Archive for the ‘Special Economic Zones’ Category

ROK ministry claims Kaesong take-home wages at $10/month

Monday, October 23rd, 2006

From the Choson Ilbo:
10/23/2006

N.Korean Party ‘Takes 60 Percent of Kaesong Wages’
 
More than half the salaries paid to North Koreans working at the inter-Korean Kaesong Industrial Park go to the North Korean Workers’ Party, a document written by a team in charge of inter-Korean economic cooperation at the Ministry of Commerce, Industry and Energy shows. The team reported to the unification minister.

Grand National Party lawmaker Kim Gi-hyeon made the document public on Sunday. According to the memo, US$30 out of the monthly pay of $57.50 goes to the Workers’ Party. With $17.50 spent on insurance and other costs, North Korean workers at the complex are left with only $10 a month.

The Unification Ministry has publicly claimed that workers get $66 on average, with 30 percent spent on benefit packages of workers, like housing and medial expenses, and 70 percent going to the workers. A Unification Ministry official on Sunday denied the report. “It is the first I’ve heard about $30 going to the party,” he said. “How could the Industry Ministry know about something that the Unification Ministry didn’t know? We have no idea.”

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DPRK raises funds the same way as US local governments-tickets

Sunday, October 22nd, 2006

From the Korea Times:
10/22/2006
Kim Sue-young

Fines on Mt. Kumgang Tourists Rise

An increasing number of tourists have been fined this year at Mt. Kumgang in North Korea, the Ministry of Unification reported yesterday.

Some 1,177 fines were levied by North Korea from January to July, the highest figure to date with $16,800, being paid to the North’s officials according to the report. (more…)

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Mount Kumgang tour struggles amid criticism

Thursday, October 19th, 2006

From the Joong Ang Daily:
10/19/2006
Seo Ji-eun

Hyundai Asan Corp. is facing another tough challenge to its Mount Kumgang tour operation amid mounting pressure to suspend business due to suspicions that it has inadvertantly helped North Korea develop nuclear weapons.

So far the company is still in business, but it may be forced to withdraw.

U.S. Assistant Secretary of State Christopher Hill said on Tuesday that the Mount Kumgang tour “seems to be designed to give money to the North Korean authorities.”

According to Hyundai Asan, North Korea has received up to $457 million since 1999 in return for allowing Mount Kumgang tours.

Experts point out that the reason the United States opposes the tourism business while not objecting to the Kaesong Industrial Complex, also operated by Hyundai Asan, is because the majority of payments from the tour company go directly to the North Korean government. Kim Sung-han, head researcher at the Institute of Foreign Affairs & National Security, said, “The United States views the Kaesong Industrial Complex as acceptable in that the major portion of capital injected into that project consists of labor costs of the North Korean workforces in actual operation there. However, Mount Kumgang is understood as being mainly for the sake of the regime.”

Political critics speculate that U.S. Secretary of State Condoleezza Rice, in a meeting with the President Roh Moo-hyun scheduled for today, may officially request a halt for the program. There is speculation of a second North Korean nuclear test, which would likely increase international sanctions against the North.

Officials at Hyundai Asan are discussing ways to retain the tour business, which accounted for 40 percent of revenue last year. Tourists to the scenic resort in the North have sharply decreased of late, making it hard for Hyundai Asan to achieve its annual goal of 350,000 visitors.

The North Korean business arm of Hyundai Group is mulling the delivery of rice, medicine and fertilizer to sustain cash flow and quell notions that it is aiding North Korea.

An executive from Hyundai Motor Co. said, “We are afraid consumers in the United States might be confused. We have no choice but to explain that Hyundai Motor and Hyundai Asan belong to different groups.”

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ROK has transferred approx. $1B since 1998

Wednesday, October 18th, 2006

From the Joong Ang:
Ministry: North got $1 billion since 1998
10/18/2006
Lee Young-jong
Ser Myo-ja

The Unification Ministry yesterday defended itself against accusations that the Roh Moo-hyun administration and its predecessor, that of Kim Dae-jung, were at least partly responsible for giving the North the cash it needed to fund its nuclear weapons programs.

Ministry data released yesterday said that South Korea sent nearly $1 billion in cash to the North from March 1998 until August of this year. The ministry said those payments were in connection with “legitimate economic activities.” Nearly half of that cash flow, it said, was from tourism receipts at North Korea’s Mount Kumgang resort, and almost all the remainder was a $500 million payment by Hyundai Group to North Korea for exclusive rights to run the tours.

When Hyundai Group first began the tour program in 1998, Lim Dong-won, then the Blue House senior secretary for security affairs, ordered the Unification Ministry to devise ways of monitoring the payments to ensure that they were not diverted to military uses. But a Unification Ministry official recently admitted the obvious: “There was and is no way to see how the North spent the money,” he said.

The same is true in the other inter-Korean programs, although the amounts are relatively smaller. Nearly $21 million has been paid to the North in the Kaesong Industrial Complex project, including the wages of 800 North Korean workers there. The few million dollars remaining in the total were payments for South Koreans to attend events such as the annual Arirang Festival.

The ministry’s statement yesterday said the Hyundai payment of $500 million was made in August 2000. In fact, it was made in June, just before the first inter-Korean summit that month, and a special counsel who looked into the then-secret payment described it as an inducement for North Korea to agree to the summit. Seven persons were later convicted of violating Korea’s foreign exchange laws in connection with the matter.

Critics on the right believe the ministry’s estimates are woefully incorrect; the Grand National Party, for example, has put the amount at $8.4 billion over the past eight years.

The ministry also challenged the Grand National Party’s argument that South Korea had spent nearly 2.2 trillion won ($2.3 billion) for a failed light-water reactor project in North Korea.

The ministry said the figure was only about 1.4 trillion won.

It also noted that that project was an international one and had begun under the Kim Young-sam administration in 1994. Only a tiny part of that funding involved cash payments to North Korea, the ministry said.

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China port deal still ‘on’ after nuke test

Sunday, October 15th, 2006

From NK Zone:
Michael Rank
10/15/2006

The Chinese businessman who is planning to develop the North Korean port of Rajin under a 50-year agreement with the border city of Hunchun says the deal remains on track despite NK’s nuclear test.

Fan Yingsheng, a property developer from Hunan province, said a road between the two cities should be completed within 15 months but gave few other details.

He told the Shanghai Evening Post [in Chinese] that U.N. sanctions “are something that we are expecting, and won’t have much effect on us.”

“After the nuclear test, North Korean colleagues did not tell my company about anything being different, I didn’t even receive any phone calls from them, which shows that it’s business as usual.

”So I am still planning to fly to Pyongyang to sign an agreement as planned, and haven’t thought of changing my schedule.“

Fan was speaking from Hunchun on October 12, shortly after meeting a group of North Korean officials, and was about to head across the border to Raseon where his company apparently has its main North Korean office. He said this visit had been scheduled a month ago.

The ceding of Rajin, an ice-free port with a handling capacity of three million tonnes a year, will give access to the sea to inland areas of northeast China which at present must send freight long distances by rail to the port of Dalian on the Bohai gulf.

The agreement also provides for the construction of a 5-10 square km industrial zone and a 67 km highway, and envisages that the Rajin area will become a processing zone for Chinese goods which will then be re-exported to southern China.

Fan is reported to have put up half the initial capital investment of 60 million euros ($70 million). The sum could not be denominated in dollars for political reasons.

Fan said in July that the Chinese side had approved the leasing of the port as had the city of Raseon, and “all we are waiting for is for the Korean central government to give its approval…”

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Cutting ROK/DPRK trade hurts the ROK

Friday, October 13th, 2006

From Yonhap:
Suspension of inter-Korean business only hurts S. Korea: official
10/13/2006

Suspending South Korea’s joint business projects with North Korea would do more harm to the South than the North while doing little to convince the communist state to halt additional nuclear tests, a ranking South Korean official said Friday.

“Cutting off (inter-Korean economic projects) now would only show our firm will (to retaliate against North Korea for its claimed nuclear test) by inflicting wounds on parts of our own body,” the official told reporters, asking not to be identified.

“The damage North Korea would suffer would be very insignificant compared to the damages we would suffer,” the official added.

The remarks came amid calls from here and abroad for the Seoul government to immediately halt cross-border business projects with the North in retaliation for the North’s claimed nuclear test on Monday.

The main opposition Grand National Party (GNP) claims the country’s economic cooperation for the impoverished North has helped the North’s missile and nuclear weapons program.

“In the current situation, (South Korea) must strengthen its alliance with the United States and actively participate in U.N. Security Council sanctions on the North while cutting off all of its cash assistance to the North,” GNP floor leader Kim Hyong-o said Friday at a party leadership meeting.

An average of 40,000 South Koreans travel to a scenic resort on North Korea’s Mount Geumgang every month, paying about US$1 million in admission fees to the North, according to Hyundai Asan, the South Korean developer of the resort.

Fifteen South Korean companies also pay about $600,000 a month on average to North Korea in wages for the 8,700 North Korean employees at an industrial complex being developed by the two Koreas near the North’s border town of Kaesong, according to the Unification Ministry.

The government official, however, said the government had no immediate plans to scrap the inter-Korean projects, claiming the money paid to the North through the projects is not aimed at assisting the North’s weapons program and that the amount is insignificant.

He said the country would align its North Korea policy and economic cooperation with a U.N. Security Council resolution when one is passed, but claimed a U.S. draft of the resolution, even if approved by the Security Council, would not call for a suspension or reduction of inter-Korean economic cooperation.

“Vice Foreign Minister Yu Myung-hwan said at the National Assembly Thursday that there is nothing in the U.S. draft resolution” that would call for a suspension of the two cross-border projects, the official said.

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What is the future of Hyundai Group in post-nuke DPRK

Friday, October 13th, 2006

From the Joong Ang Daily
10/13/2006
Seo Ji-eun

Hyun Jeong-eun, the Hyundai Group chairwoman, may face a serious problem soon: If tourist departures for the North Korean resort area of Mount Kumgang continue in their slump, should she end the operation? And if she does, what happens to the Hyundai Group’s leading role in developing business ties with North Korea, including its exclusive right to conduct tours there for South Koreans?

Hyundai Asan, the group subsidiary that operates the tours, said yesterday that only 549 tourists traveled to the mountain area, now ablaze in fall colors. A day earlier, the number was 788. The company said that 4 percent of its travelers canceled on Monday, when the North announced that it had conducted a nuclear test; yesterday, 65 percent of those who had signed up for the trip cancelled.

Even if the problem continues long enough for an “ordinary” company to think about pulling out of the business, Hyundai’s problem involves other elements of the group and more than just cash flow.

Hyundai Asan won exclusive rights to an inter-Korean tourist business in late 1998, and has set a goal of expanding its corporate sphere across the country. It plans to take tourists to Kaesong and to Mount Paektu and has an ambitious construction program to support. Shutting down the Kumgang tours could endanger that strategy because of North Korea’s long memory and penchant to hold grudges. Once out, Hyundai fears it may never again get in.

North Korea has earned about $500 million so far from the Mount Kumgang tours.

And Hyundai Group’s heritage is bound up in North Korea businesses. Cross-border business dealings were initiated by Chung Ju-yung, the group’s founder, and that business was inherited by his son, Chung Mong-hun, who committed suicide during his trial on charges of helping secretly funnel cash to the North to set up the first inter-Korean summit in 2000. Since Ms. Hyun succeeded her husband three years ago, her husband’s other brothers have been jockeying to seize control of the group from her through stock transactions, in order to reinstate the direct blood line from the group’s founder to its current management.

Ms. Hyun has often stressed that it is she who is the true champion of the founder’s spirit through her persistence in conducting business with North Korea.

In the view of some analysts, that argument could be weakened significantly by shutting down the tours, perhaps inducing group subsidiaries such as the Hyundai Department Store chain, which has remained neutral in the family feud, to turn against Ms. Hyun.

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Private aid to DPRK continues after nuke blast

Wednesday, October 11th, 2006

Yonhap:
10/11/2006

South Korean civic groups on Wednesday sent humanitarian aid shipments to North Korea despite the heightened tension over North Korea’s declared nuclear test, officials said.

A 2,864-ton ship plying the Incheon-Nampo route departed for a North Korean port with shipments of 14 containers for humanitarian aid and another 45 containers for construction and raw materials to be used at the Kaesong industrial complex just north of the inter-Korean border.

The aid shipments include 2,000 bicycles, two ambulances, blankets and boilers, they said.

Following North Korea’s announcement of its first-ever nuclear test on Monday, the South Korean government suspended a shipment of 7,500 tons of cement to the communist country.

“We hope that the provision of bicycles on humanitarian grounds will contribute to maintaining civilian inter-Korean exchanges and offering a clue to the resolution of the stained inter-Korean relationship,” a local YMCA official said. 

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Kumgang tourism hits the American media

Sunday, October 8th, 2006

LA Times:
Helen Sung
10/8/2006

“WHEN I was in North Korea last year …,” I began, over dim sum one recent Sunday afternoon with a professor friend, a sophisticated Manhattanite.

“You’ve been to North Korea?” he interrupted. “Anyone can go,” I told him. “It’s a tour.”

While living in Seoul last year, I learned that a division of the South Korean mega-conglomerate Hyundai has been operating tours to Mt. Kumgang from South Korea since 1998. Considered the most beautiful mountain range on the Korean peninsula, Mt. Kumgang has been immortalized for centuries in poetry, art and song.

Before the Mt. Kumgang tour, South Koreans had been unable to travel north of the demilitarized zone — at least it was legally barred. The DMZ, established in 1953 at the end of the Korean War, sliced Korea in two, leading to the Republic of Korea in the south and the Democratic People’s Republic of Korea, or DPRK, in the north. The 2 1/2 -mile-wide DMZ sealed off the border between the two Koreas. To this day, tensions remain. Just last week, North Korea vowed to go ahead with a nuclear test, to the increasing dismay of world leaders.

But for Americans, to whom North Korea rarely, if ever, grants tourist visas (though it does to other foreigners), the tour offers one way to get inside the Communist country.

“Let’s go!” I said to a South Korean photographer friend and colleague after I learned of the tours.

“No way. It’s just a tourist trap,” he scoffed. “I heard they monitor everything, and you can’t go anywhere on your own. It’s not like you see the real North Korea or meet any regular North Koreans.”

“That’s all part of the charm of going to a totalitarian country,” I said, trying to persuade him. “Don’t you want to see what it’s all about?”

In the end, he did. Who wouldn’t want to peek inside one of the most politically isolated countries in the world?

*

Papers in order

TO go on the trip, we filled out simple registration forms and submitted copies of our passports and photographs to the tour agency. A couple of days later, our reservations were confirmed, and we submitted payment in South Korean won, equivalent to about $350 per person for the two-night, three-day trip. (For visa information, contact North Korea’s United Nations office, [212] 972-3105.)

On a wintry February morning, we assembled at a meeting point 100 miles northeast of Seoul and received identification cards that we were to wear at all times.

Mobile phones, high-powered camera lenses and South Korean magazines were among the items not allowed into North Korea. The tour included journalists (two Germans and a South Korean), the photographer I was traveling with and about 100 South Korean tourists.

Some of the tourists came to sightsee, but I suspect more came for the opportunity to set foot on northern soil.

We drove through the DMZ — the idea of it turned out to be more thrilling than the actual act — escorted by South Korean military. We passed vast dirt fields marked by occasional shrubs, trees and tunnels. Our tour guide warned us not to take any pictures.

At the military demarcation line our tour bus stopped. Two North Korean soldiers boarded. As one soldier stood guard at the front of the bus, the other strolled down the aisle, counting heads as he went. Once the soldiers left the bus, we were allowed to continue.

Whereas the south was highly industrialized and modern, the north looked like the land that time forgot. Civilians were walking, riding bicycles and pushing wheelbarrows. Other than the occasional military truck, there were no vehicles. Tattered pieces of cloth covered cracked and broken windows in abandoned-looking houses with worn roofs and crumbling tiles.

I saw the first of many carvings that marred the smooth surfaces of towering mountains in and around Mt. Kumgang. Etched in large Korean and Chinese characters, the signs touted the leadership of former Chairman Kim Il-Sung and current leader Kim Jong II.

Once at the mountain resort, we lined up to clear immigration. The North Korean official gave my American passport and Korean face a quizzical look. Maybe he had never met a Korean American.

“How safe is the tour?” I asked Young Sil Jung, a Hyundai Asan tour guide.

“It’s very safe,” she said. “It’s like South Korea.”

Indeed. It felt more like I was at a South Korean resort — maybe because I essentially was.

Hyundai Asan had developed a resort consisting of a hotel (a second has since opened), cozy wooden cabins, a hot springs spa and a rest area where frenetic South Korean pop music blared from loudspeakers in the parking lot.

There was a Family Mart (a South Korean chain of convenience stores akin to 7-Eleven). A sprawling shop sold North Korean souvenirs, the most popular being whiskey (purportedly made from snakes) and cigarettes “made in D.P.R.K.”

There was even a Hyundai duty-free shop selling Ferragamo, Chanel and Prada, among other luxury brands. At the restaurant, an all-you-can-eat buffet featured warming pans piled high with seasoned beef, shrimp, sautéed vegetables and tofu, noodles and steamed rice.

There was no hint that we were in one of the poorest, most oppressed countries in the world, and the scene in the hotel lobby, where a Filipino band sang American pop songs, bumped us into the realm of the surreal.

*

Trail ‘guides’

AS we headed out the next morning for our first day of hiking, our tour guide warned us not to take unauthorized photos, especially of North Korean guides, who were more like minders who kept close watch over us. Male and female guides monitored the trails to ensure tourists did not litter or show disrespect to the many monuments to father and son.

As I walked along Guryongyeon trail, an easy hike over gently ascending terrain, the North Korean guides chatted amiably with the South Koreans. I met a 68-year-old South Korean man, just a boy when Korea was divided, who had wanted his whole life to see the beauty of Mt. Kumgang. When I asked him how he felt, he replied, “There are no words.”

I could see what he meant. Mt. Kumgang was impressive with its great, hulking mountains and tall, craggy peaks. At Bibong Falls, South Korean ice climbers looked like ants scaling a towering waterfall that had been transformed into a wall of sheer ice.

At the bottom of the mountain, North Koreans sold roasted potatoes and fermented rice wine to the tourists for $1 each, accepting only American dollars. “They know the smell of money now,” said Ha Jung Byun, a senior manager with Hyundai Asan.

North Koreans were selling more local products at nearby Samilpo Lake. In a large, windowed room overlooking the frozen lake, women sold steamed mussels and potato pancakes, as well as North Korean calendars and cigarettes.

The next day, we hiked Manmulsang trail, known for its thousands of interesting rock formations. It’s a rigorous hike but worth it. The scope of the surrounding rugged peaks and the steep gorges and valleys were magnificent.

At the base of the trail, I met a director of the North Korean guides. He peppered me with questions about American politics and criticized the United States, saying that the “imperialist country” needed to stay out of North-South Korea relations.

I was curious how he felt about American tourists. He replied that he welcomed Americans and all foreigners to come view the beauty of Mt. Kumgang and meet North Koreans. On the way back, the Hyundai Asan guide pointed out dirt fields where the company planned to build a beach resort and golf course. Why anyone would want to go on the tour to North Korea to lie on a man-made beach or play golf was beyond me. The real merit of this tour was the sliver of Communist life I had seen on the way to the mountain resort and meeting some real North Koreans.

GETTING THERE:

From LAX, Korean Airways and Asiana offer nonstop service to Seoul. All Nippon Airways, Northwest, JAL and United offer connecting service (change of planes). Restricted round-trip fares begin at $939.

The meeting point for the tour is at a hotel called Kumgangsan Condo, about 100 miles northeast of Seoul. Round-trip charter bus service from Seoul is available to the meeting spot for $30. The bus trip takes about four hours.

TELEPHONES:

To call the South Korean numbers listed below from the U.S., dial 011 (the international dialing code) and 82 (country code for South Korea), followed by the number.

WHERE TO STAY:

JW Marriott Hotel Seoul, 19-3, Banpo-dong, Seocho-gu, Seoul; (888) 236-2427, http://www.marriott.com . An upscale, luxury hotel in central Seoul near shopping and business districts. Doubles begin at about $225.

Ibis Seoul, 893-1, Daechi-dong, Gangnam-gu, Seoul; 2-3011-8888; http://www.ambatel.com . A new hotel offering simple yet good-quality accommodations for the budget-conscious traveler. Doubles begin at $90.

BEFORE YOU GO:

To go on the Mt. Kumgang tour, visitors must register with a travel agency and provide the requisite documentation at least 10 days before the desired departure date. In Los Angeles, Smile Tour, (213) 365-2100, provides booking and other tour information. Hyundai Asan also provides information in English; call 2-3669-3691.

TOUR PRICES:

Hyundai Asan offers two-night, three-day packages starting at $290 (all prices are per person based on double occupancy), depending on the season and level of accommodations. The price includes lodging, breakfast, entrance and departure immigration fees, and hiking-related fees. Shorter trips are also available.

TO LEARN MORE:

Korea National Tourism Organization, (800) 868-7567 or (323) 634-0280, http://www.tour2korea.com .

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Human Rights Watch weighs in on Kaesong

Monday, October 2nd, 2006

From Reuters:
North Korea: Labor Rights at Risk in Joint Industrial Complex
10/2/2006

The North Korean law governing the Kaesong Industrial Complex (KIC), a new industrial joint venture between North Korea and South Korean companies, should be amended to ensure adequate protections of basic workers’ rights, Human Rights Watch said in a new briefing paper released today. Although labor conditions for North Korean workers at the KIC likely represent an important step forward compared with the rest of North Korea, the law governing the complex and some practices by South Korean firms operating there still fall far short of international labor protection standards. The North Korean government wrote this law after consulting with the Hyundai Asan Corporation, the unit of the South Korean conglomerate Hyundai Group that is in charge of developing the complex.

“Given the dire circumstances in North Korea, the opportunity for people to work at facilities like Kaesong represents a small step forward,” said Sophie Richardson, deputy Asia director at Human Rights Watch. “But unless workers’ rights are codified into legal protections, those rights could be violated with impunity at Kaesong.”

The 19-page briefing paper, “North Korea: Workers’ Rights at Kaesong Industrial Complex,” (or here in pdf) provides an overview of labor conditions at the KIC, an industrial complex located in North Korea. It documents the KIC Labor Law’s shortcomings in the areas of the freedom of association, the right to collective bargaining, the prohibitions on sex discrimination and harassment and harmful child labor, among others.

The KIC opened in June 2004 under a contract between North Korea and South Korea’s Hyundai Asan Corporation and South Korea’s state-owned Korea Land Corporation. The complex is located between the North Korean city of Kaesong and the western border between the two Koreas. The workers produce goods mostly for the South Korean market, including watches, shoes, clothes, kitchenware, plastic containers, electrical cords and car parts, among other items. As of August, more than 8,000 North Korean workers were employed by 13 South Korean companies.

Human Rights Watch also found that South Korean companies are violating the existing KIC Labor Law, which stipulates that employers should pay workers directly in cash. An employers’ representative told Human Rights Watch that the South Korean companies have been asked instead to pay workers’ wages in U.S. dollars directly to the North Korean government, which in turn pays the workers in North Korean won after deducting a mandatory 30 percent contribution to a social welfare fund.

“The fact that North Korea has already managed to get South Korean companies to violate worker’s rights on wage payments is not only an embarrassment, but also raises concerns about other violations at Kaesong,” said Richardson.

North Korea is a party to four main international human rights treaties: the International Covenant on Civil and Political Rights; the International Covenant on Economic, Social and Cultural Rights; the Convention on the Elimination of All Forms of Discrimination against Women; and the Convention on the Rights of the Child. All provide important workers’ rights protections, including the right to freedom of association and collective bargaining, and ban sex discrimination and harmful labor for children. As a party to these international human rights treaties, North Korea has a legal obligation to protect these rights.

Human Rights Watch has not yet been given access to interview North Korean workers at the KIC. The briefing paper is based on information obtained from South Korea’s Ministry of Unification, a representative of the South Korean companies operating at the KIC, and other sources, including an analysis of KIC’s labor laws.

North Korea should allow South Korean companies to pay the workers directly in cash, as stipulated in the KIC Labor Law, and it should amend the Labor Law to meet international labor standards and ensure the law is effectively enforced. Human Rights Watch called on North Korea to join the International Labor Organization (ILO), sign its core treaties, and invite ILO officials to discuss the protection and promotion of workers’ rights.

South Korea should ensure that South Korean companies are respecting workers’ rights in the Kaesong Industrial Complex. As a member of the Organisation for Economic Co-operation and Development (OECD), South Korea should also promote the OECD Guidelines for Multinational Enterprises, which asks state members to encourage enterprises to respect basic labor rights guaranteed in core ILO treaties.

“For Kaesong to represent genuine progress for human rights in North Korea, Seoul and Pyongyang alike must ensure basic rights and protections of the North Korean workers,” said Richardson.

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