'Ryucho Island can be seen behind the ship traveling through Aprok(Yallu)
River from the vantage point of Dandong City, China.'
North Korea’s free trade base plans for Ryucho Island signal reform Experts say North Korea is looking to strengthen international economic ties and attract foreign investment
Dec. 9, 2009
North Korea is reportedly planning the creation of a free trade base on Ryucho Island near Sinuiju and its development as a new special economic district. Analysts are interpreting this as a signal from the country that it plans to renew efforts at building a special economic district in Sinuiju, the largest gateway city on its border with China.
In an interview with the Hankyoreh on Tuesday, a source who wished to remain unnamed in Dandong, who has long worked with North Korea and is familiar with the North Korean situation, reported hearing recently from senior officials in charge of North Korea’s external trade that preparations are under way for the development of Ryucho Island as part of a special economic zone. The source said, “As a result of Ryucho Island’s small area (2.82 square kilometers), it looks as if they are planning to build a free trade base rather than a large-scale complex and to display wares coming out of North Korea there so that people can buy them freely.” The source added, “They also plan to build a large dock, and there is the added advantage of China’s Langtou Harbor across the way.”
It is also reported that core parties in the North Korean government have decided on the plan and responsible parties within the North Korean government who had been appointed have already begun attracting foreign capital. Observers are predicting that if these reforms are successful, there is a strong chance that economic development will expand to the Sinuiju area.
Observers have also learned that the North Korean government will be establishing even more measures in order to create a greater ripple effect to further open up Raseon, a city in North Hamgyong Province, for investment in conjunction with the Chinese government’s development of the Chang-Ji-Tu (Changchun, Jilin and Tuman River basin) Pilot Zone.
These trends are a sign that North Korea has begun a drive for economic development through openness and the attraction of foreign investment. Observers are saying this determination towards development appears to have been present in North Korea for some time. Sources in Dandong say that Chinese factory equipment and construction materials such as H-beams have been taken into North Korea through Dandong at an unprecedented scale since early last year, lending support to claims that North Korea has already set a blueprint for its economic development. Analysts are also saying this move from North Korea could have a favorable effect on the North Korea-U.S. dialogue currently in progress.
Chinese officials familiar with the North Korea situation say that North Korea’s recent currency reform should be interpreted as a sign of the active pursuit of a “North Korean-style market economy” rather than a rollback of economic reforms in the country. Another source acquainted with trends among senior North Korean officials said that North Korea has been “very active recently about joining forces with China to development the border region, and the central government is preparing specific plans.”
The source added, “It is clear that economic reforms will move forward after this currency reform.”
It is also known that North Korea recently created a Foreign Investment Board and has been making active attempts to attract foreign investment. Scott Snyder, director of the Center for U.S.-Korea Policy at the Asia Foundation, visited North Korea in late November as a member of a U.S. Council on Foreign Relations Task Force on Korean Peninsula policy and announced what he heard from North Korean authorities during his visit in a post Monday (local time) on the web site GlobalSecurity.org.
The head of North Korea’s Foreign Investment Board who met with Snyder’s group actively informed them about plans to attract foreign investment, which include a variety of strategies ranging from the issue of repatriation of profits earned by foreign investment companies in North Korea to various tax benefits. North Korea also presented the condition of monthly wages on the order to 30 Euros (44.60 dollars). Snyder noted that this is lower than the monthly wage of 57.50 dollars currently paid to North Korean workers at the Kaesong Industrial Complex.
North Korean authorities are also known to have plans to attract foreign investment for the building of 100,000 units of housing in Pyongyang, one of the tasks set in the country’s plan for a “strong and powerful nation by 2012.” Additionally, the country has proposed a plan for special perks in the mining of North Korean natural resources to foreign companies interested in investing in the project.
Foreign companies are currently forbidden from engaging in new investment in North Korea as part of the sanctions set by United Nations Resolution 1874 in response to North Korea’s nuclear test on May 25 of this year. Observers say North Korea’s plan for attracting foreign investment can also be interpreted as a determination to reestablish relations with the international community in the future.
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