Economic Development Complex Law of the Democratic People’s Republic of Korea (2013)

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AGLC4 |
경제개발구법 2013 [Economic Development Complex Law of the Democratic People's Republic of Korea (2013)] [tr Daye Gang]
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Gyeongjegaebalgubeob 2013 [Economic Development Complex Law of the Democratic People's Republic of Korea (2013)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/


Adopted on May 29, Juche 102 (2013), as Directive No. 3192 of the Presidium of the Supreme People’s Assembly

CHAPTER I. BASICS OF ECONOMIC DEVELOPMENT COMPLEX LAW

Article 1 (Objectives of Economic Development Complex Law)

The Economic Development Complex Law of the Democratic People’s Republic of Korea shall correctly adopt system and order in the establishment, development and management of the economic development complex, and serve to develop foreign economic co-operation and exchange, develop the economy of the country, and raise the people’s standard of living.

Article 2 (Definition and categories of economic development complexes)

Economic development complexes are special economic zones where preferences in economic activities are guaranteed according to especially determined regulations of the State. Economic development complexes include development complexes in economic and scientific technical fields such as industrial development complexes, agricultural development complexes, tourism development complexes, export manufacture complexes, cutting edge technological development complexes

Article 3 (Classification of economic complexes according to management affiliation)

The State shall manage economic development complexes by classifying them into regional level economic development complexes and central level economic development complexes, according to their management affiliation. The work of determining the name and affiliation of the economic development complex shall be done by the non-standing State Deliberation Commission.

Article 4 (Establishment oversight institution of economic development complex)

The establishment and work related to practical affairs of economic development complexes in the Democratic People’s Republic of Korea shall be done by the central special economic zones guidance institution in a standardized way. The State shall cause the central special economic zones guidance institution to concentrate on and treat issues raised externally and internally related to the establishment of an economic development complex.

Article 5 (Preferences for investors)

Corporations, individuals and economic organizations of other countries, and overseas Korean may invest in an economic development complex, may establish things like enterprises, branch offices, and offices, and may freely do economic activities. The State shall assure preferential conditions for economic activity investors in fields such as land use, recruitment, and payment of tax. 

Article 6 (Encouragement of investment and prohibited or restricted sectors)

The State shall especially encourage investments in sectors that produce products that have high competitiveness in the infrastructure construction sector, advanced science technology sector, and international markets in the economic development complex. Investment and economic activities in subjects that hinder the safety of the country, the health of residents, sound societal morals, or environmental protection, and subjects that are economically or technically inferior, shall be prohibited or restricted.

Article 7 (Protection of the rights and interests of investors)

Rights given to investors, investment assets, and legal income in the economic development complex shall receive legal protection. The State shall not nationalize or collect the property of investors, and in cases where the property of the investor is inevitably collected or temporarily used related to the interests of society and the public, they shall be notified ahead of time and that value shall be sufficiently compensated in time.

Article 8 (Guarantee of personal safety)

In the economic development complex, the personal safety of individuals shall be protected according to the laws of the Democratic People’s Republic of Korea. They will not be detained or arrested without a legal warrant and their residence shall not be searched. In cases where a treaty has been entered into between our country and the relevant country related to personal safety, it shall be followed.

Article 9 (Applicable regulations)

Economic activities in the economic development complex such as development, management, and enterprise operations shall apply this law, and the regulations following this law.

CHAPTER II. ESTABLISHMENT OF ECONOMIC DEVELOPMENT COMPLEX

Article 10 (Basis of establishment of economic development complex)

The establishment of an economic development complex shall be done according to the economic development strategy of the State.

Article 11 (Principles of selection of areas for economic development complexes)

The principles of selection of areas for economic development complexes are as follows:

1. Profitable areas for foreign economic co-operation and exchange

2. Areas able to serve the economic and scientific technical development of the country

3. Areas at a certain distance from residential areas

4. Areas that do not violate protected areas determined by the State.

Article 12 (Treatment of issues raised relating to economic development complexes)

In cases where an issue has been raised relating to the establishment and development of an economic development complex with an institution, enterprise or organizations from an investor of another country, it must hand over the content raised to the central special economic zones guidance institution as a document. The central special economic zones guidance institution shall review the raised document in detail, must confirm it and treat it.

Article 13 (Approval and notification thereof from the relevant country government)

In cases where investors of other countries seek to invest in an economic development complex, the approval of their country’s government shall be received ahead of time and that fact must be communicated to the authorities concerned in our country in writing. In cases where there is no requirement to receive governmental approval according to the laws of their country, the notification of approval shall not be done.

Article 14 (Submission of establishment application documents for a regional level economic development complex)

The establishment application document for a regional level economic development complex shall be submitted by the relevant province (or municipality directly under central authority) People’s Committee to the central special economic zones guidance institution. In these cases, documents agreed with the relevant institutions in the province (or municipality directly under central authority) shall be submitted jointly.

Article 15 (Submission of establishment application documents for a central level economic development complex)

Establishment application documents for a central level economic development complex shall be drafted by the relevant authorities according to the designated process and submitted to the central special economic zones guidance institution. In these cases, documents agreed with the authorities concerned shall be submitted jointly.

Article 16 (Agreement with related institutions) 

The central special economic zones guidance institution must sufficiently agree on the establishment deliberation documents for an economic development complex with related central bodies before raising them with the non-standing State Deliberation Commission.

Article 17 (Establishment and approval of economic development complex) 

The establishment and approval of an economic development complex shall be done by the non-standing State Deliberation Commission. In cases where the central special economic zones guidance institution raises establishment deliberation documents with the non-standing State Deliberation Commission, documents agreed with related central bodies must be submitted together.

Article 18 (Promulgation of establishment of economic development complex) 

The work of promulgating the decision of the State to create an economic development complex shall be done by the Presidium of the Supreme People’s Assembly.

CHAPTER III. DEVELOPMENT OF ECONOMIC DEVELOPMENT COMPLEX

Article 19 (Principles of development of economic development complex)

The principles of development of an economic development complex are as follows. 

1. The principle of developing in stages according to a plan 

2. The principle of diversifying investment attraction

3. The principle of protecting the economic development complex and its surrounding nature and ecological environment

4. The principle of rationally using land and resources

5. The principle of raising the international competitiveness of production and labour

6. The principle of assuring both the convenience of economic activity and the interests of society and the public

7. The principle of assuring the enduring and balanced development of the relevant economic development complex.

Article 20 (Development parties)

Investors from other countries may solely or jointly develop an economic development complex after receiving approval. Institutions or enterprises of our country may also develop an economic development complex after receiving approval.

Article 21 (Approval for development enterprise)

Approval for development enterprises shall be done by the central special economic zones guidance institution. The central special economic zones guidance institution must register the development enterprise and must issue approval documents for development rights. 

Article 22 (Draft and approval of development plan)

The overarching development plan and detailed plans for the economic development complex shall be drafted by the relevant authorities or the development enterprise based on the overarching area land construction plan. The approval of the overarching development plan shall be done by Cabinet and the approval of the detailed plans shall be done by the central special economic zones guidance institution. The change or approval of the development plan shall be done by the institution that approved the relevant plan.

Article 23 (Development method) 

The development method for the economic development complex shall match the nature and development conditions of the relevant economic development complex, and may be determined as a rational method able to serve the economic development of the country.

Article 24 (Land lease contract)

In cases where a development enterprise seeks to lease land, a land lease contract must be concluded with the relevant land administration institution. The land lease contract must determine the lease period, surface area and planning, use, institution to which to pay the lease fee and the payment method, and other required particulars. The relevant land administration institution must issue a land use certificate to the enterprise that paid the land lease fee according to the land lease contract.

Article 25 (Period of land lease and prolongation of lease period)

The period of land lease of the economic development complex shall be a maximum of 50 years, and the period of land lease shall be calculated from the day the land use certificate is issued to the relevant enterprise. Where the period of land lease has ended, an enterprise may conclude another contract as necessary and may continue to use the leased land.

Article 26 (Investment of land use rights)

In cases where institutions, enterprises and organizations establish development enterprises together with investors of other countries, they may invest land use rights according to what has been decided.

Article 27 (Bearing fees for demolition and relocation of buildings and extraneous matter)

Expenses required for the demolition and relocation of buildings and extraneous matter and the move of residents in the development zones of an economic development complex shall be borne by the development enterprise.

Article 28 (Construction of infrastructure and public facilities) 

The construction of infrastructure and public facilities in the economic development complex shall be done by the development enterprise. Development enterprises may work with different enterprises to construct infrastructure and public facilities according to what has been decided. 

Article 29 (Price of land use rights, purchase and sale of buildings, subletting) 

Enterprise may buy and sell, sublet, gift, bequeath, or provide as collateral land use rights and building ownership rights. The price of the right of use of developed land, purchase and sale of buildings, and subletting shall be determined by the development enterprise.

Article 30 (Registration of land use rights and building ownership rights) 

In cases where an enterprise has acquired land use rights or building ownership rights, they must be registered with the management institution and the relevant approval documents must be issued and received. In cases where land use rights or building ownership rights have changed, an amended registration shall be done and the relevant approval documents must be reissued and received.

CHAPTER IV. MANAGEMENT OF ECONOMIC DEVELOPMENT COMPLEX

Article 31 (Economic development complex management institution)

The management of the economic development complex shall be done by the economic development complex management institution under the guidance and abetment of the central special economic zones guidance institution and the relevant province (or municipality directly under central authority) People’s Committee. The management institution may organize into names such as management committee or management office in conformity with the reality of the relevant economic development complex.

Article 32 (Principle of management of economic development complexes)

The principle of management of economic development complexes are as follows. 

1. Strict adherence to and implementation of regulations

2. Guarantee of independence of enterprises

3. Provision of preferences for economic activities

4. Reference to international customs

Article 33 (Business content of central special economic zones guidance institution)

The central special economic zones guidance institution shall do the following work.

1. Drafting the development strategy proposal related to economic development complexes

2. The cooperation and investment attraction from governments of other countries related to economic development complexes

3. Working connections with committees, Ministries and central bodies related to economic development complexes

4. Abetment of the work of the management institution

5. Review and approval of the economic development complex enterprise establishment deliberation standards

6. Tax administration of economic development complexes

7. Other work authorized by the State

Article 34 (Business content of Province (or municipality directly under central authority) People’s Committee)

The province (or municipality directly under central authority) People’s Committee shall do the following work related to economic development complexes affiliated to them.

1. Organization of management institution

2. Drafting and instructing on management documents of the State related to economic development complex work, such as the enforcement regulations of the economic development complex regulations

3. Abetment of the work of the management institution

4. Guarantee of required labour for the management of the economic development complex and for enterprises

5. Other work authorized by the State

Article 35 (Composition and persons responsible for the management institution) 

Management institutions shall be composed of the required members in conformity with the reality and benefit of the relevant economic development complex, and the person responsible shall be the Chair of the management committee or the President of the management office. The person responsible shall represent the management institution and shall oversee the work of the management institution.

Article 36 (Business content of management institutions)

Management institutions shall do the following work.

1. Drafting the rules required for the development and management of the economic development complex

2. Creation of the investment environment and investment attraction 

3. Establishment approval, registration, permission to operate of the enterprise 

4. Subject construction licenses and pre-delivery inspections

5. Storage of the subject construction design document

6. Registration of land use rights, building ownership rights

7. Cooperation in the business activities of enterprises

8. Supervision and cooperation for the construction and business administration of infrastructure and public facilities

9. Environmental protection and firefighting measures

10. Drafting bylaws of management institution

11. Other work authorized by the central special economic zones guidance institution and the province (or municipality directly under central authority) People’s Committee

Article 37 (Implementation of the budget compilation of the management institution) 

Management institutions must draw up and implement their own budgets. In these cases, documents related to budget compilation and its implementation must be submitted to the People’s Committee at the corresponding level or the central special economic zones guidance institution, according to what has been decided. 

CHAPTER V. ECONOMIC ACTIVITIES IN THE ECONOMIC DEVELOPMENT COMPLEX

Article 38 (Establishment application for an enterprise)

An investor seeking to establish an enterprise in the economic development complex must submit application documents to establish an enterprise to the management institution. The management institution must approve or reject the enterprise establishment within 10 days of receiving the application documents to establish an enterprise, and must inform the applicant of those results.

Article 39 (Simplification of process procedure) 

The central special economic zones guidance institution, the relevant province (or municipality directly under central authority) People’s Committee, and management institutions must simplify application, deliberation, approval and registration procedures and processes related to enterprise establishment.

Article 40 (Enterprise registration and corporation qualifications)

An enterprise that has received enterprise establishment approval must do establishment registration, address registration, customs registration, and tax registration within the designated time limit. Enterprises become a corporation of our country from the day the establishment registration is done with the management institution. However, branch offices and offices of enterprises of other countries are not corporations of our country.

Article 41 (Recruitment of labour)

The enterprises of economic development complexes shall preferentially recruit labour from our country. In these cases, recruitment application documents shall be submitted to the relevant labour administration institution and labour will be guaranteed. In cases where the labour of other countries is sought to be recruited as necessary, there must be agreement with the management institution.

Article 42 (Institution of minimum wages for employees) 

The minimum wages for employees of the economic development complex shall be determined by the central special economic zones guidance institution. In these cases, there will be consultation with the management institution or the relevant province (or municipality directly under central authority) People’s Committee.

Article 43 (Price of products and labour)

In an economic development complex, the prices of product traded between enterprises, labour prices, and the prices of products traded between institutions, enterprises and organizations in our country outside the enterprise and development complexes but inside the economic development complex, shall be determined by agreement of the parties according to international market prices.

Article 44 (Enterprise accounting) 

The accounting calculations and settlement of enterprises in the economic development complex shall be based on the regulations related to financial accounting that apply to the economic development complex. Particulars not determined in the financial accounting related regulations shall follow accounting customs that are internationally accepted.

Article 45 (Enterprise income tax rate)

The income tax rate in economic development complexes shall be 14% of net profits, and the income tax for enterprises in sectors being encouraged shall be 10% of net profits.

Article 46 (Currency in circulation and transaction currency) 

Currency in circulation and transaction currency in economic development complexes shall be North Korean won or a designated currency.

Article 47 (Entry and exit of foreign currency, profits, property) 

Foreign currency may be freely entered and exited from economic development complexes, and may remit without restriction legal profits and other income out of the economic development complex. Property brought into the economic development complex and property acquired by law may be taken out of the economic development complex.

Article 48 (Protection of intellectual property rights) 

Intellectual property rights shall receive legal protection in economic development complexes. The order related to the registration, use and protection of intellectual property rights shall follow the relevant regulations.

Article 49 (Tourism industry) 

Tourism resources that suit the natural scenic beauty, the environment, and nature of the relevant area in economic development complexes shall be developed to develop international tourism. Investors may conduct the tourism industry according to what has been decided.

Article 50 (Entry of people and transportation methods, and guarantee of entry and exit conditions of supplies)

Traffic inspection, customs, and quarantine institutions and relevant authorities must assure the entry of people and transportation methods, and the entry and exit of supplies, so that there is no interference to the development and management of economic development complexes and the economic activities of investors.

Article 51 (Trade in marketable securities)

Foreign investment enterprises and foreigners in economic development complexes may trade in marketable securities according to what has been decided.

CHAPTER VI. ENCOURAGEMENT AND PREFERENCES

Article 52 (Preferences related to land use)

Land for enterprises in economic development complexes shall be supplied first according to actual demand, and shall give different preferences in the lease period, lease fee and payment method according to the field of use of land. For enterprises that invest in infrastructure facilities, public facilities, and encouraged sectors, they will be given priority in choosing land location, and may exempt the relevant land usage fee in the designated period.

Article 53 (Reduction of income tax)

Enterprises that operate for more than 10 years in economic development complexes shall have reduced or be exempted from income tax. The reduction period, tax cut rate, and calculation point of the reduction period of income tax shall be determined by the regulations.

Article 54 (Preferences of income tax repayment relevant to reinvested portion) 

In cases where an investor reinvests profits to extend registered capital or to establish a new enterprise and operates it for more than 5 years, 50% of the income tax amount relevant to the reinvested portion shall be returned. In cases where there is reinvestment in the infrastructure construction sector, the whole of the enterprise income tax amount relevant to the reinvested portion paid shall be returned.

Article 55 (Preferences for development enterprises) 

Development enterprises in economic development complexes shall have priority in the acquisition of business administration rights for subjects such as the tourism industry, or hotel work. Tax shall not be levied on the property of development enterprises or the operation of infrastructure facilities and public facilities.

Article 56 (Preferential customs duty system and subjects of customs duty exemptions) 

A preferential customs duty system shall be executed in economic development complexes. Customs duty shall not be levied on supplies for the construction of the economic development complex, supplies brought in for the purpose of manufacturing trade, transit trade, or compensation trade, supplies for the production or business administration of enterprises, products produced for export, daily necessities to be used by investors, and other supplies determined by the State.

Article 57 (Entry and exit report system for supplies) 

The entry and exit of supplies from economic development complexes shall be done by a report system. In cases where supplies are sought to be entered and exited, a supplies entry and exit declaration shall be drafted and submitted to the relevant customs.

Article 58 (Communications guarantee) 

Convenience shall be provided in the use of communications means such as post, telephone, and fax in economic development complexes.

CHAPTER VII. COMPLAINTS AND DISPUTE RESOLUTION

Article 59 (Complaints and their treatment) 

Individuals or enterprises in the economic development complex may make complaints to the management institution, the central special economic zones guidance institution, or the relevant authorities. An institution that has received a complaint must investigate and resolve it within 30 days and must inform the complainant of those results.

Article 60 (Dispute resolution for complaints) 

Parties in an economic development complex may resolve disputes by the method of conciliation. A conciliation plan shall be drafted based on the will of the disputing parties and has legal effect after the disputing parties have marked it with their name by hand.

Article 61 (Dispute resolution by international arbitration)

Disputing parties may resolve a dispute by raising arbitration with an international arbitral organ in our country or other countries according to the arbitration agreement. The arbitration process shall follow the arbitration rules of the relevant international arbitration committee.

Article 62 (Dispute resolution by court proceedings) 

Disputing parties may resolve a dispute by raising a lawsuit with the province (or municipality directly under central authority) court with jurisdiction over the relevant economic development complex, or with the highest court.

SUPPLEMENTARY REGULATIONS

Article 1 (Implementation day of law) 

This law shall be implemented from the day it is adopted.

Article 2 (Restrictions on application) 

This law shall not be applied to the Rason Economic and Trade Zone, Hwanggumpyong Island, Wehuado Economic Zone, Kaesong Industrial Complex, and Mount Geumgang International Tourist Special Region.

Last updated 16 August 2020

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