Suggested citations
AGLC4 | 개성공업지구법 2003 [Kaesong Industrial Complex Law of the Democratic People's Republic of Korea (2003)] [tr Daye Gang].
Bluebook | Kaesong Gongeobjigubeob 2003 [Kaesong Industrial Complex Law of the Democratic People's Republic of Korea (2003)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on November 20, 2002, as Directive No. 3430 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on April 24, 2003, as Directive No. 3715 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF KAESONG INDUSTRIAL COMPLEX LAW
Article 1
The Kaesong Industrial Complex is an international industrial, trade, commercial, financial, and tourist area administered and operated according to the laws of the Republic. The Kaesong Industrial Complex Law of the Democratic People’s Republic of Korea shall serve to develop the national economy by strictly adopting systems and order in the development, administration and operation of the industrial complex.
Article 2
The development of the industrial complex shall be done by means of a developer leasing land in the complex and doing the site clearance and building the infrastructure and attracting investments. The industrial complex shall be divided into things such as a factory area, a commercial area, a residential area, and a tourist area.
Article 3
Southern and overseas Koreans, or corporations, individuals or economic organizations of other countries may invest in the industrial complex. An investor may establish an enterprise or install a branch office, sales office or office in the industrial complex and may freely conduct economic activities. In the industrial complex shall be guaranteed preferential economic activity conditions in fields such as recruitment, land use and payment of tax.
Article 4
Investment or business activities that hinder the safety of society and the sound development of the national economy, the health of the residents and environmental protection, or which are in economically or technically inferior sectors, may not be done in the industrial complex. Investment in the infrastructure construction sector, light industry sector or advanced science technology sector shall be especially encouraged.
Article 5
Standardized guidance on the work of the industrial complex shall be done by the central industrial complex guidance institution. The central industrial complex guidance institution shall guide the work of the industrial complex through the industrial complex administration institution.
Article 6
Institutions, enterprises and organizations may not be involved in the work of the industrial complex. In cases where they wish to be involved in the work of the industrial complex as necessary, they must agree with the central industrial complex guidance institution.
Article 7
The rights and interests of the investor shall be protected and the right of inheritance guaranteed for investment assets in the industrial complex. The property of an investor shall not be nationalized. In cases where the property of an investor must inevitably be collected related to the interests of the community, an agreement shall be made ahead of time with the investor, and that value shall be compensated.
Article 8
A southern or overseas Korean or foreigner shall not be detained or arrested, or his or her body or home searched, without a legal basis. In cases where an agreement between north and south, or a concluded treaty between the Republic and another country, relating to personal safety or criminal cases, it shall be followed.
Article 9
Economic activity in the industrial complex shall be done following this law and the regulations for its implementation. Particulars not determined by regulations shall be handled by agreement between the central industrial complex guidance institution and the industrial complex administration institution.
CHAPTER II. DEVELOPMENT OF KAESONG INDUSTRIAL COMPLEX
Article 10
The development of the industrial complex shall be done by a determined developer. The work of determining the developer shall be done by the central industrial complex guidance institution.
Article 11
A developer must conclude a land lease contract with the central industrial complex guidance institution. The central industrial complex guidance institution must give a land use certificate issued by the relevant institution to the developer that has concluded a land lease contract.
Article 12
The period of land lease in the industrial complex shall be 50 years from the day the land use certificate was issued. According to the application of the enterprise, the leased land may continue to be used even after the period of land lease has concluded.
Article 13
A developer must correctly draft the overarching industrial complex development plans and submit them to the central industrial complex guidance institution. The central industrial complex guidance institution must inform the developer of the deliberation results within 30 days of the day the overarching industrial complex development plans were received.
Article 14
The development of the industrial complex shall be done according to an approved overarching industrial complex development plan. In cases where the overarching industrial complex development plan is sought to be changed, an application shall be submitted to the central industrial complex guidance institution to receive approval.
Article 15
A central industrial complex guidance institution shall demolish and relocate buildings and extraneous matter in time and move residents so that interference is not caused to the development construction. The expenses to be spent on the demolition and relocation of buildings and extraneous matter or on moving residents within the industrial complex shall be borne by the developer.
Article 16
A developer must commence development construction at the time the demolition work of the buildings and extraneous matter within the industrial complex is completed. The development of the industrial complex may be divided into stages.
Article 17
The infrastructure construction of the industrial complex shall be done by the developer.
A developer may also construct infrastructure subjects such as electricity, communications or guaranteed water facilities jointly with another developer, or by means of transfer or commission, as necessary.
Article 18
A developer must place an enterprise according to the overarching industrial complex development plans at the time the construction of infrastructure subjects is concluded. In this case, the land use certificate and buildings in the industrial complex may be transferred or sublet to an enterprise.
Article 19
A developer may conduct business operations in the industrial complex such as domestic construction work, tourism and entertainment work, or advertisement work.
Article 20
A central industrial complex guidance institution and an institution concerned shall guarantee the entry and exit of people and the entry and exit conditions of goods, so no interference is caused to the development of the industrial complex.
CHAPTER III. ADMINISTRATION OF KAESONG INDUSTRIAL COMPLEX
Article 21
The administration of the industrial complex shall be done by the industrial complex administration institution under the guidance of the central industrial complex guidance institution. The industrial complex administration institution must report on the industrial complex administration and operation work each quarter to the central industrial complex guidance institution.
Article 22
The duties of the central industrial complex guidance institution are as follows:
1. Designation of developers;
2. Guidance in the work of the industrial complex administration institution;
3. Drafting the enforcement regulations of the industrial complex law;
4. Guarantees of labour, water and goods required by enterprises;
5. Receipt and storage of subject construction and design documents;
6. Realization of sales in the northern area of products produced in the industrial complex;
7. Tax administration of the industrial complex;
8. Other work authorized by the State.
Article 23
The central industrial complex guidance institution shall properly agree with the institution concerned on issues raised related to the administration and operation of the industrial complex. The institution concerned shall staunchly cooperate with the work of the central industrial complex guidance institution.
Article 24
An industrial complex administration institution shall be composed of members recommended by the developer. According to the requirements of the industrial complex administration institution, workers dispatched by the central industrial complex guidance institution may also become members of an industrial complex administration institution.
Article 25
The duties of an industrial complex administration institution shall be as follows:
1. Creation of investment conditions and attraction of investment;
2. Approval of establishment, registration and operating licenses of enterprises;
3. Construction licenses and pre-delivery inspections;
4. Registration of land use rights, buildings, wheeled vehicles;
5. Support for business activities of enterprises;
6. Administration of infrastructure facilities;
7. Environmental protection and firefighting measures of the industrial complex;
8. Issue of entry and exit certificates of transportation methods and people from the southern area to the industrial complex;
9. Drafting of business rules of the industrial complex administration institution;
10. Other work authorized by the central industrial district guidance institution.
Article 26
The person in charge of the industrial complex administration institution is the chairman. The chairman shall organize and guide the business in general of the industrial complex administration institution.
Article 27
An industrial complex administration institution shall have operating funds. Operating funds shall be appropriated by income such as fees.
Article 28
Southern and overseas Koreans, foreigners and transportation methods entering from the southern area to the industrial complex may take an entry and exit certificate issued by the industrial complex administration institution and may enter without a visa through designated passages. The order of entering into the industrial complex from another area of the Republic, and the order of entering into another area of the Republic from the industrial complex, shall be determined separately.
Article 29
Southern and overseas Koreans and foreigners shall be guaranteed living convenience in the culture, public health, sport, and education sectors in the industrial complex, and may freely use communication methods such as post, telephone, and fax.
Article 30
Southern and overseas Koreans and foreigners who enter, stay in, or reside in the industrial complex may tour places in Kaesong City such as revolutionary historic sites, historical sites and artefacts, scenic places, and natural monuments, according to what has been decided. The Kaesong City People’s Committee shall manage well the subjects of tourism and facilities of Kaesong City and preserve and manage them, and must supply the labour required.
Article 31
Advertisements in the industrial complex may be done without being restricted in things like location, kind, content, method, or period. However, in cases where advertising material is sought to be installed outside, the approval of the industrial complex administration institution is to be received.
Article 32
The entry and exit of goods in the industrial complex shall be done by the report system. Persons who wish to enter and exit goods shall correctly draft the entry and exit declaration and submit it to customs at the point of entry or exit of goods.
Article 33
Customs duty shall not be levied for goods brought into the industrial complex, goods taken out of the industrial complex to the south or to another country, or goods manufactured by commission at an enterprise, institution or organization of the Republic. In cases where goods brought in from another country are sold as they are in another area of the Republic, a customs duty may be levied.
Article 34
Inspection and quarantine institutions shall do the work of entry and exit inspections, customs inspections, and hygiene and animal and plant quarantine quickly and with scientific and technical methods so as not to cause interference with the safety and investment attraction of the industrial complex.
CHAPTER IV. ESTABLISHMENT AND OPERATION OF ENTERPRISES IN THE KAESONG INDUSTRIAL COMPLEX
Article 35
In cases where an investor wishes to establish an enterprise in the industrial complex, he or she must submit an application to establish an enterprise to the industrial complex administration institution. The industrial complex administration institution shall make a decision to approve or reject the establishment of the enterprise within 10 days of the day the application to establish an enterprise was received and must inform the applicant of those results.
Article 36
An investor who has received approval to establish an enterprise shall make the determined investments and register the enterprise with the industrial complex administration institution, then must make customs registration and tax registration with the relevant institution within 20 days. In this case, designated documents must be submitted.
Article 37
An enterprise must recruit employees using labourers of the Republic. Managing personnel and technical experts and technical engineers in special occupations may be recruited from labourers of the south or of other countries after informing the industrial complex administration institution. In this case, the industrial complex administration institution must report it to the central industrial complex guidance institution.
Article 38
Enterprises must conduct their business activities within the scope of the occupation they have received approval for. In cases where an extension or change of occupation is sought, the approval of the industrial complex administration institution must be received.
Article 39
An enterprise may purchase goods necessary for its business activities in areas of the Republic outside the industrial complex, or may sell products it produces in areas of the Republic. It may also commission the manufacture of raw materials, resources, or parts with institutions, enterprises, or organizations of the Republic as necessary.
Article 40
The price of products in the industrial complex, wages, and the price of products traded between enterprises and the institutions, enterprises or organizations of the Republic shall be determined by agreement of the parties based on international market prices.
Article 41
The currency in circulation in an industrial complex shall be done in convertible foreign currency and things like credit cards may be used. The kinds of currency in circulation and the base currency shall be determined by agreement between the industrial complex administration institution and the central industrial complex guidance institution.
Article 42
An enterprise must keep an account in a bank established in the industrial complex. It must inform the industrial complex administration institution and may also keep accounts in banks of the south or of other countries outside the industrial complex.
Article 43
Enterprises shall correctly perform their accounting work and must pay taxes such as income tax, transfer tax, business tax, and local tax in time. The income tax rate in the industrial complex shall be 14% of the net profits and for the infrastructure construction sector, light industry sector and advanced science technology sector it shall be 10%.
Article 44
Foreign currency may freely be brought in and taken out of the industrial complex. Profits obtained by conducting business activities and other income monies may be remitted or taken to the southern area or to another country without taxation.
Article 45
In cases where a branch office, sales office or office is sought to be installed in the industrial complex, the relevant application shall be made to the industrial complex management institution and approval shall be received. A branch office or sales office may only conduct business activities after registering with the industrial complex administration institution.
CHAPTER V. DISPUTE RESOLUTION
Article 46
Differences in opinion related to the development, management and operations, and business activities of the industrial complex shall be resolved by means of agreement between the parties. In cases when it cannot be resolved by means of agreement, it shall be resolved by .. commercial dispute resolution processes agreed between north and south or by arbitration or judicial process.
RULES
Article 1
This law shall be enforced from the day it is adopted.
Article 2
The content of an agreement concluded between north and south related to the Kaesong Industrial Complex shall have the same legal effect as this law.
Article 3
The interpretation of this law shall be done by the Presidium of the Supreme People’s Assembly.
Last updated 4 June 2021