‘Kaesong’s value is really much more than just economic’

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‘Kaesong’s value is really much more than just economic’


Shin Han-yong, Leader of business owners’ group who ran operations in the Kaesong Industrial Complex

The Kaesong Industrial Complex was a major factor in this year’s presidential election. Then-candidate Moon Jae-in criticized then-President Park Geun-hye’s decision to shut down the complex in February 2016, and vowed to expand the factories from the current 3.3 million square meters (estimate 815 acres) to 66 million square meters. He had promised to reimburse the affected companies and reopen the industrial complex.

After the election, however, the likelihood of the Kaesong Industrial Complex reopening has diminished. Despite people waiting for hopeful signs, even with North Korea’s nuclear tests and missile firings, the body blow came with Radio Free Asia’s broadcast on Oct. 2.

The radio broadcast station reported that North Korea has been secretly running the South Korean-owned clothing factories at the Kaesong Industrial Complex without permission from Seoul. Uriminzokkiri, a North Korean propaganda website, then confirmed this on Oct. 6 by asserting its sovereignty over the previously joint venture, flaunting their plans to run the factories.

Following the sudden announcement, business owners of the Kaesong Industrial Complex requested that the North Korean authorities verify whether the North Korean claims of running the complex were true. They also asked the South Korean government to investigate the matter and requested their promised reimbursements.

To inquire about the issue, JoongAng Ilbo requested an interview with Shin Han-yong, 57, the leader of the business owners group of the Kaesong Industrial Complex.

Q. How did your discussion with the Blue House go?

We went to ask about how the compensations are proceeding. The clear cut figures will be known only after the government announces them. All in all, it was only a customary statement that they are “doing their best to help.”

Didn’t the South Korean government agree to authorize a visit by the business owners to the complex?

Yes. Whether the North Koreans are bluffing, the Ministry of Unification is uncertain. We hope that it’s not true.

Are there no other channels for the Kaesong Industrial Complex business owners to contact?

There aren’t. Conglomerates may have some methods, but we small and midsize companies only had information from collaborating with the planning group of the Ministry of Unification.

Is there any possibility of Chinese interference in North Korea’s illegal running of the Kaesong Industrial Complex?

We heard a year ago, from one of the business owners from North Korea, that a finished product from the Kaesong Industrial Complex was being sold through illegal markets. We’ve also heard that the raw materials or finished products were also in Dandong, China, or bordering areas. None of it was verifiable.

Is it true that the raw materials were supplied mostly from South Korea?

Yes, 100 percent. The materials we didn’t have were imported to the complex from the South. We proposed to the Ministry of Unification that we acquire available raw materials from China, through North Korea, but that went nowhere.

How does North Korea manage to unilaterally run the complex when they don’t have any business partners?

We can’t say they’re entirely bereft of business partners because more than 60 percent of the factories there are textiles and sewing factories, and North Korea also trades with China and Russia.

If there is nothing you can do to stop the North Koreans illegally running the factory, why bother?

It’s the action that matters. It’s symbolic. If the authorities in the North and South adhere to our requests, that means things are more hopeful, and we are trying to keep it that way.

Were the businessmen in your group not compensated for their losses?

We received 480 billion won ($425 million). But the sum we reported, including the investment assets, floating assets, finished products and raw materials was 950 billion won. The government only acknowledged 780 billion won. That leaves 300 billion won unpaid, even though the government had confirmed the losses.

Why did the government not pay?

The previous administration said there was not enough in the budget and they had to cut corners. They also said it wouldn’t be fair to those who operated small and midsize companies here. What they mean is it’s too much of a burden to save businesses using taxpayers’ money.

Were the reimbursement assessments premised on the grounds of a complete business withdrawal?

Regardless of a temporary or permanent pullout, the government pays the insurance money. If the complex reopens, all of it needs to be returned to the government.

So it would be better for business owners to get the reimbursement than to reopen?

Yes, but investments are like children to entrepreneurs. If the complex reopens, most of us are of the mind to go back and run the businesses than count our losses and move on.

How many were willing to continue operating businesses?

Five months ago, when the Moon administration was instated, I held a group meeting for the member companies. We had expectations that things would be different with this administration, compared to the previous one. It was assumed that the complex would be reopened, one year later at latest. And 93 percent said they would return to Kaesong. However, since then there were two nuclear tests and rumors of illegal North Korean operations. If they were doing things secretly, it would mean that they don’t want to continue businesses with us. Still, the working conditions in North Korea are very attractive to us, even compared to other places like Africa.

How are the members of your group faring?

Out of the 124 member companies, 20 have relocated to Vietnam or other regions. Some have quit altogether and opened up chicken shops. About 10 business continue because they would have to pay the loans if they shut down. We are all struggling to make ends meet.

What is your outlook on the complex reopening?

President Moon wants it, so even if it doesn’t happen immediately, it will happen someday, possibly in the near future. Amongst ourselves, we had bet maybe this year, next year or within two years. Right now, everyone sees that the conditions are unfavorable. It’s out of our control at the moment. But corporations won’t give up hope.

Isn’t the danger of being taken hostage worrisome if the complex were to be reopened?

Everyone else worries about the possibility, but we didn’t feel any peril there. On the contrary, we felt the Kaesong Industrial Complex was the safest place, because the international community kept an eye out for it.

Did the Kaesong Industrial Complex help South Korea’s economy in a tangible manner?

Around 800 South Korean nationals worked at the complex and 5,000 companies signed up to become our business partners. The employment effect creates jobs for 78,000 people. Nearly 80 percent of the raw materials come from South Korea. Even without contractors, there are suppliers of raw materials from the South.

If there were five more industrial complexes like it, this kind of tense situation wouldn’t have appeared in the first place. Kaesong’s value is really much more than just economic, because it encompasses national security, coexistence and cooperation.

BY KIM JIN-KOOK [bae.seunghoon@joongang.co.kr]
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