THE LAW OF THE DEMOCRATIC PEOPLE’S
REPUBLIC OF KOREA ON WHOLLY FOREIGN-OWNED ENTERPRISES
Adopted by Resolution No. 19 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
Chapter 1. Fundamentals
Article 1. The Law of the Democratic People’s Republic of
Korea on wholly foreign-owned enterprises is intended to ensure establishment
and operation of foreign enterprises within the Rason economic and trade zone,
and to expand and promote economic cooperation and exchange with other countries
over the world.
Article 2. A wholly foreign-owned enterprise is an enterprise
that a foreign investor set up an enterprise by investing full amount of capital
required for its operation and runs independently.
Article 3. Foreign investors may establish and run enterprises
in the electronics industry, automation industry, machine-building industry,
food-processing industry, clothing industry, daily-necessities industry, transport,
service industry and other industries.
No enterprise that might threaten the national security or which is technically
backward shall be established.
Article 4. The State shall protect by law the capital invested
by foreign investors and their income from their business activities.
Article 5. Foreign investors shall respect and strictly observe
the laws and regulations of the DPRK and shall not hinder the development of
the national economy of the DPRK.
Article 6. This law shall be applied in the Rason economic
and trade zone.
Chapter 2. Establishment of WhollyForeign-Owned Enterprises
Article 7. A foreign investor who wishes to establish an enterprise
in the DPRK shall submit an application for the establishment of an enterprise
to the central trade guidance organ through consultation with the relevant organs.
The application shall be accompanied by all documents required for its examination
and approval, including the memorandum of the enterprise, a feasibility study
report and a document certifying the creditability of the investor’s capital.
Article 8. The central trade guidance organ shall make a decision
on the approval or refusal of the establishment of an enterprise, within 80
days from the day of receipt of the application.
Article 9. A foreign-investor shall, within 30 days of the
approval, register the enterprise at the Rason City People’s Committee.
The date of registration shall mark the date of the establishment of the enterprise.
A wholly foreign-owned enterprise shall, within 20 days of its registration,
complete its tax registration at the financial organ in the area of its location.
Article 10. With the approval of the Cabinet, a wholly foreign-owned
enterprise may establish branches, representative offices, agencies and subsidiaries
in the DPRK or other countries and conduct joint operations with companies in
Article 11. A foreign investor may entrust any construction
required for the establishment of the enterprise to a construction enterprise
in the DPRK.
Article 12. A foreign investor shall make an investment within
the period stated in the approved application for the establishment of his enterprise.
If investment within the fixed period is impossible due to unavoidable circumstances,
it may be extended, with the approval of the organs concerned.
Article 13. Where a foreign investor fails to make an investment
within the fixed period for no good reason, the central trade guidance organ
may abrogate the approval of the application.
Chapter 3. Business Activities of Wholly Foreign-Owned Enterprises
Article 14. A wholly foreign-owned enterprise shall conduct
business activities in accordance with the memorandum of enterprise endorsed.
If the wholly foreign-owned enterprise wishes to increase or change categories
of business, it shall obtain an approval from the organ that has approved its
Article 15. A wholly foreign-owned enterprise shall submit
its production import and export plans to the Rason City People’s Committee
with which it has been registered.
Article 16. A wholly foreign-owned enterprise may obtain in
the DPRK or from abroad, the materials it needs in its business activities,
and either export its products or sell them in the DPRK.
Article 17. A wholly foreign-owned enterprise shall, in principle,
purchase raw and other materials and equipment from the DPRK and sell its products
to the DPRK through the foreign trade agencies of the DPRK.
Article 18. A wholly foreign-owned enterprise shall open an
account at the Foreign Trade Bank of the DPRK.
A wholly foreign-owned enterprise may, on agreement with the DPRK foreign exchange
control organ, open an account at other banks in the DPRK or at banks abroad.
Article 19. A wholly foreign-owned enterprise shall keep its
financial and accounting documents in its seat and conduct its management calculation
in accordance with the regulations of the DPRK on bookkeeping and accounting
in wholly foreign-owned enterprises.
Article 20. A wholly foreign-owned enterprise shall employ
the labour of the DPRK.
Some management personnel, technicians and skilled workers for special jobs
who have been fixed in the contract may be employed from foreign countries.
In such a case, a foreign investor shall reach an agreement with the central
trade guidance organ.
Article 21. Employees of a wholly foreign-owned enterprise
shall be permitted to form a trade union.
The trade union shall protect the rights and interests of the employees in accordance
with the laws and regulations of the DPRK on labour, conclude a contract concerning
working conditions with the wholly foreign-owned enterprise and supervise its
A wholly foreign-owned enterprise shall provide conditions for the activities
of the trade union.
Article 22. A wholly foreign-owned enterprise may reinvest
lawful profits from its business activities or remit them abroad, in accordance
the laws and regulations of the DPRK relating to foreign exchange control.
Article 23. Should a wholly foreign-owned enterprise require
insurance, it shall be insured in the DPRK.
Article 24. A wholly foreign-owned enterprise shall pay tax
as stipulated in the relevant laws.
Article 25. No customs duty shall be levied either on materials
that a wholly foreign-owned enterprise brings in for its production and management
activities or on products, which it exports.
Article 26. A wholly foreign-owned enterprise may increase
the registered capital.
Should a wholly foreign-owned enterprise wish to transfer its registered capital
to another enterprise, it shall obtain approval of the organ that has approved
A wholly foreign-owned enterprise shall not reduce its registered capital during
Article 27. The central trade guidance organ and financial
organ may inspect and supervise investment and tax payment by a wholly foreign-owned
Chapter 4. Dissolution of a Wholly Foreign-Owned Enterprise and Settlement
Article 28. A wholly foreign-owned enterprise shall be dissolved
when the approved period of its operation expires.
Should a foreign investor wish to dissolve the enterprise before its expiry
or extend its duration, approval of the organ that has approved its establishment
shall be obtained.
Article 29. Should a foreign investor or a wholly foreign-owned
enterprise violates this law, the central trade guidance organ and other organs
concerned, in accordance with the extent of the violation, shall suspend its
business or dissolve it or impose a fine upon it.
Article 30. Should a wholly foreign-owned enterprise be dissolved
or go bankrupt, the foreign investor shall file its dissolution or bankruptcy
with the Rason City People’s Committee with which the enterprise was registered.
The assets of a wholly foreign-owned enterprise shall not be disposed of at
will until the liquidation procedures have been completed.
Article 31. All disputes concerning a wholly foreign-owned
enterprise shall be settled through consultation. In case of failure to settle
them through consultation, they shall be settled by arbitration or legal procedures
provided by the DPRK.