The Rason Special Economic Zone is right at the north-eastern tip of North Korea, up against the Russian and Chinese borders. It was established by Pyongyang in 1992 to promote economic growth through foreign investment. It's of special interest to the Chinese in particular because the city of Rason is an ice-free port, and the Chinese have no coast line here to the east of North Korea: there's a narrow strip of Russian territory between China and the Sea of Japan. The Russians have some interest too, as Vladivostok, some distance up the coast, can't always claim to be ice-free.
So it's all going swimmingly, then? Not exactly:
Chinese and Russian investors in Rason Special Economic Zone of North Hamgyong Province are reportedly withdrawing from North Korea. The root cause of the phenomenon is said to be the North Korean government's inconsistent policies.
Rason, regarded as a symbol of North Korea's reform and openness, has been actively seeking foreign investment, although sources in the region say it now feels like a “ghost town,” and has lost signs of its previous vitality. Foreign investors have stopped visiting the city, and existing foreign-owned companies are said to be withdrawing in quick succession.
"The Chinese companies in Rason all want to withdraw, citing unacceptable government practices. Some Russian companies have withdrawn from the city in the middle of construction, realizing that they can't expect to profit from investing in the city," a source in North Hamgyong Province told Daily NK.
"The Chinese investors used to mobilize their own vehicles to carry goods to the city, but now these practices are disappearing. Rason has for some time been regarded as a risky investment by foreign investors."
According to a separate source in North Hamgyong Province, the city of Rason has lost its credibility with foreign investors due to repetitive swindling by North Korean businesses and institutions. North Korean entities are known to insist that conditions that were previously not mentioned in contracts have not been met, or provide various excuses for not remitting money that has been earned.
"Some foreign companies have left the city quickly, without even attempting to take their investment profits with them, believing that it’s a waste of time. They must have concluded that they should leave before losing even more," he said.
"Some private Chinese investors have yet to receive any of their profits because they believed that their North Korean counterparts would abide by their promises to remit the money. Despite this, some small and medium-sized businesses and private investors appear unwilling to leave the city.”
"Foreign investors are tired of North Korea's ridiculous demands and are saying that they will never invest in North Korea again. Even the local residents are saying that the city is being abandoned.”
In addition the Mangyongbong, a ferry that's just started up service between Rason and Vladivostok, has failed to attract the hoped-for foreign travellers. Tourists, it seems, are no longer interested in visiting the DPRK. God knows why not.
The internal collapse of the Kim regime is still our best hope for avoiding war. This all helps.
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