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Gov’t Pressures Firms to Join Gaesong

Posted May. 11, 2006 07:08,   


The government has asked the Federation of the Korean Industries (FKI) to help urge large companies to set up in the Gaesong Industrial Complex.

Most large companies do not want to do so, and they view the request of the government as “pressure.”

The leader of the Gaesong Industrial Complex Support Team of the Ministry of Unification and an executive of Korea Land Corporation (KLC) early last month visited the FKI and asked it to encourage large companies to move into the complex.

An FKI official said, “The leader of the support team said that in order for us to attain the goal of inter-Korean economic cooperation, we need to have large companies have a presence in the industrial complex since most companies operating currently in the complex are small manufacturing firms.”

At the request of the government, the KFI will hold a fair targeting only large companies. On the other hand, the Korea Chamber of Commerce and Industry (KCCI), the Korea International Trade Association (KITA), and the Korea Federation of Small and Medium Business (KFSB) will hold a fair for SMEs late this month.

The industrial complex has existed since 2002 with the purpose of enhancing inter-Korean economic cooperation by combining technologies and capital of the South and cheap labor force of the North.

KLC, which is responsible for establishing the complex, plans to allocate one million pyeong of land to South Korean companies. Out of the land, 250,000 pyeong will be rent in late June.

However, large companies feel uneasy about the idea of entering the complex.

An executive of a large company said, “Due to international convention, major strategic materials are not allowed in the North. Therefore it is difficult to make investments in facilities within the complex. However, it is also difficult to turn our back on the government’s request.”

Despite the problem, some large companies are expected to ultimately choose to go to Gaesong because of pressure from the government.

A business leader said, “It is uncertain as to when the North Korean nuclear issue will arise. Under the circumstance, it is unreasonable for large companies to make huge investment in the North. If large companies, not labor-intensive SMEs, enter the complex, they do so for political motivation.”

In the meantime, the leader of the support team said in a phone interview with Dong-A Ilbo, “It is true that the government made the request, but it was just about publicity and survey on demand.”

Jeong-Hun Park sunshade@donga.com