Kaesong Industrial Complex: 10 years on

Описание: Ten years ago today, the two Koreas began operation of their jointly-run Kaesong Industrial Complex in the North Korean border city.

Marking the occasion, we wanted to take a look at how far the inter-Korean cooperation project has come in the last decade and see what we can expect in the decade to come...

For that, we are joined live in the studio by our Unification Ministry correspondent Hwang Sung-hee.
Good evening, Sung-hee.

Good evening.
The Kaesong Industrial Complex has seen significant growth over the last 10 years as the only remaining form of economic cooperation between the two Koreas.
The business park started out in 2004 with just 15 South Korean firms.
Today, 1-hundred-25 South Korean companies have factories running in Kaesong.
The production volume has also increased.
In 2005, the annual production volume was at around 15 million dollars,... and now it's at approximately 470 million dollars.
That was cut in half last year when the factories were put out of commission for five months,... but as you can see... the complex is recovering,... with the production figure at well over 100 million dollars as of March this year.
Around 3-thousand North Koreans worked at South Korean factories in the complex 10 years ago.
Now, some 52-thousand North Korean workers are employed there.

The complex was suspended for five months last year after North Korea unilaterally suspended operations amid escalating inter-Korean tensions.
Since operations resumed, the two Koreas have been working to improve its management, but not much progress has been made.

They formed a joint committee on the management of the complex after the five-month suspension as a means to prevent another unilateral closure by the North.
But experts point to the root of the problem.


"The two Koreas do not have a framework for ministerial-level dialogue and almost all inter-Korean cooperation is at a standstill. On top of that, South Korea maintains its May 2010 sanctions against North Korea. These are at the root of the problems."

The joint management committee met again last week -- its fifth meeting in all and its first in six months -- but did not make any progress on key issues such as the installation of internet service and the implementation of an electronic entry system that would facilitate the commute for South Korean workers.
The electronic entry system has been ready for use since the beginning of this year, but the North is still mulling the idea.

Hasn't South Korea been working on globalizing the complex, thinking it might help prevent another unilateral closure by the North?

Yes, the factory zone has seen a number of interested foreign investors.
In February, a Russian fisheries firm owned by a Korean-Russian consortium visited the complex and submitted a business proposal.
The next month, the Russian minister for the Development of the Far East, Alexander Galushka, reached agreement with North Korean Prime Minister Pak Pong-ju in Pyongyang to discuss Russian investment in the complex.
In April, around 40 German businessmen from companies including BMW and Bosch visited Kaesong.
Then, last month, 24 Norwegian businessmen and government officials made the trip there.
Seoul's Unification Ministry says around 20 foreign companies have shown interest in investing in the joint business park, but concerns about the stability of the complex are holding them back.

What is it about the Kaesong complex that businesses find attractive?

A South Korean businessman in Kaesong told me the average life span of small and medium-sized firms in South Korea is five years, but those in Kaesong are flourishing even after 10 years in business.
The Kaesong complex offers cheap labor,... at a cost of around 150 dollars a month per worker,... and goods are transferred over land, which means they can be on the shelves the day they're manufactured.
But there are risks as well.


"The Kaesong complex is often affected by political tensions. The two Koreas must make a clear distinction between political tensions and economic cooperation so that companies in Kaesong can work freely."

On the positive side, experts say the Kaesong Industrial Complex could actually be seen as a good example of the small steps President Park Geun-hye is taking towards reunification.

Thank you, Sung-hee, for your report today.