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[Editorial] N. Korea`s Ignorance of Business Deals

Posted May. 16, 2009 22:16,   


North Korea sent a notice that can be constructed nothing other than its intent to seize the Kaesong industrial complex. The North unilaterally said it will take steps to revise laws and regulations on the complex, voiding deals agreed upon by the two Koreas. Pyongyang also demanded that Seoul accept its offer unconditionally or withdraw from the complex. The North is making a demand unimaginable for someone who understands the meaning and weight of a contract in economic relations. What a truly reckless and untrustworthy nation the North is. How on earth can a country forge and develop a relationship with such a country like North Korea in the modern era? While immediately expressing regret, Seoul rejected the demand.

The North demanded April 21 wage hikes for North Korean workers in the Kaesong complex and a reduction in the rent exemption period for land there to six years from the agreed time of 10 years. The average North Korean worker earns at least 50 U.S. dollars a month, and a raise cannot exceed five percent per year from the previous year.

There is also a land rental contract under which the North agreed to allow the South`s Hyundai Asan Corp. and the (South) Korea Land Corp. to rent land there for 50 years. The contract was signed by the North, but Pyongyang is apparently allowing its people to starve. This is no surprise given the North`s unduly management of its communist regime for several decades and the country turning into the most reclusive in the world. Common sense dictates that if there is cause for a change to a contract, the signatories must discuss it first.

Worse, Pyongyang has detained a Hyundai Asan worker since March 30, and has threatened Seoul and South Korean companies operating in Kaesong. The North has habitually urged "cooperation between the Korean people" but has shown its real intent amid the South`s rejection of its demands.

The Kaesong complex is an inter-Korean economic cooperation project based on an agreement between the two Koreas. South Korean companies have provided technology, facilities and capital to the complex, while the North has offered labor to create a win-win situation. The North claims it has given benefits to the South in rent, wages and taxes, but this is another unilateral claim. As the North has repeatedly threatened the survival of the complex, many South Korean companies operating there have had trouble producing and selling products.

Seoul has repeatedly demanded that as soon as the two Koreas meet, they must discuss the worker`s release. His safe return is the top priority, however, if the situation is seen from a humanitarian perspective. The South must not succumb to the North`s irrational demand and instead must continue to follow principles. If South Korean companies are forced to withdraw, Seoul should hold Pyongyang responsible for the consequences.