Last year, after a series of workshops on Special Economic Zone development, we realized that it might be more effective to pilot an extended consultation with one promising SEZ. After some exploration, we picked Unjong Park because of availability of infrastructure, stable management, and a commitment to innovation. Also, a commitment to only being 30 minutes drive from Pyongyang - it sits on the border of the capital and Pyongsong city.
While we've visited several times, this was our first time staying in Pyongsong city, at the wonderful Jangsusan Hotel. The Jangsusan has at one point earned a reputation as the place to put foreigners when Pyongyang hotels were fully booked. Now one can stay there year round, assuming there is running water - the area appeared extremely parched.
Workshop leaders from last year’s program rejoined us in for a two and half day session at Unjong Park. Prior to the trip, Unjong SEZ managers had sent us a list of extended questions, which we used to frame discussions on the issues of rents, fiscal incentives, management structure, laws and how to build research and industry linkages.
The first day was spent largely on the question of rental rights and policies - Our team emphasized that they cannot expect their first investors to subsidize cost of infrastructure needed to get the park up and running given the huge risks in the DPRK business environment and track record of foreign investors in the country. (This is a common and unrealistic expectation in North Korea.)
We decided focus on day two should be on how to create a better domestic environment for businesses at the SEZ, for both foreign and domestic companies. We began with a discussion on sanctions and what they allow or forbid, and how this will impact investors’ perception of ‘investability’ of Unjong. The afternoon focused on what they can do to improve the business environment. We used the World Bank "Doing Business" survey as a framework to map out procedures to set up a business, time taken etc. etc.
The final day, we focused on the significant problems over governance/incentives with JV structure in DPRK today, and provided suggestions for how they tackle these problems. We wrapped up by discussing the importance of incubator as a platform to experiment and learn about developing new businesses