North Koreans talk shop with foreigners at trade fair

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RASON, North Korea (AP) — Fleets of shiny minivans, Chinese-made bulldozers and dump trucks festooned with red ribbons fill the plaza while toys, clothes and even probiotic digestive capsules are displayed inside an exhibition hall.

Walking past the booths and examining the goods are Chinese, North Koreans and even some Europeans, who are exchanging business cards and sharing lively conversations — North Korea once again is hosting an international trade fair, which opened Monday in Rason, in the far northeast, a city seeking to sell itself as friendly to foreigners and a potential hub for international transportation, trade and tourism.

It’s a scene not common in the rest of North Korea, where most business is state-run and interaction between foreigners and locals is strictly monitored.

The trade fair is an indication of how keen the insular nation is to attract foreign investment needed to spur its listless economy. Pyongyang has not publicly released detailed economic data for decades, but it has made building the economy a focus of government policy since 2009.

Rason, however, is one of North Korea’s newly revamped special economic zones, governed by a separate set of laws and rules giving local officials more autonomy, as well as being easier to access from the Chinese city of Yanji than from the North Korea capital of Pyongyang.

With its economy languishing, in sharp contrast to the booming market economies of its neighbors in Northeast Asia, Pyongyang has turned in recent years to China to provide trade, investment and know-how in exchange for access to its minerals and labor.

Last week, Jang Song-thaek, uncle of North Korea’s new leader, Kim Jong-un, forged deals with China on accelerating joint development of North Korea’s special economic zones, including Rason and Hwanggumphyong Island, according to China’s Ministry of Commerce. Details were not available.

“The timing (of Mr. Jang’s visit) has got to be to try to make Chinese investors who are coming or thinking of coming (to Rason) feel more comfortable about the agreements they are about to or are considering signing,” said Andray Abrahamian, executive director of Choson Exchange, a Singapore-based nonprofit group that has provided business and legal training for North Korean government officials.

Doing business in North Korea, even as Pyongyang seeks to draw in foreign investment, remains a challenge. Travel to North Korea is carefully regulated, with foreigners requiring invitation letters from North Korean agencies or joining sanctioned tour groups. All interaction with locals is monitored. Use of personal cellphones, Internet access and transportation — basics for conducting business anywhere else in the world — require authorization. Even with their own cellphones, foreigners often cannot phone their local staff because of restrictions governing communication between North Koreans and outsiders.

Rules in Rason were loosened to make it easier for foreign businesses to set up shop, particularly regarding visas and entry.

Yong Nam, vice-director of the economic cooperation department of the Rason City People’s Committee, said laws also were amended in December to protect foreign investors’ property.

Still, though changes were made to the legal code and transport from China has improved, Rason officials must ensure steady electricity, broadband Internet, an international banking system and cellphone service for foreigners, Mr.  Abrahamian said.

Earlier this month, a Chinese firm, the Xiyang Group, warned other companies against investing in North Korea, calling its four-year experience trying to tap into North Korea’s mining industry “a nightmare.”

Xiyang said it invested $37.1 million to set up a joint venture to build a mining facility and sent 100 workers to North Korea last year. However, North Korean officials demanded changes after the contract was signed, and when Xiyang refused, they cut off utilities to the plant and deported the workers, it said in a blog post.

A project manager who asked to be identified only by his surname, Wu, confirmed the post Tuesday.

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