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North Korea Announces New Economic Zone

The organizer of a new special economic zone in North Korea says businesses will make money there and be sheltered from political interference by the country's communist government. Some skeptical analysts note other projects in the impoverished country have not worked out.

North Korea's newly announced special economic zone in the border town of Siniuju is offering many inducements to investors, including low cost labor, tax breaks, and, according to one report, visa-free entry for foreign businesses.

It's located on North Korea's west coast, right on the border with China. The organizers say they will clear out hundreds-of-thousands of current residents out of the area to make room for new businesses. The stated hope is that the zone will create wealth and inject money and life into North Korea's stagnant economy, in the same way special economic zones have helped boost China's economy in recent years.

The wealthy Chinese-born entrepreneur who heads the scheme, Yang Bin, told a delegation of visiting journalists this week Pyongyang's rigid government will not get in the way of businesses in the zone.

Mr. Yang says Siniuju is "totally separate" from North Korea and totally independent. He says it will have its own legal system and that key positions will be held by foreigners.

Mr. Yang became one of China's wealthiest men, operating agricultural and export businesses, while China underwent changes from a socialist to a more market-oriented economy. He is convinced he can help other businesses do the same thing during what he clearly hopes will be a major transformation in North Korea.

The isolated Stalinist state is better known for the starving refugees who flee the country into China, seeking food and jobs, than as a haven for enterprise and profit. It is also one of three countries that President Bush recently called an "axis of evil."

But business consultant Roger Barrett says North Korea has carried out economic reforms that may help it attract a variety of foreign businesses.

"A mixture of manufacturing, light industry, consumer products and assembly. There is a lot of skilled labor (in North Korea)."

But in the North Korean capital, British Diplomat James Hoare says Siniuju is only one in a series of experiments by North Korea, to "get away from the economic failures of the past several years." He says Pyongyang is hoping for a quick solution to its complex economic problems, but he doubts it will find one.

"I think it would be very difficult for the methods chosen to produce the required answers in the short term."

Other analysts say it may take years for this zone to become profitable, if ever, and note that similar earlier efforts in the country produced disappointing results so far.