Posted on : May.16,2006 11:15 KST Modified on : May.16,2006 11:35 KST

(Yonhap News) South Korea's state-run industrial complex operator said Tuesday it will break ground Wednesday for a combined factory and residential building in North Korea that will house 40 labor-intensive firms from the South.

Scheduled for completion around June 2007, the "factory apartment" will be built on a 13,200-square-meter lot in Kaesong near the inter-Korean border to help the companies harness inexpensive but skilled North Korean labor, the Korea Industrial Complex Corp. (KICOX) said.

A groundbreaking ceremony is slated for Wednesday morning, with more than 200 officials and businessmen from the Koreas attending.

The South Korean representatives are to include Commerce and Industry Minister Chung Sye-kyun, KICOX President Kim Chil-doo and Hyundai Group Chairwoman Hyun Jeong-eun.

A mammoth industrial park is now under construction in Kaesong for South Korean companies, a symbol of inter-Korean economic cooperation. A total of 15 firms have set up operations in the park or plan to move there.

The KICOX said the five-story building will have manufacturing areas, living quarters for workers, a training center for workers and other amenities.

The corporation, which operates several similar buildings in South Korea, said the envisioned facility would have considerable advantages over other plants in Kaesong.

"Placing relatively small companies under one roof will help cut operational costs, including electricity and water bills as well as logistics costs," it said.

The Ministry of Commerce, Industry and Energy also said manufacturers in the Kaesong complex will sign a deal with South Korean retailers on the same day in an effort to help market their products.

"The memorandum of understanding is expected to help boost sales of companies operating in Kaesong," said Na Do-sung, head of the trade policy office at the ministry.

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