Gov’t not doing enough to secure economic protection
Concerns are mounting that the escalating tensions over North Korea’s nuclear crisis test will bring cross-border business in the (Kaesong) Gaesong Industrial Complex to a halt. If that happens, it would seriously impact on the 15 South Korean companies operating there, as well as render useless investments made by the South Korean government into the project. An additional economic impact will be felt among the other 24 companies that have begun construction of plants in Gaeseong, located just north of the demilitarized zone (DMZ). The Seoul government approved a total of 172.2 billion won (US$173 million) to be invested in Gaesong, and agreed to provide subsidies for companies wishing to build plants in the town. Of the 109.5 billion won the government set aside for infrastructure, 47.6 billion won has already been spent. The Korea Land Corp., a developer at the industrial complex, injected an additional 63.6 billion won into the project.The government has also offered 8 billion won in loans to the Korea Electric Power Corp. to help it supply stable electricity for companies doing business in the complex. It also provided financial support for KT Corp. to set up a communications network there. "So far, the government has injected some 100.3 billion won [into Gaeseong], if the money provided for free is included," a Unification Ministry official said. Most vulnerable are companies currently in full operations there. Currently, there are 15 South Korean firms producing US$7 million worth of goods every month and employing 8,900 North Korean workers. They have produced a combined US$54.63 million worth of goods since the opening of the complex. The government, however, is not offering enough measures to protect these companies. The only protection given currently is the provision of insurance for 90 percent of losses up to 5 billion won. But only three companies have joined the insurance program, with others calling the protected amount too small. Meanwhile, companies in the industrial park are busy preparing for the worst. Representatives from the 15 fully operational firms and others planning to move their plants into the area convened an emergency meeting on Wednesday in Seoul, and will have another meeting on Friday, this time in Gaeseong. "We have decided to hold a meeting in Gaeseong to dismiss rumors that even the safety of South Korean workers in the area cannot be guaranteed," a representative said. "We will call on the government to make renewed commitment [to the cross-border business] and provide countermeasures against worst-case scenarios."
