Suggested citations
AGLC4 | 라선경제무역지대법 2011 [Rason Economic and Trade Zone Law of the Democratic People's Republic of Korea (2011)] [tr Daye Gang].
Bluebook | Rason Gyeongjae Muyeokjidaebeob 2011 [Rason Economic and Trade 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 January 31, Juche 82 (1993), as Decision No. 28 of the Standing Committee of the Supreme People’s Assembly
Amended and supplemented on February 26, Juche 88 (1999), as Directive No. 484 of the Presidium of the Supreme People’s Assembly
Amended on November 7, Juche 91 (2002), as Directive No. 3400 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on April 19, Juche 94 (2005), as Directive No. 1083 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on September 26, Juche 96 (2007), as Directive No. 2367 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on January 27, Juche 99 (2010), as Directive No. 583 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on December 3, Juche 100 (2011), as Directive No. 2007 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF RASON ECONOMIC AND TRADE ZONE LAW
Article 1 (Objectives of Rason Economic and Trade Zone Law)
The Rason Economic and Trade Zone law of the Democratic People’s Republic of Korea shall serve to develop the Rason Economic Trade Zone into an international relay transportation, trade and investment, finance, tourism, and community service area, by correctly adopting systems and orders in the development and management of the economic and trade zone.
Article 2 (Status of Rason Economic and Trade Zone Law)
The Rason Economic and Trade Zone is a special economic zone of the Democratic People’s Republic of Korea where preferential policy in the economic field is executed.
Article 3 (Construction of Industrial Zones)
The State shall construct in a planned way industrial zones founded on cutting edge technical industry, international logistics industry, equipment manufacturing industry, primary processing industry, light industry, community service industry, and modern agriculture in the economic and trade zone.
Article 4 (Parties to investment)
Corporations, individuals, and economic organizations from many countries of the world may invest in the economic and trade zone. Korean compatriots residing outside the territory of our country may also invest in the economic and trade zone according to the law.
Article 5 (Principle of guaranteeing conditions for economic activities)
Investors may establish things such as companies, branch offices and offices in the economic and trade zone, and may freely conduct economic activities. The State shall assure preferential conditions for economic activities to investors in fields such as land use, recruitment, payment of tax, and entry into the market
Article 6 (Encouragement, prohibition, restriction of investment in sector)
The State shall especially encourage investment in sectors that create products with high competitiveness in the infrastructure construction sector, the advanced science technology sector, and international markets in the economic and trade zone. Investment in subjects that can hinder the safety of the country, the health of the residents, and the sound societal morals, subjects that can harm environmental protection and the growth and development of animals and plants, and economically or technically inferior subjects shall be prohibited or restricted.
Article 7 (Principle of protecting investors’ property, benefits and rights)
In the economic and trade zone, the property, legal income, and rights given to investors shall be protected by law. The State shall not nationalize or collect the property of investors. In cases where .. the property of an investor inevitably must be collected or temporarily used related to the benefits to public society, they shall be notified ahead of time, shall follow the given legal process, and shall sufficiently and effectively compensate that value at the right time and without discrimination.
Article 8 (Principle of prohibiting involvement in the entity in charge or management committee work of economic and trade zone administration and operation)
The administration and operation in industrial districts and designated areas of the economic and trade zone shall be done by the management committee with the guidance and abetment of the central special economic zones guidance institution and the Rason city People’s Committee. Other institutions may not be involved in the work of the management committee except in cases determined by this law.
Article 9 (Guarantee of personal safety and human rights, prohibition on illegal detention and arrest)
The personal safety and human rights of citizens shall be protected according to law in the economic and trade zone. Detention and arrests will not occur, and residential places shall not be searched, without a legal warrant. In cases where a treaty has been entered into between our country and the relevant country related to personal safety or a criminal case, it shall be followed.
Article 10 (Applicable regulations)
Economic activities like development, management, and operation of enterprises in the economic and trade zone shall apply this law and the regulations and rules for the implementation of this law.
In cases where the regulations of the economic and trade zone are different to the content of a treaty like an arrangement, memorandum of understanding or agreement entered into between our country and another country, the treaty shall be preferentially applied, and in cases where they are different to the content of the regulations applied outside of the economic and trade zone, the regulations of the economic and trade zone shall be preferentially applied.
CHAPTER II. DEVELOPMENT OF THE ECONOMIC AND TRADE ZONE
Article 11 (Principle of development)
The principles of development of the economic and trade zone are as follows:
1. Guarantee of comparative superiority of the natural geographical conditions, resources, and production factors in the economic and trade zone and its surroundings
2. Economizing and rational use of land and resources
3. Environmental protection of the ecology of the economic and trade zone and surroundings
4. Increase in the international competitiveness of production and community service
5. Guarantee of convenience of economic activities like trade and investment
6. Guarantee of benefits to public society
7. Guarantee of enduring and balanced economic development
Article 12 (Development plans and their change)
The development of economic and trade zones shall be done according to approved development plans. Development plans include things like the overarching development plan, complex development plan, and detailed plans. Approval to change development plans shall be done by the institution that has approved the relevant development plan.
Article 13 (Development method of economic and trade zone)
Enterprises shall comprehensively develop the constant surface area of the land in the economic and trade zone, and shall especially permit to enterprises methods of business administration and the construction and right of management and business administration of infrastructure and public facilities, and may develop using different methods such as methods of development or methods agreed between the developing parties. Development enterprises may also construct infrastructure and public facilities by working with other enterprises.
Article 14 (Approval for development enterprises)
Approval for development enterprises in the economic and trade zone shall be done by the method of the central special economic zones guidance institution issuing to the development enterprise a development work rights approval document through the management committee or the Rason city People’s Committee. The authorization of development enterprises and the issue and application of development work rights approval documents shall be done by the management committee or the Rason city People’s Committee.
Article 15 (Land lease contracts related to comprehensive land development business administration)
In cases where development uses comprehensive land development business administration methods, the development enterprise must conclude a land lease contract with the land administration institution. In the land lease contract shall be determined the required particulars such as the lease period, surface area, planning, use, payment period and payment method of lease fees. The land administration institution must issue a land use certificate to development enterprises that have paid land lease fees.
Article 16 (Period of land lease)
The period of land leases in the economic and trade zone shall be concluded from the day the land use certificate was issued to the relevant enterprise to 50 years. Enterprises in the economic and trade zone may conclude a contract again after the period of land lease ends, and may continue to use leased land.
Article 17 (Issue of relevant approval documents and acquisition of real estate)
Enterprises in the economic and trade zone may acquire land use rights and building ownership rights according to regulations. In these cases, the relevant institutions shall issue land use certificates or building ownership rights registration certificates.
Article 18 (Land use rights, transfer or lease price of buildings)
Development enterprises have the right to transfer or lease land and buildings developed according to the development plan and the advancement of infrastructure construction. In these cases, the transfer or lease prices shall be determined by the development enterprises.
Article 19 (Change and registration of land use rights and building ownership rights)
Enterprises in the economic and trade zone may transfer, lease or secure as collateral within the validity period by methods of buying or selling, exchange, gift or inheritance land use rights and building ownership rights. In these cases, an amended registration shall be done for land use rights or building ownership rights and a land use certificate or a building ownership rights registration certificate must be reissued.
Article 20 (Demolition and relocation of buildings and extraneous matter)
Institutions and enterprises that have taken on demolition or relocation must demolish or relocate things like public buildings, homes and extraneous matters within the development area, and must move residents, so that there is no interference to development construction.
Article 21 (Start point of development and construction and planned development)
Development enterprises must commence development construction within development zones at the time the demolition and relocation work of buildings and extraneous matters ends.
Article 22 (Development and use of agricultural land, forest land, land for water)
Investors in the economic and trade zone may develop and use agricultural land, forest land and land for water according to a subcontracting production method. In this case, a contract must be concluded with the relevant authorities.
CHAPTER III. MANAGEMENT OF ECONOMIC AND TRADE ZONE
Article 23 (Principle of management of economic and trade zone)
The principles of management of economic and trade zones are as follows:
1. Strict adherence to and implementation of regulations
2. Guarantee of independence of management committees and enterprises
3. Preferential supply to trade and investment activities
4. Objective laws of economic development and adherence to market theory
5. Reference to international custom
Article 24 (Establishment and status of management committee)
A management committee shall be established to administer and operate the economic and trade zone. The management committee is a field management institution that is responsible for the administration and operation of the industrial district and designated areas.
Article 25 (Composition of management committee)
The management committee shall be composed of the Chair, Vice-Chair, Secretary and required members. The management committee shall keep divisions required for the development and management of the economic and trade zone.
Article 26 (Person responsible for management committee)
The person responsible for the management committee is the Chair. The Chair represents the management committee and shall oversee the work of the management committee.
Article 27 (Business content of the management committee)
The management committee shall do the following work within the scope of its jurisdiction:
1. Drafting the rules required for the development and management in the economic and trade zone
2. Composing an investment environment and attracting investment
3. Approval to establish enterprises and permission to register and operate
4. Promulgation of inventory of encouraged, restricted and prohibited investments
5. Construction licenses of subjects and pre-delivery inspections
6. Storage of subject design documents
7. Establishment of an independent financial management system
8. Registration of land use rights and building ownership rights
9. Management of entrusted property
10. Business activity cooperation of enterprises
11. Supervision and cooperation for construction of infrastructure and public facilities and business administration
12. Environmental protection and firefighting measures of jurisdictional areas
13. Cooperation of entry and exit of people and transportation methods and entry and exit of supplies
14. Drafting the bylaws of the management committee
15. Other work entrusted by the central special economic zone guidance institution and the Rason city People’s Committee related to the development and management of the economic and trade zone.
Article 28 (Installation of office of management committee)
The management committee may have things as necessary such as an office. The office shall work within the scope of the authority of the management committee authorization.
Article 29 (Submission of work plan and statistical materials)
The management must submit a work plan and statistical materials of the industrial complex and designated areas to the central special economic zone guidance institution and the Rason city People’s Committee every year.
Article 30 (Business content of Rason city People’s Committee)
The Rason city People’s Committee shall do the following work related to the development and management of the economic and trade zone.
1. Drafting the economic and trade zone law and the enforcement regulations of laws
2. Guarantee of labour required for the development and business activities of the economic and trade zone
3. Other work authorized by the central special economic zone guidance institution related to the development and management of the economic and trade zone.
Article 31 (Business content of central special economic zone guidance institution)
The central special economic zone guidance institution shall do the following work:
1. Drafting development strategy of the economic and trade zone
2. Work connections with national institutions related to the development and construction of the economic and trade zone
3. Cooperation and connections of the governments of other countries
4. Approval of deliberation standards for establishing an enterprise
5. Selection of domestic enterprises to invest in the economic and trade zone
6. Domestic sales cooperation of products of the economic and trade zone outside the zone.
Article 32 (Compilation and implementation of budget)
The management committee shall draw up and implement a budget. In this case, the draft budget and documents related to implementation must be submitted to the central special economic guidance institution and the Rason city People’s Committee.
Article 33 (Cooperation in the work of the management committee)
The central special economic zone guidance institution and the Rason city People’s Committee must actively help the work of the management committee.
Article 34 (Operation of an advisory committee)
An advisory committee may be operated in the economic and trade zone to consult and conciliate issues raised in the development, administration and operation in the zone, and in the business administration of enterprises. The advisory committee shall be composed of relevant members of the Rason city People’s Committee and the management committee, and representatives of key enterprises.
Article 35 (Management of place of origin)
The work of managing place of origin in the economic and trade zone shall be done by the place of origin management institution. The place of origin management institution must do the management of place of origin of products in conformity with the economic and trade zone regulations and international custom.
CHAPTER IV. ESTABLISHMENT OF ENTERPRISES AND ECONOMIC AND TRADE ACTIVITIES
Article 36 (Simplification of deliberation and approval process)
The economic and trade zone shall simplify each kind of deliberation and approval process related to economic and trade activities using standardized and intensive processing methods.
Article 37 (Application to establish an enterprise)
Application documents to establish an enterprise must be submitted to the management committee in cases where an investor seeks to establish an enterprise in the industrial complex, and to the Rason city People’s Committee in cases where an enterprise is sought to be established outside the industrial complex. The management committee or the Rason city people’s committee must approve or reject the application documents to establish an enterprise within 10 days of the day of receipt and must inform the applicant of those results.
Article 38 (Registration and corporation qualifications of enterprises)
An enterprise that has received enterprise establishment approval must do enterprise registration, customs registration and tax registration within the designated time limit. Registered enterprises become a corporation of our country.
Article 39 (Establishment and registration of branch offices and offices)
In cases where a branch office or office are sought to be established in the economic and trade zone, the approval of the Rason city People’s Committee or management committee must be received according to what has been decided, and the relevant registration procedures must be followed.
Article 40 (Rights of enterprises)
Enterprises in the economic and trade zone have the right to independently decide the order of business administration and management, the right to adopt production plans, sales plans, financial plans, recruitment, wage standards and form of payment, the price of produced goods, and ways of distributing profits. The business activities of enterprises may not be illegally interfered with, and expenses not determined in the regulations may not be collected and duties may not be imposed.
Article 41 (Approval in type of business of change of an enterprise)
Enterprises must conduct their business activities under the scope of the occupation for which they are approved. In cases where they seek to extend or change their type of business, they must receive approval again.
Article 42 (Serious consideration and fulfilment of contracts)
Enterprises must give serious consideration to contracts, maintain credibility and must responsibly fulfil their contracts. Parties must adhere to the principle of equality and mutual benefit in entering into and fulfilling the contract.
Article 43 (Economic transactions with enterprises of our country outside the zone)
Enterprises may conclude contracts to purchase raw materials, resources and supplies required for business activities in the territory of our country outside the economic and trade zone, and may sell produced products. They may also commission the manufacture of raw materials, resources, and parts with the institutions, enterprises and organizations of our country.
Article 44 (Price of products and community services)
The price of products and community services traded between enterprises inside the economic and trade zone, and the price of products traded between enterprises inside the economic and trade zone and institutions, enterprises and organizations of our country outside the zone, shall be determined by agreement between the parties based on international market prices. The price of public necessities such as food or staples and public wages shall be determined by the Rason city People’s Committee. In these cases, financial compensation shall be paid for the damage incurred by enterprises.
Article 45 (Trade activities)
Enterprises in the economic and trade zone may conduct different forms of trade activities such as manufacturing trade, transit trade, or compensation trade.
Article 46 (Special approval for right of business administration)
In the economic and trade zone, business administration may be conducted as a special approval subject by infrastructure facilities and public facilities. In cases where enterprises that have special approval for right of business administration seek to transfer it or share it with another enterprise, a contract must be concluded and the approval of the relevant authorities must be received.
Article 47 (Permission to develop natural resources capable of generating wealth)
Enterprises in the economic and trade zone may receive the approval of the relevant authorities to guarantee raw materials or fuel required for production, to develop natural resources capable of generating wealth in the zone. The development of natural resources capable of generating wealth outside the economic and trade zone shall be done through the central special economic zones guidance institution.
Article 48 (Purchase of products from the economic and trade zone)
Institutions, enterprises and organizations of our country outside the economic and trade zone may conclude a contract and purchase products produced or sold by an enterprise inside the zone.
Article 49 (Recruitment of labour)
Enterprises must preferentially recruit labour from our country. In cases where labour from another country is sought to be recruited according to need, the Rason city People’s Committee or the management committee must be notified.
Article 50 (Minimum monthly wages)
The minimum monthly wages of employees working in enterprises in the economic and trade zone shall be determined by agreement between the Rason city People’s Committee and the management committee.
Article 51 (Advertising work and approval to install advertising material outside)
Advertising and advertisement work may be conducted inside the economic and trade zone according to the regulations. In cases where advertising material is sought to be installed outside, the approval of the relevant authorities shall be received.
Article 52 (Accounting of enterprises)
Enterprises in the economic and trade zone may apply accounting standards commonly used internationally in accounting calculations and settlement.
CHAPTER V. CUSTOMS DUTY
Article 53 (Execution of a preferential customs duty system)
A preferential customs duty system shall be executed in the economic and trade zone.
Article 54 (Subjects of exemption from customs duty)
Subjects of exemption from customs duty are as follows:
1. Supplies required for the development of the economic and trade zone
2. Imported supplies required for the production and business administration of enterprises and produced export products
3. Supplies brought into the economic and trade zone for the purposes of manufacturing trade, transit trade or compensation trade
4. Daily necessities and office supplies required for investors
5. Cargo of other countries transiting
6. Supplies donated by the governments, institutions, enterprises or organizations of other countries, or by international organizations
7. Other separately determined supplies.
Article 55 (Cases where customs duty shall be levied on subjects exempt from customs duty)
Customs duty shall be levied in cases where supplies brought in as subjects of exemption from customs duty are sold inside the economic and trade zone, with the exception of products in the duty free shops.
Article 56 (Levying customs duty for imported raw materials, resources and parts)
In cases where an enterprise sells products produced in the economic and trade zone to institutions, enterprises and organizations in the zone or outside the zone without exporting them, customs duty may be levied for the imported raw materials, resources and parts used in the production of those products.
Article 57 (Report system of entry and exit of supplies)
The entry and exit of supplies that are subjects exempted from customs duty to the economic and trade zone shall be a report system. In cases where supplies that are subjects exempted from customs duty are sought to be entered or exited, the entry and exit declaration must be correctly drafted and submitted to the relevant customs.
Article 58 (Fixed dates for storage of customs duty payment records)
Enterprises must store documents like customs duty payment records, customs inspection documents, or product invoices for 5 years.
CHAPTER VI: CURRENCY AND FINANCE
Article 59 (Official currency and transaction currency)
Official currency and transaction currency in the economic and trade zone shall be the North Korean won or in a designated currency. The conversion of foreign currency to North Korean won shall follow the determination of the zone foreign currency management institution.
Article 60 (Establishment of banks)
Investors in the economic and trade zone may create banks or bank branches and may conduct banking activities according to the regulations.
Article 61 (Accounts of enterprises)
Enterprises must keep accounts in banks of our country or the investment banks of foreign countries established in the economic and trade zone. In cases where accounts are sought to be kept in a bank of other countries outside the territory of our country, the approval of the zone foreign currency management institution or the management committee must be received according to what has been decided.
Article 62 (Loan of funds)
Enterprises in the economic and trade zone may receive loans for funds required for economic and trade activities from banks of our country or the financial institutions of foreign countries. North Korean won received as a loan or North Korean won exchanged into foreign currency must be deposited and used at a bank determined by the Central Bank.
Article 63 (Establishment of insurance institutions and purchase of insurance)
Investors in the economic and trade zone may establish and operate insurance companies, and insurance companies in other countries may establish and operate branch offices or offices. Enterprises and individuals in the economic and trade zone shall purchase insurance of insurance companies inside the territory of our country and compulsory insurance shall be purchased at a designated insurance company.
Article 64 (Trade in marketable securities)
Foreign investment enterprises and foreigners may trade marketable securities in the economic and trade zone according to regulations.
CHAPTER VII. ENCOURAGEMENT AND PREFERENTIAL TREATMENT
Article 65 (Remittance of income and transfer out of investment assets)
Income in the economic and trade zone such as legal profits and interest, dividends, lease fees, service charges, income from property sales may be remitted outside of the territory of our country without restrictions. Investors may transfer out of the economic and trade zone without restrictions any property they brought into the economic and trade zone and property acquired legally within the economic and trade zone.
Article 66 (Encouragement of exports and imports)
Enterprises or personal enterprises of another country in the economic and trade zone may conclude a contract with enterprises inside or outside the zone and may trade in products, labour or technology, and may also do export and import agent work.
Article 67 (Income tax rate)
The income tax rate in the economic and trade zone shall be 14% of net profits. The income tax rate of specially encouraged sectors shall be 10% of net profits.
Article 68 (Reduction of income tax)
Designated enterprises that have been operating for more than 10 years in the economic and trade zone their income tax must be exempted or reduced. The period of exemption or reduction of income tax, the calculation point for the tax cut rate and reduction period shall be determined by the relevant regulations.
Article 69 (Preferential treatment related to land use)
Land for enterprises in the economic and trade zone is supplied first according to actual demand and different preferences shall be given in the lease period, lease fee and payment method according to the field and use of the land. Enterprises investing in infrastructure facilities, public facilities and sectors for special encouragement shall be given the priority in choosing the location of the land, and may be exempted from the relevant land usage fee for a designated period.
Article 70 (Preferential treatment for development enterprises)
Development enterprises have priority in acquiring business administration rights over subjects like the tourism industry and hotel industry. Tax shall not be levied on property of development enterprises, infrastructure facilities, and the operation of public facilities.
Article 71 (Repayment of income tax relevant to reinvestment)
In cases where profits are reinvested in the economic and trade zone to extend the registered capital or establish a new enterprise to operate for more than 5 years, 50% of the income tax amount relevant to the reinvested portion shall be returned. In cases where reinvestment goes to the infrastructure construction sector, all of the income tax amount relevant to the paid reinvested portion shall be returned.
Article 72 (Protection of intellectual property rights)
Intellectual property rights of enterprises and individuals in the economic and trade zone shall receive legal protection. The Rason city People’s Committee must adopt a work system related to the registration, use and protection of intellectual property rights.
Article 73 (Labour related to business administration)
Labour related to business administration such as banking, insurance, accounting, law, and measurement according to the regulations in the economic and trade zone.
Article 74 (Tourism industry)
Within the economic and trade zone shall be developed profitable tourist resources such as distinctive natural and scenic beauty like pine groves and sandy beaches on the coastline and islands, and folkloric culture, and international tourism shall be extensively organized. Investors may conduct the tourist industry in the economic and trade zone according to regulations.
Article 75 (Guarantee of convenience)
Communication methods such as the post, telephone, or fax may be freely used in the economic and trade zone. Residents and visitors shall be supplied the comforts of education, culture, medicine, and sporting fields.
Article 76 (Free entry and exit of supplies)
Supplies may be freely brought into the economic and trade zone and those things may be sent out to other countries by storing, manufacturing, assembling, sorting, and packaging. However, supplies for which entry and exit are prohibited may not be brought in or sent out.
Article 77 (Guarantee of conditions of entry of people and transportation methods and entry and exit of supplies)
Traffic inspection, customs, quarantine institutions and relevant authorities must speedily and conveniently assure the entry of people and transportation, and the entry and exit of supplies, so that there is no interference with the development and business activities of the economic and trade zone.
Article 78 (Entry of ships and sailors of other countries)
The ships and sailors of other countries may freely come and go from Rason Port, Sonbong Port, Ungsang Port according to the free trade port entry order commonly used internationally.
Article 79 (Entry, stay, residence of foreigners)
Foreigners may enter, stay in, or reside in the economic and trade zone and may come and go without a visa into the economic and trade zone through a designated passage with a passport or a certificate of entry as a substitute. The order of entering into the economic and trade zone from a different area of our country shall be separately determined.
CHAPTER VIII. COMPLAINTS AND DISPUTE RESOLUTION
Article 80 (Complaints and their treatment)
Enterprises or individuals in the economic and trade zone may make complaints to the management committee, the Rason city People’s Committee, the central special economic zone guidance institution and the relevant authorities. An institution that has received a complaint must investigate it within 30 days and inform the complainant of the result.
Article 81 (Dispute resolution by conciliation)
The management committee or relevant authorities may conciliate a dispute according to the request of the disputing parties. In this case, a conciliation plan must be drafted based on the intentions of the disputing parties. A conciliation plan only has legal effect if the disputing parties mark it with their name by hand.
Article 82 (Dispute resolution by arbitration)
Disputing parties may raise an arbitration by agreement with an international arbitral organ of our country established in the economic and trade zone or of other countries. Arbitrations shall follow the arbitration rules of the relevant international arbitration committee.
Article 83 (Dispute resolution by court proceedings)
Disputing parties may raise a lawsuit in a court with jurisdiction over the economic and trade zone. The administrative lawsuit process in the economic and trade zone shall be separately determined.
SUPPLEMENTARY REGULATIONS
Article 1 (Date of implementation 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 2 August 2020