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Vice Unification Minister Chun Hae-sung speaks about the government’s decision to compensate companies that were engaged in inter-Korean cooperation during a press conference held at the Seoul Government Building in the Sejongno Seoul on Nov. 10. (Yonhap News)
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The Unification Ministry announced support for businesses that have suffered due to policy changes
The South Korean government has decided to compensate the losses suffered by companies involved with the Kaesong Industrial Complex and other inter-Korean economic cooperation projects as the result of the suspension of economic cooperation between the two sides. During a press conference held on the morning of Nov. 10 at the main government complex in Seoul, the Unification Ministry announced support measures for these companies. “We have been deliberating the question of providing support for these companies since the launch of the Moon Jae-in administration. We are taking these measures because the state should take responsibility for companies involved with the Kaesong Industrial Complex and other inter-Korean economic cooperation projects that are in financial trouble because of sudden and unexpected policy changes,” said Vice Unification Minister Chun Hae-sung during the press conference. These measures entail governmental compensation for the economic losses suffered by these companies as a result of previous government actions. Tourism to Mount Kumgang was suspended after a South Korean tourist amed Park Wang-ja was shot and killed in 2008; the May 24 Measures were adopted following the sinking of the Cheonan corvette in 2010; and the KIC that was completely closed at the beginning of 2016. The government intends to provide 66 billion won (US$58.86 million) in additional assistance for tenant companies of a range of sizes that had operations at the Kaesong Industrial Complex according to the results of a fact-finding inquiry carried out last year into these companies’ losses. 51.6 billion won (US$46.02 million) in support will be provided for losses in current assets (including raw materials, subsidiary materials and completed products) confirmed in last year’s inquiry. The government has also decided to provide 14.4 billion won (US$12.84 million) in additional support for losses in invested assets (including land, factories and machinery) that were confirmed in the inquiry but for which no support was provided. “We have been providing support since the complete closure of the Kaesong Industrial Complex in Feb. 2016, but some of the findings of the inquiry into the losses have not been adequately addressed. This is directly connected with losses to a large number of small-scale suppliers, and since this is the key to normalizing management and production activity at the Kaesong Industrial Complex tenant companies, we have agreed to provide additional support on an exceptional basis,” Chun said. The government has already paid 517.3 billion won (US$461.4 million) in compensation to tenant companies damaged by the complete shutdown of the Kaesong Complex in Feb. 2016, which amounts to 64% of the 777.9 billion won (US$693.8 million) in damages confirmed by the government. Economic support will also be provided for companies involved in inter-Korean economic cooperation projects. The government agreed to carry out a fact-finding inquiry into the losses of companies hit hard by the end of tourism to Mount Kumgang and by the May 24 Measures and to provide compensation according to that inquiry’s findings. Prior to this, these companies have received no assistance, aside from subsidized loans. The plan is to compensate these companies for 45% of losses to invested assets as confirmed by the inquiry (up to 3.5 billion won; US$3.12 million) and for 90% of losses to confirmed current assets (up to 7 billion won; US$6.2 million). This is likely to be the last instance of support from the government for these companies. When a reporter asked whether there would be additional support in the future, Chun said, “We are currently deliberating [support for damages] with the companies. We are not making calculations for additional support.” Following a vote by the Deliberative Body for Promoting Inter-Korean Exchange and Cooperation, the Unification Ministry will be finalizing its decision for support measures for these companies. By Noh Ji-won, staff reporter Please direct questions or comments to [english@hani.co.kr]
