The two Koreas agreed Friday to start work to set up an electronic tag system along the inter-Korean border that can facilitate movement of people and materials to and from the joint factory park of Kaesong in North Korea, officials said.

Seoul's Ministry of Unification said construction of the radio frequency identification tag (RFID) system will begin next week and that North Korea agreed to give its full cooperation.

The understanding was reached at a sub-panel meeting of the joint Kaesong management committee, which is responsible for reforming the transit and communication rules.

The system, once set up, would allow authorized personnel to freely cross over the demilitarized zone (DMZ) that separates the two Koreas at any hour of the day.

At present, even with prior permission, people must cross the heavily militarized border only during certain designated hours.

Failure to do so can result in stiff fines or being turned away to make reservations for another day.

Such a hassle has been cited as an obstacle to improving overall competitiveness of the complex.

"The goal is to get everything ready by year's end, yet it still remains to be seen whether the system will be fully operational by then," a ministry official said.

In addition to this headway, a ministry official said Seoul and Pyongyang will hold a working-level meeting next week to discuss other pressing issues such as Internet connectivity and other forms of communications between Kaesong and the outside world, including military telephone connections. Smooth military communication is vital for easy movement of people and materials over the heavily guarded demarcation line.

The talks, meanwhile, mark the first time in 77 days that the two sides have sat down to discuss improving transit and communication links to enhance the business environment at Kaesong.

Seoul has insisted that changes in these areas are crucial for the sustainable development of the complex, but the North in the past has been slow to lift restrictions it had control over.

"We have been working with technicians to quickly set up the RFID system and Internet lines if progress is made at the talks," an official said earlier in the day. He said if an agreement is reached, the RFID system and Internet connections can be set up relatively quickly.

Kaesong, which first churned out products in late 2004, was closed for more than five months after the North, citing political and military provocations, pulled out all of its 53,000 workers assigned to the 123 factories there run by South Korean companies

in early April. The Kaesong complex only reopened on Sept. 16 following long, drawn-out negotiations and a pledge by Pyongyang to never again close down the complex for non-economic reasons.

(Yonhap News)