Two South Korean companies with factories at the inter-Korean factory park in Gaeseong have decided to close operations in the face of unfavorable business conditions, sources said Tuesday.
The unification ministry and corporate insiders said a textile manufacturer and an electronic parts producer opted to close their factories at the Gaeseong Industrial Complex and signed contracts to sell off their assets.
Another company is also close to inking a deal to sell off its holdings in the face of mounting financial difficulties, they said.
All operations at the complex came to a screeching halt in early April amid heightened tensions on the Korean Peninsula.
After Seoul and Pyongyang reopened Gaeseong for business, companies have been struggling due to a lack of orders and no headway being made to change rules governing travel, communications, customs and protection of South Korean workers.
Of the 123 companies with factories in Gaeseong, three have not restarted their factories, with many others conceding they are operating below full capacity. Entrepreneurs claimed companies are currently operating at just 50 percent capacity even though normal operations resumed on Sept. 16.
"Concerns caused by a cooling off of cross-border relations after the Gaeseong complex reopened are making it hard to secure orders, and there are growing fears that things will not improve in the near future," said a corporate source, who declined to be identified.
He claimed that there are other companies who may decide to leave Gaeseong if things don't improve soon.
Other businessmen said that the option to leave has been fueled by an inability of companies to payback 176.1 billion won (US$165.8
million) in insurance payments they received from Seoul and the North's move to demand supplemental security income equal to 60 percent of its workers monthly pay starting this month.
The security income must be given if the company, for whatever reason, cannot employ workers it has been assigned by the communist country.
Related to the latest developments, the unification ministry, which is in charge of handling all North Korean policies, said it knew about troubles facing companies and the decisions by some to pull out of Gaeseong.
It, however, said no formal paperwork for the sale of assets has been received. (Yonhap News)