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Test Could Halt North-South Projects

Posted October. 10, 2006 06:46,   


Pyongyang’s nuclear test is expected to deal a hard blow to North-South economic cooperation projects such as the Gaesong Industrial Complex and the Mt. Geumgang tourist resort. The Korean government is highly likely to suspend those projects by joining the international community in sanctioning the communist country. The inter-Korean economic cooperation projects, in fact, have provided economic assistance to North Korea.

First of all, the parceling out of Gaesong Industrial Complex site seems to be once again put off. The selling of lot was first planned in June, but later postponed to mid October.

The Korea Land Corporation (KLC), which oversees the operation of Gaesong complex, had planned to encourage companies to invest in the plant lot for development this month. Of the total 79.2 hectares, KLC was to sell 9.9 hectares of an apartment-style plant site and 29.7 hectares of an ordinary plant site.

“We will arrange the investment schedule for the complex by closely watching the development of inter-Korean relationship and international response,” the KLC said on October 9.

A representative of an apparel company, which sought to start business in the Gaesong Industrial Complex, said he might reconsider his plan.

“I thought about moving into the Gaesong Industrial Complex, since the government is supportive in many ways. But now, doing business there appears to be difficult unless the North Korean nuclear issue is fundamentally resolved.”

South Korean companies already doing business in Gaesong are preparing for the worst-case scenario of the complete shutdown of the industrial complex.

“If uncertainties accelerate due to North Korea’s nuclear test, Gaesong Industrial Complex would lose its attractiveness as an investment destination and the project might be suspended. We are considering to transfer some of our operation to China and Hong Kong, in case of the situation getting worse,” says Jang Ho-seon, executive director of Romanson, a watchmaker in the Gaesong compound.

Hyundai Asan, which arranges South Koreans’ tours to Mt. Geumgang, is facing the biggest challenge in the company’s history.

Since the tourism unit of Hyundai Group totally depends on the Mt. Geumgang project, it will be impossible to continue its operation once the project is suspended.

Having an all-day-long emergency meeting, Hyundai Asan is closely watching the development of the North Korea nuclear test issue.

The number of tourists already fell significantly after the test-firing of Pyongyang and has not recovered during the busy September fall season.

“Not many people asked for the cancellation of tour. Mt. Geumgang project will continue as planned unless there’s special direction from the government,” said an official from Hyundai Asan.

Most of 1,100 tourists who reserved a three-day Mt. Geumgang tour left for North Korea yesterday. After the announcement of North’s nuclear test, 10 people out of 528 tourists who were scheduled to leave in the afternoon cancelled their plans.