South Korean companies operating in the North are worried over escalating political tension that is threatening their business, investments and worker security.
Businesses participating in the joint industrial park in the North’s border town of Gaeseong expressed concerns and demanded the two sides restrain from worsening the situation.
“The Gaeseong complex must be protected from an economic point of view,” said an official from an association of some 120 South Korean firms at the joint complex.
There have been no cancelations of orders yet and factories are being operated as usual so far, he said.
But reports say there are already some companies considering withdrawing from the North, citing the insecurity of South Koreans working in the complex.
South Korean vehicles cross the South-North Korea border, returning from Gaeseong on Thursday. Yonhap News
Seoul presented evidence on Thursday that Pyongyang was responsible for killing 46 South Korean sailors in a torpedo attack two months ago. It pledged to take stern measures against the communist nation.
North Korea warned Friday that it would scrap the non-aggression pact with South Korea and freeze all inter-Korean relations if Seoul tried to punish it for the sinking of the Cheonan.
Seoul’s Unification Ministry said it would consider suspending most inter-Korean business and cooperation except for the operation of the Gaeseong Industrial Complex and humanitarian aid. South Korean companies employ about 42,000 North Korean workers at the complex, according to South Korean government data. The firms have been paying about $50 million towards workers’
income and insurance per year.
The joint venture is the last remaining inter-Korean economic project resulting from a 2000 summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il.
Experts, however, said it will be difficult for the North to suspend Gaeseong operations as they are a very effective source of income for the deeply impoverished communist nation.
Banks operating businesses in the North also expressed worries over the worsening inter-Korean ties. Woori Bank, the only South Korean lender with a branch in the Gaeseong complex, is preparing a ontingency plan. Its branch in Gaeseong, with three South Korean employees and three North Koreans, has been providing a number of financial services such as tax payments and wire transfers.
“In the case of the South Korean government ordering us to withdraw business in Gaeseong, we will keep the foreign-exchange reserves to a minimum level and send customer information to South Korea,” an official said.
Hit hardest would be Hyundai Asan, the South Korean developer of Gaeseong and the operator of a tourist resort at North Korea’s Mount Geumgang.
Pyongyang froze most South Korean assets there, including two hotels owned and operated by Hyundai, last month as tours to the North Korean resort have remained suspended since a South Korean tourist was shot in the back by a North Korean guard there in 2008.
Hyundai official said the growing tension left “little hope” of the company resuming its business in the reclusive state any time soon.
http://www.koreaherald.com/pop/NewsPrint.jsp?newsMLId=20100521000141
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