SEOUL, Nov. 10 (Korea Bizwire) – South Korea said Friday it will provide more compensation to domestic companies for their losses stemming from investments in inter-Korean projects which have now been suspended due to political tension.
The support will be given to those involved in the joint industrial complex in Kaesong closed in 2016, the joint tour program at Mount Kumgang halted in 2008, and other business projects affected by Seoul’s sanctions on the North implemented in 2010.
“The measure is meant to fulfill state responsibility for those companies which have suffered from unexpected business setbacks due to a shift in the government’s policy decisions,” the ministry said in a statement.
The government of liberal President Moon Jae-in has been reviewing measures to address damage those companies suffered because of the hardline policies taken by preceding conservative governments from February 2008 to in May 2017.
The ministry said that it has decided to offer an additional 66 billion won (US$59 million) in funds to companies that invested in the Kaesong Industrial Complex on top of the previous government assistance of 517.3 billion won.
Seoul shut down the complex in February 2016 in response to North Korea’s fourth nuclear test and long-range rocket launch.
The firms claimed that the closure has incurred more than 1.5 trillion won in losses, saying that the government’s financial support is not sufficient to cover their damage.
But the government estimates their losses to be some 786 billion won. The ministry said that the fresh support will be able to cover some 74 percent of the damage.
The factory zone, opened in 2004, had accommodated 124 South Korean firms employing more than 54,000 North Korean workers to produce labor-intensive goods, such as clothes and utensils.
The ministry will also help other inter-Korean project investors after conducting due diligence on their losses. It would mark the first time that Seoul will provide funds to them similarly to the Kaesong companies.
About 1,000 South Korean firms invested in inter-Korean economic projects or entered into business deals with North Korea in 1998-2008 under South Korea’s previous liberal administrations.
But they suffered setbacks following Seoul’s halt of the Mount Kumgang tour program in 2008 after the killing of a South Korean tourist by a North Korean soldier and its imposition of economic sanctions in May 2010 over North Korea’s sinking of a South Korean warship.
The government said that the number of firms subject to financial help will be decided after the review. It expects the funds could be provided to them as early as February.