Businessmen seek a ‘second Kaesong Complex’ in N. Korea

Posted on : 2014-02-05 15:50 KST Modified on : 2014-02-05 15:50 KST
Current restrictions on inter-Korean trade and investment would prevent any such new investment projects in the North

By Lee Chun-jae and Choi Hyun-june, staff reporters

The Korea Federation of SMEs (Kbiz) announced plans on Feb. 4 to push for a “second Kaesong Industrial Complex” in North Korea.

Chairman Kim Ki-mun met with reporters that day to discuss the plan.

“North and South Korea have long been in agreement on the need for a second Kaesong,” he said. “We plan to push for the second complex this year as a way of developing models of the kind of inter-Korean economic cooperation we need for reunification.”

Kim went on to mention the North Korean city of Nampo as a strong candidate.

“North Korea wants to build a complex in the Rason Special Economic Zone, but it’s not really a suitable location because of the bad electricity and distribution conditions,” Kim explained.

“To produce the kind of results that Kaesong has gotten, two good candidates would be Haeju and Nampo on the West [Yellow] Sea coast, which have good electricity and distribution infrastructure,” he continued. “And Nampo would be more suitable than Haeju, which has a heavy naval presence.”

Nampo is about 130 kilometers from the Kaesong Industrial Complex, which means it could be accessed in about an hour and a half if the highway is developed more. It also has a geographic advantage because it can draw on the Kaesong electricity grid, Kim explained.

“Not only that, but you can also find a lot of workers because it’s so close to Pyongyang,” he added.

Kim went on to say Kbiz had not discussed the matter yet with the South Korean government.

“But the Kaesong Industrial Complex also started out when SMEs identified a need and pushed the project themselves in conjunction with Hyundai Asan,” he added. “It was only later that the government agreed to it.”

“Once the industry calls have some momentum behind them, we’re certain the government will take an interest.”

Kim also discussed the potential for South Korean SMEs to set up shop at a new complex.

“The waiting list for companies to move into Kaesong was as long as 2,000 at one point,” he noted. “Inter-Korean relations may have soured, but the demand is still there.”

Kbiz said it planned to start pushing for the “second Kaesong” once the May 24 Measures - a ban on new and increased investment in Kaesong that was introduced in the wake of the 2010 sinking of the ROKS Cheonan - are lifted.

Although Kaesong has faced its own share of crises, including a five-month shutdown last year after inter-Korean relations soured, it is now back up and running - indeed, it is now facing a labor shortage, Kbiz reported.

“We can’t hope to expand the complex relying solely on the labor in the Kaesong area,” said the president of one tenant company on condition of anonymity. “Right now, we’re about 20,000 workers short.”

“What we need to do is build the worker dormitories that the North and South Korean authorities agreed to during the Roh Moo-hyun administration [2003-08] and bring in workers from elsewhere in North Korea,” the company president added.

The Ministry of Unification was dismissive of the idea.

“Last year, we only just managed to get the Kaesong Complex back to normal after its shutdown,” said a ministry official on condition of anonymity. “We’re not at the stage now where we should be considering a ‘second Kaesong.’”

“There are also restrictions on inter-Korean economic cooperation in place because of the May 24 measures,” the official added.


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