THE LAW OF THE DEMOCRATIC PEOPLE’S
REPUBLIC OF KOREA ON THE LEASING OF LAND
Adopted by Resolution No. 40 of the Standing Committee of the
Supreme People’s Assembly on the October 27, 1993, and
amended by Decree No. 484 of the Presidium of the Supreme People’s Assembly
on the February 26, 1999
Chapter 1. Fundamentals
Article 1. The Law of the Democratic People’s Republic of
Korea on the Leasing of Land shall contribute to establishing a proper system
in the leasing of land needed for foreign investors and foreign-invested enterprises
and for use of the leased land.
Article 2. A foreign corporate body or individual may lease
and use land in the DPRK.
Article 3. The lessee shall have the right to use the land
leased. Natural resources and deposits in the land leased shall not be covered
by the right to use land.
Article 4. The leasing of land shall be undertaken with the
approval of the central land and environment protection guidance organ.
The contract for leasing land shall be made by the land and environment protection
department of the People’s committee of the province (or municipality directly
under central authority) or of Rason City.
Article 5. Any institution, enterprise and entity of the DPRK
that intends to contribute land to an equity or contractual joint venture may
be granted the right to use land by the People’s Committee of the province (or
municipality directly under central authority) where it is located, or of Rason
Article 6. The term of lease shall be fixed by agreement between
the contracting parties within the limit of 50 years, as stipulated in the Law
of the Democratic People’s Republic of Korea on Foreign Investment.
Article 7. The right to use the land leased shall become the
property right of the lessee.
Article 8. The lessee shall manage and use the land leased
in accordance with the laws and regulations of the DPRK and the contract for
leasing the land.
Chapter 2. Ways of Leasing Land
Article 9. The leasing of land shall be undertaken through
consultation. It may also be realized by means of tender and auction in the
Rason economic and trade zone.
Article 10. The lessor shall provide the lessee with the following
1. The location and area of the land and its topographical map,
2. Uses to which the land may be put,
3. The building area and a plan for development of the land,
4. The period during which construction must be completed and the minimum amount
of investment required,
5. The requirements for environmental protection, for hygiene and anti-epidemics
and for fire prevention,
6. The term of lease of the land, and
7. The state of development of the land.
Article 11. Land shall be leased through consultation in accordance
with the following procedure:
1. A potential lessee shall study the supplied information concerning the land
and submit to the lessor an application for the use of land accompanied by a
copy of document approving the establishment of an enterprise or residence,
2. The lessor shall notify the applicant of its approval or rejection within
20 days of the receipt of the application,
3. The lessor and the potential lessee shall conclude a contract which specifies
the area and usage of the land, the purpose and period of the lease, the total
amount of investment, period during which construction may be undertaken, the
rent for the land and other relevant matters, and
4. The lessor shall, after the receipt of the charge for transferring the right
to use land in accordance with the contract or the leasing of land, issue a
certificate for use of the land and register it.
Article 12. The procedure for leasing land through tender is
1. The lessor shall make public information of the land, the place and date
of the tender, the opening date for the tender, the procedure for tender and
other relevant information, or forward a tender guide to designated tenderers,
2. The lessor shall sell tender documents to tenderers,
3. The lessor shall provide consultation with regard to the tender,
4. The tenderer shall pay the required amount as a guarantee and place a sealed
tender document in the tender box,
5. The lessor shall form a jury, including members from economic, legal and
other relevant sectors,
6. The jury shall review and assess the tender documents and decide the best
offer in consideration of the development of land and construction on it and
the amount of rent offered,
7. The lessor shall issue a notice to the successful tenderer after the jury
has reached its decision,
8. The successful tenderer shall conclude a contract for leasing the land with
the lessor within 30 days of the receipt of the notice and pay the relevant
charge for transferring the right to use the land due prior to receiving and
registering the certificate for use of the land.
Should it be necessary to defer the signing of the contract, an application
for a deferment of 30 days should be submitted to the lessor at least 10 days
prior to the prescribed date,
9. The unsuccessful tenderers shall be informed of the result of the judgement
within 5 days of the decision of the jury and the guaranty shall be refunded.
No interest shall be paid on the guaranty, and
10. Should the successful tenderer fail to conclude a contract for leasing the
land within the prescribed deadline, the tender shall be declared null and void
and the guaranty shall not be refunded.
Article 13. Leasing land through auction shall be conducted
1. The lessor shall make public information concerning the land; data, place
and procedure of the auction, reserve price for the land, and other information
necessary for the auction,
2. The lessor shall put up land for auction based on the reserve price which
has been made public, and the bidder who offers the highest price above this
shall be declared the successful bidder, and
3. The successful bidder shall conclude a contract for leasing the land with
the lessor and then be issued with a certificate for use of the land and have
Article 14. The lessee shall use land in accordance with the
contract for use of land. A lessee who wishes to alter the use of land shall
conclude a supplementary contract with the lessor.
Chapter 3. Transfer and Mortgage of the Right to Use Land
Article 15. The lessee shall be permitted, with the approval
of the lessor; to transfer (by means of selling, re-leasing, donation or inheritance)
or mortgage to a third party the right to use a part or the whole of the land
The term of the transfer or mortgage of the right to use land shall not exceed
the remaining period of the lease prescribed in the contract.
Article 16. The lessee may sell, re-lease, donate or mortgage
the leased land only after paying the total amount of charge for transferring
the right to use land stipulated in the contract for leasing the land and making
the contracted investment.
Article 17. In case of the transfer of the right to use land,
the rights and obligations relating to the use of the land, and the structures
and other appurtenance of it, shall also be transferred.
Article 18. The sale of the right to use land shall be conducted
1. The seller and buyer of the right to use land shall conclude a contract and
receive attestation from a notary office,
2. The seller shall submit an application for the sale of the right to use land,
with a copy of the contract, to the lessor for approval,
3. The seller and buyer shall register any change in the right to use land with
the relevant lessor.
Article 19. Where a lessee sells the right to use land, the
lessor shall have the preferential right to buy it.
Article 20. The lessee may re-lease the land leased. In this
case he shall file an application for the re-lease, accompanied by a copy of
the contract for leasing the land, with the lessor for approval.
Article 21. A lessee may mortgage the right to use land with
the purpose of obtaining a loan from a bank or other financial institutions.
In this case the structures and other appurtenance on the land shall also be
mortgaged together with the land.
Article 22. When mortgaging the right to use land, the mortgagor
and the mortgagee shall conclude a contract for the mortgage in accordance with
the terms of the contract for leasing the land. In this case the mortgagee may
request from the mortgagor the contract for leasing the land, a copy of the
transfer contract, a copy of the certificate for use of the land or other information
relating to the current state of the land.
Article 23. Both the mortgagor and the mortgagee of the right
to use land shall register the mortgaged right with the relevant lessor.
Article 24. The mortgagee may dispose of the right to use the
land mortgaged by contract, as well as the structures and other appurtenance
of the land in accordance with the mortgage contract if the mortgagor fails
to pay the amount due by the expiry of the mortgage, or if business has been
dissolved or gone bankrupt during the period of the mortgage contract.
Article 25. One who has won the right to use land and the structures
and other appurtenance on it disposed of by the mortgagee shall receive attestation
from a notary office, register the change with the registration office and use
the land in accordance with the contract for leasing the land.
Article 26. The mortgagor shall not be permitted to remortgage
or transfer the right to use land during the period of contract without the
approval of the mortgagee.
Article 27. Should a mortgage contract be terminated due to
the repayment of debt or other reasons, the mortgagee and the mortgagor shall
cancel the registration of mortgage of the right to use the land within 10 days.
Chapter 4. Rent of Land
Article 28. The lessee shall pay rent for the leased land
to the lessor. The rent shall include the charge transferring the right to use
land and the charge for land use.
Article 29. When leasing developed land, the lessor shall receive
from the lessee the charge for transferring the right to use land plus the cost
of land development.
The cost of land development shall include the costs of land-levelling, road
construction, and building water-supply, drainage, electricity, telecommunications
and heating systems.
Article 30. The lessee shall pay the total amount of charge
for transferring the right to use land within 90 days of signing the contract
for leasing land.
The lessee may make payment by installments over a period of five years on agreement
with the lessor for part of the land that is eligible for preferential treatment,
or for land development which requires a high charge for transferring the right
to use land. In this case an appropriate interest shall be paid on the rent
Article 31. A lessee who has been leased land through consultation
or auction shall pay to the lessor a guaranty equivalent to 10 per cent of the
charge for transferring the right to use land, within 15 days of the conclusion
of the contract for leasing the land. The guaranty may be appropriated for the
charge transferring the right to use land.
Article 32. Should the charge transferring the right to use
land not be paid before the prescribed deadline, the lessor shall demand additional
payment equivalent to 0.2 per cent the overdue rent on a daily basis, starting
from the first day of default. If arrears are not paid for more than 50 days,
the contract for leasing land may be cancelled.
Article 33. The user of the land leased shall pay annually
land use charge.
For those who invest in priority sectors and in the Rason economic and trade
zone, land use charges may be reduced or exempted for up to 10 years.
Chapter 5. Return of the Right to Use Land
Article 34. The right to use land shall automatically return
to the lessor on the expiry of the term of the lease stipulated in the contract.
The structures and other appurtenance on the land shall also return, without
compensation being paid.
In case of land leased for more than 40 years, compensation may be made against
the residual value of the buildings completed within 10 years before the expiry
of the land lease.
Article 35. When the term of the land lease comes to an end,
the lessee shall return the certificate to the issuing authority and cancel
the registration of the right to use land.
Article 36. The lessee who wishes to extend the term of land
lease shall apply to the lessor for approval to extend the period of land lease
6 months before the expiry of the term.
In this case he shall re-enter into a contract for leasing the land, follow
the necessary procedures and receive a reissued certificate for the use of land.
Article 37. When the term of the lease expires, the lessee
shall withdraw the structures, facilities and other appurtenance on the land
at his own expense and clear the land, in accordance with a request from the
Article 38. The right to use leased land shall not be cancelled
during the period of the lease.
Should it be necessary to cancel the right to use land during the period of
the lease owing to unavoidable circumstances, the lessor shall obtain consent
from the lessee six months before and offer the lessee other land of the same
conditions or pay proper indemnity for any losses incurred.
Chapter 6. Penalties and Settlement of Disputes
Article 39. If a lessee illegally uses land without the certificate
for the use of land, or changes the use of land or transfers or mortgages the
right to use land without approval, he shall be fined, have the facilities on
the land confiscated or be required to restore the land to its original state,
and the contract for transfer or mortgage be declared null and void.
Article 40. In case of a failure to invest 50 per cent of the
total sum of investment during the period prescribed in the contract for the
leasing of land, or to develop the land as contracted, the lessee may be deprived
of the right to use land.
Article 41. If the lessee disagrees with the penalty imposed
on him, he may appeal to an institution senior to the one that has imposed sanctions
or file a suit with an appropriate court within 20 days of the receipt of the
notice of penalty.
Article 42. Disagreements arising in leasing land or transferring
and mortgaging leased land to a third party shall be settled through consultation.
In case of failure in consultation, they shall be settled through arbitration
or legal procedures provided by the DPRK, or may be taken to an arbitration
body in a third country for settlement.