Pyongyang recently designated 14 new economic zones, an indicator that North Korea is increasingly desperate to remedy its stagnated economy. North Korea envisions these zones to bring in about $70 million to $240 million each—perhaps a lofty goal.
The planned developmental zones will be on a smaller scale, compared to the Kaesong industrial complex North Korea co-operates with South Korea. Earlier in April, North Korea abruptly withdrew all of its workers from the complex as a retaliation against Foal Eagle, the annual joint military training between South Korea and the U.S. Operations at the complex resumed after a five-month hiatus, however the sudden withdrawal of workers created a distrust from foreign investors.
North Korea took measures to incentivize the investment prospect, including a law established in the economic zones that allows companies to freely exchange foreign currency and ensures the safety of workers; The corporate tax rate will remain relatively low at 14%, and investors have the right to use and develop land over 50 years.
The 14 zones are comprised of four economic developmental zones that consist of trade and tourism and other sectors, three industrial development zones, two zones each for agriculture, tourism, and export processing; Lastly, a high-tech development zone in Kaesong, on the border of South Korea.
What will these developmental zones potentially look like?
An industrial developmental zone in Wiwon, Jagang province, seeks to combine mineral resources processing, machinery manufacturing, and research on silk culture and freshwater fish farming. A tourism zone in Onsong, North Hamgyong province will accommodate a golf course, racetrack, swimming pool, and resorts.
Foreign companies are wary of the high costs of investment considering the current lack of infrastructure for development, along side the economic sanctions placed on North Korea due to its nuclear proliferation program. North Korea has failed in the past to attract investors to its special zone on Hwanggumpyong and Wihwa islands, yet Pyongyang is not deterred from pursuing its agenda—as evident in the announcement of these zones—and with a special zone in a sensitive military area near its border with China.