Quoting from the Korea Times:
Inter-Korean trade fell 27.7 percent in November from a year earlier to $142.72 million, according to the ministry data posted on its Web site.
“Payments to North Korea are mostly made in dollars or euro, so the weak Korean currency has been the primary reason behind the falling trade,” a ministry official was quoted as saying.
More than 80 South Korean firms produce watches, shoes, clothes and kitchenware at a joint industrial complex in the North’s border town of Gaeseong. North Korea also exports sand to the South.
In October, South and North Korea traded goods and services worth $163.06 million, down 23.2 percent from a year earlier.
Meanwhile, inter-Korean trade from January to November reached $1.69 billion, an increase of 3.7 percent from the same period in 2007.
And According to the Hankyoreh (h/t OneFreeKorea):
According to a report, seven companies have canceled their contracts to build facilities at Gaeseong complex since October. Three of the seven bought space at a site reserved for machinery and metal cooperatives in June, and were in the process of constructing or designing factories. The report was submitted to Rep. Chun Jung-bae of the main opposition Democratic Party by the division supporting the Gaeseong Industrial Complex at the Ministry of Unification.
Two companies are in situations unrelated to the breakdown in inter-Korean relations, one had a fire last summer and another is suffering from losses incurred as a result of investment in KIKO, “knock-in knock-out” currency options trading.
The remaining five companies were believed to have abandoned their plans because of the deterioration in inter-Korean relations. An official at one of the five companies, which canceled its investment contract in December, said, “Although the economic crisis was one of the reasons why we canceled the contract, the main reason was that business prospects have darkened due to strained inter-Korean ties. Other companies that moved to (the Gaeseong complex) at the same time also decided to cancel their contracts for the same reason.”
In canceling their contracts, the seven companies forfeited their initial investments, which ranged from 17 million won (US$12,500) to 70 million won each. Land at the Gaeseong Industrial Complex was sold at 45,000 won per one square meter and the companies paid 10 percent of that price as part of their deposit.
Seven other companies also canceled their contracts last year, but they did so after an on-site feasibility study was conducted and it was determined that their businesses were not financially viable. All seven companies were able to receive their deposits under a special provision on contract cancellation, which allows companies to receive their deposits if the contract is canceled within six months of when it was signed.
The companies that canceled their contracts this year were not able to take advantage of the provision because they canceled over six months after signing their contracts.
There are growing concerns that more companies may be canceling their contracts as well. The head of Company “H,” who signed a contract to build a facility at the Gaeseong complex last year, said, “Though I would lose my initial investment of several millions of won, I’m considering canceling the contract because the tensions inter-Korean relations are likely to continue for another five years.”
Read the full story here:
Inter-Korean Trade Falls for Second Straight Month
Korea Times
12/20/2008
More companies cancel contracts at Gaeseong complex
Hankyoreh
12/17/2008
