South Korea's government is moving to directly compensate companies that were forced out of the inter-Korean Kaesong Industrial Complex following the spike in cross-border tensions, an official source said Sunday.

"In 2013, when operations were suspended for several months at Kaesong, support was provided in the form of soft loans, but this time, the government is considering direct compensation for finished goods and materials left behind by South Korean firms," said the official, who declined to be identified.

On Feb. 10, the Seoul government ordered the shutdown of the industrial park just north of the Demilitarized Zone (DMZ) that separates the two Koreas. The South took the step after Pyongyang tested its fourth nuclear device on Jan. 6 and fired a long-range rocket on Feb. 7.   

The North countered the South's move by declaring it will kick out the South Korean companies and declaring it will confiscate all assets left behind by these businesses. It said the complex will be turned into a military zone.

Launched in late 2004, the complex merges South Korean capital with cheap North Korean labor. Kaesong lies some 10 kilometers north of the DMZ in North Korea but is connected by a road to the South.

An emergency committee of the 120 companies ordered out of Kaesong had called for government compensation for fixed assets and manufacturing equipment left behind by using the inter-Korea economic cooperation insurance scheme. They have also asked for some sort of settlement for finished products and manufacturing materials they were not able to bring out.

These businesses claimed that the value of finished goods and materials left behind stood at 246.4 billion won ($210.6 million).

Related to such demands, the government has said that because many companies opted not to get insurance coverage there was no way they could technically receive the support, but there are clauses in the law governing the Kaesong complex, as a whole, that could allow some form of assistance to be given.

Seoul is currently in the process of providing 330 billion won in insurance coverage to Kaesong companies that had paid premiums in the past, with each firm getting a max 7 billion won.

"The government is looking at the pullout from the Mount Kumgang resort in 2008 as reference so it can compensate Kaesong companies," the official said, without providing more details.

South Korea halted all trips to the mountain resort after a North Korean guard shot and killed a South Korean tourist.

Seoul said that the ongoing probe on damages that will be compiled by April 10 will shed light on the extent of actual losses sustained by firms.

"Based on the findings, Seoul will come up with a plan to compensate companies for losses," the insider said. (Yonhap)