May 18, 2012 (TSR) – The DPRK Commission for Joint Venture and Investment held a meeting at Koryo Hotel on May 14 to give an outline of the investment policy and environment in the country to the participants in the 15th Pyongyang Spring International Trade Fair.
Present there were officials of the CJVI and the Ministry of Foreign Trade and delegations from various countries and regions to take part in the fair.
Kim Il Sun, section head of the CJVI, delivered a speech:
To keep apace with the developing world economy which is characterized by cooperation and exchange, the DPRK government has been paying due attention to the expansion of external economic cooperation based on the constant development of the foundations of the self-reliant socialist economy and making active efforts to create favorable environment for investment.
The DPRK Commission for Joint Venture and Investment is a government organ that manages all the work concerning foreign investment such as examining and endorsing investment projects, offering assistance to the management and operation of foreign investment enterprises, management of overseas investments and special economic zone; it formulates and implements the state strategy for foreign investment.
The CJVI makes recommendations on the issues that arise in improving the investment environment of the country to the Presidium of the Supreme People’s Assembly, the Cabinet and other organs concerned; it looks for potential investors for the projects that are of national significance when the investment and economic cooperation projects are defined and helps them conclude investment contracts and implement them.
Besides, it provides introductions on the investment climate and the projects of the country through presentations, forums and exhibitions, gives relevant information to the investors and conducts investment consultancy service such as credit reference of the local companies as they demand.
Then allow me to introduce the investment environment of the country.
We have adequate legal foundations for foreign investors.
Foreigners are welcome to invest in the territory of the DPRK on the principle of complete equality and mutual benefits. Legal guarantees for the legitimate rights and interests of the foreign investors are fully ensured.
The article 37, chapter 2 of the Socialist Constitution of the Democratic People’s Republic of Korea stipulates: “The government encourages setup of contractual and equity joint ventures, establishing and managing various enterprises in special economic zones between DPRK institutions, enterprises and organizations and foreign corporations or individuals.”
Our country enacted the Law on Equity Joint Venture in 1984 allowing foreign direct investment in the form of joint ventures, and shortly after, in 1990s, newly enacted, revised and amended more than 20 laws and regulations on foreign investment including the Law on Foreign Investment, the Law on Wholly Foreign Owned Enterprises and the Law on Contractual Joint Venture, thus providing the main legal foundation for foreign investors.
And quite recently, we are exerting positive efforts to create more favorable investment environment by making amendments to the laws on foreign investment to suit the requirements of the developing actual conditions.
To provide more profits and better convenience to the investors who are interested in investing in special economic zones we have issued the “Law on Rason Economic and Trade Zone of the DPRK” (revised) which is a drastically revised version of the previous law. Endevours to establish special zones in Wihwa-do and Hwanggumphyong and also in Hwanghae Province apart from Rason economic trade zone are now being made.
The government has concluded bilateral agreements on investment encouragement and protection, agreements on prevention of double taxation with many countries. We are going to conclude agreements with more other countries.
Our country has favorable economic environment for investors.
A comprehensive economic structure is arranged for ferrous and nonferrous metal, mining and building materials industries, shipbuilding and garment industry, agriculture and fishery; the solid foundation of self-reliant economy is endowed with great potentials.
The diversified economic structure of the country makes it possible for the investors to choose the right projects that suit their needs and capabilities in any chosen sector.
The infrastructures are comparatively perfect.
Railways, roads, sea and air transport are available across the country. The national telephone network is based on the optic fiber cables and the state enterprises are run computerized.
The 3rd generation mobile telecommunication is realized and the nationwide network of power and water supply and drainage facilities are in operation all over the country.
Rich natural resources serve as a strong foundation that guarantees the development of the self-reliant economy.
We have abundant deposits of over 200 valuable minerals, not only metallic but also non-metallic, and the graphite, magnesium ore and rare–earth metals deposits are known to belong the richest in the world.
Thanks to the fact that our country has a lot of mountains, rivers and streams and that it is sea-bound on three sides, we are rich in fauna and flora resources. Opportunities for tourism are also to be appreciated.
Thanks to the universal 11-year compulsory free education system having been enforced since 1970, we have over 12 million of very productive and diligent laborers who have received more than secondary education and are ready for any type of job. The minimum salary per month is only 30 €, which is very low in comparison with the quality of the manpower.
The geographical conditions of the country, too, provide advantages for investment.
Our country is situated in East Asia that has strong economic vitality and, at the same time, close to countries like China and Russia, which are well known across the world to hold vast markets.
We are connected with Europe via trans-Siberia railway and are doing privileged frontier trades with China through more than 10 border bridges, railroads and harbors. Chongjin, Rajin and the other East Sea harbors have favorable conditions in meeting import and export demand of the northeastern part of China which is far away from the sea. Therefore, it ensures favorable conditions for the supply of raw materials and the sale of products through international markets.
For the purpose of encouraging foreign investment, the government sets no limit to the nationality of investors and in case of equity and contractual joint ventures there is no restriction on the ratio of investment, that is, open for the parties concerned to decide.
The kinds of taxes imposed on the foreign-invested enterprises are not many; they are either corporate income tax, personal income tax and turnover tax, or business tax, resource tax, property tax, inheritance tax and local tax. Some taxes generally found in other countries, such as capital tax, registration tax and withholding tax, are not to be charged in our country.
Tax rates are also relatively low and the corporate income tax is usually 25 %.
Resource tax is imposed on the enterprises that export the natural resources without any processing.
Local tax includes car use tax and city management tax and the rate is almost negligible.
Our government is offering different types of special treatment to foreign-invested enterprises.
First of all, corporate income taxes may be exempted, reduced or refunded.
In case of those foreign-invested enterprises operating in priority sectors in which our government encourages investment, the corporate income tax rate is lowered from 25 % to 10 % and, for three years after the profitable year, the income tax is exempted 100 % and for 2 years after that 50% is reduced. Additional preference of tax exemption is applied for investors in projects of infrastructure building.
When profits are reinvested, enterprises engaged in infrastructure construction are fully exempted from the income tax and others by 50 %.
If foreign-invested enterprises export their products, they are exempted from the turnover tax.
Foreign-invested enterprises enjoy privilege in import and export and exemption from customs duty.
Enterprises engaged in production are provided with electricity and industrial water at more favorable rates than those engaged in service sector.
Foreign-invested enterprises can open their accounts in the external settlement bank or foreign-invested banks and can remit their legal earnings abroad free of tax.
We have various kinds of financial service system that can cater to the needs and convenience of the foreign investors and the invested enterprises.
Foreign exchange service is provided by the state-run external settlement banks such as the Trade Bank and foreign-invested banks. We have joint venture banks that are run jointly with partners of China, Singapore, Egypt and Hong Kong of China.
We have the Foreign Trade Arbitration Committee, Maritime Arbitration Committee and Software Arbitration Committee to settle all the disputes that may arise in respect of investment.
You can get guide service on investment conditions and opportunities from the DPRK Foreign Investment and Economic Cooperation Committee, Foreign Trade Promotion Committee, Korean Chamber of Commerce and other trade missions or commercial sections abroad.
The enthusiasm of the foreign investors to invest in our country is now on the rise.
Contractual joint venture contracts on mobile telecommunication, the equity joint venture contract for cement production, the equity joint venture contracts for building the container port and railways have been concluded and are now on the way by investors of many countries like Egypt and Russia.
If you are willing to make investments in our country the DPRK Commission for Join Venture and Investment will make every possible effort to provide successful investment opportunities to you and help you achieve mutually beneficial economic profits.