March 15, 2010 08:39
North Korea has revised a law on the Rajin-Sonbong Economic Special Zone, making it possible for overseas residents to do business there, it emerged Sunday. The law was changed on Jan. 27 as part of efforts by the cash-strapped dictatorship to lure investment from overseas.
Article 8 of the revised law makes it possible for "Koreans" living outside North Korea to do business in the special zone, apparently with a view to attracting South Korean investors.
It also removes a clause requiring foreign companies to obtain government approval when they open sales offices or branches in the zone, making it easier to enter the North Korean market.
Instead, approval is with a new agency overseeing the Rajin-Sonbong zone.
But foreign firms and their staff are explicitly under North Korean jurisdiction, including all the draconian laws that apply to North Koreans.
The previous law permitted foreign investors unconditional no-visa entry and stay in North Korea, but under the new rules they are restricted to the zone.
Corporate income tax is reduced from 14 percent to 10 percent "in sectors particularly promoted by the state." But other terms related to customs, land lease and bank loans remain unchanged.
A South Korean security official said the revisions "are not attractive enough to draw much investment. If anything, things have changed for the worse."
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