Suggested citations
AGLC4 | 황금평, 위화도경제지대법 2011 [Hwanggumpyong Island, Wehuado Economic Zone Law of the Democratic People's Republic of Korea (2011)] [tr Daye Gang].
Bluebook | Hwang-geumpyeong, Wihwado Gyeongjejidaebeob 2011 [Hwanggumpyong Island, Wehuado Economic Zone Law of the Democratic People's Republic of Korea (2011)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on December 3, Juche 100 (2011), as Directive No. 2006 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF ECONOMIC ZONE LAW
Article 1 (Objectives of Economic Zone Law)
The Hwanggumpyong Island, Wehuado Economic Zone Law of the Democratic People’s Republic of Korea shall correctly adopt systems and order in the development and management of the economic zone and shall serve to expand and develop foreign economic co-operation and exchange.
Article 2 (Status and location of economic zone)
The Hwanggumpyong Island, Wehuado Economic Zone is a special economic zone in the Democratic People’s Republic of Korea where a preferential policy is executed in the economic field. The Hwanggumpyong Island, Wehuado Economic Zone shall include the Hwanggumpyong Island Complex and the Wehuado Complex of the North Pyongan Province.
Article 3 (Development and industrial composition of economic zones)
The development of economic zones shall be done by complex and by stages. The Hwanggumpyong Island Complex shall be developed using the information industry, light industry, agriculture, commerce, and tourism industry as the foundation, and the Wehuado Complex shall be developed according to the Wehuado development plan.
Article 4 (Investing parties)
Corporations, individuals, or economic organizations of many countries of the world may invest in the economic zone. Korean compatriots residing outside the territory of our country may also invest in the economic zone according to this law.
Article 5 (Guarantee of conditions for economic activities)
Investors shall establish things such as companies, branch offices, and offices in the economic zone and may freely do business activities. The State shall assure preferential conditions for economic activities for investors in fields such as land use, recruitment, payment of tax, and entry into the market.
Article 6 (Sector for encouraging, prohibiting, and restricting investment)
The State shall especially encourage investment in the infrastructure construction sector, advanced science technology sector, and sectors that produce products with high competitiveness in international markets in the economic zone. Investment or business operations that hinder the safety of the country, health of the residents, sound societal morals, or environmental protection, and for economically or technically inferior subjects, shall be prohibited or restricted.
Article 7 (Entity in charge of economic zone administration and operation, principle of prohibition on involvement in the work of the management committee work)
The administration and operation of economic zones shall be done by the management committee with the assistance of the guidance of the central special economic zones guidance institution and the North Pyongan Province People’s Committee. Other institutions may not be involved in the work of the management committee, except in cases where determined by this law.
Article 8 (Protection of rights and interests of investors)
The property, legal income, and rights given to investors in the economic zone shall be protected according to law. The State shall not nationalize or collect property of investors. In cases where the property of investors is inevitably collected or sought to be temporarily used related to the interests of society and the public, the investor shall be notified ahead of time and the given legal process shall be used, and shall sufficiently and effectively compensate that value in time without discrimination.
Article 9 (Guarantee of personal safety and human rights, prohibition on illegal detention and arrests)
The personal safety and human rights of citizens in the economic zone shall be protected according to law. There shall be no detention or arrest, and residences shall not be searched, without a legal warrant. In cases where there is a treaty entered into related to personal safety and criminal cases between our country and a given country, it shall be followed.
Article 10 (Applicable regulations)
Economic activities such as the development, management, and enterprise operation in economic zones shall apply this law, the regulations for implementing this law, regulations, and rules. In cases where the regulations in the economic zone is different to the content of a treaty such as an arrangement, memorandum of understanding, or agreement entered into between our country and other countries, the treaty shall first be applied, and in cases where it is different to the content of regulations applied outside the economic zone, the economic zone regulations shall first be applied.
CHAPTER II. DEVELOPMENT OF ECONOMIC ZONE
Article 11 (Principle of development of economic zone)
The principles for development of the economic zone are as follows.
1. The guarantee of comparative superiority of natural geographical conditions, resources, and production factors of the economic zones and their surroundings
2. Conservation and rational use of land and resources
3. Ecological and environmental protection of the economic zones and their surroundings
4. Raising international competitiveness of production and labour
5. Guarantee of convenience of economic activities such as trade and investment
6. Guarantee of interests of society and the public
7. Guarantee of enduring and balanced economic development
Article 12 (Development plans for economic zones and their changes)
The development of economic zones shall be done according to an approved development plan. Approval for changing a development plan shall be done by the institution that approved the given development plan.
Article 13 (Development method for economic zone)
The Hwanggumpyong Island complex in the economic zone shall be developed by the method of the development enterprise leasing the whole surface area of the land comprehensively developing and doing business administration. The Wehuado complex shall be developed by methods agreed between the parties to the development.
Article 14 (Approval for development enterprises)
Approval for development enterprises shall be done by the method of the central special economic zones guidance institution issuing approval documents for development rights for development enterprises through the management committee. Authorization for development enterprises and applications to issue approval documents for development rights shall be done by the management committee.
Article 15 (Land lease contracts)
A development enterprise that has received approval documents for development rights must conclude a land lease contract with an land administration institution. In the land lease contract shall be determined the lease period, surface area and planning, use, payment period and payment method for lease fee, and other required particulars. The land administration institution shall issue a land use certificate to a development enterprise that has paid the land lease fee.
Article 16 (Period of land lease)
The period of land lease in the economic zone shall be up to 50 years of the day the land use certificate was issued to the given enterprise. Enterprises inside the zone shall conclude the contract again after the period of land lease ends, and may continue to use the leased land.
Article 17 (Demolition and relocation of buildings and extraneous matter)
Institutions and enterprises responsible for demolition and relocation must demolish and relocate things such as public buildings, homes, and extraneous matter inside the development area and must move the residents so there is no interference to development construction.
Article 18 (Starting point for development construction)
Development enterprises must commence development construction at the time the demolition and relocation work of the buildings and extraneous matter inside the development zones ends.
Article 19 (Construction of infrastructure facilities and public facilities)
The construction of infrastructure and public facilities in the economic zone shall be done by the development enterprise, and shall have special approval for the right of business administration. Development enterprises may construct infrastructure and public facilities by working with different enterprises.
Article 20 (Land use rights and transfer and lease price for buildings)
Development enterprises have the right to transfer or lease land and buildings they have developed according to the advancement of the development plan and infrastructure construction. In these cases, the transfer or lease price shall be determined by the development enterprise.
Article 21 (Change and registration of land use rights and building ownership rights)
Enterprises in the economic zone may buy and transfer land use rights and building ownership rights by the method of buying and selling, exchanging, gifting, or bequeathing, or leasing or securing as collateral within the validity period. In these cases, the registration of land use rights and building ownership rights shall be amended, and another land use certificate or building ownership rights registration certificate must be reissued.
CHAPTER III. MANAGEMENT OF ECONOMIC ZONE
Article 22 (Principle of management of economic zone)
Principles of management of the economic zone are as follows.
1. Strict adherence to and implementation of the regulations
2. Guarantee of independence of management committees and enterprises
3. Provision of preferences for trade and investment activities
4. Law of objectivity of economic development and adherence to market theory
5. Reference to international custom
Article 23 (Establishment and status of management committee)
A management committee shall be established in the economic zone for the administration and operation of the zone. The management committee is a field management institution that has responsibility for the administration and operation of the development of the economic zone.
Article 24 (Composition of management committee)
The management committee shall be composed of the Chair, Vice-Chair, Secretary, and required members. The management committee shall have divisions required for the development and management of the economic zone.
Article 25 (Person responsible for management committee)
The person responsible for the management committee shall be the Chair. The Chair shall represent the management committee and shall oversee the work of the management committee.
Article 26 (Business content for management committee)
The management committee shall do the following work.
1. Drafting of rules required for the development and management of the economic zone
2. Creation of the investment environment and investment attraction
3. Approval to establish enterprises, registration, permission to operate
4. Promulgation of inventory to encourage investment, restricted and prohibited items
5. Subject construction license and pre-delivery inspection
6. Storage of subject construction design document
7. Establishment of independent financial management system of economic zones
8. Registration of land use rights, building ownership rights
9. Management of authorized property
10. Business activities cooperation of enterprises
11. Construction of infrastructure and public facilities, supervision and cooperation for business administration
12. Environmental protection and firefighting measures of economic zones
13. Entry of people and transportation methods, cooperation for entry and exit of supplies
14. Drafting bylaws of management committee
15. Other work authorized by the central special economic zone guidance institution and the North Pyongan Province People’s Committee related to the development and management of the economic zone.
Article 27 (Convening of meeting of persons responsible for enterprise)
The management committee may convene a meeting of persons responsible for enterprises, where the representatives of the enterprises participate. The meeting of persons responsible for enterprises shall consider important issues raised related to the development of the economic zone and to the management and operation of enterprises.
Article 28 (Compilation and implementation of budget)
Management committees shall draw up and implement a budget. In these cases, a document related to the state of budget compilation and implementation must be submitted to the central special economic zones guidance institution and the North Pyongan Province People’s Committee.
Article 29 (Business content for North Pyongan Province People’s Committee)
The North Pyongan Province People’s Committee shall do the following work related to the economic zone.
1. The drafting of enforcement regulations for economic zone laws and regulations
2. Guarantee of labour required for economic zone development and management and operation of enterprises
3. Other work authorized by the central special economic zones guidance institution related to the development and management of the economic zone.
Article 30 (Business content of central special economic zones guidance institution)
Central special economic zones guidance institutions shall do the following work.
1. Drafting development strategy for economic zones
2. Working connections with domestic institutions related to the development and construction of economic zones
3. Cooperation and connection with governments of other countries
4. Approval of deliberation standards for establishing an enterprise
5. Selection of domestic enterprises to invest in the economic zones
6. Domestic sales cooperation for economic zone products outside of the zone
Article 31 (Submission of work plans and statistical materials)
Management committees must submit work plans and statistical materials for the economic zones to the central special economic zone guidance institution and the North Pyongan Province People’s Committee every year.
CHAPTER IV. ESTABLISHMENT, REGISTRATION, OPERATION OF ENTERPRISES
Article 32 (Application to establish an enterprise)
Investors seeking to establish an enterprise in the economic zone must submit an application document to establish an enterprise to the management committee. The management committee must approve or reject the application document to establish an enterprise within 10 days of the day it is received, and must inform the applicants of the results.
Article 33 (Registration and qualifications for legal personality for enterprises)
An enterprise who has received enterprise establishment approval must do enterprise registration, customs registration, and detailed registration within the designated time limit. An enterprise registered with the management committee shall be a corporation of our country.
Article 34 (Rights of enterprise)
Enterprises in the economic zones have the right to adopt business administration and management orders, production plans, sales plans, and financial plans according to the bylaws, and the right to independently decide recruitment, wage standards, form of pay, the price of produced goods, and the ways of distributing profits. Business activities for enterprises may not be illegally interfered with, and expenses may not be collected or duties may not be imposed if not determined in regulations.
Article 35 (Type of business and approval of changes to enterprises)
Enterprises must do their business activities within the scope of the occupation for which approval has been received. In cases where the type of business is sought to be extended or changed, the approval of the management committee must be received.
Article 36 (Recruitment of labour)
Enterprises must preferentially recruit labour from our country. In cases where labour from other countries is sought to be recruited as necessary, the management committee must be notified.
Article 37 (Minimum standards for monthly wages)
The minimum standards for monthly wages for employees working in enterprises in the economic zones shall be determined by agreement of the North Pyongan Province People’s Committee and the management committee.
Article 38 (Trade with enterprises of our country outside of the zone)
Enterprises may conclude a contract and supply the raw materials, resources, and supplies required for business activities or sell produced products in the territory of our country outside of the economic zone. They may also commission the manufacture of raw materials, resources, and parts from institutions, enterprises and organizations of our country.
Article 39 (Price of products and labour)
Prices of products and labour traded between enterprises in the economic zone, and the price of products traded between enterprises inside the economic zone and institutions, enterprises and organizations of our country outside of the zone, shall be determined by agreement between the parties based on international market prices. The prices and public wages for important public necessities such as food and staples shall be determined by the North Pyongan Province People’s Committee. In these cases, financial compensation shall be made for damage caused to enterprises.
Article 40 (Accounts of enterprises)
Enterprises must have accounts in a bank in our country or in an investment bank of a foreign country established in our economic zone. In cases where an account is sought to be held in a bank of another country outside the territory of our country, the approval of the management committee must be received. The process of establishing a bank or bank branches in the economic zone shall be determined by the regulations.
Article 41 (Purchase of insurance and establishment of insurance institutions)
Enterprises and individuals in the economic zone shall purchase insurance from an insurance company inside the territory of our country, and compulsory insurance purchased shall be the insurance of the designated insurance company. Investors may establish and operate an insurance company, and insurance companies of other countries may establish and operate a branch office or office in the economic zone.
Article 42 (Accounting for enterprises)
The accounting calculations and settlement of enterprises in the economic zone shall be done by applying accounting standards commonly used internationally.
Article 43 (Duty to pay tax of enterprises and income tax rate)
Enterprises in the economic zone must pay the designated tax. The income tax rate shall be 14% of the settlement profits, and the income tax rate for especially encouraged sectors shall be 10% of the net profits.
Article 44 (Installation and registration of branch offices and offices)
In cases where things like a branch office or office is sought to be installed in the economic zone, the approval of the management committee must be received and they must do the registration. Branch offices, and offices must do detailed registration and customs registration within the designated time limit from the day it was registered with the management committee.
CHAPTER V. GUARANTEE OF CONDITIONS FOR ECONOMIC ACTIVITIES
Article 45 (Simplification of deliberation and approval process)
In the economic zone, standardized and intensive handling methods shall be used to simplify each kind of deliberation and approval process related to economic activities.
Article 46 (Currency in circulation and transaction currency)
In the economic zone shall be distributed designated currency. Currency in circulation and transaction currency shall be done using North Korean won or a designated currency. Processes related to foreign currency exchange and the exchange rate in the economic zone shall be determined by regulations.
Article 47 (Entry and exit of foreign currency, profits, property)
Foreign currency may be freely entered and exited in the economic zone, and legal profits and other income may be remitted to outside the economic zone without restriction. Investors may take out without restriction any property brought into the economic zone, and property acquired legally inside the zone, to outside the economic zone.
Article 48 (Protection of intellectual property rights)
Intellectual property rights in the economic zone shall receive legal protection. The management committee shall adopt a work system related to the registration, use, and protection of intellectual property rights in the economic zone.
Article 49 (Management of place of origin)
Place of origin management work in the economic zone shall be done by the place of origin management institution. The place of origin management institution must do place of origin management work of products in conformity with economic zone regulations and international custom.
Article 50 (Special approval for right of business administration)
In the economic zone, infrastructure facilities and public facilities may be allowed to operate as a subject for special permission. In cases where an enterprise that has special approval for right of business administration seeks to transfer or distribute it to a different enterprise, a contract shall be concluded and the approval of the management committee must be received.
Article 51 (Purchase of economic zone products)
Institutions, enterprises and organizations of our country outside the economic zone may conclude a contract and purchase products produced or sold by an enterprise in the economic zone.
Article 52 (Serious consideration and fulfilment of contracts)
Enterprises shall seriously consider contracts and shall maintain credibility, and must responsibly fulfil the contract. Parties shall adhere to the principles of equality and mutual benefit in the entry into and fulfilment of the contract.
Article 53 (Labour related to business administration)
In the economic zone, labour may be done related to business administration, such as banking, insurance, accounting, law, and measurement, according to the regulations.
Article 54 (Installation approval for advertising work and outdoor advertising material)
In the economic zone, advertisement work and advertising may be done according to the regulations. In cases where advertising materials are sought to be installed outdoors, the approval of the management committee shall be received.
Article 55 (Construction standards and technical norms)
To construction design and construction in the economic zone may be applied the advanced design standards, construction technical standards, and technical norms of other countries.
Article 56 (Tourism industry)
Tourism resources such as natural and scenic beauty and folkloric culture shall be developed in the economic zone to develop international tourism. Investors may operate in the tourism industry in the economic zone according to the regulations.
Article 57 (Use of means of communications)
In the economic zone, means of communications such as post, telephone, and fax may be freely used.
Article 58 (Guarantee of conditions for entry of people and transportation methods, entry and exit of supplies)
Traffic inspection, customs, and quarantine institutions and authorities concerned must speedily and conveniently assure the entry of people and transportation methods, and the entry and exit of supplies, so that no interference is caused to the development and business activities in the economic zone.
Article 59 (Trade in marketable securities)
Foreign investment enterprises and foreigners may trade in marketable securities within the economic zone according to the regulations.
CHAPTER VI. ENCOURAGEMENT AND PREFERENCES
Article 60 (Investment methods)
Investors may invest in the economic zone using different methods such as direct investment or indirect investment.
Article 61 (Encouragement of exports and imports)
Enterprises may conclude contracts with enterprises inside the economic zone or outside of the zone, and may trade in trade in products, techniques, and labour, and may also do export and import agent work.
Article 62 (Reduction of income tax)
For designated enterprises operating for more than 10 years in the economic zone, they may be exempted from enterprise income tax or it may be reduced. The period for exempting or reducing income tax, and the calculation point for the tax cut rate and the reduction period, shall be determined by the given regulations.
Article 63 (Preferences related to land use)
Land for enterprise use in the economic zone shall be first supplied according to actual demand, and different preferences shall be given to each other in lease periods, lease fees, and payment methods according to the field and use of land. For enterprises investing in infrastructure facilities, public facilities, and special encouragement sectors, they shall have priority in choosing the location of land, and may be exempted from the given land usage fee in the designated period.
Article 64 (Income tax repayment related to reinvested portion)
In cases where profits are reinvested to extend the registered capital, or a new enterprise is established and operated for more than 5 years in the economic zone, 50% of the relevant income tax amount of the reinvested portion shall be returned. In cases of reinvesting in the infrastructure construction sector, the whole of the given income tax amount paid on the reinvested portion shall be returned.
Article 65 (Preferences for development enterprise)
Development enterprises shall have priority in the business administration rights acquisition for subjects such as the tourism and hotel industry. Tax shall not be levied on the property, infrastructure facilities, or public facilities operations of development enterprises.
Article 66 (Preferences for persons operating a business on subjects for special permission)
Management committees shall give preferences to persons operating a business on subjects for special permission so that they obtain rational profits.
Article 67 (Entry into economic zone)
Foreigners and transportation methods entering into the economic zone may enter through a designated passage without a visa with a passport or a certificate of entry to substitute it. The order of entering into an economic zone from a different area of our country, and the order of entering into a different area of our country from an economic zone, shall be separately determined.
Article 68 (Preferential customs duty systems and customs duty exemptions)
A preferential customs duty system shall be executed in the economic zone. Customs duties shall not be levied for supplies brought into the economic zone for the purpose of manufacturing trade, transit trade, and compensation trade; supplies required for the production and business administration for enterprises and products produced for export; office supplies and daily necessities required by investors; and supplies required for economic zone construction; and other designated supplies.
Article 69 (Entry and exit report system for supplies)
The entry and exit of supplies in the economic zone shall be done by a report system. Enterprises or individuals seeking to enter and exit supplies must correctly draft an entry and exit declaration and submit it to customs at the entry and exit branches.
Article 70 (Offer of convenience for things such as education, culture, medicine, and sport)
Residents and visitors to the economic zone shall be guaranteed convenience in fields such as education, culture, medicine, and sport.
CHAPTER VII. COMPLAINTS AND DISPUTE RESOLUTION
Article 71 (Complaints and their handling)
Enterprises or individuals may make a complaint to management committees, the North Pyongan Province People’s Committee, the central special economic zone guidance institution, and the authorities concerned. An institution that has received a complaint must investigate and resolve it within 30 days, and must inform the complainant of the result.
Article 72 (Dispute resolution by conciliation)
The management committee or the authorities concerned may conciliate the dispute according to the requests of the disputing parties. In these cases, a conciliation plan must be drafted based on the wishes of the disputing parties. The conciliation plan shall only have legal effect if the disputing parties mark it with their name by hand.
Article 73 (Dispute resolution by arbitration)
Disputing parties may raise arbitration by agreement to an international arbitral organ of our country or of another country established in the economic zone. Arbitration shall follow the arbitral rules of the given international arbitration committee.
Article 74 (Dispute resolution by court proceedings)
Disputing parties may raise a lawsuit with a court with jurisdiction over the economic zone, or with a court installed in the economic zone. The process for administrative lawsuits in the economic zone shall be separately determined.
SUPPLEMENTARY REGULATIONS
Article 1 (Implementation date of law)
This law shall be implemented from the day it is promulgated.
Article 2 (Right of interpretation of law)
The interpretation of this law shall be done by the Presidium of the Supreme People’s Assembly.
Last updated 4 November 2020