Four S. Korean companies cancel contracts for land use in Kaesong

Sohn Suk-joo

Four South Korean companies have canceled their contracts for the use of land at an inter-Korean industrial complex in the North Korean border city of Kaesong for unknown reasons, officials said.

The cancellations come amid growing concerns about stalled negotiations on North Korea’s nuclear weapons program, which critics fear might endanger, in the worst-case scenario, the status of the inter-Korean joint economic project, the brainchild of the unprecedented inter-Korean summit in 2000.

Refusing to identify the companies, they said the contracts were revoked in January, February and April, respectively, but the government has yet to take back the corporate licenses for doing business in the Kaesong industrial complex.

In the capitalist enclave, South Korean businesses use cheap North Korean labor to produce goods. The monthly production in the complex exceeds US$10 million.

Currently, 23 South Korean companies employ about 15,000 North Korean workers at a site developed on a trial basis, including construction workers and others at a management office. The number of North Korean workers is expected to increase to more than 350,000 when the complex becomes fully operational by 2012.

In September 2005, the South Korean government offered plots of land to 24 South Korean companies so that they could start to move into the area created in the first phase of the industrial complex’s development.

Some raised the possibility that the companies canceled the contracts becase there is little chance that the complex will become an “outward processing zone” in a free trade deal between South Korea and the United States.

South Korea pushed for the U.S. to include products from the complex in the trade deal, but they only agreed to create a committee to discuss what they called an outward processing zone.

South Korea sees it as the basis for further discussion of the Kaesong issue, while the U.S. cautions against reading too much into it, saying it is a kind of agreement they can reach with any bilateral trade partner regardless of the existence of a free trade deal. They are expected to formally sign the deal later this month.


Comments are closed.