Archive for the ‘Rason Economic and Trade Zone (Rajin-Sonbong)’ Category

Mangyongbong 92 to be put to use in Rason for tourism

Sunday, August 7th, 2011

 

Pictured above: (L) Mangyongbong-92 in the Wonsan Harbor. (R)  American Budweiser Beer and dried fish served on the Mangyongbong-92

UPDATE 3 (2013-2-26): The Singaporean ship,  Royale Star, has been delivered to Rajin to handle tourist cruises. According to Google Earth imagery (2012-9-21), the Mangyongbong-92 has been returned to its primary port in Wonsan.

UPDATE 2 (2011-9-3): The Telegraph and ITN (UK) put together a humorous take on the cruise here.

UPDATE 1  (2011-8-31): According to the Associated Press:

The maiden voyage — a trial run — arrived Wednesday, carrying dozens of Chinese travel agents, international media and North Korean officials.

About 500 North Koreans lined up with military precision at the Rason port for a red carpet send-off Tuesday, waving small flags and plastic flowers while revolutionary marches such as “Marshal Rides a White Horse” blared over the loudspeakers. Streamers swirled and balloons spiraled skyward.

The Mangyongbong, a refurbished Japanese-built cargo ship with rusty portholes and musty cabins, was used for the 21-hour overnight cruise tracing the length of North Korea’s east coast. Some passengers slept on wooden bunkbeds while others were assigned mattresses on the floor. Simple meals were served cafeteria-style on metal trays.

A plaque on board commemorated a 1972 tour of the boat by North Korea’s founder, late President Kim Il Sung, and bright red posters emblazoned with his sayings decorated the walls.

Park promised a “more luxurious” ship capable of carrying up to 900 passengers, perhaps next year. He said the goal is to bring as many as 4,000 visitors a day from Rason to Mount Kumgang during the peak summer season, up from some 500 per week now.

“People from any country — Jamaica, Japan, Singapore, people from various countries — can come to Rason and don’t require a visa,” said Rason’s vice mayor, Hwang Chol Nam. “That’s the reality.”

But other restrictions remain. Hwang said visitors must book with approved travel agents and remain in their guides’ company throughout. Mobile phones must be left behind in China.

It remains to be seen how many Chinese tourists will be interested in the new tours. With incomes rising, Chinese are traveling abroad in rising numbers, thronging tour groups to Europe, Thailand, Japan and South Korea, with a small but growing number making the short trip to neighboring North Korea.

A rush of American visitors is unlikely. A long-standing U.S. State Department travel warning says North Korea strictly monitors visitors and harshly punishes law-breakers and reminds Americans that the two countries do not have diplomatic relations.

A senior South Korean official said North Korea would have trouble drawing investors and tourists after the way the North dealt with South Korean businesses.

South Korea’s Unification Ministry plans to send a letter to foreign embassies asking them not to cooperate with any new Diamond Mountain tours offered by North Korea, said the official, who spoke on condition that his name was not used.

North Korea’s latest moves are likely to upset Hyundai — but that might be the strategy of Pyongyang officials riding out conservative South Korean President Lee Myung-bak’s leadership, which ends next year, said Yoon Deok-ryong, an economist at the Korea Institute for International Economic Policy in Seoul.

“If they bring potential investors into the Mount Kumgang area, Hyundai would be upset and try to mobilize possible supporters in Parliament so the next government in South Korea will improve inter-Korean relations,” he said. “That is I think the design of the North Korean government.”

Wang Zhijun, a Chinese hotel manager from Jilin province who joined the trip free of charge, said it won’t be hard to sell the cruise to tourists in his region, which has a large ethnic Korean population and lacks coastline of its own.

But, he said, the price would have to stay low, suggesting around 2000 yuan (US$310) per passenger for an all-inclusive, five-day trip.

“It ought to be very popular. There are a lot of tourists already coming across to Rason,” Wang said. “People from China’s northeast would really like this kind of trip because it’s a cruise. You can enjoy the sea.”

The AFP also reported from the bosom of the Mangyongbong:

It has karaoke and fresh coffee, but the bathrooms on the lower decks are out of water and some guests sleep on the floor. Welcome aboard North Korea’s first cruise ship.

Keen to boost tourism and earn much-needed cash, authorities in the impoverished nation have decided to launch a cruise tour from the rundown northeastern port city of Rajin to the scenic resort of Mount Kumgang.

In a highly unusual move, the reclusive regime invited more than 120 journalists and Chinese tour operators on board the newly-renovated, 39-year-old Man Gyong Bong ship for a trial run of the 21-hour journey.

The vessel left one of Rajin’s ageing piers on Tuesday to the sound of rousing music, as hundreds of students and workers holding colourful flowers stood in line and clapped in unison.

“The boat was only renovated one week ago,” said Hwang Chol Nam, vice mayor of the Rason special economic zone, as he sat on the top deck at a table filled with bottles of North Korean beer, a large plate of fruit, and egg and seafood dishes.

“But it has already made the trip to Mount Kumgang and back. I told people to test the ship to make sure it was safe,” said the 48-year-old, dressed in a crisp suit adorned with a red pin sporting late leader Kim Il-Sung’s portrait.

The project is the brainchild of North Korea’s Taepung International Investment Group and the government of Rason, a triangular coastal area in the northeast that encompasses Rajin and Sonbong cities, and borders China and Russia.

Set up as a special economic zone in 1991 to attract investment to North Korea, it never took off due to poor infrastructure, chronic power shortages and a lack of confidence in the reclusive regime.

Now though, authorities are trying to revive the area as the North’s economy falters under the weight of international sanctions imposed over the regime’s pursuit of ballistic missiles and atomic weapons.

The country is desperately poor after decades of isolation and bungled economic policies, and is grappling with persistent food shortages.

In Rason, Hwang said authorities had decided to focus on three areas of growth — cargo trade, seafood processing and tourism.

North Korea has only been open to Western tourists since 1987 and remains tightly controlled, but more destinations are gradually opening up to tour groups keen to see the country for themselves.

Mount Kumgang, though, is at the heart of a political dispute between North and South Korea after a tourist from the South was shot dead by a North Korean soldier in 2008.

And Rason, where the cruise begins, is a poor area. The tours are tightly monitored, and the only brief contact with locals is with guides, tourist shop owners and hotel employees.

Visitors can expect only brief glimpses of everyday life through the windows of tour buses, as locals — many dressed in monochrome clothing — cycle past or drive the occasional car in otherwise quiet streets.

Small apartment blocks, many of them run down, are interspersed with monuments to the glory of the country’s leaders.

A portrait of current leader Kim Jong-Il and his late father Kim Il-Sung greets visitors as they walk through the vast lobby of the large, white hotel in Rajin.

“The book is a silent teacher and a companion to life,” reads a quotation from the late Kim, hung over glass cases full of books about North Korea, with titles like “The Great Man Kim Jong-Il” and “Korea — a trailblazer.”

The rooms are spartan but clean. But there is no Internet connection anywhere in the area, and the phone lines are unreliable and expensive. Foreign mobile phones are confiscated by tour guides as travellers enter the country.

Hwang said the government in Rason was trying to address communication problems and had signed a 26-year exclusive agreement with a Thai firm to set up Internet in the area, which he hoped would be running in September.

He acknowledged, however, that non-business related websites would likely be blocked, with the media tightly controlled in North Korea.

Many of Rason’s tourists come from neighbouring China. The area sees an average of 150 travellers from China every day during the summer peak season.

One Chinese national from the southeastern province of Fujian who gave only his surname, Li, said he had come to North Korea after a business meeting on the Chinese side of the border.

“We’ve come here mainly to see what changes there have been compared to our country… I like to go to places I’ve never been to before,” he said, standing in front of a huge portrait of Kim Il-Sung.

Simon Cockerell, managing director of Koryo Group, a Beijing-based firm that specialises in tours to North Korea, conceded that Rason may not be everyone’s idea of a holiday, but said its attraction lay in the unknown.

“A lot of people like going to obscure places. And this is the most obscure part of a very obscure country in tourism terms — the least visited part of the least visited country,” he said.

Back on the boat, Chinese tour operators sang karaoke in a dining hall decked out with North Korean flags as a waitress made fresh coffee, while guests drank beer and ate dried fish at plastic tables up on deck.

Inside, some cabins were decked out with bunk beds, while others just had mattresses laid out on the floor. The better rooms had tables, chairs and private washrooms.

Water in bathrooms on the vessel — used as a ferry between North Korea and Japan until 1992 when it started shipping cargo — was unreliable and when available, was brown.

But Park Chol Su, vice president of Taepung, said he had big plans for the tour if it attracted enough visitors.

He wants to invite more than 100 tourist agencies from Europe in October to sample the same trip, in a bid to attract travellers from further afield.

Authorities have promised no visas will be needed to go on the cruise and, if all goes to plan, the ship will be upgraded to a more comfortable one.

“Next year, we aim to get a bigger, nicer boat that can accommodate 1,000 people. We’d rent that from another country in Southeast Asia,” he said.

Some great photos of the trip are here.

A timeline of Kumgang stories from the shooting until today can be found here.

Read the full story here:
North Korea starts group tours from China to mountain resort formerly operated with South
Associated Press
2011-8-31

ORIGINAL POST (2011-9-7): The Mangyongbong-92 is going to be used for tourism. According to Yonhap:

North Korea appears likely to use a ferry to try to attract foreign tourists, a source familiar with the issue said Friday, in what could be an attempt to earn much-needed hard currency.

For decades, the Mankyongbong-92 served as the only shuttle between North Korea and Japan, which have no diplomatic relations, and was mostly used by pro-North Korean residents in Japan.

The 9,700-ton ship was later used to transport cargoes before Tokyo blocked its entry as part of economic sanctions over Pyongyang’s missile and nuclear tests in 2006.

The ferry has also been suspected of being used for trafficking drugs, counterfeit money and other contraband goods.

North Korea is now preparing to use the vessel as a cruise ship for Chinese and other foreign businessmen during an upcoming international fair in Rason, the country’s special economic zone near China and Russia, the source said.

The North plans to use the ship to take the businessmen on a sightseeing trip in waters off the economic zone at the end of the international fair later this month.

The move is widely seen as the North’s attempt to use the ship for its tourism project.

“It is meaningful in that the Mankyongbong-92 would set sail as a cruise ship for the first time,” said Cho Bong-hyun, a researcher at the IBK Economic Research Institute, noting the North seems to be revitalizing tourism in the economic zone and attempting to attract Chinese tourists to earn hard currency.

The North designated Rason as a special economic zone in 1991 and has since striven to develop it into a regional transportation hub, though no major progress has been made.

Read the full story here:
N. Korea pushing to use ferry to attract foreign tourists
Yonhap
Kim Kwang-tae
2011-8-5

Share

DPRK emulates China’s FDI legal framework

Tuesday, July 26th, 2011

Evan Ramsatad writes in the Wall Street Journal’s Korea Real Time Blog:

Choson Exchange, which has previously concentrated on academic avenues into North Korea, this week published a report on the legal framework North Korea has developed for accepting foreign direct investment.

It resembles China’s structure to a large degree, including requiring that outsiders work with a local business to make an investment and are subject to review by a special commission and potentially other government bodies.

The 14-page report is based chiefly on research from a recent trip to Pyongyang. There, they listened to government officials explain the structure they’ve set up and the places they’d most like to see be developed by foreign investors.

At the top of the list: Rason, the port city in the northeast part of the country that Russia has built a rail line to and China is building a four-lane highway to. Already, Switzerland has reportedly invested in a berth at the city’s port and Norway and other countries helped develop a wind energy project just outside the city.

The report’s conclusion is that North Korea’s foreign investment laws “provide a logical if bureaucratic framework” for foreigners to approach the country. But Choson Exchange said a big ambiguity remains: will North Korea be fair?

To get investor confidence, the group said North Korea “will need to establish a practice of applying and enforcing its laws fairly and consistently, even where the result is not always in the best interest of the DPRK or its state-owned entities.”

The full report published by Choson Exchange can be found on their web page here (PDF).  According to the summary:

In June, Choson Exchange took a fact-finding and training needs-mapping trip to Pyongyang. The main impetus for the trip was to get a better understanding of the legal structure that the DPRK has in place to govern inbound foreign investment. We found a legal structure that draws heavily on China’s experiences. Our full findings are in this report.

Key points include:

– Investment projects categorized into encouraged, permitted, restricted and prohibited categories.

– As in China, foreign enterprises require a local business vehicle to conduct FDI; the primary business vehicles available in the DPRK are limited liability corporate bodies and representative offices.

– The JVIC (Joint Venture and Investment Commission) and other government bodies (if applicable) will review the business scope, capitalization and other aspects of a proposed corporate body prior to incorporation.

– Investment in Rason will be particularly encouraged. According to JVIC, corporate bodies established in Rason can also apply to do business elsewhere in the DPRK.

– The operations and governance of DPRK corporate bodies are set out in law, including scope of activities, investment scale, limited liability, location, management, staffing and repatriation of profits.

– Domestic and Foreign arbitration is the primary mechanism for resolving commercial disputes between DPRK and foreign parties.

– Some ambiguities remain. Will laws be enforced uniformly and consistently?

Share

Lankov pessimistic on the DPRKs SEZs

Thursday, July 14th, 2011

Pictured above (Google Earth) is the electrified fence around the Rason special economic zone.

Lankov writes in the East Asia Forum:

SEZs are acceptable to the North Korean government because they are relatively easy to control. North Korean SEZs have been fenced off with barbed wire and all visitors have had their IDs carefully studied at checkpoints.

The North Korean government obviously hopes that small areas of controlled capitalism will generate enough income to make a difference — or at least to keep afloat the long-decaying economy.

Similar SEZs with China to those recently declared have been attempted before. At Raseon a major problem was its isolated location and underdeveloped transport infrastructure, even by meagre North Korean standards. At Sinuiju there were numerous problems. One was North Korea’s choice of the Chinese entrepreneur Yang Bin to lead the project as he wanted to transform the city into a gambling centre, a Macau of the North. This was not welcomed by the Chinese government. Also, it did not help that the North Koreans, following their modus operandi, did not bother to liaise with the Chinese beforehand.

The success of KIZ might seem encouraging, but it is actually a very special case. It is viable because the South Korean government is willing to go to great lengths to support it. It has subsidised industrial development and has provided adventurous developers and companies with generous subsidies and guarantees that made the entire undertaking possible. This willingness is driven by a multitude of political considerations. Frankly, it is doubtful whether the Chinese side would be equally interested in subsidising a similar undertaking by Chinese companies in Sinuiju.

What will happen to these two planned new SEZs? The fate of Raseon seems pretty certain. Available evidence indicates it is largely about transportation links. Chinese Manchuria is landlocked, so Chinese companies will save a small fortune on transportation costs if they are given access to a seaport on the Eastern coast of the Korean Peninsula. If this is what happens in Raseon, it has a relatively bright future.

The future of the Hwanggumpyong SEZ is far less certain. Obviously Chinese businesses want to do there what their South Korean counterparts did in Kaesong, take advantage of low labour costs in North Korea. Even though Chinese labour is cheap, North Korean labour is much cheaper still, since US$15-20 a month would be seen by the average North Korean worker as a good wage. For the same labour, they would have to pay a Chinese worker between US$100 and US$150 a month.

But that said, the business reputation of North Korean managers leaves much to be desired. They are likely to intervene in operations − partially as a way to extort bribes, but largely because they will worry about excessive exposure of their population to dangerous Chinese influences. South Korean businesses in Kaesong accept such interference, but they are backed by the South Korean government. It remains to be seen whether the same situation will develop in a Chinese-led zone.

Previous posts on the Sinuiju (including Waudo and Hwangumphyong) can be fond here.

Previous posts on Rason (Rajin-Sonbong) can be found here.

Read the full story here:
North Korea-China special economic zones
East Asia Forum
Andrei Lankov
2011-7-14

Share

The Rason Economic and Trade Zone to Adopt the Singapore Model

Thursday, June 30th, 2011

Institute for Far Eastern Studies (IFES)
2011-6-25

Since the June 8 and 9 groundbreaking ceremonies for joint development projects between North Korea and China were held, attention has been directed toward North Korea’s international economic activities. The Japan-based newspaper, Chosun Shinbo, featured an interview article regarding these collective projects, including the areas of Hwanggumpyong and Wiwha Islands and the Rason Economic and Trade Zone.

According to North Korea’s Committee of Investment and Joint Venture, Rason Economic and Trade Zone is, “an important national undertaking following the teachings of Kim Il Sung. . . . Rason will soon become the entrepot port like Singapore, enhancing the lives of North Korean people.”

In addition, it was mentioned that the development of economic zones in Hwanggumpyong and Wiwha Islands will solidify the already strong DPRK-China friendship and expand the boundaries of international economic relations.

According to North Korea’s Committee of Investment and Joint Venture, politically, “Stable political atmosphere allow investors to engage freely in investment activities and necessary legal measures were taken creating favorable legal conditions for foreign investments. This includes the establishment of Joint Venture Law (of 1984) and other related laws.” Economically, “All the necessary substructures supporting the business operation are set. Workers will all be provided free 11-year education and tax rates are the lowest in the region and for those investors investing in sectors that the DPRK is promoting, will be provided with preferential treatment.”

North Korea is encouraging foreign investments especially in the industrial, agricultural, transportation, construction, financial, and tourism sectors. In particular, adopting state-of-the-art production technology is considered most important. This is to increase the area’s competitiveness in the international market through the production of items that have high export value. However, investment restrictions are placed preventing exports on natural resources like ore and coal.

The Committee also stressed the accomplishments of economic cooperation with China and Egypt and revealed plans of passing a double tax avoidance agreement with China, who is the largest foreign investment for North Korea.

The Egyptian company Orascom Telecom has invested in telecommunications, construction, and financial sectors in North Korea. The president of Orascom is said to have met with Kim Jong Il early this year, announcing his plans of expanding investment in the country.

In addition, the Committee reiterated building an independent national economy does not exclude international economic relations. It explained, “We are trying to resolve our shortcomings through international economic activities while maximizing our domestic technology and resources. This is the principle of socialist economic construction.

The Committee of Investment and Joint Venture was established last July, which is a central state organization under the Cabinet overseeing joint ventures and investments. It is in charge of guiding, supervising and administering the inducement of investments from abroad. It is a government body on the level of the Ministry of Trade, which it has close affiliations with. The Ministry is a central organization controlling general trade activities while the Committee is mostly responsible for attracting foreign investment, joint investment, and ventures.

Share

Some alleged guidelines for the Hwanggumphyong SEZ

Friday, June 24th, 2011

According to the JoongAng Daily:

The JoongAng Ilbo has acquired North Korea’s guidelines for Chinese investors at its economic development zone on Hwanggumpyong Island, and many are more liberal than those offered to South Koreans at the Kaesong Industrial Complex.

The date of the document acquired by the JoongAng Ilbo was not known.

According to the guidelines written by a joint committee for the development and organization of the Hwanggumpyong and Rason special economic zone, transactions in Chinese currency are allowed. Independent and joint banks will also be allowed to be established in the zones.

South Korean companies working in Kaesong conduct all business in U.S. dollars. Unlike South Koreans working in Kaesong, investors in the new zones will receive special privileges when it comes to using land. They are free to lease, lend or even bequeath the land to their relatives, as long it is done within a contracted period of time. Those who reside within the special economic zones can also freely use cell phones and are provided with Internet access.

Cell phones are not allowed in the Kaesong industrial complex.

The goal of the zones, the document said, was to “continue to firmly develop the traditional friendship between the two countries,” which was “agreed upon by the two greatest leaders” of China and North Korea, referring to Chinese president Hu Jintao and North Korean leader Kim Jong-il.

“It also supports the hopes and future gains of the people from the two countries,” it said.

The economic zones are also meant to improve North Korea’s manufacturing ability, quality of life for North Koreans and the North’s competitiveness in earning foreign currency, the document added. In order to do so, North Korea’s natural resources would be utilized to their fullest, including human resources, land and minerals.

The document’s role, it said, was to “aid the writing of more detailed development policies.” The guidelines are valid in the 470 square kilometers (181 square miles) of the Rason free economic zone and 16 square kilometers of Hwanggumpyong.

In case the zones fill up, the document hinted at the possibility of a third zone that could be established.

For Rason, the document said three piers leased out to different countries – China, Switzerland and Russia – would be modified to allow vessels of more than 50,000 tons to dock. In addition, new highways, bridges and even an airfield would be built in the area.

At Hwanggumpyong, a new port will be constructed for passengers and cargo vessels between the island and the North Korean city of Sinuiju. The document said the airport at Dandong, which is near Hwanggumpyong, would be “actively utilized.”

The document emphasized that foreign investors’ assets would not be nationalized and that all investors’ legal rights were guaranteed.

The document was written in both Chinese and Korean.

Despite all the promises in the guidelines, analysts remained skeptical as to how successful the trade zones will be. “It’s a mystery as to how many investors will be eager to invest there,” said a diplomatic source in North Korea.

Read the full story here:
Pyongyang promises China investors the moon
JoongAng Daily
Chang Se-jeong, Christine Kim
2011-6-24

Share

DPRK looking to ink tax deal with China

Thursday, June 23rd, 2011

According to the Korea Herald:

North Korea is pressing to ink a deal with China to prevent double taxation, a pro-Pyongyang newspaper said Wednesday, signaling an apparent bid to attract investment from its key ally and the world’s No. 2 economy.

The isolated country has already signed similar accords with Egypt and 11 other countries and negotiations are under way with other countries, the Chosun Sinbo reported, citing a North Korean official handling the issue of attracting foreign investment.

However, the newspaper, widely seen as the mouthpiece of the communist regime in Pyongyang, did not give any further details.

Earlier this month, North Korea and China broke ground on their border island and the North’s Rason special economic zone to jointly develop the two areas.

The trade volume between North Korea and China stood at $3.46 billion in 2010, up from $2.68 billion in 2009, according to South Korea’s Unification Ministry, which handles inter-Korean affairs.

The North designated Rason as a special economic zone in 1991 and has since strived to develop it into a regional transportation hub near China and Russia, but no major progress has been made.

The North hopes to transform Rason into a regional hub of transit trade like Singapore, and it should expand economic relations with outside world to improve its faltering economy, the newspaper said, citing the North Korean official.

North Korea and China are also likely to complete the repairs of a key logistics road that links the Chinese city of Hunchun to the Rajin port inside the Rason economic zone by October, two months earlier than previously planned, according to sources in Hunchun.

Beijing has secured the right to use the port, which provides China with an export route to other countries.

Read the full story here:

N. Korea pushing to sign double taxation avoidance deal with China
Korea Herald
2011-6-22

Share

Lankov on the DPRK’s new SEZs

Tuesday, June 21st, 2011

Lankov writes in the Korea Times about the DPRK’s various Special Economic Zones:

In early June, the governments of China and North Korea declared that they would work to develop two new special economic zones (SEZs). One zone is to be situated in the small port city of Raseon, on the eastern coast of South Korea, just 20 kilometers from the nearest crossing to China. Another zone will be developed on the unremarkable sandy island of Hwanggumpyong, in the vicinity of Sinuiju, the largest city on the border (some three quarters of trade between the two countries pass through this city).

One cannot be surprised by this initiative as talk of new SEZs “soon to be established” has been around for over a decade. There is little doubt that the North Korean government is very interested in the idea of SEZs. Unfortunately, this interest does not necessary mean that the North Korean authorities are willing to make the concessions that would allow the SEZs to operate efficiently.

The history of North Korean SEZs is essentially the history of frequent failures and occasional partial successes. The first attempt to create a SEZ took place in 1991, when the North Korean government established a SEZ in the remote northwestern corner of the country. The Raseon SEZ, as it has now become known, is located where the borders of China, Russia and North Korea meet.

Read the remainder of the story below:
(more…)

Share

Politics comes before economy for DPRK

Monday, June 20th, 2011

The Global Times (PR of China) has posted a very interesting and blunt assessment of the DPRK’s newly announced Special Economic Zone by Zhang Liangui (张连瑰), a specialist in Korean issues and professor at the International Strategic Research Bureau at the Party School of the Central Committee of CPC.  The article is posted below:

After drawing up a 10-Year Economic Development Plan at the beginning of this year, North Korea has announced several measures to readjust its ties with China from an aid-dependent relationship to an economic partnership. Will North Korea switch from its militaristic focus to economic development? What are the implications of the recently announced Hwanggumpyong island project in the middle of the Yalu River? Nanfang People Weekly magazine talked to Zhang Liangui (Zhang), a specialist in Korean issues and professor at the International Strategic Research Bureau at the Party School of the Central Committee of CPC, on these issues.

Q: What is the rationale behind North Korea’s efforts to facilitate the joint development of Hwanggumpyong with China?

Zhang: There are several reasons. The most straightforward motive is obviously to ameliorate the shortage of foreign money, since North Korea is suffering from international sanctions as a result of its nuclear weapon development.

Beyond that, North Korea wants to strengthen its economic ties with China, avoiding a hopeless isolation from the international community. Third, this move also reflects North Korea’s territorial concerns.

Q: Why do you think the cooperation has something to do with territorial issues?

Zhang: Because of the border on the Yalu River. Usually rivers on the border between two sovereign nations are demarcated on a half-to-half basis, which means there’s a middle line of control accepted by both sides.

However, the Yalu River is jointly held by both China and North Korea, while the latter has exclusive possession of Hwanggumpyong island.

For years due to alluvial deposition, the island has continued to expand. It now has abutted on the Chinese side, and local government has to build a fence along the border.

Under this circumstance, North Korea has de facto control over the part of Yalu River to the east of Hwanggumpyong island.

Thus the development on Hwanggumpyong island may help North Korea secure its territorial and river possession.

With the erection of buildings and infrastructure, North Korea expects Chinese developers to build the ground base, cement the foundations and free the island from the threat of alluvial erosion. If there’re many buildings, North Korea will have safe and unchallenged control over the island.

After acquiring Hwanggumpyong, North Korea asked farmers to plant trees and develop farmland. This caused the island to expand as well as causing disputes between the two sides. China should be fully aware of these concerns if it is looking for long-term cooperation over Hwanggumpyong.

Q: Why China is willing to cooperate and provide 80 percent of the funds?

Zhang: Many Chinese believe the US will try to contain China, especially at a time of tension among Northeastern Asian countries. The security concerns may give China and North Korea impetus for cooperation.

China also perceives North Korea’s instability, both economically and politically. China’s aid to North Korea is understandable and necessary in pursuing its goal of regional stability.

But China should be clear that its aid doesn’t serve the purpose of saving a specific government. The survival of any particular government is up to North Korea’s domestic will. And China doesn’t need to intervene in everything.

Q: Why did North Korea grant the opportunity to a Hong Kong enterprise? Will Hwanggumpyong become another Hong Kong, as North Korea wishes?

Zhang: It seems that North Korea is particularly enthusiastic about cooperating with Hong Kong firms. The precedent is the casino in Rason. A casino managed by Hong Kong executives can better woo Chinese tourists, as well as corrupt officials and outlaws.

However, Hong Kong’s prosperity is based on its transparent government, advanced legal system, high credibility, well-established infrastructure and financial markets, and in particular, stability.

It remains a difficult mission for today’s North Korea to build another Hong Kong.

Q: Will the Hwanggumpyong project attract more Chinese business people in the future?

Zhang: North Korea has reason to expect more investors to come. But I think there are several reasons preventing a great number of investors from going to Hwanggumpyong. According to my experience in dealing with Chinese business people, many of them complain of a lack of lawful regulations and the capricious North Korean economic policies.

Besides, many countries including China don’t accept credit cards issued by North Korea. Understandably, much of China’s national investment in North Korea comes out of political reasons rather than economic motivations. Unless North Korea has a stable and predictable government as well as international credibility, the prospect of foreign investment in North Korea is bleak。

Q: What do you think of the 10-Year Economic Development Plan, announced recently by the North Korean government?

Zhang: It seems 10 years is a bit long for North Korea’s management habits. So far, North Korea hasn’t been able to follow through on many of its long-term economic projects.

For example, the Kaesong Industrial Park was once planned to be a lucrative business produced by North-South Korean cooperation.

In May 2009, North Korea unilaterally announced a demand for wage and rent rises and scrapped the agreement they had signed up to. In 2010, the sinking of the Cheonan warship further hampered industrial activities in the region. Thus I think the 10-Year Economic Development Plan remains provisional and is intended more or less for propaganda purpose.

Q: Why does North Korea stress that its 10-Year Economic Development Plan “isn’t a reform and opening-up policy?”

Zhang: This is obviously aimed at China. Many Chinese media are under the delusion that North Korea is emulating China’s example to get rid of poverty and develop its country. In fact, North Korea is very unhappy about this claim.

North Korea is still against the idea of “reform and opening-up,” albeit now inexplicitly. It once equated “reform and opening-up policy” with revisionism and imperialists’ supposed conspiracy to topple socialist regimes.

During Kim Jong-il’s visit on June 5, while the Chinese media speculated about North Korea going through “reform and opening-up policy,” the North Korean media never used this phrase.

Share

Hong Kong company likely to be tapped as developer Hwanggumphyong

Monday, June 20th, 2011

According to Yonhap:

A Hong Kong conglomerate is likely to be tapped as a developer of a China-North Korea joint industrial complex on a North Korean island, a Chinese-language weekly said Monday, a move seen as deepening the North’s economic reliance on its neighboring country.

Earlier this month, China and North Korea broke ground to develop Hwanggumphyong Island, which sits at the estuary of the Yalu River between two border cities, Dandong on the Chinese side and Sinuiju on the North’s side.

The Economic Observer, one of the leading economy-focused newspapers in China, said it has exclusively obtained a document showing that Sunbase International Holdings Ltd., an investment conglomerate based in Hong Kong, will win exclusive rights to develop the border island.

The group, which reportedly has direct control over total assets of over HK$60 billion (US$9.3 billion), is recognized as one of the largest property management companies in Hong Kong and mainland China.

Gunter Gao, chairman of the board of Sunbase International, visited North Korea twice last year and had high-level meetings with North Korean government officials on the economic development of the island, the report said.

The newspaper earlier reported that the 56-year-old Hong Kong tycoon met Kim Yong-nam, president of the Presidium of the North Korean Supreme People’s Assembly, before the groundbreaking ceremony of the joint economic zone. Gao is widely considered to have strong ties with politicians in mainland China.

Gao has long served as one of the Hong Kong members of the National Committee for Chinese People’s Political Consultative, a political advisory body in mainland China.

Citing unnamed sources, the weekly said the North Korean authorities preferred Hong Kong entities rather than mainland Chinese firms as developers of the joint economic zone because Hong Kong companies are more open and international.

The economic cooperation between China and North Korea comes on the heels of North Korean leader Kim Jong-il’s weeklong trip to China in May when he studied the neighboring country’s economic development. It was his third trip to China in just over a year.

Beijing has been trying to lure its impoverished ally to embrace the reform that lifted millions of Chinese out of poverty and helped China’s rise to become the world’s second-largest economy.

North Korea has been facing worsening food shortages and massive inflation, which has increased public anger in the country.

Read the full story hre:
Hong Kong conglomerate likely to be tapped as developer of N. Korean island: report
Yonhap
Kim Young-gyo
2011-6-20

Share

Rason’s Chinese investor tour

Friday, June 10th, 2011

Pictured above (Google Maps): The Wonjong Bridge and route traveled by Chinese drivers from the border to Rason

UPDATE 6 (2011-6-15): Here is a great news video of the Chinese driving tour:

Click image to watch video at YouTube

UPDATE 5 (2011-6-10): Barbara Demick writes in the L.A. Times:

No doubt the most attractive part of the package for China is the access to the port in Rajin, part of a larger special economic zone known as Rason. In 1860, China’s weak Qing dynasty signed a treaty that ceded a long strip of coastline to Russia, leaving Chinese Manchuria landlocked. The use of the port in Rajin makes it easier to transport raw materials from the resource-rich region of northeastern China to the industrial hubs in southern China. In December, the Dalian-based Chuangli group, which had spent $3.6 million renovating the port, shipped 20,000 tons of Manchurian coal through the North Korean port to Shanghai.

“It is faster and cheaper to ship through North Korea’s port than to use the railroads,” said a businessman who was in Rajin this week as preparations were underway for the groundbreaking. “Everybody in Rajin is very excited about what the Chinese are doing. They think it will bring jobs.”

UPDATE 4 (2011-6-9): KCNA coverage of the Hwanggumphyong ground breaking ceremony also mentioned developments in Rason:

The [Hwanggumphyong] ceremony was followed by announcing the start of the reconstruction of the Rajin Port-Wonjong road, ground-breaking ceremonies of Athae Rason Cement Factory and the Rason, DPRK-Jilin Province, China High Efficiency Agricultural Model District and departing ceremonies of Chinese domestic freight transit transportation via Rajin Port and private car tourism as the first phase projects for the start of the joint development of the zone.

UPDATE 3 (2011-6-10): China’s Global Times reports on the Chinese business tour:

The first self-drive tour from China to North Korea started on Thursday, with around 100 tourists setting off from Changchun, Jilin Province, to Rason, North Korea, China News Service (CNS) reported.

A total of 24 vehicles carrying around 100 travelers including well-known entrepreneurs, officials with the Changchun Tourism Bureau and provincial government took part in the tour, according to a staff member surnamed Wang with the publicity department of the China Youth Travel Service (CYTS) Tours Corporation Jilin Branch, which organized the tour.

“We’ve spent more than a month preparing for the activity. We sent invitations to tourists and negotiated with the Rason government,” Wang told the Global Times on Thursday.

The tour will last from June 9 to 11, and the cost for each tourist was more than 1,000 yuan ($149), an anonymous staff member with the executive office of the CYTS Tours Corporation Jilin Branch told the Global Times on Thursday.

After assembling at the Changchun Exhibition and Conference Center on Thursday morning and identifying each car with a number, the tourists began their journey at 7 am and planned to reach Hunchun, the border city in Jilin Province that leads to North Korea, in the afternoon, according to the CNS report.

“The 24 vehicles were all provided by the tourists themselves, but we have dispatched a car to lead them and they were all given interphone sets in case some of them fall behind,” she told the Global Times on Thursday.

After passing through Hunchun, the tourists will reach Rason district and tour guides dispatched by the Rason government will lead them to visit Rajin Port and Rajin Bay.

There, they will be able to enjoy children’s performances and also visit local scenic spots, according to the staff member with the executive office of the CYTS Tours Corporation Jilin Branch.

“There were so many people who called to ask about this activity, so I believe we will organize a second tour in the near future,” she told the Global Times.

The North Korean government plans to develop Rason, located in the border area between China and North Korea, into an international economic zone. At the end of May, the North Korean government allowed Chinese tourists to make the self-drive trip to Rason to enjoy its scenery, according to CNS.

“Allowing self-drive tours from China to North Korea means a lot to both countries, because it will increase the interaction and enhance mutual understanding between the two peoples, and consequently, enhance friendly relations between the two countries,” Yang Zhenzhi, a professor at the School of History and Culture (Tourism) with Sichuan University, told the Global Times, adding that the decision will also help to boost economic ties between the two countries.

UPDATE 2 (2011-6-4): According to an earlier report in the Donga Ilbo a “groundbreaking ceremony” for the Rason area will also take place Thursday (June 9).  No doubt this will take place just before the convoy of Chinese investors crosses into the DPRK.  According  to the article:

Sources in China`s Yanbian Autonomous District in Jilin Province and Dandong in Liaoning Province said Friday that the groundbreaking ceremony for the special district in Rason Special City will be held Thursday and that for the development of Hwangkumpyong in the Yalu River near Shinuiju will come Tuesday.

UPDATE 1 (2011-6-6): The news out today indicates that, as earlier reported (see original post below), a convoy of Chinese investors will travel the new road from Wonjong to Rason to explore investment opportunities.  There are a few interesting differences between the time the story was originally published (in April) and today:

Firstly, and the least interesting point, the “investment convoy” is about nine days behind the original schedule. Originally the convoy was to depart for the DPRK on June 1.  The convoy now appears to be departing on June 9.

Secondly, the convoy appears to be operated by a different Chinese tour company.  Back in April the convoy was being coordinated through the Sanjiang International Travel Agency in Hunchun.  The convoy departing this week, however, is run by CYTS Tours.  I do not know enough about either of these businesses to speculate on treasons for the last minute switch in partners.

Thirdly, the cost of the trip has increased significantly.  In April the Sanjiang Travel Agency said the trip would cost 680 Yuan.  Now CYTS Tours says the cost will be 1450 Yuan per person, and the convoy size will be limited to 30 vehicles.

Here is the most recent report in the Donga Ilbo:

Chinese nationals can start traveling Thursday to Rason, a free trade zone in North Korea`s northeastern region, with their own cars for three days.

This is in line with the development plan linking the Chinese cities of Changchun, Jilin and Tumen that the Chinese government is promoting, China’s Xinhua News Agency said Friday.

For starters, the service launched by CYTS Tours will begin with fewer than 30 cars. Travel costs will be 1,450 yuan (224 U.S. dollars) per person, including lodging and eating. Whether anyone has applied remains unknown, however.

People who will start from Changchun Thursday will drive 500 kilometers to Hunchun in Yanbian Korean Autonomous Prefecture and then enter North Korea through the maritime customs at Quanhe. After crossing the Tumen River, they will go through immigration procedures at the customs office in the North Korean village of Wonjeong-ri and then go to Rason through a Hunchun-Rason road under construction.

The travelers will tour the port of Rajin and then tour Rajin Bay by boat. They will watch a children’s show and visit Sea Village and Wang Hai Guo, where the late founder of North Korea Kim Il Sung visited.

A source at CYTS Tours said, “The product was designed as a part of the (Chinese) government’s travel development plan for Changchun, Jilin and Tumen.”

ORIGINAL POST (2011-4-4): According to the Choson Ilbo:

North Korea is reportedly allowing Chinese motorists to drive to the special economic zone of Rajin-Sonbong so they can look around for investment opportunities there.

A spokesman for Sanjiang International Travel Agency in Hunchun, China on Friday said a group of Chinese motorists will tour Rajin-Sonbong and Duman near the North Korean-Chinese-Russian border under an initiative by the Tourism Bureau of Jilin Province on May 31-June 1. Sanjiang specializes in travels to the lower reaches of the Duman (Tumen) River in North Korea and Russia.

The two-day trip will cost 680 yuan (approximately W115,000) per person.

The Sanjiang staffer said small groups of Chinese motorists have gone to Rajin-Sonbong before, but this is the first large-scale trip organized by the Jilin provincial government and the first time tourists are visiting Duman.

The aim is apparently to lure Chinese investors to Rajin-Sonbong. Early this year, the North agreed with Hunchun city to build a large recreation center and park in its special economic zone.

Back in March 2008, the North allowed South Korean motorists to travel to the scenic Mt. Kumgang resort, but only four months later the tours were suspended after a South Korean tourist was shot dead by a North Korean soldier.

Related historical information:

1. Bridge on China-North Korea border being renovated (2010-4-13)

2. DPRK-China border bridge opens (2010-6-23)

3. Who uses Rajin’s Ports? (2010-5-23)

4. Rason port facilitates intra-China coal distribution (2011-1-4)

Read the original stories here:
China to allow nat`ls to travel to Rason, N.Korea, by car
Donga Ilbo
2011-6-6

Chinese Motorists to Tour N.Korean Investment Zones
Choson Ilbo
2011-4-5

Share