North increases operations in Kaesong Industrial Complex almost three-fold

The Kaesong Industrial Complex in North Korea from Paju, northern Gyeonggi on the South Korean side of the border on March 13 [YONHAP]

North Korea has increased its operations in the Kaesong Industrial Complex almost three-fold since last year, Seoul officials recently told the JoongAng Ilbo.

The North’s increased use of factories at Kaesong comes despite recent warnings from the South against using equipment and facilities left behind by South Korean companies when they withdrew from the zone in 2016.

Based on Seoul’s own surveillance of activity and vehicular movements in the Kaesong Industrial Complex and estimates of the North’s electricity supply to the zone, the regime is likely running at least 30 factories, according to multiple South Korean government officials who spoke to the JoongAng Ilbo on condition of anonymity.

Last year, the South Korean government estimated that the North was operating approximately 10 factories in the zone without permission from their South Korean owners.

South Korea’s Unification Ministry issued a statement on April 6 asking North Korea to stop using South Korean assets at the Kaesong Industrial Complex, including buses, which have been spotted being used for public transportation in Pyongyang, saying such actions infringe on South Korean companies’ property rights and prior inter-Korean agreements governing the zone.

The industrial complex, located only 10 kilometers (6 miles) north of the demilitarized zone, was one of the main projects realized under the so-called “Sunshine Policy” pursued by liberal presidents Kim Dae-jung and Roh Moo-hyun. It opened in 2004.

The zone matched South Korean manufacturing prowess with skilled but inexpensive North Korean labor and was intended to demonstrate the benefits of capitalism and democracy to the North.

The complex twice became a casualty of deteriorating inter-Korean relations: briefly in 2013, when it closed during a period of high tension on the peninsula, and again in 2016, when it closed indefinitely in response to a North Korean missile test.

South Korean companies and their staff withdrew from the zone, but factories, equipment and raw materials were left behind.

Products currently being made by the North in the Kaesong Industrial Complex are primarily consumer electronics and household appliances whose low manufacturing costs compared to sale prices yield greater profit for the regime, said one South Korean official who declined to be named.

One prominent example is a North Korean knockoff version of South Korea’s popular Cuckoo rice cooker, which several anonymous South Korean officials previously told the JoongAng Ilbo are being manufactured at Cuckoo Electronics’ Kaesong plant and sold at a Pyongyang department store.

The South believes at least 8 to ten other factories have recently been reactivated by the North and are manufacturing clothing.

The North’s “blatantly” expanded use of facilities in the Kaesong Industrial Complex “is intended to produce and sell products through middlemen in Chinese and Russian border regions, and even in South Korea,” according to another South Korean official who spoke to the JoongAng Ilbo on the condition of anonymity.

Under United Nations Security Council resolutions adopted in September and December 2017, Pyongyang is barred from exporting both consumer electronics and clothing.

North Korea's unauthorized use of the Kaesong Industrial Complex has also been detected from outer space.

Thermal infrared images taken on Feb. 24 by satellites belonging to Planet Labs showed elevated heat levels at two electronics factories, one clothing factory and another manufacturing facility in the zone, suggesting these facilities were in operation, according to a report by Radio Free Asia.

BY JUNG JIN-WOO,MICHAEL LEE [lee.junhyuk@joongang.co.kr]