The Korea Herald

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Seoul to offer W300b rescue package for Gaeseong firms

7 remaining personnel fail to return home

By Korea Herald

Published : May 2, 2013 - 20:27

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The Seoul government will offer 300 billion won ($272 million) in emergency relief funds to South Korean firms suffering from liquidity crunches following the suspension of the inter-Korean industrial park in Gaeseong last month.

Starting from next Monday, companies can apply through the Export-Import Bank of Korea for the funding, which will be provided in the form of special low-interest loans.

The 123 firms were forced to stop their manufacturing operations at the North Korean border town on April 9 as some 53,000 North Korean workers did not come to work.

Since Pyongyang unilaterally barred the entry of South Koreans and cargo into the park on April 3, the firms have been faltering with their orders canceled, buyers reluctant to do business with them because of political uncertainty and other financial issues.

The financial package consists of 63 billion won from the inter-Korean cooperation fund, 100 billion won from the small and medium enterprise promotion fund, and 100 billion won from the Korea Finance Corporation.

It also includes 36.9 billion won from a special fund run by the Korea Credit Guarantee Fund and Korea Technology Financial Corporation.

The government is also pushing for a separate loan package worth 300 billion won while lawmakers of the ruling Saenuri Party has decided to include another 100 billion won in the extra national budget to help the firms.

The firms, which are in labor-intensive industries such as textiles, clothing and electronic parts, initially stressed the normalization of the decade-old complex, but shifted their focus to recovering their losses.

Meanwhile, the seven remaining South Korean personnel at the complex failed to return home Thursday as the North demanded that tax and pay-related issues be settled before their departure.

“Working-level negotiations are still ongoing. No decision has yet been made as to when they can return,” a Seoul official said.

“Our stance remains unchanged that the remaining personnel should return after these working-level issues are addressed as soon as possible.”

Pyongyang demanded more than $10 million for unpaid wages worth $7.2 million, as well as income taxes and communications fees, reports said. The government was said to be considering paying the demanded amount first with taxpayers’ money and settling the issues with the firms later.

All of South Korean workers except for them returned to the South on Monday as Seoul decided to pull them out for their safety following Pyongyang’s rejection of dialogue to normalize the complex.

After all have returned home, the complex, the last remaining symbol of cross-border cooperation and exchanges, would be empty, causing concerns that Seoul would have no official communication channels with Pyongyang.

The absence of regular contact channels would augment challenges to the Seoul government, which has sought dialogue-based trust building to mend fences with the reclusive state, experts said.

By Song Sang-ho (sshluck@heraldcorp.com)