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S. Korean Firms Stand to Lose up to 750 Billion Won from Suspension of Operations
Kaesong Industrial Complex
S. Korean Firms Stand to Lose up to 750 Billion Won from Suspension of Operations
  • By matthew
  • August 5, 2013, 05:33
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North Korean workers at Kaesong Industrial Complex produce sneakers.
North Korean workers at Kaesong Industrial Complex produce sneakers.

 

The government announced that South Korean companies' losses could amount to 750 billion won arising from a prolonged suspension of the joint inter-Korean industrial complex in North Korea.

According to a statement released Sunday by a spokesperson for South Korea's Ministry of Unification, it is estimated that South Korean companies' losses come to approximately 300 billion won, plus about 450 billion won of investment assets over four months, following the shutdown of the economic zone due to Pyongyang's unilateral decision to block entry to the site and to force all South Koreans to leave.

In the statement, spokesman Kim Hyung-seok said, "60,000 people working for the South Korean firms in Kaesong and their subcontractors are worried that they can lose their jobs, and 50,000 individuals who cannot work there may suffer," pressuring the North to accept the South's proposal for talks while citing possible job losses for North Korean workers.

"The more serious problem is that buyers have lost confidence in South Korean firms for their failure to deliver goods on time. As a result, regaining market trust will be very difficult even after the zone is reopened," he added.

"The government already spent about 14.49 billion won of the Inter-Korean Cooperation Fund to pay the outstanding amount instead of South Korean companies. It also used around 80 billion won of Inter-Korean Cooperation Fund and funds to support small and medium-sized enterprises, which suffered production damages in the form of loans. Nevertheless, it still needs to make an additional payment of about 280 billion won of the Inter-Korean Cooperation Fund to make payouts for inter-Korean Trade & Economic Cooperation Insurance, which 100 companies applied for," said Kim.

He said, "It means the fund for the purposes of improving relations between North and South Korea and developing small and medium-sized businesses is used to other purposes. In the end, our citizens will suffer the consequences."

"Pyongyang should show its willingness to resolve the issue through responsible words and actions instead of keeping silent, if it truly desires to take away the suffering of South Korean companies and their workers," said spokesman Kim, urging the North to change its attitude and to take responsibility.

"Pyongyang ought to remember that South Koreans who want the North to exhibit a more sincere attitude are reaching the limit of their patience over stalled talks," he pointed out.

On July 29, Minister of Unification Ryoo Kihl-jae made another proposal to the North for a seventh round of working-level talks on reopening the complex, but North Korea has remained silent for a week.