South Korea scraps cash limit for its nationals visiting the North

The South Korean government has lifted the limit on the amount of cash its citizens can carry into North Korea, the finance ministry said on Thursday, as part of foreign exchange regulatory reforms.

The current cash limit of US$1,000 (1,023,540 South Korean won) for South Koreans visiting the North will be discontinued due to its “low effectiveness,” as will a ban on credit card and debit card use in the isolated country, the Ministry of Strategy and Finance said in a statement.

A finance ministry official said the decision was not a “gesture of peace” towards the North.

“You usually need more than US$1,000 to pay for a stay in North Korea and this has led to visitors unwillingly breaking the law [and taking more than allowed],” said Lim Gang-taek, a senior researcher at the Korean Institute for National Unification.

Lim said the decision was most likely aimed at easing “unrealistic” regulations rather than fostering better relations with Pyongyang.

North and South Korea are still technically at war after the 1950-53 Korean War ended in a truce, not a peace treaty. South Koreans cannot travel to North Korea, except in rare cases where approval is granted as an exception, including family reunions where hundreds are reunited at a time.

According to government statistics, 76,403 South Koreans visited the North last year, down from 120,360 in 2012 after the North decided to temporarily shut down a border industrial zone shared with South Korea.

The move by South Korea could potentially provide large amounts of cash to North Korea in the event ties do normalise, in which case up to 300,000 or more tourists could go to the North every year as they did in the previous decade before ties chilled.

South Korean businesses have also been looking into expanding business in the North and recently visited the port city of Rajin, which the North hopes to develop as an industrial zone.

Ties between North and South Korea have been tense since the fatal shooting of a South Korean tourist by a North Korean soldier in 2008 and the sinking of a warship in 2010 which was soon followed by a bombing of a border island that year.

North Korea is heavily sanctioned under United Nations resolutions related to its nuclear and ballistic missile programmes and has threatened to conduct a fourth nuclear test.