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China, North Korea Sign Agreements On Economic Zones

by Mary Swire, Tax-News.com, Hong Kong

16 August 2012


The third meeting in Beijing between China and North Korea for the joint management and development of two economic zones in North Korea has led to expectations that cooperation between the two countries, particularly Chinese investment in North Korea, will increase substantially in the future.

Both North Korea’s Rason Economic and Trade Zone and the Hwanggumphyong and Wihwa Islands Economic Zone are on the country’s borders with China. The joint steering committee for their development held its first meeting in November 2010, with a second meeting in June 2011.

To show the importance given to the zones by both countries, with North Korea looking for additional direct investment from China, the third meeting this month was jointly presided over by the Chinese Minister of Commerce Chen Deming and Jang Song Taek, the uncle of Kim Jong-un, the Supreme Leader of North Korea, and Vice-Chairman of the National Defence Commission.

A subsequent statement from China’s Ministry of Commerce said that previous cooperation by the two governments and businesses from both countries has meant that the development of the two economic zones has already yielded significant results.

Both governments have now signed agreements to make further progress, for example, in compiling detailed laws and regulations, establishing customs clearance facilities and telecommunication links, and providing infrastructure.

The North Korean government has already revised the law governing the Rason zone and formulated the law governing the Hwanggumphyong and Wihwa Islands zone. It is expected that foreigners will be allowed visa-free access to the zones, and businesses will be given tax breaks for making their investments.

The Rason zone will focus on developing the raw material, industrial equipment and high-tech industries, and will gradually be built into the most advanced manufacturing base in North Korea. An international logistics centre and a regional tourist centre will also be located there. The Hwanggumphyong and Wihwa Islands zone will focus on developing an IT industry, cultural and creative industries, modern agriculture and garment processing.

TAGS: tax | business | Korea, North | law | China | travel and tourism | agreements | manufacturing | legislation | tax breaks | regulation | services

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