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Growing political tension causing problems for reconciliation symbol
January 08, 2009
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Kaesong Industrial Complex, once a shining symbol of expanding inter-Korea joint ventures, is teetering. South Korean companies that opened factories in the complex hoping to take advantage of cheaper labor are now lamenting slowing business in an increasingly unfavorable political environment. Admitting Seoul may have few immediate options for improving ties with Pyongyang, analysts here urged the South’s government to try to resume minimal hotline communication channels with the North. SNG, a South Korean men’s suit maker, spent 9 billion won ($7 million) to build a new three-story plant in the Kaesong complex last July and hoped to hire as many as 2,000 North Korean workers. But following the escalating political tensions between the two Koreas, Pyongyang became less cooperative. Authorities there assigned only some 720 workers for SNG’s new plant. As a result, the company’s plan to fully operate the factory is gone. Only the first floor is buzzing with sounds of workers and machines while the two other floors remain vacant, leaving the company little chance to quickly recoup its investment. “I have new orders coming in because the labor cost is rising in China. But my factory remains idle,” said Chung Ki-sup, the head of SNG. And SNG’s troubles do not end with a partially filled factory. The North is now demanding that the South build dorms for North Korean laborers working in the complex, in line with the Oct. 4 joint declaration between the two countries’ leaders in 2007. But the South claims the construction will not begin unless Pyongyang responds to Seoul’s request to resume inter-Korea dialogue. SNG is not alone in facing trouble in the new environment. Chung Yang-geun, the chairman of Taelim Industrial Co., which produces materials for contractors, does not even know how his factory in the North is working, if it’s working at all. There is no way for him to find out since the North kicked all South Korean managers out of the area last Dec. 1. The company entered a joint venture with the North and invested $12 million to buy concrete mixers, excavators and other heavy machinery for stone extraction. The sales were crisp in the beginning, with the company grossing more than 1 billion won a month before the North’s Dec. 1 action. Business has been hit hard. “I’ve completely lost contact with the North and the promised invitation for the visit to the North is not coming,” said Chung. “I don’t even know what the sales for last month were.” The situation is no different for bigger companies. Hyundai Asan, the spearhead for inter-Korea joint economic ventures, has seen its businesses shrink so dramatically for the past month that some 200 of its employees are forced to work at home for 70 percent of their ordinary pay. The company, the sole operator of the tourism program for South Koreans to visit the North, had both its tour programs to Mount Kumgang and the city of Kaesong suspended last year. “A situation far worse than this may arrive if the tourism programs do not resume,” said one employee who wished to remain anonymous. But the governments in both Koreas show no signs of blinking. Seoul is still sticking to its position that it will not repeat the past administrations’ practice of luring Pyongyang to the negotiation table with economic aid. The North is also standing firm. Kim Yong-chul, the North Korean lieutenant general in charge of senior-level military talks, indicated last month the nation was not afraid of a worst-case scenario for the Kaesong complex. “The South predicts that we will never give up on the complex [by completely shutting it down],” Kim said in his last visit to the complex on Dec. 17 last year. “But they are mistaken. We lived well in a situation far worse than this.” The new year could bring an important opportunity for Seoul to change the deadlock not just for the struggling South Korean companies but for its own sake as well, said many analysts here. “The Kaesong complex offers important breathing room for our companies that are suffering from high labor costs,” said Han Wan-sang, South Korea’s former prime minister. “If the current administration actually pursues a pragmatic approach, it should stop thinking that ‘we should teach the North some lessons,’ and instead redirect its policies toward genuine economic coexistence.” Kim Yong-hyun, North Korean studies professor at Dongkuk University, echoed the sentiment and said that no past administration in Seoul has ever been so disconnected from Pyongyang. “We have to reopen the contact points and communication lines in order to help ourselves better detect any irregular moves within the regime and its military,” said Kim. By Chae Byeong-geon JoongAng Ilbo/ Jung Ha-won Staff Reporter [hawon@joongang.co.kr] |
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