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Untitled Document
REGULATIONS ON CONTRACT CONSTRUCTION IN THE RASON ECONOMIC AND TRADE ZONE

Adopted by Decision No. 59 of the Cabinet on October 27, 2000

Chapter 1. General

Article 1. These regulations are formulated to provide a regime governing contract construction and facilitate contract construction in the Rason economic and trade zone.
Article 2. Any foreign-invested enterprise, foreign individual or Korean compatriot residing outside the territory of the DPRK (hereinafter called the owner) may commission a construction project to a DPRK or foreign building company (hereinafter called the contractor) in the Rason economic and trade zone (hereinafter called the Zone).
Article 3. Contract construction is an undertaking, in which the owner concludes a contract with the contractor to commission a construction project.
Article 4. Contract construction shall include main contract construction and subcontract construction (including labour subcontract construction).
Main contract construction is an undertaking, in which the contractor takes over the whole construction project under the contract with the owner.
Subcontract construction is an undertaking, in which the contractor concludes a subcontract with another contractor to commission part or whole of the construction project, subject to approval of the owner.
Labour subcontract construction is an undertaking, in which labour subcontractor takes over the construction project under the condition that main contractor or subcontractor provides equipment, tools, instruments, building materials and others at its own expenses.
Article 5. Contract construction projects shall include construction of new buildings and other structures, reconstruction, relocation, enlargement, rehabilitation, improvement, expansion and repair.
Article 6. The contractor shall have such skilled labour and modern equipment that it can carry out contract construction in the Zone, and be self-supportive as an independent entity.
Article 7. Labour for contract construction shall be provided through the labour exchange agency in the Zone. A foreign owner or contractor shall employ more than 80 per cent of total labour needed for contract construction with that of the DPRK.
In special cases, the percentage may be regulated subject to approval of the central trade guidance organ.
Article 8. The Zone construction supervision organ shall exercise a uniform control over contract construction, under the guidance of the central trade guidance organ.
Article 9. The matters that are not covered by these regulations shall be governed by other corresponding laws and regulations of the DPRK.

Chapter 2. Project Construction

Article 10. Where the owner wishes to be engaged in contract construction, it shall submit an application for a contract construction project to the State construction supervision organs for approval.
The State construction supervision organs include the central construction supervision organ and the Zone construction supervision organ.
Article 11. The State construction supervision organs shall review and decide whether to reject or approve the application for a contract construction project within 10 days from its receipt.
Article 12. A contract construction project shall be designed as indicated in the letter of approval.
The owner may place an order with a DPRK design institution or a foreign design company to design the project.
Article 13. A contract construction shall be undertaken according to the contract between the owner and the contractor.
Article 14. A contract may be entered into by means of tendering or agreement.
Tendering shall be approved by the Zone construction supervision organ.
Article 15. When the owner has selected a contractor or subcontractor, it shall obtain an approval of the Zone construction supervision organ.
Article 16. The contractor who intends to undertake a contract construction project shall register the contract with the Zone construction supervision organ.
Article 17. Before groundbreaking, the owner shall apply to the Zone construction supervision organ for construction licence, and hand over to the contractor the letter of approval, design, construction licence and other necessary documents.
Article 18. Ground shall not be broken for an unlicenced construction project.
Article 19. The contractor, which has not been registered in the Zone, shall submit an application to the zone business registrar for temporary business registration.
Article 20. The Zone business registrar shall, within 20 days from the receipt of application, review it and decide whether to register the applicant or reject it.
When the temporary registration has been approved, a certificate of temporary business registration shall be issued.
Article 21. A business registration certificate shall be valid for the period specified in the contract.
Article 22. The contractor shall be a corporate body of the DPRK from the day on which it has made temporary business registration.
Article 23. Where a contract is not implemented within the valid period of temporary business registration, the contractor shall apply to the business registrar for its extension within the ranges of 6 months.
Article 24. The contractor shall, within 10 days from its temporary business registration, go through necessary procedures required by the taxation institution and customs office.
Article 25. The owner and contractor shall open accounts with a relevant bank in the Zone.
Article 26. The contractor shall, on a monthly basis, have a progress report confirmed by the owner and submit it to the Zone construction supervision organ. Upon completion of the project, the contractor shall submit the final financial report to the Zone taxation institution.
Article 27. The owner and constructor shall make a set amount of payment due to the State.
Article 28. Employment of foreign superintendent, technicians and skilled workers for special jobs in contract construction shall be approved, through the Zone construction supervision organ by the central trade guidance organ.
Article 29. Any foreign individual coming into the Zone for contract construction shall go through formalities for stay and residing therein, according to the law and regulations related to entry and stay of foreign nationals.
Article 30. Where underground installments, historical relics or remains are discovered in the course of contract construction, the work shall be suspended, pending for the instruction of the Zone construction supervision organ.
Article 31. The contractor shall take necessary measures for the protection of the people and environment surrounding the construction site.
Article 32. The contractor shall take out an insurance policy from a DPRK insurance company.

Chapter 3. Inspection and Takeover of the Completed Contract Construction Building Structure

Article 33. The contractor shall, upon completion of any contract construction project, conduct a comprehensive inspection over the building and send to the owner a notice of completion of the project concerned.
Article 34. The owner, upon receipt of the said notice, shall submit a written request to a relevant State construction supervision organ for final inspection over the building.
Article 35. The State construction supervision organs shall, within 15 days from receipt of such request, shall inspect the building and issue a certificate of final inspection, or otherwise, order a correction.
Article 36. The building structure shall be taken over, in principle, at a time upon completion of the project, or stage by stage, depending on the scope and characteristics of the project, as may be specified in the contract.
Article 37. The guarantee period for any structure built under contract shall be 1 year.
Compensation for any accident that occurs before expiry of the guarantee period shall be made by a party which has been proved to be responsible for it.
Article 38. The structure that has been built under contract shall be used from the day of take-over, after the final inspection.
Article 39. The owner shall clear all payments for the contract construction project within 30 days from take-over.

Chapter 4. Supervision over Contract Construction and Settlement of Disputes

Article 40. The State construction supervision organs shall exercise strict supervision and control over contract construction so as to prevent any possible deviation.
Article 41. In case of any breach of these regulations, such administrative punishment as fine, suspension of project and deportation shall be imposed depending on the severity of violation. Criminal charges shall be applicable to serious offenses.
Article 42. Any dispute in connection with contract construction shall be settled through consultation, or otherwise, through arbitration or civil proceedings effective in the DPRK.


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