NK Names Kaesung Special Economic Zone

The state-run Central News Agency reported yesterday that the standing committee of North Korea`s Supreme People`s Assembly endorsed a law that designates Kaesung as an industrial complex on Nov. 13.

As North Korea finally declared the long-protracted act for the Kaesung industrial complex, about 200 small and medium sized enterprises as well as big corporations will face a new opportunity to make inroads to the North Korean market.

The new law rules that the North Korean authorities cannot arrest South Koreans or foreigners or search their houses, unless they violate North Korean law. In case of punishment for criminal violation, the North is obliged to consult with the South or related foreign authorities.

An official of the Unification Ministry said that the South Korean government would confer with its North counterpart to set up institutional devices with relates to movement, communications, personal safety. He added that if there is no hurdle to the establishment of institutional devices, the ground-breaking ceremony for the Kaesung industrial complex will be held in December.

The new law ruled that a steering committee for the industrial zone would be composed of people recommended by the North Korean authorities and South Korean investors, leaving a room for South Koreans to run the complex.

South Korean or foreign businesses can rent lands in Kaesung for as long as 50 years and set up infrastructure for electricity, communications and water.

North Korea expresses its strong will to attract foreign investment in high-tech industries by reducing tax rate for the construction of infrastructure, light industry and high technology sectors, while charging 14 percent of profits from the businesses as tax.

But North Korea rules that developers should foot the bill for the removal of existing people or buildings, having a direct or indirect influence on corporations that want to have an office and do business in Kaesung.

Young-Sik Kim spear@donga.com