chinese expert, Li Tianguo, a researcher at the National Institute of International Strategy at the Chinese Academy of Social Sciences, was less pessimistic.

Li told the newspaper that the new zones will "have great attraction to Chinese enterprise and bring good opportunities, in particular for businesses with border trade and processing production."

   China's direct investment into North Korea jumped to US$109.46 million in 2012 from $5.86 million in 2009, the newspaper reported, citing "2012 Statistical Bulletin of China's Outward Foreign Direct Investment."

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