South Korea to aid Kaesong companies

CHICAGO - Agence France-Presse

South Korean vehicles return from the inter-Korean Kaesong Industrial Complex, which has been shut down by the North since April 3. REUTERS photo

South Korea has offered 300 billion won ($272 million) million in special loans to companies affected by Pyongyang’s decision last month to close a jointly run industrial zone in North Korea, a government official said yesterday.

A government taskforce will provide the assistance from May 6 in the form of loans with interest rates of 2 percent. More than 120 South Korean businesses have invested in the border complex at Kaesong.

“The government is currently trying to provide tailored support for these businesses and once we finish determining the current status of the companies, we will continue to make more support available,” said Suh Ho, a director-general at the Unification Ministry which deals with inter-Korean affairs.

Suh said cash handouts to the companies were legally impossible and that loans - money for which will be taken out of various government funds - were the only available solution in the short-term.

North Korea decided to withdraw its 53,000 workers from the Kaesong industrial zone amid heightened tensions between the two Koreas in April, and sent most South Korean workers from the zone, virtually stopping all operations.

Seven South Korean workers remain in Kaesong. North Korea had cited last-minute checks on taxes and wages as reasons for holding them back.

The shutdown of production at Kaesong, which remained in business even during North Korea’s attack on a South Korean island in 2010, was the first since it opened in 2004 as a test case for reunification.