‘Kaesong is the answer’: S. Koreans pin hopes on shuttered complex
SEOUL: It has been three years since Park Yong-man’s factory was shuttered amid weapons tests and soaring tensions, but next week’s summit between the US and Pyongyang may well signal the South Korean businessman’s lucrative return to the North.
His textile company, which employed around 300 North Korean workers, was one of 125 southern firms operating in the Kaesong Industrial Complex, a highly symbolic cross- border business project that made hundreds of millions of dollars for Pyongyang.
Seoul shut down the complex in response to a nuclear test and missile launches by the North, claiming that profits from the North Korean border city were funding Pyongyang’s provocations.
Despite toughened international sanctions against the North for its weapons programmes – which currently make restarting Kaesong almost impossible – the recent rapprochement on the Korean peninsula has renewed hopes for businessmen like Park.
“This will be my fourth excruciating year,” said Park, who has struggled to keep his business afloat since leaving Kaesong, where he had access to hard-working, low-cost skilled labour.
Like other businessman in Kaesong, Park paid the North Korean government US$70 a month for each of the workers it provided – and critics say employees may have received only a fraction of that.
Since the closure Park said he had visited more than a dozen countries trying to find the ideal base for his operations.
“And the answer was Kaesong,” he added.
He now runs two factories in China and Vietnam and a small production line in the basement of his Seoul office.
When AFP visited, five workers were diligently stitching uniforms for a Saudi Arabian cement company in a room ringing with the soft whir of sewing machines.
A survey conducted by the Korea Federation of Small and Medium Business last year showed that 96 per cent of South Korean firms who had operations at Kaesong wished to return.
Normalising operations at the complex was one of the key agreements reached between North Korean leader Kim Jong Un and the South’s President Moon Jae-in at their summit in Pyongyang last September.
Kim said earlier this year he wanted to reopen Kaesong “without any preconditions”.
The dovish Moon has called cross-border economic cooperation “a blessing”, but an intricate web of sanctions tightened since the 2016 closure has halted further action.
“For now, reopening the Kaesong Industrial Complex is hard,” said Kim Kwang-gil, a lawyer who was stationed in the factory zone from 2004 to 2013.
The new measures include bans on forming joint ventures with Pyongyang and operating financial institutions, such as a bank for the payment of wages, inside the impoverished state.
The UN sanctions also prevent textile exports from North Korea – a key product manufactured by Kaesong firms – and the US has banned all products manufactured with North Korean labour.
The transfer of bulk cash for workers’ wages is banned by the 15-member council and paying North Korea in US dollars, as it did before the shutdown, would now be a violation of Washington’s sanctions.
Seoul could seek exemptions from the UN, Kim Kwang-gil said, as it did for a cross-border railway project last year.
But these exemptions have so far been temporary and would not be ideal for guaranteeing Kaesong’s future, said Korea Economic Institute senior director Troy Stangarone.