Banks mobilize to support Kaesong companiesAmid escalating concerns that small- and midsize companies that have invested in the Kaesong Industrial Complex will struggle after the South Korean government’s decision to virtually shut down the zone, local banks have rolled up their sleeves to extend loan deadlines and cut interest rates.
The Export-Import Bank of Korea, which is in charge of the inter-Korean cooperation fund, said Saturday it has created two more task forces to effectively deal with businesses operating in the joint industrial zone. On April 3, the bank formed its first two teams to support companies financially if they had to leave the complex. The bank now has 27 employees assigned to Kaesong assistance businesses.
Seoul’s Ministry of Unification established the cooperation fund in March 1991 to encourage trade and economic cooperation with North Korea.
Separately, the bank said it will lower loan interest rates by 0.5 percentage point for companies that pulled out and expand their maximum credit lines to 100 percent of export performance. Previously, companies were only allowed to receive loans equal to 60 percent to 90 percent of the values of their exports.
Woori Bank, which has a branch at the Kaesong Industrial Complex, also has earmarked 100 billion won ($90.3 million) for new and expanded loans to Kaesong companies. It said it also extended due dates for loans.
Eight years ago, three Woori employees were assigned to the Kaesong branch when it first opened. One employee arrived in the South before tensions flared, while the remaining two were set to return around 5 p.m. yesterday with the rest of the South Korean workers in the complex. They are due to return once negotiations with the North are complete.
“South Korean companies deposited and withdrew money from our branch in Kaesong, and they gave money to a North Korean committee in charge of the complex,” said an official from Woori Bank. “I’m aware that the committee then gave out monthly payments to North Korean workers in the form of coupons.”
Woori Bank said that during the “temporary shutdown” of its branch in the North, it will operate a branch inside its headquarters in central Seoul for South Korean companies that need follow-up services.
By Lee Eun-joo [firstname.lastname@example.org]
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