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061296B.SHP  + Source:  ONR Asia +
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Contributory Categories: ENG

Country: North Korea, China, Russia

From:   Japan Times
        7 June 1996
        p. 17 

KEYWORDS: North Korea, China, Russia, Tumen River; Port
facilities, Economic Zone


South China Morning Post

     Proponents say it is Northeast Asia's answer to Shenzhen.  It
boasts easy aecess to the wealthy Japanese and South Korean
markets and a low-cost manufacturing base.

     Yet the Tumen River Economic Development Area, a triangle
extending from Chongjin in North Korea to Yanji in China's Jilin
Province and north to Vladivostok and Nakhodka in Russia, is still
off the investment map of most foreign .ompanies.
     Advisers from the United Nations Development Program said one
of the main reasons was the three nations had not made the area a
high enough priority.
     The director of the UNDP-assisted Tumen Secretariat in
Beijing, Michael Underdown, said: "Russia is concerned about
Chechnya and NATO expansion.  In China, Tumen does not figure as
large in the government's planning as Pudong (in Shanghai) or the
Three Gorges project."
     North,Korea, despite actively promotnig Rajin-Sonbong, its
free-trade zone in the Tumen region, as a window for foreign
investment, has failed to clear up lingering questions over its
economic openness and political stability.
     Tumen Secretariat investment adviser Dan Davies said that
with much of the basic infrastructure necessary to move goods in
and out of the delta region almost complete, the major obstacles
were bureaucratic.
     "There are many institutional barriers that need a lot of
     "These countries are still operating according to old habits
and ideas," Davies said.
     Inefficient customs procedures mean that crossing the border
between North Korea and China can take several hours when it
should take a few minutes.
     On the Russian border, differences in time zones - China's
clocks are set to Beijing time - and working hours meant that
customs of the two countries in the men region only overlapped for
five hours a day, Davies said.
     Visa problems also are a major obstacle.  North Korea will
issue on-the-spot visas to the Rajin-Sonbong zone to any foreigner
holding an invitation letter, but the Chinese reqiuire that any
third-country citizen entering from their territory holds a normal
North Korean visa.
     Since its launch in 1992, the Tumen River development program
has suffered from unrealistically high expectations and incorrect
reports that threaten to drown it in skepticism.
     Davies and Underdown said the Tumen development was
frequently described as a "$30 billion United Nations project," a
misnomer they said was started by consultants four years ago.
     "The amount of investment in the next 10 years will be
several billion dollars, and that does not mean we are scaling
down the operation," Davies said.
     "There was never $30 billion of projects ever suggested for
the region."
     In the most recent UNDP investment guide to the Tumen region
published in March, independent economists were quoted as saying
the area will require about $6 billion of investment to 2000.
     Still, that is an ambitious goal for a region that up to the
end of last year had accumulated a total of $282 million in for-
eign investment.
     Of that, $191 million went to China's Yanbian Korean
Autonomous prefecture on the Tumen border.
     Another $70 million, was plowed into ports and shipping
facilities in the Russian section, and $20 million was invested in
North Korea's Rajin-Sonbong zone.
     Underdown and Davies take satisfaction from the fact that 60
percent of the total foreign investment inflow has occurred in the
last two years.
     "A whole lot of things happening now mean that by the middle
of next year you will have a very different picture in terms of
access, border crossings and shipments to Japan and North Korea,"
Davies said.
     A 70-km railway will open at the end of this year, linking
the Chinese and Russian parts of the Tumen region.
     New container facilities at Rajin port in North Korea allowed
sailings between Rajin and South Korea's Pusan to begin in October
last year, cutting travel time between Yanji and Pusan from one
month (if moved through Dalian port) to between five and six days
- and at a 40 percent discount.
     Those services soon will be upgraded to using 11,000-ton
     New lines also are opening between North Korea and Japan.
     Contrary to previous expectations, the Tumen area was
unlikely to develop as a single international free-trade zone, but
rather as a meeting point of three separate areas each with its
own zones and characteristics, Davies said.

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