Investment Cautions

·   Restricted opening without national reform

The China, Vietnam, etc. sought domestic economic reform while opening policy to convert into the market economy, but North Korea¡¯s opening is being made in the restricted areas without domestic economic reform.

• Socialist society and little information

It is very difficult to know local circumstances due to closed society whose uncertainty is a big when considering the investment into North Korea.

• Underdeveloped SOC

The SOC such as railway, harbor, road, communication, etc. is poor. The power shortage can lower the operation rate of factory due to failure of mechanical facilities, and most of railways have a single track and they were constructed under the rule of Japanese Imperialism with a sleeper seriously corroded, so it is difficult to keep normal speed. Most of harbors have container facilities uninstalled, excluding the harbors in Nampo and Rajin, and the maximal pier capacity is 10,000 to 20,000 tons. Other communication facilities, including telephone, facsimile, etc., are very deficient.

• Restriction on Business operation

The typical restrictions are the uncertainty of market acquisition and remittance, the frustrated plan for local supply of raw material, limited personnel exchange and communication with the head office, etc. There is the possibility of North Korean government¡¯s direct involvement into overall business operation such as employment, dismissal, etc.

• Obscure profit remittance

It is uncertain that the profit can be remitted due to shortage of foreign exchange holdings in North Korea. The remittance is legally guaranteed, but the domestic sales profit is difficult to exchange into circulating currency and compelled to execute it for operation expense in North.

• Ambiguous provisions  

The provisions are uncertainly prescribed so, there are many articles that can arbitrarily be interpreted according to decision of North Korean government.