North Korea’s recent move to establish a collaborative joint venture within the Kaesong Industrial Complex (KIC) has been attracting attention of late. The North hopes that the “Kaesong High-Tech Development Zone” will bring in overseas capital, but not from South Korea.
Chosun Central News Agency (KCNA) reported on the 17th that an international consortium of foreign companies has come to an agreement on the construction of the zone, and that work is now underway. These foreign investors predominately hail from Singapore, Hong Kong and the Middle East.
North Korea recently created the Chosun Economic Development Committee, a private group tasked with overseeing the development of special economic zones. The country has also hosted an international debate as part of its active efforts to engage with foreign investors.
Last March, North Korea modified its legal and systemic processes in order to allow for foreign investment. Following this move, the KIC was selected as a ‘model zone.’
North Korea’s new economic zones will likely be based on this Kaesong model; that is, pairing foreign capital and skills with the local workforce. Some believe that experience accrued from the KIC has given the North the confidence needed to pursue these new projects.
Others assess that North Korea’s move to attract foreign currency is the outcome of the difficulty of doing business with the South. South Korea is maintaining a principled stance in regard to the reopening of the Mt. Geumgang tourist resort, and North Korea looking elsewhere for investment may be well be a targeted act.
Oh Gyeong Seob of the Sejong Institute spoke to Daily NK, “North Korea is displaying a half-hearted attitude because they know they must go through a difficult negotiation process with a South Korean administration that wants developmental normalization of the KIC. Attracting foreign capital is less burdensome for Kim Jong Eun than economic collaboration with the South. That’s why they’ve made this decision.”
“North Korea is likely hoping to woo foreign capital in the future, too. At the same time as guaranteeing a little bit of economic freedom, they may well invigorate the KIC and launch a policy aimed at attracting South Korean capital,” he added.
