Posted on : Jun.16,2006 17:13 KST

South Korea plans to extend financial support for South Korean companies that operate in an inter-Korean industrial complex in North Korea in an effort to help their business there, the country's Finance Ministry said Friday.

Currently, the South Korean government provides financing to South Korean companies seeking to run businesses in the Kaesong industrial complex just north of the demilitarized zone separating the two Koreas.

The South Korean government has so far provided a total of 53.7

billion won (US$56.2 million) in loans to 16 companies that have a presence in the industrial complex.


Meanwhile, state-run banks such as the Korea Development Bank have extended a combined 16.6 billion won to them so far, but just 40 billion won in state funds are earmarked for lending to them this year.

But under the new plans, the country's state-run Korea Credit Guarantee Fund will provide domestic companies with credit guarantees for up to 10 billion won in loans provided by financial companies.

The credit guarantees will be provided for up to seven years at an annual interest rate of up to 3 percent, according to the ministry.

The Kaesong industrial complex is one of the most tangible results of a historic summit between the two Koreas' leaders in 2000 that paved the way for a reconciliatory mood on the peninsula after more than half a century of animosity.

The inter-Korean project is aimed at combining the South's capital and expertise with the North's cheap land and labor. About a dozen of South Korea's labor-intensive firms are already in operation there, employing thousands of North Koreans.

Seoul, June 16 (Yonhap News)



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