North Korea plans to expand special economic zones

North Korea, hoping to lure foreign investment, plans more special economic zones

Associated Press
North Korea plans to expand special economic zones
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Academics and experts attend an international meeting on special economic zones at Yanggakdo Hotel in Pyongyang, North Korea, Wednesday, Oct. 16, 2013. In a bid to bolster its laggard economy, North Korea plans to set up new special economic zones and has created a group to assist potential foreign investors, state media and the organizers of the rare international conference said Wednesday. (AP Photo/Jon Chol Jin)

PYONGYANG, North Korea (AP) -- In a bid to bolster its laggard economy, North Korea plans to set up more special economic zones and has created a group to assist potential foreign investors, state media and the organizers of a rare international conference in Pyongyang said Wednesday.

Ri Chol Sok, vice president of the newly formed Korea Economic Development Association, which is hosting the two-day conference, said the zones "are already starting to be organized all over the country."

The meeting began Wednesday with academics and experts from 13 countries — including the US, Canada, India, China, Malaysia and Vietnam — and 60 North Korean participants.

North Korea is still regarded as too risky by many businesses but has had its eye on expanding its use of economic zones since at least June, when it announced foreign investors would be given preferential treatment for land use, labor and taxes.

North Korea, which is one of the world's poorest countries, officially follows a rigid planned economy, but authorities have tolerated unofficial capitalist activities for years. It has experimented with special economic zones as a means of enticing foreign investment since the 1990s.

The longest-running example is the Rason Special Economic Zone, in the far northeast of the country. It was set up in the early 1990s, but made little progress until recently after being reinvented as a joint North Korea-China project. Another North Korea-China joint economic development project on the border between the two countries at Hwanggumpyong is still at a much earlier stage of development.

North Korea also has a joint industrial zone with South Korea, at Kaesong, but that was shut for months this year after North Korea pulled its workers out during a period of heightened tension between Pyongyang and Seoul.

The two Koreas have agreed to reopen Kaesong, but it has not returned to full operations and tensions remain. North Korea abruptly called off reunions for war-separated families last month and South Korea postponed an information session aimed at introducing the Kaesong complex to foreign investors.

Many analysts say North Korea takes Kaesong's resumption and the new zones seriously because it believes they could help draw outside investment and revive its struggling economy, one of leader Kim Jong Un's top stated goals.

Doubts remain over whether foreign investors will be willing to take the risk of operating in the North.

While Pyongyang has shown new signs of trying to reform its economy over the past year and a half, it has also continued to maintain state control. Instead of "reform" or "change," North Korea referred to the free market style changes last year as "new economic management methods."

The foreign co-organizer of the conference, Park Kyung-ae, from the University of British Columbia in Canada, said she hopes to continue such exchanges with more conferences abroad.

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