Reunions will have economic impacts

It appears as though once the reunions of separated families in the two Koreas get into full swing, it will send mini shock waves through various social and economic sectors for both states.

As the citizens of both Koreas cross the border in an ever increasing number of reciprocal visits, there will arise the natural necessity for specialized eateries, travel agencies, accommodation providers and other related services catering to their specific needs. With the added possibility of the more affluent families in the South sending household and electronic goods and necessities, not to mention cash, the North and South might quite possibly become one big market.

Interchange progresses from persons to goods:

For the simultaneous family reunions to take place in Seoul and Pyongyang starting Aug. 15-18, the South Korean government has adhered to the principle that the cost of reunification will be the government`s responsibility. As such, with the government taking on the burden of the hotel accommodations and other costs for the relatively small-scale family reunions for the current round, there will not be significant short-term economic impacts.

However, as the current atmosphere of working toward peace continues unabated and as the number of family reunions increase, the situation might not remain the same.

The first predictable carryover as the family members from the South visit the North could begin with the transfer of such goods as wristwatches, radios and other necessities in the form of gifts. This could lead to a further development of limited trade autonomy for the people for a limited number of goods designated and approved by the North`s government.

Then, with the establishment of a distribution network into the North and a mutual agreement by the two Koreas, a greater exchange of goods could take place as a consumption shift occurs in the North for goods in the higher end of the market such as computers, TVs and even cars.

Unified market on the horizon:

While the purchasing power of the people of the North remains insignificant, with the greater flow of goods into the North through family reunions, the brand and qualitative recognition of the South`s goods will take place. The rooting of such awareness within the North`s society undoubtedly will lend an advantage when the economic unification occurs and the South`s enterprises make their entry into the North in earnest.

"In terms of economic reunification, the continued reunions of the separated family members will bring about economic unity much quicker than without, through the rebuilding of trust and exchange of goods," Kim Joo-Hyun of Korea Bank said.

The online wire transfer of funds to family members in the North, currently being developed by Havit Bank, runs along the same track as the family reunions. In the light of next year`s abolishment of the restriction on the amount of funds that can be wire transferred abroad (currently US$10,000), many analysts expect the limit on the amount that can be given to a family in the North most likely also will increase.

While such a move would be welcomed by the North as it would mean capital gains for the state, the South Korean government has yet to announce its decision.

Reunion costs likely to decline:

Until now, in cases of family reunions that have taken place in a third nation, the total cost of a meeting, which begins with the investigation into the current status of the sought-after family member and an exchange of written letters, requires abut 800,000 won to 1,800,000 won per person.

Some of those who have greater economic means chose to apply for permanent residency in the United States, making it easier for them to meet their family members in the North.

For a Korean-American to meet a family member in the North, the cost of travel, accommodations and other incidentals total about US$10,000. If the cost of immigrating is added, the number is much higher.

With a broader bilateral agreement for family reunions, such unnecessary costs can be reduced.