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S.Korean companies in Kaesong express anguish over rusting of facilities

S.Korean companies in Kaesong express anguish over rusting of facilities

Posted June. 13, 2013 06:25,   


“Can the (South Korean) government afford to leave people’s assets being destroyed (without doing anything)? We had no expectations on North Korea in the first place, but the (South Korean) government should immediately hold talks with the North, and worry about ‘levels of negotiators’ later,” said Jeong Ki-seop, vice chairman of the business association in the Kaesong Industrial Park. With their hope for the resumption of entry into the inter-Korean industrial complex in the North having gone up in smoke due to the call-off of the planned inter-Korean talks, South Korean companies with factories in the complex have expressed their anguish and despair toward the governments of the two Koreas, something that they internally reserved.

Jeong said as the suspension of the Kaesong complex’s operation got prolonged, he travelled to Vietnam, Cambodia and Myanmar to find an overseas factory last week and returned to South Korea Tuesday afternoon to watch proceeding of the planned inter-Korean talks, only to become hugely disappointed at news that the talks were stalled. “Even if we buy an overseas factory, it takes one to two months until production starts, and if we build a new factory, it will take at least a year,” Jeong said in expressing hardships he is facing.

The head of a company that would produce machinery parts in the Kaesong complex said with rage, “I cannot understand both the North Korean government that focuses on “levels of negotiators” and the South Korean government, which insists that Kim Yang Gon, director of the United Front Department, should attend the talks, at a time when companies with businesses in the complex are on the verge of collapse.”

“There is no country in the world that unilaterally withdraws workers and restricts travel (by South Korean businesses),” said Kim Hak-gwon, co-chair of the emergency committee to urge normalization of the Kaesong Industrial Park. “After all, it is North Korea to be blamed.”

What companies with operation in the complex are worried about the most are their production facilities. Moon Chang-seop, co-chair of the committee, said, “If a facility inspection team fails to enter the complex this month, 70 to 80 percent of the machinery will go out of order, and it will take six months to one year to repair.” For this reason, companies with factories in the complex demand the two Koreas discuss the Kaesong complex issue separately from the bilateral talks.

As the suspension of the complex gets prolonged, a growing number of companies are applying for payment of inter-Korean economic cooperation insurance to the Export Import Bank of (South) Korea. Only three companies of the 141 firms that purchased insurance policies for inter-Korean economic cooperation applied for payments through Tuesday, but nine other firms applied for payments on Wednesday, when news spread that the planned talks were called off. The inter-Korean economic cooperation insurance compensates up to 7 billion won (6.1 million U.S. dollars) for assets that companies invested in the North.

Collecting the insurance payment effectively means withdrawal of their businesses from the Kaesong complex. Upon receiving insurance payments, they should automatically give up their assets. If they are to re-enter the complex, they should return insurance payments that they have taken.