Chongjin vs. Hamhung, Chilbo vs. Gumgang

We recently visited Rason for the 3rd time in as many years, where we are hoping to begin programs in 2014. One of the things that we’ve been hearing, both in Pyongyang and elsewhere, is that the government is planning on creating up to 13 Special Economic Zones, including the ones already in existence. Asahi Shimbun thinks the number 14 is luckier. As the DPRK’s awkward history of SEZs has shown, these will likely not all be booming successes, but they will introduce several important concepts to investment attraction in the country. One crucial change will be that of regional competition.

In Rason’s neighborhood, Chilbo mountain is already designated a Special Tourist Zone, we’ve heard, while Chongjin has long been rumored to be unofficially drifting towards SEZ status.

Easy access to Chilbo through Rason could help draw RMB from Chinese tourists who think that Changbaishan - some of you might know it as Baekdusan - is passe. (It is run somewhat like a Disneyish Natureland on the Chinese side, packed in the summer months with armies of Chinese and South Korean pseudo-hikers.) Furthermore, one can also imagine a period when South Koreans are allowed back to Gumgangsan. When that happens, the managers of Chilbo and Gumgangsan will inevitably begin to see each other as rivals for South Korean won and perhaps someday Japanese yen.

Moreover, if I am a high ranking city official from Hamhung and I see that all the major east coast ports - Wonsan, Chongjin and Rason - get to offer inbound investors a better deal that I am allowed to offer, how could I not lobby the central government to be allowed some sort of special status?

All of the east coast SEZs will really require political breakthroughs in South Korea and to a lesser extent Japan to see dramatic growth. While that won’t be easy, if it happens, there will be a host of opportunities as provincial North Korean managers and administrators will have been learning to compete with each other.