SEOUL, Dec. 24 (Korea Bizwire) – South and North Korea have reached an agreement on the land use fee amount for South Korean firms operating a joint industrial park across the border, the Unification Ministry announced Thursday.
The deal calls for South Korean firms at Kaesong Industrial Complex to pay US$0.64 per square meter every year, it said.
The complex in the North’s border city of Kaesong opened in 2004 as a symbol of inter-Korean reconciliation. A total of 124 South Korean firms are running factories with about 54,000 North Koreans working in them.
Kaesong has served as a major revenue source for the cash-strapped North, while South Korea has benefited from cheap but skilled North Korean labor.
The South’s firms were exempted from land use fees for a decade under a 2004 deal. The two sides launched talks over the issue again in late 2014.
“The government hopes that the agreement will help South Korean firms focus on their businesses in a stable manner,” said a ministry official, asking not to be named.
The North initially claimed that the South should pay $1 per square meter for all areas that were supposed to be developed under the 2004 agreement, according to an industry source.
But Seoul insisted that it will pay only around half of the North’s offered price for the land that the South’s firms are actually using. They are currently using about 25 percent of the 1 million square meter land.
“The government hopes that the two Koreas could resolve other pending issues related to the operation of the factory zone through dialogue,” the official added.
The operation of the complex has been affected by the ups and downs of inter-Korean ties. In April 2013, the North abruptly suspended the operation of the complex for about five months, citing inter-Korean tensions.
Ending a months-long wage dispute, the two sides agreed in August to raise the minimum wage for the North’s workers by 5 percent to US$73.87 per month.