North Korean City Receives Foreign Investment

By Park Sae-jin Posted : September 28, 2011, 10:20 Updated : September 28, 2011, 10:20
According to the Washington Post, foreign investors have begun shifting investment into a North Korean port city called Rason. Already in the northeastern tip of North Korea, Chinese and Russian construction crews are racing to build transportation lines to a long-neglected port city that may become an oasis for foreign investment.

Chinese workers, living in roadside tents, are widening and paving a 31-mile road whose condition was considered unusable that trucks needed three hours to travel it. Russians, meantime, are finishing a $200 million renovation of a 34-mile stretch of railroad.

The road starts in Hunchun, China, and the railway starts in Khasan, Russia, but both pathways end at the same spot: a seaside city known as Rason, where North Korea is experimenting with the economic reforms it has consistently resisted.

North Korean officials had designated Rason as a special economic zone, but the leadership in Pyongyang, ambivalent about loosening its state-run economy, spent the subsequent 19 years ignoring Rason’s potential.

Only this year have North Korean officials delivered a new message, touting Rason as their mini-Singapore, a business-friendly hub with cheap labor, low taxes and a soon-to-arrive Internet connection for foreigners.

Investors in China and Russia want to use Rason’s three ports, which give the trade giants efficient access to Japan and South Korea.

However, experts note that China and Russia, by upping their investment in Rason, also are taking a risk: Corruption infests business, discouraging major investments, even when they are government-backed. Those who conduct business in North Korea speak of arbitrary rule changes, with no legal system fit for handling disagreements.

(아주경제 앤드류 이 기자)

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