Zones to boost DPRK trade

Chinese investment in the Democratic People's Republic of Korea and business links between the two countries are expected to increase sharply in the near future, with priority being given first to the development of two special economic zones aimed at attracting foreign investment.

A director from China's Ministry of Commerce told China Daily on Tuesday that work on the two zones in the DPRK had already reached a substantive stage, after ground was first broken at the sites in December.

Although China's investment in the DPRK is still relatively small, the director surnamed Dong from the ministry's Department of Asian Affairs, said it will "gain speed in the future, and the two sides will get closer and closer".

She added that the two economic zones will act as the stimulus for future investment between the two countries, and that it is hoped they will also attract considerable interest too from international investors.

The official's comments came during the third meeting of the organizing committee behind the development of the zones, being held in Beijing, at which officials from both sides agreed to strengthen the investment environment by accelerating their construction and implement policies to attract more foreign direct investment.

The conference was part of a six-day visit to China by a delegation led by Jang Song-thaek, director of the central administrative department of the Workers' Party of Korea, which started on Monday.

Jang's visit was aimed at enhancing bilateral economic relations, and Chen Jian, vice-minister of commerce, also said in an article published in the People's Daily on Tuesday that China plans to actively support Chinese companies' investment in the DPRK.

The two zones — in the DPRK port of the Rason on the east coast near China's Jilin province, and in the west at Hwanggumpyong and Wihwa islands near the Chinese city of Dandong, Liaoning province — are the subject of an agreement struck between Chinese President Hu Jintao and then DPRK leader Kim Jong-il during his official visit to Beijing in 2010.

The DPRK announced in June that foreigners would be allowed visa-free access to the Hwanggumpyong and Wihwa zone, along with tax breaks.

The ministry said on its website on Tuesday that the two sides have now agreed to develop the Rason zone into one of the DPRK's most advanced manufacturing and logistics hubs, covering East and North Asia, and it will act as a regional tourism center, while the Hwanggumpyong and Wihwa islands zone will focus on the finance, economic and IT sectors.

Some Chinese companies have already made considerable inroads developing business links with the DPRK.

The Hunan-based Better-Life Commercial Chain Share Co Ltd, a supermarket chain, announced earlier this year that it plans to open stores there, while Beijing-based telecoms operator Panda International Information Technology Co Ltd announced it had started providing services to the country during the first half of the year.

Analysts suggest that the greatest business potential lies in the DPRK's mining sector.

A recent report from Beijing-based China Sunny & Forecasting Information Consultant Ltd suggested Chinese companies enjoy huge advantages over their DPRK counterparts, in that they have access to sufficient capital and advanced technology, and equipment used for exploration, excavation and smelting.

"The geographic closeness helps keep transportation costs low too," it added.

According to the ministry, China's investment in non-financial sectors in the DPRK had reached $300 million by the end of last year.

The DPRK's total investment in China was $100 million, going to various industries including catering.

Korean Unphung Joint Venture Co is a joint venture between Korea Unpasan Trading Company and Liaoning Wellhope Agri-Tech Co Ltd, and was founded in 2006 to produce a wide range of livestock feeds.

Jin Weidong, chairman of Wellhope Agri-Tech, said the cooperation was working well with cumulative sales reaching 18,720 tons, and joint assets worth 19 million yuan ($2.99 million) by the end of 2011.