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Uncertainty Surrounds Fate of Inter-Korean Biz Complex

Posted March. 10, 2009 03:07,   


○ Suspended labor and raw materials supply

A South Korean underwear manufacturer failed to send five employees to the Gaesong Industrial Complex yesterday as North Korea unilaterally cut off military communication with the South.

The company had four resident employees in the complex and four others who stayed there for under a week at a time.

The company’s president Jin Gyeong-joon expressed worry over the North’s unexpected measure, saying, “Since I got the notice without warning, I had no chance to set up countermeasures or estimate the ensuing damage. If we fail to supply raw materials to our factory, we’ll have no choice but to stop production.”

Fan coil producer Hosan ACE, which has operated in the complex since 2004, also faced a similar situation as five of its seven resident employees returned home over the weekend. Only two of its staff members are in its factory in the North.

Hosan President Cho Dong-su said, “I’ve never seen such a case since I moved my production to the North five years ago. Not just sending raw materials and staff but also giving specific orders is virtually impossible at the moment. If things continue like this for the next couple of days, we cannot continue normal operations.”

○ Damaged consumer trust and profits

Semiconductor parts manufacturer TS Precision, which also moved into the complex in 2004, had to halt production yesterday due to worker shortage and no raw materials from the South.

The company has five resident workers but three went on leave over the weekend.

“I am worried more about the damage from failing to meet the contracts of our corporate customers rather than that from the production halt. With such uncertainty in doing business here, how many companies can risk putting in orders here?” TS President Yoon Seong-seok said.

He urged the South Korean government to help, saying, “Many companies planning to move into the industrial park are continuing building factories there. The government should come up with measures to ensure safe operations and safety of the people there.”

The North’s cutoff of dialogue channels with the South has dealt a heavy blow even to companies that have contingency plans for Pyongyang’s capricious behavior.

Watch manufacturer Romanson, which produces about 50,000 units a month in the complex, warned of the consequences of prolonged tension in inter-Korean relations.

“Following the North’s expulsion of South Korean employees from the complex in December last year, we stocked goods enough to last for two months so we don’t expect serious problems in sales this time,” a Romanson source said.

“If this situation lasts longer, however, this will lead to big concerns.”

“Lack of workers at the scene is causing a major problem in production. We were supposed to deploy two workers this morning but they had to return after failing to get permission to enter the North,” he added.

○ Growing fears over safety of remaining workers

The families of the stranded workers in the North are anxious over the safety of their relatives.

Certain companies are trying to reassure the families by calling the workers in the complex.

“Since the North cut off its communication channels with the South, we have received a number of phone calls from families asking about their relatives stranded in the North,” one company source said. “We are trying to help them contact their family members in the Gaesong complex since the phone lines still work.”

Other companies operating in the complex are reportedly considering ceasing business operations there if inter-Korean tension continues to build.

“The rising tension has apparently fueled fears with our customers over our ability to meet delivery and other tasks. We’ll carefully watch the developments, and in the worst-case scenario, we’ll consider outsourcing our operation overseas such as to China,” a business source said.

In a separate move, companies are known to be mulling a lawsuit against the South Korean government.

A source at one company said, “From the early stage of the pilot industrial project in 2004, rumors were prevalent that the government would provide ample support for companies moving into the complex, but this was empty talk. Given our situation, the government should be accountable for damages.”

○ Volunteer doctors stranded

South Korean medical doctors on a humanitarian mission are also said to be stranded in the North. At least three members of Green Doctors are providing free medical services for 20 to 30 South Koreans a day at a hospital just north of the heavily fortified inter-Korean border.