Here we introduce an outline of a north Korean project to set up bonded processing trade areas in the port cities of Nampo and Wonsan (as disclosed by the DPRK Committee for the Promotion of the External Economic Cooperation last October at a Hong Kong business forum), and the latest development of the Rajin-Sonbong Free Economic and Trade Zone which attracted about 83,000 foreign visitors during the first eight months of this year. The information bellow was provided by the Tokyo-based Korea-Japan Export-Import Co.

(1) On the establishment of bonded areas in Nampo and Wonsan

- About 200 hectares of land is earmarked for a bonded area in Nampo, and about 100 hectares in Wonsan. The land will be expanded in accordance with the development of the situation.

- The zones will be developed into an industrial park equipped with a wharf.

- The local economic authorities will take charge of its management and development.

- Foreign firms will be able to start business there on their own or in joint ventures with local companies.

- The Nampo zone is located seven km from the residential area and 80 km from the Pyongyang International Airport (about 1.5-2 hour drive).

- All the materials produced or processed in the zones will be exported in principle.

- Foreign firms which participate in the land development projects will be given special benefits. Now officials concerned are negotiating with the Hong Kong-based Pedegrine Company on the construction of dwarfs.

- A draft "special law” concerning a bonded processing trade zone, was completed.

- It is not decided yet when the bonded zones are officially inaugurated. But their opening will be declared after the special law is approved by the State Administration Council and infrastructure facilities are adjusted to a certain degree.

(2) On the current situation of the Rason Free Trade Zone

- Foreign investors have been allowed since last March to get free access to the Rason area without obtaining a visa if they take the Quonhe (China)-Wonjon (Korea) route by car (or bus). A regular chopper shuttle service is scheduled to open at the end of this year between Rason and Yanji.

- In an attempt to simplify complicated investment procedures and reduce investors' inconvenience, broad powers have been transferred from the State to the Rason economic authorities. They include the rights to invite foreign delegations and land lease rights.

- Related laws and provisions have been continuously strengthened. So far, a total of 52 related laws have been implemented since the early 1990s while a law on stock is scheduled to be enacted in the near future.

- In order to train local people in modern management, taxation, investment, computerization, etc., preparations for the foundation of Rajin Scientific and Technological University are being accelerated while some people have been sent to Austria and Hungary for business study.

- Allocation of a State budget to the construction of infrastructure such as railroads, roads and communications in the Rason Zone has been substantially increased. A total of 200 million won has been allotted to it in the past twelve months.

- The railway system has been reorganized with several railway bureaus having been integrated into the Rajin Railway Bureau.

- Three drastic reforms have been introduced since June 1 this year.

(1) Currency exchange

The use of purple foreign exchange coupons is not allowed any more within the territory of the Rason zone. Instead, the use of the local brown won is permitted. This raises the value of hard currency against the won.

The price fluctuation system has been introduced, and the exchange rate is currently in the range of 200-220 won per dollar.

For a smooth won-dollar exchange, the Golden Triangle Bank has been in operation.

(2) Conversion of state enterprises into independent entities

State and locally owned state enterprises are allowed to be converted into independent, economic entities, responsible for their own management. Private businesses are permitted.

The category of private industrial enterprises permitted include the manufacture of clothing, processed food, daily necessities, furniture and handicraft, recycling, accommodation business, repairing and transportation business, trade in additional agricultural produce, food and drinking service, construction of dwelling houses and fishery.

(3) Opening of free trade market