Company leaves Kaesong complex, blasting security

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Company leaves Kaesong complex, blasting security

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Employees enter the office of clothing manufacturer Skin Net yesterday in Guro-dong, southwestern Seoul. The company decided to close its business in the Kaesong Industrial Complex, raising concerns that other firms will follow suit. [YONHAP]

A South Korean clothing company has sought approval to pull out of the Kaesong Industrial Complex by the end of this month, citing threats to the safety of its employees and plummeting sales.

The move added to concerns that more companies could leave the industrial zone, whose future as a symbol of inter-Korean reconciliation has come under cloud.

Skin Net, which produces fur and leather clothes, has submitted necessary documents to the Kaesong Industrial District Management Committee, which oversees Kaesong operations for the South, the company’s president Kim Yong-gu said late Monday night. Skin Net entered Kaesong in September 2007 and has 103 employees.

Other South Korean companies have moved equipment outside the Kaesong factories, but Skin Net is the first to completely halt its operations in the complex since it opened in 2003.

Kim explained that threats to employees’ safety and declining orders forced him to shut the Kaesong plant.

“Families of our employees were really worried,” Kim said. “We previously had employees living in Kaesong but they will now commute from Seoul [which is 60 kilometers, or 37 miles, south].”

The decision comes at a time of heightened military tensions between the two Koreas. After conducting its second nuclear test late May, North Korea has threatened to take military action against the South and shown signs of preparing a long-range missile launch.

Also, a South Korean employee has been held in Kaesong since March 30 for allegedly criticizing the North Korean regime and encouraging a female North Korean co-worker to defect. The South Korean government has been denied access to the detained man. Kim, the company president, said the worker’s detention was the decisive factor behind his decision to leave Kaesong.

“Without his case, we wouldn’t have done this,” he said. “We could live with other problems that might arise while doing business in the North. But they’ve taken away one of our citizens.” Kim said he’d be willing to re-enter Kaesong “as long as the safety of our employees is guaranteed.”

South Korea and North Korea are scheduled to meet for their second round of government-level talks tomorrow in Kaesong. The two sides are expected to discuss the future of the complex and the detained worker.

Chun Hae-sung, spokesman for the Unification Ministry in Seoul, stressed that the South Korean government will “continue to strive for the steady development of the Kaesong complex.”

The ministry previously said that it is up to individual companies to decide whether to stay in Kaesong. Chun said yesterday Skin Net’s decision to pull out was entirely its own.

Chun also played down problems Kaesong-based companies are facing.

“To the best of my knowledge, there are obvious difficulties for our companies in Kaesong but they don’t apply to every single one of them,” he said. “It’s the few small companies that are in trouble, and we’re doing everything necessary to help them and will continue to do so.”

Chun said the South will take the opportunity tomorrow to work with the North to create a business environment conducive to the development of the complex. Kim, the Skin Net president, said he had high expectations for the meeting.

“I hope that their talks would help improve working conditions for companies still in Kaesong,” he said. “Hopefully, the two sides can turn the corner.”

The complex was built as part of the inter-Korean joint economic project, following the first-ever summit between the two Koreas in 2000. Currently, 106 South Korean companies employ about 38,000 North Koreans there.

But the future of the complex has come in doubt in recent months as inter-Korean relations deteriorated. Conservative South Korean President Lee Myung-bak has linked the South’s economic aid to the North’s denuclearization efforts, saying the former would be difficult without the latter.

Last March, North Korea severed the last remaining inter-Korean communication line and closed the border several times, restricting trips by South Korean business executives in Kaesong and prompting talks of a possible shutdown.

In April, Pyongyang demanded Seoul raise wages for North Korean workers and start paying land-use fees in 2010, four years earlier than stipulated in the existing deal. Then last month, the North declared all contracts and agreements on Kaesong were invalid.

The South Korean government this week released figures that demonstrate declining businesses in Kaesong. According to the Unification Ministry, exports of South Korean firms operating in Kaesong fell by more than half in the first four months of this year. The ministry said overseas shipments out of Kaesong were $7.2 million from January to April this year, compared to $16.3 million over the same period a year ago.



By Yoo Jee-ho [jeeho@joongang.co.kr]
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