Seoul helps Kaesong plants hit by shutdown

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Seoul helps Kaesong plants hit by shutdown

Seoul will help four Korean companies that operated production plants at the Kaesong Industrial Complex build new plants in the nation by providing them 9.5 billion won ($8.1 million), the government announced Friday.

This is the first time the government has announced a plan to pay a specific amount of money to affected companies after shuttering the industrial park this year. The government closed the complex in February, which it operated with North Korea some 50 kilometers (30 miles) north of Seoul, as a punitive response to Pyongyang’s nuclear test a month earlier.

According to the Ministry of Trade, Industry and Energy, companies affected by the shutdown will receive government subsidies if they decide to build new plants in the country.

Currently, the government pays 30 percent of the money that the companies spend to buy land and another 24 percent to build facilities. According to the ministry, four companies reported their 36.4 billion won worth of projects, and the government will pay them 9.5 billion won.

“It is very encouraging that companies that operated in Kaesong are trying to find new places to do business in order to normalize their management,” a Trade Ministry official said. “We hope more companies decide to find new places to do business by receiving government subsidies.”

In March, the government announced a plan to support companies that built alternative manufacturing plants in Korea. They only planned to support those building plants in non-metropolitan areas, but the government later said it would give grants to those who consider opening new plants in metropolitan areas.

It also announced that it would postpone principal payments on loans and extend the maturity date for those with existing loans.

A clothing manufacturer was the first company to get subsidies, receiving some 2.7 billion won. According to the ministry, the company had 1,200 employees and yearly sales of approximately 8.8 billion won before the shutdown in February.

The company successfully managed to find new plants in North Jeolla to move into and received subsidies. Two other companies will operate new plants in the Gyeongsang region, and another company will relocate to South Chungcheong.

The Kaesong Industrial Complex was the last remaining economic cooperation project between the two Koreas. A total of 261 companies reported damages of 944.6 billion won due to the shutdown. The government said it would support 90 percent of damages, up to 7 billion won per company, for those who bought insurance.

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