North Korea (DRRK) - 라선 특별경제구
The Rason Special Economic Zone (SEZ), established in the early 1990s, was North Korea’s first attempt at creating a capitalist economy within its borders. This initiative was inspired by the success of the Shenzhen SEZ in southern China. Despite its strategic location near the borders of China and Russia, the development of Rason SEZ has been slow due to fluctuating political and economic conditions in North Korea.
Rason SEZ, previously known as the Rajin-Sonbong Economic Special Zone, is situated near several ports, making it a potential future export manufacturing hub for North Korea. The zone encompasses the cities of Rajin and Sonbong (hence the name RASON) and is located near the border with China’s Jilin province and Russia’s Khasansky District in Primorsky Krai. Before 1991, the Soviet Union used Rason as an alternative warm water port.
Economic Experiments and Innovations for Rason Special Economic Zone
Rason SEZ serves as a testing ground for North Korea’s economic policies, including the establishment of a free market for local companies and farms. It is the only market in North Korea that foreigners can legally visit. Other innovations include the opening of a casino by the Macau-based Emperor group and the allowance of foreign real estate ownership. The Rason Golden Triangle Bank, which facilitates international transactions, has erected a seven-story building in Rajin.
Chinese and Russian companies have invested in the Rason SEZ, where the use of foreign currency is permitted. The zone’s administration falls under the Committee for Promotion of External Economic Cooperation (CPEEC), which invites foreign companies to participate in the special zone. The first joint North-South company, Chilbosanmeri Joint Company, was established in the Rason SEZ.
Future Prospects and Challenges at Rason Special Economic Zone
Despite the challenges, there are signs of revival in the Rason SEZ. Recent reports suggest an increase in trade activity, with ships docking there for the first time since 2018. However, the zone’s development has been hindered by international sanctions, particularly in response to North Korea’s nuclear weapons and ballistic missile tests.
Despite these obstacles, the Rason SEZ remains a significant part of North Korea’s strategy to attract foreign investment. It was the site of the country’s first mobile network and the only place where buying and selling homes were legalized in 2018. As North Korea continues to experiment with capitalist economic models, the Rason SEZ could play a pivotal role in the country’s economic transformation.
Rason Special Economic Zone is also close to a number of ports that could allow the zone to be a future export manufacturing hub for the country.