Seoul tries to interest foreigners in Kaesong

In an effort to attract investors from other countries to the Kaesong Industrial Complex, a ruling party lawmaker proposed a bill to cut taxes and provide low-interest loans.

Representative Won Yoo-chul of the Saenuri Party introduced a revised bill on support for the Kaesong industrial district on Wednesday after discussions with the Ministry of Unification to attract foreign investors to the jointly run industrial park in North Korea’s Kaesong.

Won and ministry officials agreed that turning the Kaesong park into an international business district would help stabilize operations, which were shut down by North Korea this year for more than five months.

The bill proposes an exemption for foreign companies on some corporate tax or income tax for five years after they start doing business in Kaesong.

The government would also provide low-interest loans or insurance for foreign companies, the bill says. The interest would be lower than that charged by local banks to South Korean small- and medium-sized companies, which ranged from 5.47 percent to 7.89 percent.

In case North Korea unilaterally seizes assets in the complex, foreign investors would be covered by an insurance offered by the government.

Under the bill, the government would start a local support center for foreign investors to deal with investment counseling, market analysis and PR assistance.

“As the Kaesong Industrial Complex has finally restarted operations, expectations are rising among foreign buyers reviewing joint investment possibilities with South Korean companies in the Kaesong park,” Won said. “If this bill is passed, it could contribute to the internationalization of the complex.”

President Park Geun-hye has put emphasis on making the Kaesong park more international since operations at the complex resumed on Sept. 16.

During a visit to Russia to attend the G-20 summit on Sept. 5, she talked about investments in Kaesong with Italian Prime Minister Enrico Letta at bilateral talks on the sidelines of the summit. Park said, “We agreed on the internationalization of the complex at a global standard,” and, “I understand that it would not be easy for Italian companies at this moment, but I hope you pay attention to it and participate in it.”

South Korea’s Ministry of Unification, which is in charge of all inter-Korean business, is also stepping up efforts to draw foreign investment to the complex. The ministry plans to hold an investment seminar for foreign companies on Oct. 31 inside the complex.

On Sept. 26, the CEO of German shoe importer Me & Friends AG visited Kaesong to see the complex. The German company currently imports shoes manufactured by a South Korean company running factories in Kaesong.

Lee Yun-se, president of the Korean Apparel Manufacturers Association in Los Angeles, told Radio Free Asia that he is “considering investing on the Kaesong and planning to visit the complex soon,” although he admitted there would be “difficulties due to U.S. sanctions” on the North Korean regime.

“If foreign companies open factories at the complex, it would make it harder for North Korea to unilaterally close down the complex,” said Yoo Ho-yeol, a North Korea studies professor at Korea University. “To prevent further shutdowns at the complex, we should prepare this kind of precaution.”

BY KWON HO [heejin@joongang.co.kr]