Summit raises hopes for Kaesong reopening

After the first-ever summit between a North Korean leader and U.S. president ended on a positive note Tuesday, expectations are growing that the inter-Korean Kaesong Industrial Complex will reopen, two years after it was shut down.

Shin Han-yong, the chairman of the Corporate Association of Kaesong Industrial Complex, said on Wednesday that he and the association’s members have requested approval from the South Korean government to visit the North.

“If the [South Korean] government approves the visit, we will be there as soon as possible,” Shin said.

In February 2016, the 124 South Korean companies operating in Kaesong were forced to leave after the Park Geun-hye administration closed the joint industrial zone over Pyongyang’s ballistic missile tests. Since then, the association has made five requests to visit North Korea.

Expectations that the complex would be reopened gained momentum after the relationship between the two Koreas rapidly improved earlier this year, culminating in the summit between North Korean leader Kim Jong-un and South Korean President Moon Jae-in in April.

Last week, a 14-member South Korean delegation led by Vice Unification Minister Chun Hae-sung visited Kaesong to review the industrial park and discuss opening a liaison office. The visit was part of the agreement made during the Kim-Moon summit.

The Corporate Association of Kaesong Industrial Complex is hoping to inspect Kaesong’s factories soon and reopen the complex within the year.

The association expects that the positive atmosphere produced by the Trump-Kim summit in Singapore will lead to the reopening of the complex.

Hyundai Research Institute, in a report released on Wednesday, proposed that North Korea develop the Kaesong complex and then create a new special economic zone.

“The Kaesong Industrial Complex, as a test site for inter-Korean economic cooperation, should be fostered and developed rather than developing a new special zone,” the report read.

Samsung Securities, which recently opened up a special North Korea investment strategy team, released a report on Wednesday that said North Korea had crossed a bridge of no return after the summit.

The brokerage said the North will likely develop special industrial zones to pursue economic development while still maintaining its current regime.

The Federation of Korean Industries, the largest South Korean business lobbying group, said the economies of the two Koreas would expand by 0.81 percentage points for the next five years and create 128,000 jobs if they merged.

However, some have cautioned against the recent hype. On Tuesday, credit rating company S&P released a statement that said it would take years before geopolitical risk subsides.

“The rapprochement came so fast that it’s hard to believe,” the S&P statement read. “S&P Global Ratings believes these recent developments could benefit the sovereign creditworthiness of northeast Asia.”

However, it added that “the next three years or so are unlikely to see policy shifts that translate to materially lower regional sovereign credit risks.”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]