Kaesong is a special administrative region of North Korea formed in 2002 featuring the Kaesong Industrial Park, a collaborative economic development zone with South Korea. The park is located 10 kilometres north of the Korean Demilitarised Zone and allows South Korean companies to employ cheap skilled labour whilst providing North Korea with an important source of foreign currency.
Two Koreas restart operations at Kaesong industrial zone
Inter-Korean zone reopened five months after closure due to military tensions
South Korean businessmen crossed into North Korea yesterday as the joint Kaesong industrial zone reopened five months after it was closed by soaring military tensions and threats of war.
In the most tangible outcome to date of recent efforts to improve inter-Korean relations, dozens of cars, trucks and factory managers crossed the border shortly after 8.30am.
Video: Inter-Korean industrial zone reopens
“I hope we can work together well again, just like before,” said the 50-year-old manager of a Seoul textile company who declined to be named.
The optimistic mood at the Kaesong border checkpoint contrasted sharply with the sense of impending disaster that had loomed over the closure of Kaesong back in April.
Months of heightened military tensions, with Pyongyang issuing daily apocalyptic threats of nuclear strikes, saw North Korea withdraw its 53,000-strong workforce from the joint industrial zone.
As military tensions eased, the two Koreas agreed last month to work together to resume operations.
As part of the deal, the North accepted the South’s demand that efforts be made to encourage foreign investment in Kaesong.
Seoul believes having vested interests outside the Korean peninsula involved in Kaesong will make it harder for Pyongyang to shut down the complex the next time North-South relations go into freefall.
“Honestly, I still feel a bit nervous because you never know whether the North will change its mind in the future,” the textile company manager told AFP.
“Who knows if a crisis like this will happen again?” he told AFP.
Born out of the “sunshine” reconciliation policy initiated in the late 1990s by then-South Korean president Kim Dae-jung, Kaesong was established in 2004 as a rare symbol of inter-Korean cooperation.
It provided an important hard currency source for the impoverished North through taxes, other revenues, and its cut of workers’ wages.
It had appeared immune to previous downward spirals in North-South relations, but finally fell victim to the months of tensions that followed the North’s nuclear test in February.
Pyongyang initially barred South Korean entry to the park in early April and shortly afterwards withdrew its workers - effectively closing down the complex, which houses production lines for 123 South Korean firms.
Each side blamed the other, with the North insisting its hand was forced by hostile South Korean actions - in particular, a series of joint military exercises with the United States.
The most immediate task for the South Korean managers is to inspect the state of production lines that have been out of operation for nearly five months, and to determine how quickly they can get them up and running again.
The South’s Unification Ministry said 820 South Korean managers and workers planned to cross the border into Kaesong yesterday, with more than 400 to stay overnight to oversee production operations.
“I’m glad things have returned to normal finally,” said Shin Han-yong, the chief executive of the Shinhan Trading company.
“I never believed the complex would be permanently closed. I think things will be alright from now on,” Shin said.
In an effort to prevent any future closures, the North and South have created a joint committee to oversee Kaesong and deal with any problems related to its operations.
The South Korean co-chairman Kim Ki-woong said future committee talks would focus on ensuring that Kaesong becomes internationally competitive.
“To reach this goal, there are still quite a few problems to resolve, even though the factory park itself has reopened,” Kim said.
Kaesong, on paper at least, has always been open to foreign investors although none have taken the plunge and set up business there.
A road show for foreign investors is scheduled to be held in Kaesong in October, but many experts question who would be attracted by a project jointly run by two countries that are still technically at war.
“What foreign firm in their right mind would consider investing in Kaesong?” asked Aidan Foster-Carter, a noted Korea expert at Leeds University in Britain.
“There are a myriad separate reasons to steer well clear,” he wrote in a commentary for the Wall Street Journal.