3. Legal Guarantee by the State on the Rights, Interests, Property and Safety of the Foreigners Investing in the Wonsan-Mt Kumgang International Tourist Zone
The DPRK provides legal guarantee on the legitimate rights and interests of the foreigners in its territory.
The Socialist Constitution of the DPRK stipulates in its Article 16:
“The Democratic People’s Republic of Korea shall guarantee the legal rights and interests of foreigners in its territory.”
The Wonsan-Mt Kumgang International Tourist Zone is a special economic zone and so the vested rights, invested property and legal incomes of the investors in the zone are legally guaranteed according to the specially stipulated legislation. The state shall not nationalize or confi scate investor’s property. If it is going to confiscate or temporally use it for unavoidable reasons, it sends notice to the investor in advance and makes full compensation in time.
In case of infringement upon his rights and interests in the zone, the investor can get legal protection through various settlements such as petition, mediation, arbitration and trial. Arbitration can be settled by the arbitration organs in the DPRK or in other countries according to the agreement between the disputing parties.
The personal safety of the investor is fully provided by the law of the DPRK
4. Legal Privileges for the Foreigners Investing in the Wonsan-Mt Kumgang International Tourist Zone
The foreign corporate bodies, individuals and economic organizations and overseas compatriots are free to conduct economic activities by investing in the Wonsan-Mt Kumgang International Tourist Zone and establishing their businesses, branches or offi ces, and can be provided with privileged conditions for the economic activities in such sectors as land use, labour employment and taxation.
Special encouragement is given to the infrastructure construction, state-of-the-art science and technology and the sectors that provide products and services with high international competitiveness, and these sectors enjoy greater privilege.
An enterprise investing in these sectors in the zone will enjoy preference in choosing land, and be exempted from rent for a certain period
In addition, the businesses operating for over 10 years will get reduced and exempted in their income tax and if they reinvest their profi ts, the income tax for the reinvested profi ts will be reduced or exempted. The corporate income tax rate is 14 per cent, and 10 per cent for the priority sector
The businesses investing in the infrastructure sector in the zone enjoy preference in obtaining management for favourable businesses including tourism and hotel service, and tax is not imposed on the property of these businesses and the infrastructure operation. Preferential taxation is enforced in the zone; materials for construction and processing trade and daily necessities for investors, materials needed for production and management of the businesses and their products for export are free from customs duty
5. Legal Guarantee for Conditions for the Economic Activities of Foreign Investors in the Wonsan-Mt Kumgang International Tourist Zone
Foreign investors are allowed to establish and operate equity and contractual joint ventures or wholly foreignowned enterprises by making investment in the zone and are provided equal status. They can invest in the form of cash, in kind or property, and are allowed to bring into the zone materials needed for development and operation and bring out products.
Products manufactured in the zone can be sold outside the zone in the territory of the DPRK by making a contract with the enterprises outside the zone and purchase from them raw and other materials, equipment and other goods. Investors can choose modes of development that suit the characteristics and development condition of the zone and that can contribute to its long-term development.
The zone is managed by the management committee, and investors are provided with all the conditions for their economic activities through the committee. The committee is independent in managing the zone, and is duty bound to draw up guidelines for the development and management of the zone, create the environment for investment, invite investment, approve establishment of enterprises, register them and approve their operation, approve construction projects, inspect them upon their completion and keep their designs, register the rights to use land and to own a building, cooperate with the enterprises for their management activities, supervise and cooperate with the construction and management of infrastructures and public facilities, and take measures for environment protection and fire fighting.
Investors may lease land in the zone. The term of land lease is 50 years to the maximum, and when the term comes to an end, enterprises may use the land continuously if they want
Investors are allowed to transfer, mortgage or lend the right to use land and building within the period of lease, and the price and rent may be fi xed according to the agreement of the relevant parties
Prices of products and services among enterprises in the zone are fi xed by the parties according to the international market price, and the investor can freely take in and out foreign currency and take out profi ts and other incomes and property.
Intellectual property rights are under legal protection in the zone, and securities may be transacted as stipulated. Immigration and emigration, customs and medical inspection organs shall provide convenience for the exit and entry of the personnel, means of transport and materials needed for the development, operation and economic activities in the zone. Enterprises in the zone are entitled to employ both Koreans and foreigners and decide the wage level independently according to the minimum monthly wage level fi xed by the DPRK. They are also entitled to ask the relevant organ of the DPRK for labour, and refuse to employ them if they do not conform with their situation or dismiss them for good reason.