Foreign investors leave North Korea, citing corruption, 'lack of common sense'

July 3 (UPI) -- Foreign investors who were once lured by promises of high returns in a North Korean city are leaving after suffering heavy losses, according to a South Korean press report.

Daily NK reported Monday that Chinese and Russian investors are withdrawing their financial support for projects in Rason, the northeastern North Korean city designated a special economic zone under Kim Jong Il, the father of current leader Kim Jong Un.

Outside investors were discouraged by relentless corruption, according to North Korean sources in North Hamgyong province who spoke to Daily NK on the condition of anonymity.

State authorities often made demands outside business contracts, or concocted excuses to not return investment profits to foreign interests, sources said.

Some Russian and Chinese enterprises are leaving Rason because they realized they "could not solve the problem using common sense" with the North Koreans, according to one source in the province bordering China and Russia.

The investors, who were unable to recoup their losses, decided to "get out of the city before suffering more damage," the source said.

Russian companies that had begun construction on new buildings suspended their projects, leaving behind "skeletal structures" that stand unfinished in a city once touted for its economic potential as a trading hub.

Individual Chinese investors are among those who have "not received a penny in return for their investment" and are quitting the city.

Others cannot leave Rason, but the source did not specify whether they are unable to leave because of North Korea regulations, or because they cannot afford to exit their North Korea investments.

There is also evidence of skyrocketing gasoline prices, according to the report.

Corruption among state officers has enabled them to make other demands that extend beyond bribes and include requirements for gasoline from the foreign business community.

The price of gasoline is $5.56 per gallon, up from $3.33 per gallon in recent weeks, according to the report.