Expand the Kaesong complex

Despite the stalemate between South and North Korea, production and the number of North Korean workers at Kaesong Industrial Complex have risen consistently since 2010. According to the latest statistics from the Ministry of Unification, the special economic zone in the North has produced $369.86 million worth of goods from January through November last year, a whopping 25.7 percent increase over the same period in 2010.

The number of Northern workers hired in the complex increased by 2,424 to 48,708 as of last November. Pyongyang reportedly plans to put about 400 new workers in the complex later this month in an attempt to implement its manpower reinforcement plan that was put off after the death of North Korean leader Kim Jong-il last December. The solid maintenance of the complex serves as strong evidence of its ability to sustain itself even in times of crisis.

No doubt the vitality of the complex comes from mutual benefits: the cash-starved North earns foreign currency in return for its workers’ labor, while the South produces competitive products by taking advantage of low labor costs. The complex could have expanded much further had bilateral relations not been strained.

That prospect bodes well for future relations between Seoul and Pyongyang, as the complex proves the effectiveness of an economic cooperation model that can function as a safety net amid the deterioration of bilateral relations. Lim Eul-chul, a professor of North Korean studies at Kyungnam University, said that it demonstrates Pyongyang’s pragmatic approach to economic issues.

The Kaesong complex is yet to be developed as only the first phase of the construction has been completed. A total of 250 South Korean companies have applied to participate in the complex, but only 123 are operating. Moreover, our companies complain that they need about 20,000 to 25,000 more North Korean workers to run their business there. Though the problem can partly be attributed to the government’s ban on further investment in the complex after the North’ attacks on the Cheonan warship and Yeonpyeong Island, it primarily results from the lack of available North Korean workers.

Cho Dong-ho, a North Korea expert at Ewha Womans University, said that the government needs to develop a new area in the North or establish another such complex in Paju, Gyeonggi, so that it can link it to the one in Kaesong. In any case, the government should expand the special economic zone in Kaesong.