[EDITORIALS]Next steps for GaeseongNorth Korea has promulgated a law governing the Gaeseong special industrial zone. The law specifies that the zone will be operated under capitalist principles; the North listened carefully to Seoul's opinions and consulted with our legal community while drafting the decree. That is very important.
The decree establishes the conditions under which South Korean firms, who will probably be the major investors in the industrial zone, can do business freely. Private property and inheritance rights are guaranteed; foreign currency transactions and profit remittances are also guaranteed.
The decree also allows investors to use communication tools with no restrictions and they are allowed to advertise freely inside the zone. North Korea made those decisions in order to develop Gaeseong successfully. The North's move also shows that Pyeongyang has learned belatedly that it cannot survive through its own efforts alone.
But North Korea has to resolve other issues before it can join the international economic community and Gaeseong becomes a model of inter-Korean economic cooperation. Most important is the need for Pyeongyang to improve its relations with the United States. North Korea once halted the mine removal operations inside the Demilitarized Zone in order to fend off the United Nations Command's jurisdiction over the area. The suspension delayed the construction of the Gyeongui railroad and road links necessary for the Gaeseong zone. If that attitude persists, North Korea's decree to set up the Gaeseong industrial zone will never work.
And the North persists in using Hyundai Asan, whose capital is almost gone, to develop Gaesong out of gratitude to its long-time development partner. Seoul wanted the Korea Land Corporation to be involved, but that demand was rejected. Our tax money will be spent on infrastructure in the complex, so a trustworthy developer is needed to pay for clearing the site and relocating residents; that will drive up the lease prices.
The North also banned investments by companies with less competitive technology, shutting out many small firms. North Korea must meet Seoul's demands on labor and wage issues. Then the zone will work well.