“North Korea’s Special Economic Zones: Plans vs. Progress”
The Unjong High-Tech Development Zone, designated in July 2014, is located in the outskirts of Pyongyang, bordering Phyongsong city. The zone is affiliated with the State Academy of Sciences (SAS), rather than the Ministry of External Economy, which oversees most other SEZs. The affiliation with SAS should be an advantage, as it is the only zone to date with a dedicated and important institutional base that is both focused on its development and vested in its success. The disadvantage is that the managers come from the science and research community and by and large do not have management or investment promotion training.
Officials at the zone describe the goal of bringing together “research, development, production and export” as a “national priority,” and this broad remit should promote creative approaches available to zone managers since they will not be limited by a particular industrial focus or numerical goal. Unfortunately, as of summer 2015, they have not secured any significant investment.
At this point, domestic investment is the most likely option for any truly high-tech products, given the numerous sanctions in currently in place. That said, the definition of “high-tech” at SAS seems to be broad enough to cover a variety of non-sanctioned products, such as certain household goods or healthcare products.
The struggles to find either domestic or international investment may improve once a management committee is established, which, as of late 2015, is said to be “nearly formed.” Currently, Unjong is reported to “officially open” at some point in 2016, and will feature an international center with communications and accommodation. There are also plans for a business incubator, from which small teams should be able to develop ideas into commercial products. In preparation for this, Unjong managers have been busy working on a variety of mundane but important issues including taxation, auditing standards and various other rules of governance.
“High-Tech Development Zones: The Core of Building a Powerful Knowledge Economy Nation,” IFES Brief, May 20, 2014, http://ifes.kyungnam.ac.kr/eng/FRM/FRM_0101V.aspx?code=FRM140605_0001.