Gov’t loans for Kaesong firms as talks keep going

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Gov’t loans for Kaesong firms as talks keep going

The South Korean government decided to funnel emergency funds to the owners of businesses at the Kaesong Industrial Complex who are at risk of going bankrupt due to the abrupt shutdown of the inter-Korean venture.

The Ministry of Unification announced a package to compensate the 123 South Korean firms running factories in the industrial zone for losses, including loans of 300 billion won ($271 million) in total with a low annual interest rate of 2 percent.

The owners of the mostly small- and medium-sized companies say they are close to bankruptcy due to the North’s unilateral decision to suspend operations at the complex in early April.

Suh Ho, the head of the ministry’s inter-Korean cooperation district support bureau, announced a “first round of support program” for the companies at a daily briefing yesterday.

“For the emergency liquidity of the company, the government decided to offer 300 billion won of working capital, which is the maximum amount of money that the government can arrange,” Suh said. “We are planning to arrange further rounds of assistance as soon as we finish estimating the entire losses of the companies.”

Suh told reporters that under the current law, the government can’t provide state funds for the companies for free.

“Offering loans is the only way for us to help under current law,” Suh said. “To make up for the losses of the companies, we should use the state budget, which is a matter that has to be decided in the political arena.”

The last remaining seven South Koreans in the industrial park - five government officials and two telecommunication employees from KT - didn’t return to the South yesterday due to a deadlock in negotiations with North Korea. Officially, the negotiations are about wages owed the North Korean workers and taxes owed the North Korean government.

A South Korean government official told the JoongAng Ilbo on the condition of anonymity that even if the negotiations end, Seoul is mulling continuing to supply electricity and water to the complex, not only on a “humanitarian basis” for ordinary North Korean citizens but also to thaw frosty inter-Korean relations.

“If we cut the electricity and water, it could worsen the atmosphere [with Pyongyang],” the official said.

By Kim Hee-jin, Sarah Kim []
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