Last month, we ran a workshop on Special Economic Zones in Wonsan, with people from 5 provinces attending. Workshop leaders were practitioners, focusing on the nuts and bolts from an investor perspective, rather than on academic theories on SEZs. One such practitioner, a British with over 15 years of experience investing in North Korea, shared Singapore’s experience developing the Suzhou Industrial Park (SIP) in China. He was a big fan of the project, and called it the “go-to place for businesses looking to set up in China.” He also spent considerable time explaining Irish SEZs, which he also recommended as another model for North Korea to study.
The $30B SIP generated significant controversy in Singapore in its early years. Local Chinese officials undermined the project by building a competing park next door. From a financial point of view, the project lost money in its early years. But as a special zone, it established its reputation as a good location for businesses.
Perhaps in Singapore, lessons from this experience laid the foundation for future projects. The experience definitely did not deter Singapore from getting involved in developing a string of industrial parks, high-tech zones and other SEZ-type projects in India, Vietnam and China. SIP is more relevant to North Korea than Shenzhen, given that the sizes of the proposed SEZ corresponds more to an industrial park than to an entire region.
Singapore’s experience from these projects will be highly relevant as North Korea continues to focus on developing its SEZs. A Singaporean friend who visited North Korea in 2009 mentioned how the government officials he met had studied SIP and quizzed him about Singapore's experience developing it. It is this practical knowledge, good managers, and strong political support that is very much needed to ensure SEZs in North Korea stand a chance of taking off.
We hope to see more efforts by North Koreans to send their SEZ managers overseas for extended training and research and would like to support them in doing so. We have often pressed our partners on the need for DPRK policymakers to focus not just on the short-term, but understandably urgent, goal of attracting investments, but also on laying a proper foundation by ensuring that their managers are well-equipped with international knowledge and experiences. Frequently, we fail to recruit the best managers for long-term scholarships, as their organizations need them for more immediate projects. At the national level, we have yet to see significant efforts made to ensure the process for sending people abroad for programs is more easy, efficient or transparent.
And the best part of the workshop last month? A workshop leader who was terribly cynical about the SEZ effort felt he was self-censoring. He did not think the investment conditions or infrastructure was anywhere near ready for foreigners, but did not want to be brutally honest. We brought his concerns to a young Korean partner, who told us that workshop leaders should be direct and honest in replying to questions. “People are here to learn,” he said.
Update: Calvin, our resident urban planning expert, adds:
The main learning points for SIP are strong leadership, good management, strategic implementation in phases. Physical scale wise, SIP is almost a city / region actually, much larger than other typical industrial parks developed by Singapore and even Kaesong.
Kaesong: 300ha approx.
Calvin previously wrote a post comparing Rason and SIP.