Seoul may ease travel restrictions to N.K.

The government is considering easing restrictions on visits by South Koreans to North Korea as it prepares for talks with Pyongyang on their joint industrial venture.

The South Korean government limited private visits to the North for security reasons around the time of its rocket launch on April 5.

It reserved approving applications for visits by several liberal groups such as the Korean Teachers & Education Workers` Union.

"(The government) is reviewing normalizing the visits by private organizations," Unification Ministry spokesman Kim Ho-nyoun said yesterday.

The ministries of foreign affairs, defense and unification discussed the issue at a security policy meeting on Thursday.

Unification Minister Hyun In-taek yesterday met with representatives of businesses operating in Gaeseong to hear about their views on the North`s demands to raise wages at the industrial park.

The South Korean companies, which produce clothes, shoes, watches and kitchenware in the Northern border city, reportedly decided they could not agree to wage hikes of over 5 percent unless the North guaranteed five conditions for corporate activity.

The conditions are: guarantee of border crossing, telecommunication and customs clearance; increase in staff numbers; guarantee of efficient labor management; construction of a dormitory for the North Korean employees; and improvements to the financial auditing system.

About 39,000 North Koreans are working in the industrial park, but the labor-intensive businesses say they need more. The plan to build a dorm was set under the previous liberal administration to help the companies hire more workers from outside the Gaeseong area, but the Lee Myung-bak administration refused to fulfill the promise, linking the joint venture with the North`s missile tests.

South Korean companies are expected to see losses of 1.36 trillion won should the industrial park be shut down, according to a parliamentary report released yesterday.

A report by the National Assembly Research Service on the expected economic losses of the two Koreas should Seoul join the Proliferation Security Initiative, written upon request by Rep. Chun Jeong-bae of the opposition Democratic Party, noted that, "Seoul`s PSI membership could result in a shutdown or downsizing of the Gaeseong industrial complex."

The report estimated that the 101 companies running factories in Gaeseong had invested a total of about 730 billion won so far, which cannot be retrieved should the industrial park close down.

The opportunity cost - the estimated induced production if the same amount were invested in South Korea - is estimated at 630 billion won, putting the total possible loss at 1.36 trillion won, according to the report.

The report also noted that should South Korean carriers be prohibited from passing through North Korean airspace, their annual economic loss would be about 1.6 billion won, as the detours would increase operation costs by 7.4 billion won while they would save only 5.8 billion won in payments to the North.

"If the PSI could perfectly block North Korea`s missile exports, the country could see an economic loss of up to $1.5 billion," the report said.

"But it is difficult to be accurate about this, as views on the effect (of the PSI) vary even within the United States."

Seoul plans to fully participate in the U.S.-led anti-proliferation regime, a plan that Pyongyang warned would be regarded as a declaration of war.

The South Korean government recently allowed the companies in Gaeseong defer payments of state loans by up to a year amidst difficult economic conditions and soured inter-Korean relations.

North Korea told South Korean officials at a rare meeting on Tuesday, the first government-to-government contact in 14 months, that it wanted to start negotiations to revise the contract on the industrial complex.

"We believe it is time we raised land fees and wages as we cannot keep losing out under the existing contract," the North said in a statement delivered to the South.

South Korean companies wire North Korean employees` wages of about $73 per person to North Korean government bank accounts.

The North also demanded the South start paying for its land use in Gaeseong from next year, suggesting a revision of the land lease contract that allowed a 10-year grace period until 2014.

By Kim So-hyun



(sophie@heraldm.com)