FEATURE: N. Korea's special economic zone remains in doldrums

Asian Political News, July 2, 2001

TOKYO, June 26 Kyodo

The Rajin-Songbong area came into the spotlight 10 years ago as a region that might signal the start of North Korea's reform and open-door policy when Pyongyang designated it as a special economic zone.

However, the development of the zone in the northeastern part of the country, near the border with China and Russia, is in the doldrums, against the background of slow progress in investment, recent visitors to the area told Kyodo News.

The area, consisting mainly of Rajin and Sonbong, is now called Rason after the two cities were merged by August last year.

Groups of children begging for money or cigarettes from foreign visitors hang around Rason's central plaza, where a giant board displays the slogan, ''The sun of the 21st century, long live Gen. Kim Jong Il.''

Local officials call the children ''scoundrels,'' and a Japanese company employee said such things are never seen in tightly controlled Pyongyang.

The Rajin University of Marine Transport has opened a business school, but a Chinese businessman from Jilin Province said, ''Not even the teachers know what the economy is.''

Some experts say Rason may lose some of its significance as an economic and trade zone. That is because Pyongyang has indicated it may establish a similar zone in the south of the country, perhaps Kaesong, as a result of the historic summit between North Korean leader Kim Jong Il and South Korean President Kim Dae Jung in June last year.

Rason, nevertheless, forms a different world from the rest of the country, with its deluxe Emperor Hotel, which has a casino where people feverishly gamble into the early hours of the morning.

The casino dealers are Chinese, as are most of the gamblers. Trucks with license plates issued by China's Jilin Province are seen everywhere, bringing goods from across the border.

The Wonjong Bridge spanning the Tumen River on the China-North Korea border is in dire need of repair or replacement. Japan built the bridge during its colonization of the Korean Peninsula, which ended in 1945.

''For people in northeast China who do not have access to the sea, Rason is an important place because it has a good port,'' a U.N. Development Program official said.

Teruo Komaki, a professor from Kokushikan University, who has visited Rason a number of times, said, 'The Chinese government is not so keen, but provinces in the border area such as Jilin are highly interested'' in the special zone.

In fact, China has almost completed upgrading the road leading to the border. It has built facilities, including a customs post, and is widening the bridge on its side.

Cash-strapped North Korea has not made any progress in paving the road.

Rajin port is the biggest in the region, and handles freight, mainly automobiles and foodstuffs from Japan and South Korea. Most of the cargoes are hauled to China, according to Kim Chun Il, a division chief of the port's foreign business bureau.

The region's harbor facilities are the core of its three development projects -- transit trade, processing products on contract, and tourism. However, the deterioration of the Rajin port facilities, also built during Japan's rule of Korea, has become serious because of shortage of funds.

''The port handles about 1.2 million tons of freight a year,'' Kim said. ''We hope to increase the volume to about 4 million tons in the future.'' But the volume has leveled off.

He said national investment and foreign capital are necessary for the port's development, adding that North Korea has signed contracts with a number of foreign enterprises but they have not actually made any investment.

Locally hired Korean women working at the casino wear badges showing the picture of the late Korean President Kim Il Sung. ''Work is work wherever we work because of the guidance of great leader Gen. Kim Jong Il,'' one of them said, without any expression.

But a little later, she whispered, ''The casino is too extravagant. I was surprised. We don't have money.''

The shipping university offers a six-month business course to local employees of corporations that have established businesses in the region. A university official said employees of the Emperor Hotel, which was built by a Hong Kong enterprise, have also studied at the university.

About 100 university students study computer science and foreign languages, including Chinese, English and Japanese. A woman student facing a computer screen said, ''I've studied computers for two months. I would like to work in the computer area.''

The underdevelopment of infrastructure such as roads, communications and electricity poses a serious problem for Rason.

The economic zone will be more viable if the Seoul-Sinuiju Railway becomes a reality. Russia is beginning to show interest in linking it with the Trans-Siberian Railway. That would bring Rason into the spotlight again, according to Korea specialists.

Komaki said the fate of the Rason special economic zone depends ultimately on Kim Jong Il. ''It is possible the region will develop if he declares he will continue to develop the zone,'' Komaki said.