Posts tagged special economic zones

Andrew Marshall on the the Mekong incidents

In October 2011, a Chinese cargo vessel was attacked on the Mekong. Thirteen sailors died. Initial reports blamed Naw Kham, the legendary pirate and drug lord. Later it seemed that a unit of Thai special forces was arrested for their alleged involvement. A special report by Andrew Marshall (Reuters) now reveals that nothing is clear yet. The Thai soldiers have not been charged with any crime (they are still on duty) and USD 6 million worth in Methamphetamine pills was found on board the ship.

If you are interested in the story of a modern day freshwater pirate, the business in meth as opposed to opium, the Shan rebels, and the role of a Chinese casino and Special Economic Zone, read this fascinating piece.

Here is a teaser:

Opium and heroin are no longer the Golden Triangle’s only products. Since the late 1990s, secret factories in Shan State have churned out vast quantities of methamphetamine. This highly addictive drug is known across Asia in pill form by the Thai name yaba (“crazy medicine”) and in its purer crystalline form as ice or shabu.
It is now the top drug in Japan, South Korea, the Philippines, Thailand, Cambodia, Laos and Brunei, the United Nations Office of Drugs and Crime reported in 2011. Naw Kham’s rise coincided with this explosion of meth use, which transformed the ill-policed Mekong between Myanmar and Laos — Naw Kham’s patch — into one of Southeast Asia’s busiest drug conduits.
Every year hundreds of millions of Myanmar-made methamphetamine pills are spirited across the river into Laos or down into Thailand. The trade is worth hundreds of millions of dollars — enough to corrupt poorly paid law enforcement officials across the region.
Narcotics are not the Mekong’s only contraband.
Other lucrative goods include: endangered wildlife such as tigers and pangolins; weapons, stolen vehicles and illegal timber; and, in the run-up to this month’s Tet celebrations, thousands of dogs in filthy cages bound for restaurants in Vietnam.
There is human contraband too. Illegal migrants from Myanmar and Laos are bound for Thailand’s booming construction or sex industries, while a constant stream of North Koreans journey across southern China and through Laos to surrender to the Thai authorities, who obligingly deport them to South Korea.

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Curious case of the China-North Korea special zones

The Dear Leader Kim Jong-il concluded his week long visit to Russia and China on 29 Aug 2011. Upon his return, Kim spoke highly of China’s economic development and mentioned that bilateral exchanges and cooperation should be enhanced between different departments and localities between these two countries, according to a Xinhua report.
Kim visited China in May this year, and this subsequent visit in August has been interpreted as a positive sign that North Korea is eager to gain prosperity by opening its borders for more trade and aid.
Indeed, in June this year, China and N. Korea launched two economic development zones along the border: one in Rason at the far end of  north-east N. Korea, and the other on the islets of Hwanggumpyong and Wihwa just across the border from Dandong. Within these two zones, both governments will re-build roads, a new cement factory, electricity infrastructure and develop Rason’s port.

But Jamil Anderlini of the Financial Times reported that the establishment of these zones has led to nothing:

Even though Chinese entrepreneurs are being encouraged and supported by China to invest there, they are still very cautious about considering the Hwanggumphyong Island Economic Zone, and investors from other countries will be even more circumspect…

So says Zhang Liangui, a professor of international strategic research at China’s Central Communist Party School.

North Korea’s past experience of working with other countries has left it with a serious credibility problem and this will stop a lot of foreign investment from even considering these new zones.

Moreover, similar initiatives in the past have not yet come to fruition. The Rason zone is in fact based on an investment zone designated in the early 1990s but never attracted any interest. In Hwanggumpyong, according to the FT report, there is no indication that
any companies have signed up to invest in the new economic zone, despite the imprimatur of China’s central government. The economic zone is still a swampy patch of grassland and mudflats, with nothing but a Chinese propaganda poster to mark the spot where officials broke ground on the project nearly three months ago.
The North Korean city Sinuiju (bordering Dandong) was planned to become a SAR with its own legal and economic system (using US dollars and Chinese yuan) in 2002. But when Kim Jong-il picked a successful Chinese businessman Yang Bin (who held a Dutch passport after 1989) to be in charge of the SAR in 2002, Yang was swiftly arrested by the Chinese police for economic crimes (fraud, false accounting, bribery and illegal use of agriculture land) and was sentenced to 18 years in prison (for detailed stories of Yang’s appointment and arrest, see this special report in TIME and another one in the Economist).
A Dandong-based Chinese trader who travels to Sinuiju regularly on business described the Sinuiju SAR in this way:
Nowadays there’s almost nothing there. There are barely any factories and everything they have is imported from China, even the food and medicine.
The China-North Korea economic zone business is really a curious case, it seems. On the one hand, China is extremely enthusiastic about establishing these zones as they prove to be models of success, not only in terms of financial gains, but also in terms of expanding its “soft power” in the adjacent territories. On the other hand, if the cross-border economic zones prove to spin out of China’s controls (e.g. Yang’s appointment was declared without consulting China first), it does not hesitate to pull the plug. It is therefore interesting to see how the newly launched economic zones can be developed and managed in the years to come. If N. Korea shows disobdience again,will China abandon the new zones as a punitive measure and turn them into no man’s land?
Close ties: Chinese and North Korean policemen at a flag-raising ceremony on the Friendship Bridge

 

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