class.doc - CHAPTER 6 Jeong-Ho Roh[Preceding sections omitted During the last few years the Democratic People’s Republic of Korea(DPRK has taken

class.doc - CHAPTER 6 Jeong-Ho Roh[Preceding sections...

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CHAPTER 6 Jeong-Ho Roh [Preceding sections omitted] During the last few years, the Democratic People’s Republic of Korea (DPRK) has taken “unprecedented” steps in an effort to attract foreign investments, aggressively enacting new laws and amending existing laws and regulations on foreign investment. The 1991 establishment of the Free Economic Trade Zone, 1 located in an isolated region of Rajin-Sonbong, 2 initiated a flurry of legislative activity, suggesting a shift from a reclusive and tightly controlled economy toward some form of liberalization in economic policy. 3 These efforts, however, have met with relatively little Western enthusiasm to date. Shortly after 1992, no less than 47 new laws and regulations pertaining to foreign investment were enacted 4 to supplement the Equity Joint Venture Law 5 which had been the sole legislation addressing foreign investment. Under the principle of “complete equality and mutual benefit,” 6 the new investment scheme - under the Law of the DPRK on Foreign Investment, 7 the Equity Joint Venture, the Contractual Joint Venture, 8 the Law on Foreign Enterprises, 9 and related regulations - permitted foreign investment in such diverse sectors as “industry, agriculture, construction, transport, telecommunications, science and technology, tourism, commerce and financial services.” 10 The law further provided for preferential treatment of foreign-invested corporations, including “reduction of and exemption from income and other taxes, favorable conditions for land use, and the preferential supply of bank loans” 11 Although disputes arising under the contracts were to be settled principally through consultation, the law provided that “disputes shall be examined and settled by a court of law or an arbitration body of the DPRK, according to prescribed procedures, or may be taken to an arbitration agency in the third country for settlement.” 12 From a purely textual interpretation of investment laws and their mechanisms for the settlement of disputes, the DPRK appears to be on the right track. The historic June 2000 Summit meeting between the leaders of South and North Korea provided a catalyst for a dramatic turnaround in direct cooperation and exchanges between the two Koreas, giving rise to renewed optimism for some form of meaningful reconciliation. The successful implementation of the reunion of separated families provided the necessary but
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guarded confidence that North Korea may well be serious about genuine engagement, politically and economically, with South Korea and the rest of the world. Armed with this renewed confidence, the South Korean government announced plans for the construction of a four-lane inter-Korean highway and the reconnection of the Seoul-Shinuiju railroad, to facilitate the inter- Korean exchange of people and goods. Thereafter, following numerous high level meetings, the two Koreas signed agreements on the protection of investments, the prevention of double taxation, procedures for dispute resolution, and settlement of accounts.
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