Kaesong firms hopeful complex might reopenOptimism over today’s summit is spreading to the business community, with many welcoming the talks and the effect they may have on the economic cooperation that abruptly stopped in 2016.
Companies that used to have factories in the Kaesong Industrial Complex, in particular, will be paying close attention to the summit in the hope that their factories could be reopened.
“We have been waiting for this moment for more than two years,” said Shin Han-yong, chairman of the Corporate Association of Kaesong Industrial Complex, on Thursday. “We see hope and although we don’t expect an immediate result, we are optimistic that the industrial complex will gradually reopen.”
The road to reopening the complex won’t be easy, as it would need the cooperation of the United Nations and the U.S. to lift a number of sanctions.
“An agreement between the two Koreas wouldn’t mean anything until the U.S. and the global community eases up on the sanctions,” Shin said.
The association chairman said the members of the association will be waving off President Moon Jae-in as he heads to the summit, and then closely monitoring the situation from the group’s office in Yeouido.
There are 124 South Korean companies operating in the industrial complex when it was closed by President Park Geun-hye in February 2016.
The Moon government has already allocated 248 billion won ($229 million) in the budget for potential economic cooperation between the two Koreas. This is double the size of the budget set for such a purpose in 2017, at 138.9 billion won. In addition, the government has separately set 31.2 billion won aside to support the Kaesong Industrial Complex.
Another company keenly monitoring the situation is Hyundai Group.
Hyundai Group used to have the exclusive rights to North Korean tourism for South Koreans. However, as South Koreans were banned from traveling to North Korea as tourists after a North Korean soldier shot and killed a South Korean tourist in July 2008, Hyundai’s tourism operation has ground to a halt.
As a result Hyundai Group suffered heavily. Hyundai Asan, which was in charge of businesses in North Korea, was estimated to have suffered a loss amounting to over 1.1 trillion won between 2008 and 2017. The number of employees has shrunk from 1,000 in 2008 to 150 today.
Larger business communities also welcomed the summit.
But some analysts have warned that investors should be cautious.
“According to reports provided by the United Nations, North Korea’s real GDP as of 2016 was $14.9 billion, which is equivalent to 1.15 percent of South Korea’s,” said Oh Tae-dong, an analyst at NH Investment & Securities. “[Investors] have to take into account the actual benefits that South Korean companies might get with the growth of North Korea’s economy.”
In fact, only 26 percent of companies said they would return to the complex if it reopens, while the majority of companies said they would wait until the South Korean government introduces a law to protect their businesses.
BY LEE HO-JEONG [firstname.lastname@example.org]
More in Industry
Move over Federer
Hanjin KAL slams largest shareholder, accusing it of peddling lies
Tech firms brief president on state of AI research
Dongsuh recognizes female authors at Scent of Life Awards