Kaesong Industrial Complex

More Support for Kaesong Industrial Complex Firms, but No Resumption

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On Nov. 10, the South Korean government announced measures to further compensate corporations hit by the shutdown of Kaesong Industrial Complex, one of the last remaining tangible results of inter-Korean cooperation. But business owners with factories at the complex are far from satisfied.

The complex, located a short drive from the inter-Korean border in North Korea, was the fruit of a historic summit between former South Korean President Kim Dae-jung and then-North Korean leader Kim Jong Il in June 2000. Under Kim Dae-jung and his successor Roh Moo-hyun, South Korea operated the “Sunshine Policy,” aimed at improving ties with the North. The Kaesong complex was designed to combine North Korean manpower and resources with South Korean technology and capital.

But the South Korean government, then under the leadership of president Park Geun-hye, decided to suspend the entire complex in February last year following a rocket launch and fourth nuclear test by the North. This meant a crisis for over one hundred companies operating inside the factory complex, with some relocating production to Southeast Asia. When President Moon Jae-in was elected, there was hope for better relations with North Korea, including resumption of Kaesong Industrial Complex.

In last Friday’s statement, South Korea’s Unification Ministry said that it was “fulfilling its responsibilities to Kaesong Industrial Complex and its enterprises, which are experiencing unexpected management difficulties due to sudden changes in government policy.” In the same statement, the ministry announced a decision to provide an additional 66 billion won (59 million dollars) in compensation, on top of what the government had already committed to providing. (517 billion won, or 463 million dollars).

A committee representing tenants of the industrial complex slammed the government’s announcement of additional support as “utterly inadequate.”

Speaking to Korea Exposé, a spokesperson for the Emergency Measures Committee of the Kaesong Industrial Complex Tenant Companies said, “We are disappointed. Of the 786.1 billion won in damages the government calculated through its own surveys, we have yet to receive approx. 225 billion. The extra 66 billion won promised by the government last Friday is less than a third of that.”

The committee also branded the government’s damage estimate as being too low. “We have estimated that our losses amount to at least 1.5 trillion won [1.34 billion dollars] in total.”

Road to Kaesong Industrial Complex, as seen from the south side in the Demilitarized Zone
Road leading to Kaesong Industrial Complex, as seen from the south side inside the Demilitarized Zone. (Raphael Rashid/Korea Exposé)

The spokesperson added that that “On Nov. 13, we agreed to accept the government’s additional support measures [66 billion won]. However, we will continue to demand government support so that tenant companies that were hit hard by the abrupt closure can resume business at the complex.”

Last month, a delegation of more than 40 businesses applied to the Ministry of Unification for permission to visit the Kaesong complex in order to inspect and maintain equipment and check for signs of unauthorized use of the factories.

“The ministry asked North Korea to cooperate with assurances of personal safety and traffic-related measures. However, the North is not responding, so the visit to Kaesong Industrial Complex is still on hold,” said the spokesperson. “The companies will continue to push to visit North Korea.”

But the ministry made it clear that, regardless of the group’s chances of visiting North Korea, “The resumption of inter-Korean economic cooperation, including the Kaesong Industrial Complex, will be considered at a time when the North Korean nuclear issue is settled.”


Cover image: Kaesong Industrial Complex. (Source: Mimura via Wikimedia Commons)

Raphael is a freelance journalist and fixer. He has an MA in Korean Studies from Korea University, and worked at Edelman Korea for three years representing some of South Korea's biggest conglomerates.