A sense of hope is brewing among businesses for the revival of suspended inter-Korean economic projects as the liberal bloc, which traditionally favors warmer relations with North Korea, returns to the presidency.
The anticipation is building among several South Korean businesses that were forced to leave the inter-Korean Kaesong Industrial Complex nearly a decade ago. They now share a hope of returning to the shuttered joint economic zone in the North’s border city to either resume their business or retrieve what they left behind, a CEO of a manufacturing company with a factory in Kaesong told The Korea Herald Sunday.
“There is definitely anticipation building among those who left their businesses in Kaesong,” said Shin Han-yong, former chairman of the Kaesong Industrial Complex Business Association and CEO of Shinhan Trading, a fishing-gear company.
“We have been given a false sense of hope multiple times throughout the past decade — I sincerely hope this time, we will be able to continue our business or be able to retrieve what was left behind (in Kaesong),” he added.
Shin’s hope is based on Lee’s latest pledges to swiftly restore suspended dialogue channels with the North as part of his goal to alleviate the escalating military tension between the two Koreas.
The joint economic zone, which opened in 2003, has remained closed since February 2016. Seoul shuttered the complex in response to Pyongyang’s fourth nuclear test and long-range rocket launch a month earlier. South Korean factory owners have been banned from returning to the joint complex ever since, and inter-Korean relations have significantly deteriorated in recent years, with the cross-border dialogue channels completely cut off.
Of the 124 firms that were members of the business association, many suffered significant losses or were forced to shut down after failing to return to the zone in the past nine years, according to Shin. A lot of them had over 80 percent of their production capacity in the border city.
“I’m one of the luckier ones,” said Shin, who is currently the head of the Global Business Leader center at Inha University and operates another business. “We were only able to receive one-third of our investments through government compensation and insurance payouts — it devastated many of us.”
In 2016, Shinwon, a clothing manufacturer, announced an impairment loss of 25.7 billion ($18.7 million) a few months after being forced out of Kaesong. It then received a combined 19.3 billion won in compensation from the government and insurance payouts.
Echoing Shin’s sentiment, Kim Ki-moon, chair of the Korea Federation of Small and Medium Enterprises, said that “several SMEs that had operated in Kaesong Industrial Complex have expressed hope that the inter-Korean economic cooperation would thrive again,” during a meeting between Lee and Korean business leaders on Friday.
Kim was the chairman of Romanson, a local watch manufacturer, which has an abandoned factory in Kaesong.
“As one of the first businessmen who entered (Kaesong), I want things to work out,” he added.
Inter-Korean business-related stocks surged after Lee ordered the suspension of loudspeaker broadcasts toward the North on Wednesday. The North, in response, halted its propaganda broadcasts near the border the next day.
According to the Korea Exchange, shares of Hyundai Elevator, the largest shareholder of Hyundai Asan, which owns the rights to the Mount Kumkang tours, rose 7.25 percent from the previous trading to 84,300 on Thursday. They fell 2.97 percent to 81,800 on Friday.
Shares of Ananti jumped 26.7 percent to 9,870 won on Thursday from the previous session and closed higher at 10,600 won on Friday. The local luxury resort developer built a golf course and a hotel in the Mount Kumkang area in the 2000s.
The South’s tours to the Mount Kumkang area were halted in 2008, following an incident in which a North Korean soldier fatally shot a South Korean tourist.
But a North Korea expert expressed skepticism over the possible revival, citing the North's latest developments in its advancing nuclear weapons program and how the South may have lost its role in the dialogue surrounding it.
"The future looks bleak for inter-Korean economic cooperation because it's currently beneficial for the Kim Jong-un regime to cut off ties with the South, which has been repeatedly calling for Pyongyang's denuclearization and continued military presence of the US Forces Korea on the peninsula," Hong Min, a senior researcher at South Korea's Korea Institute for National Unification said via phone.
"The situation surrounding the North's nuclear program no longer needs the South to play a part in it. This means Pyongyang would no longer give the South room or leverage with such cross-border economic cooperation to intervene in its matters," he added.
Observers also pointed to signs of the North dismantling South Korea-built facilities in both the Kaesong complex and the Mount Kumgang area, and highlighted that such hurdles could be too high to revive certain suspended projects.
Inter-Korean ties have historically experienced periods of thaw under the South’s liberal governments following the 1950-53 Korean War, which resulted in the division of the country. A period of warming was highlighted globally, especially during the "sunshine policy" era under late liberal President Kim Dae-jung in the late ‘90s.
mkjung@heraldcorp.com
