Back To Top

Government plans full compensation for Kaesong complex firms

South Korean firms that operated factories at the inter-Korean industrial complex will receive full compensation for their losses from the previous government’s decision to halt its operation, said the Ministry of Unification on Sunday.

“The government has decided to provide additional compensation to the local companies that were financially damaged by the shutdown of the Kaesong Industrial Complex,” a ministry official was quoted as saying by the local media.

“The full compensation plan will be given for damages that can be confirmed.”

This photo taken on May 26, 2017, in Paju, Gyeonggi Province, shows the Kaesong Industrial Complex in North Korea. (Yonhap)
This photo taken on May 26, 2017, in Paju, Gyeonggi Province, shows the Kaesong Industrial Complex in North Korea. (Yonhap)

The statement reportedly came during the Unification Ministry’s briefing to the presidential State Affairs Planning Advisory Committee on Friday.

Local firms suffered a heavy blow on South Korea’s decision to shut the Kaesong Industrial Complex in February 2016, under suspicions that the revenue generated from the project was being used for Pyongyang’s nuclear and missile program development.

According to government reports, the shutdown resulted in a loss of 700.5 billion won ($626 million), contradicting several firms’ claims that the actual loss adds up to 940 billion won.

As the companies struggle to recover, the government has only paid partial compensation of 501.5 billion won to 123 South Korean companies so far, according to government reports.

The budget will first be used to recover losses from liquid assets, such as raw materials and finished products, which is believed to have inflicted firms with 191.7 billion won in damages. The government has repaid 123.9 billion won for the area.

Compensation on investment assets including land, factories, and machines which has so far received 365.2 billion won, will also receive further attention.

Additional fiscal measures will be drawn to rejuvenate firms that were involved in the Mount Kumkang tours and inter-Korean businesses affected by Seoul’s sanctions against Pyongyang. The May 25 sanctions, which followed the North’s sinking of the South Korean Navy corvette Cheonan in 2010, have since acted as a barricade between cross-border exchanges.

Businesses that have invested in the suspended tour project were offered a selection of special state loans, but were not directly funded by the government.

President Moon Jae-in has been making hopeful remarks about reopening and the expansion of the industrial town if Pyongyang is ready to respond to the inter-Korean hotline.

However, there are also voices within the administration that find full compensation unnecessary due to the Kaesong businesses’ high-risk nature that calls for corporate responsibility.

The state inter-Korean cooperation fund will arrange the money upon detailed inspection and planning.

The joint industrial complex was established 50 kilometers northwest of Seoul in the border city of Kaesong in 2004 as part of late President Roh Moo-hyun’s efforts to inherit the legacy of the Sunshine Policy drafted by his predecessor President Kim Dae-jung’s administration.

By Jung Min-kyung (mkjung@heraldcorp.com)
MOST POPULAR
LATEST NEWS
catch table
Korea Herald daum
subscribe