Kaesong Companies Ask for Help in Pulling Out

South Korean companies operating in the Kaesong industrial complex are urging the government to prepare to help them pull out of the facility.

A number of South Korean companies have previously withdrawn or considered doing so, but the association of such enterprises has made an official request to Seoul to support their withdrawal.

In a meeting of its 24 member companies at its office in Seoul yesterday, the association in a statement asked for these and other measures from the South Korean government.

“We cannot accept any demand for pay raises that fail to comply with contracts and regulations guaranteed by the South and North Korean governments at the time of our entry into the complex,” the statement said.

“We call on our government to come up with measures to provide companies operating in the complex with operational funds and ways to pull out to reduce damage incurred to them.”

“Discussion of pay raises should be held only when security of personnel is guaranteed, the business environment is improved, and low labor productivity is increased and within the boundary of the basic conditions.”

The association also demanded the construction of dormitories and childcare centers for companies that stay in the complex, as originally agreed upon.

Association chairman Kim Hak-kwon said, “The North’s unilateral demand for pay raises violates the provision on a maximum annual pay raise of five percent, and (Seoul) should allow companies to pull out of the complex.”

In working-level talks Thursday at the complex, the North demanded that the monthly pay for North Korean workers in the complex be raised to from 75 to 300 U.S. dollars and additional rent of 500 million dollars, or 31 times the original amount.

Many companies operating in the complex are reluctant to withdraw, even if they have incurred losses. An inter-Korean economic cooperation insurance program compensates up to 90 percent of losses under a ceiling of seven billion won (5.582 million dollars) in the event of a crisis.

Premiums can be paid out only if a company suffers business suspension for more than a month due to North Korea’s unilateral revocation of an agreement or if the North confiscates the company’s assets. No premium is paid if a company voluntarily withdraws.

The association’s vice chairman Yoo Chang-geun said, “We applied for business stabilization funds with South Korea’s Unification Ministry to support companies operating in the Kaesong complex, but we have received no reply yet.”

“Under these circumstances, it is important that the government creates an environment to allow companies on the brink of collapse to pull out from the complex.”

jmpark@donga.com swon@donga.com