Exclusive: N Korea tightens its grip on Rajin-Sonbong special economic zone

The Kim Il-sung villa in Rajin-Sonbong is no longer available for hire, according to a reliable source in the area. The de-listing happened in the course of a Ministry of State Security (MSS) surveillance operation in North Korea’s Rajin-Sonbong special economic zone.

The operation was instigated under orders from the Organisation and Guidance Department (OGD) of the Workers’ Party, as it tightens its grip on the zone in the aftermath of Jang Song-thaek’s purge and execution. Nevertheless, the operation is being conducted in a relatively discreet manner so as not to startle Chinese businessmen in the zone.

The talk among senior DPRK cadres is that although Rajin-Sonbong’s Party Secretary, Party Committee Chair and MSS Supervisor are Jang Song-thaek’s associates, they are being left alone for the time being because of their close personal relations with Chinese investors; but that following the Supreme People’s Assembly elections in March, they will be replaced.

Nevertheless, the highest ranking female cadre in Rajin-Sonbong, the Tourism Director, was taken away. This prompted rumours that she was Jang Song-thaek’s lover, but her circumstances make this very unlikely.

The International Club in Rajin-Sonbong closed after the purge of Jang Song-thaek and the coming and going of Chinese businessmen has also decreased. The Kim Il-sung holiday villa in Rajin-Sonbong, which had been rented by HK investing company Emperor Group, has now been confiscated.

This villa is a 70s construction built as a getaway for Kim Il-sung and was a prized landmark in Rajin-Sonbong, with even a commemorative monument to mark the villa’s location. When the Emperor Group set up a casino in the area, they asked for permission to hire the villa for its VIP guests. At first, the Rajin-Sonbong Party Committee refused because it was considered a sacred landmark related to Kim Il-sung.

The person who secured the deal for the Emperor Group was an ethnic Korean Chinese named Ri Bong-hui, director of a fuel oil company. He donated US$1 million as a brokerage fee and the rental permit was granted. Rumours have now been spread that this fee had gone personally to Jang Song-thaek.

Existing land lease agreements in the Rajin-Sonbong special economic zone have also been affected. These originally stipulated that at US$20 / m2, plots of land could be leased for 20-50 years, depending on their location. The agreements have now been invalidated on the grounds that the details had been mismanaged by Jang Song-thaek.

Further, personnel tax and operating tax have been re-calculated and a request has been made by Party authorities in Rajin-Sonbong for the appropriate payments to be made in yearly groupings. As the Rajin-Sonbong authorities have asked for ten years back payment, many small investors from China are complaining about their losses.

The fact that the new rulings are being applied only to smaller companies is said to be exacerbating their disgruntlement. Chinese firms making larger investments are currently exempt, but some are still worried that the new measures might be applied to the bigger investors in a second phase of rulings.