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[Newsmaker] SMEs in Gaeseong fall victim to tensions

Small and mid-sized South Korean companies running factories in the sole inter-Korean industrial complex in the North’s border city of Gaeseong are being hit hardest by the stoppage of their production lines in the industrial park.

About 53,000 North Korean factory workers did not come to the complex Monday following the North’s announcement that it temporarily suspended Gaeseong’s operations.

The move added pressure on SMEs doing business in the Gaeseong complex, together with a weeklong ban on entry of South Korean workers and cargo to the complex. An association representing 123 SMEs doing business in the Gaeseong complex held an emergency meeting in Yeouido, Seoul, to discuss ways to normalize their business in the North. 
Sudo Corp. CEO Han Jae-kwon, head of the association of firms in the Gaeseong Industrial Complex, speaks at a news conference in Seoul on Tuesday. (Yonhap News)
Sudo Corp. CEO Han Jae-kwon, head of the association of firms in the Gaeseong Industrial Complex, speaks at a news conference in Seoul on Tuesday. (Yonhap News)

“We are like patients lying in an emergency room. A number of firms running factories in the Gaeseong complex could face bankruptcy unless their production lines are resumed in the near future,” the association said in a statement issued after the meeting.

Most of all, the association urged the government to dispatch an SME delegation to the North to discuss the resumption of the production lines through dialogue.

Economic fallout from the North’s hostile moves has been on the rise. The association estimated that the losses caused by the halt at the Gaeseong complex amounts to $1.28 million per day. The SMEs in the Gaeseong industrial zone mainly produce labor-intensive products like clothes, utensils and kitchen supplies.

President Park Geun-hye and the Ministry of Unification, which is responsible for inter-Korean projects, expressed strong regret over the North’s moves, but they have yet to bring a tangible measure to normalize the last remaining symbol of inter-Korean cooperation. The Ministry of Trade, Industry and Energy, which has pitched support for SMEs, only asked conglomerates to offer extended deadlines for product delivery to SME suppliers which run factories in the North.

“It is the first time that the Gaeseong complex has been paralyzed since its opening in 2004. SMEs doing business in the North are afraid that their lifeline has been cut amid escalating political disputes between the South and the North,” said an association official.

By Seo Jee-yeon  (jyseo@heraldcorp.com)
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