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September 11, 2013

Koreas Agree to Reopen Kaesong Industrial Complex

by Daniel Schearf

North and South Korea have agreed to reopen a jointly-run industrial park just inside the North Korean border on a trial basis starting next Monday.
 
The South's Unification Ministry says negotiators reached the deal on the Kaesong industrial complex following lengthy negotiations that lasted through early Wednesday.
 
​​The two sides tentatively agreed last month to reopen the facility, which was effectively closed by the North in April. But the South was still looking for compensation for its companies hit by the closure.
 
The owner of one of the Kaesong factories, Rok-Sec Garments President Park Young-man, said he is very happy with the agreement, but that the process of getting back to business will take some time.
 
"Operating a business is like dealing with a living creature," he said. "The complex has been shut down for over five months. It will take lots of efforts, sacrifices and prices to normalize the complex completely."
 
The South's statement said the two sides agreed that South Korean companies would not pay taxes for this year. They also agreed to open the complex to foreign investors, which could make it harder to shut down operations in the future.
 
North Korean state media confirmed the September 16 reopening date, but offered no other details.
 
​​Troy Stangarone, Senior Director of the Korea Economic Institute of America, called the deal an important step for Korean relations, but said he is skeptical that international companies will want to invest in Kaesong under the current circumstances.
 
"The challenge is going to be that most of these companies are going to want to see how the process moves forward," he said. "Are there any real assurances that the North Koreans will [keep] the complex open?"
 
North Korea pulled its 53,000 workers from Kaesong in April. It blamed rising tensions from joint U.S.-South Korean military exercises. It was also angry over expanded U.N. sanctions in response to its third nuclear test.
 
Since 2004, Kaesong has been an important symbol of cooperation between Seoul and Pyongyang, which technically remain in a state of war since their early 1950's conflict ended in a truce.
 
More than 120 South Korean businesses use Kaesong to manufacture a variety of products with cheap North Korean labor. In turn, the industrial park serves to provide vital foreign currency to the impoverished North.
 
Wednesday's announcement is the latest sign of easing tensions on the Korean peninsula. Last month the two Koreas also agreed to resume stalled talks on reuniting families forcefully separated six decades ago by the Korean War.

VOA Seoul bureau producer Youmi Kim contributed to this report, which was produced in collaboration with the VOA Korean service.