Adopted by Resolution No. 17 of the Standing Committee of the
Supreme People’s Assembly on October 5, 1992, and
amended by Decree No. 484 of the Presidium of the Supreme People’s Assembly
on February 26, 1999
It is a consistent policy of the DPRK
to expand and develop economic cooperation with other countries.
The State encourages foreign investors to invest in the territory of the
DPRK on the principles of complete equality and mutual benefit.
This Law is the basic law relevant to foreign investment
which stipulates the general principles and rules for the protection of
the investments of the foreign investors and for the guarantee of the
legal rights and interests of the foreign-invested businesses.
A foreign investor is a corporate body or an individual of a foreign country
that invests in the territory of the DPRK.
Foreign-invested businesses shall include foreign-invested enterprises,
which may be a contractual or equity joint venture enterprise or a wholly
foreign-owned enterprise, and foreign enterprises that are set up in the
territory of the DPRK.
A contractual joint venture is a form of business activity in which investors
from the DPRK and a foreign country jointly invest, the management is
assumed by the partner from the host country and, depending on the provisions
of the contract, the portion of the investment made by the foreign investor
is redeemed or the share of the profits to which the foreign investor
is entitled is distributed to him.
An equity joint venture is a form of business activity in which investors
from the DPRK and from a foreign country invest jointly, operate the business
jointly, and profits are distributed to the investors in accordance with
the shares of their investment.
A wholly foreign-owned enterprise is a business enterprise in which a
foreign investor invests and manages on his own account.
A foreign enterprise is an institution, enterprise, individual or other
economic organizations from foreign countries with a source of income
in the territory of the DPRK.
A foreign investor shall be permitted to set up
and operate an equity or contractual joint venture within the territory
of the DPRK and a wholly foreign-owned enterprise in the Rason economic
and trade zone.
The State shall guarantee the legal rights and interests
of foreign investors and foreign-invested businesses, as well as the conditions
of their management activities.
Institutions, enterprises, individuals and other
economic bodies of foreign countries shall be permitted to invest within
the territory of the DPRK.
Overseas Korean compatriots shall also be allowed to invest within the
territory of the DPRK, subject to the relevant laws and regulations.
A foreign investor shall be allowed to invest in
various sectors such as industry, agriculture, construction, transport,
telecommunications, science and technology, tourism, commerce and financial
The State particularly encourages investment in
sectors that introduce modern technologies including the high technology,
sectors that produce internationally competitive goods, the sectors of
natural resources development and infrastructure construction, and the
sectors of scientific research and technology development.
Those foreign-invested enterprises that invest and
operate in priority sectors stipulated in the previous Article shall receive
preferential treatment, including the reduction of and exemption from
income and other taxes, favourable conditions for land use, and the preferential
supply of bank loans.
Those foreign-invested enterprises that are established
in the Rason economic and trade zone shall receive preferential treatments
1. No customs duty shall be levied on export and import goods other than
those items that are prescribed by the State.
2. For an enterprise in a production sector, no income tax shall be payable
for 3 years from the first profitable year and income tax may be reduced
by up to 50 per cent for the following 2 years.
The rate of income tax shall be 14 per cent, which is lower than in the
The State shall ensure that the relevant institutions
make convenient the immigration formalities and methods for foreign investors
entering or leaving the country with the purpose of setting up or operating
business enterprises in the Rason economic and trade zone.
Investment shall be prohibited or restricted in
those projects which hinder the development of the national economy or
endanger the national security, or which are technically obsolete and
harmful to the environment.
A foreign investor may invest in the form of currency,
property in kind, industrial property rights, technical know-how and other
assets and property rights. The value of assets and property rights invested
shall be determined through an agreement between the partners on the basis
of the international market prices prevailing at the time of the valuation.
Foreign-invested enterprises shall be permitted
to open branch offices, representative offices or agencies and to establish
subsidiaries in the DPRK or other countries. They shall also be permitted
to conduct joint operations with companies in other countries.
Equity or contractual joint venture enterprises
and wholly foreign-owned enterprises shall become corporate bodies of
the DPRK. Foreign enterprises and their branches, agencies and representative
offices that are set up within the territory of the DPRK shall not become
corporate bodies of the DPRK.
The State shall lease the land required for foreign
investors and the establishment of foreign-invested enterprises for a
maximum period of 50 years.
Land so leased may be transferred or inherited during the period of lease
with an approval of the relevant organ.
A foreign-invested business shall employ its labour
force from the host country. Managerial personnel, technicians and skilled
workers for special jobs that are prescribed in the contract may be employed
from abroad in agreement with the central trade guidance organ.
Labour force of the DPRK shall be employed or dismissed according to a contract
made with the relevant labour service agency.
Foreign investors and relevant foreign-invested
businesses shall pay income tax, turnover tax, property tax and other
Foreign investors shall be permitted to reinvest
the whole or part of their profit within the territory of the DPRK.
In such cases the whole or part of the income tax already paid on the
reinvested portion may be refunded.
Foreign-invested enterprises and assets invested
by foreign investors shall not be subject to nationalization or seizure
by the State.
Should unavoidable circumstances make it necessary to nationalize or seize
such enterprises and assets, fair compensation shall be paid.
Legal profit and other incomes earned by a foreign
investor in its business activities and any money that remains after the
liquidation of the business may be remitted abroad, subject to the laws
and regulations of the DPRK relating to foreign exchange control.
The State shall protect by law the managerial secrets
of foreign-invested enterprises and shall not disclose them without prior
agreement with the foreign investor.
Any disagreement concerning foreign investment shall
be settled through consultation.
In case of failure in consultation, it shall be settled by arbitration
or legal procedures provided by the DPRK or may be brought to an arbitration
agency in a third country for settlement.