North Korea to ex­pel South Kore­ans, freeze as­sets at fac­tory

The Pak Banker - - BUSINESS -

North Korea said it was ex­pelling South Kore­ans from a jointly run in­dus­trial park and sev­er­ing a mil­i­tary hot­line be­tween the two coun­tries, a day af­ter the govern­ment in Seoul an­nounced its with­drawal from the site to pun­ish Kim Jong Un for his re­cent nu­clear test and long-range rocket launch.

The North Korea army is tak­ing con­trol of the Gae­seong in­dus­trial com­plex and freez­ing the as­sets of the more than 120 South Korean com­pa­nies op­er­at­ing there, the of­fi­cial Korean Cen­tral News Agency re­ported Thurs­day. The army is also seal­ing off the land route from the fac­tory park to the nearby demil­i­ta­rized zone that has sep­a­rated the coun­tries since the end of their civil war more than six decades ago, KCNA said.

South Korea an­nounced the with­drawal of its com­pa­nies from Gae­seong on Wed­nes­day, say­ing the move would de­prive North Korea of cash for its weapons pro­grams af­ter Py­ongyang fol­lowed a nu­clear test in Jan­uary with a long-range rocket launch on Feb. 7. Set up dur­ing a pe­riod of de­tente in the early 2000s, Gae­seong has been one of the big­gest sources of hard cur­rency for the iso­lated regime, with the salaries of 54,000 North Korean work­ers paid in U.S. dol­lars di­rectly to Py­ongyang.

"The south Korean pup­pet group will ex­pe­ri­ence what dis­as­trous and painful con­se­quences will be en­tailed by its ac­tion," the Com­mit­tee for the Peace­ful Re­uni­fi­ca­tion of Korea said Thurs­day in a state­ment car­ried by KCNA. The com­mit­tee said that Pres­i­dent Park Geun Hye was "a fool" for end­ing op­er­a­tions at the com­plex, which was the last ves­tige of eco­nomic co­op­er­a­tion be­tween the two coun­tries, call­ing the sus­pen­sion "a dan­ger­ous dec­la­ra­tion of war."

Gae­seong pro­vided 616 bil­lion won ($514 mil­lion) in cash to North Korea since op­er­a­tions be­gan more than a decade ago, in­clud­ing 132 bil­lion won last year, South Korea's Uni­fi­ca­tion Min­is­ter Hong Yong Pyo said Wed­nes­day. The govern­ment in Seoul and pri­vate cit­i­zens have also in­vested more than 1 tril­lion won in the pro­ject, he said.

"The re­la­tions be­tween the two Koreas will re­main ex­tremely sour for some time," Kim Soo Am, a re­search fel­low at the Korea In­sti­tute for Na­tional Uni­fi­ca­tion, said by phone af­ter the North Korean an­nounce­ment. "Once Gae­seong turns into a mil­i­tary area, it will be hard for the in­dus­trial com­plex to re­open as North Korea will be re­quest­ing strong com­pen­sa­tions."

About 200 South Kore­ans are be­lieved to be af­fected by the ex­pul­sions. All South Korean prop­erty ex­cept pri­vate be­long­ings will be frozen and man­aged by a com­mit­tee of Gae­seong res­i­dents, the North Korean com­mit­tee said. All North Korean work­ers will be with­drawn from the fac­tory park as well, it said. The mil­i­tary hot­line, sym­bol of ef­forts to ratchet down ten­sions be­tween the two coun­tries, will be dis­con­nected, KCNA said.

Cot­ton Club, an un­der­wear maker, said three of its em­ploy­ees were in the com­plex and were un­sure of their where­abouts. SNG, an ap­parel maker, said two em­ploy­ees were still at Gae­seong and it didn't have es­ti­mates on in­ven­to­ries on site. Man­sun Cor­po­ra­tion, a win­ter jacket maker, said there was "not that small" amount of in­ven­tory re­main­ing in the com­plex.

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