News / Asia

North Korea Would Lose Millions by Closing Kaesong

South Korean vehicles return from the inter-Korean Kaesong Industrial Complex in North Korea to the Customs, Immigration and Quarantine office in the South, just south of the demilitarized zone separating the two Koreas in Paju, north of Seoul, April 30, South Korean vehicles return from the inter-Korean Kaesong Industrial Complex in North Korea to the Customs, Immigration and Quarantine office in the South, just south of the demilitarized zone separating the two Koreas in Paju, north of Seoul, April 30,
x
South Korean vehicles return from the inter-Korean Kaesong Industrial Complex in North Korea to the Customs, Immigration and Quarantine office in the South, just south of the demilitarized zone separating the two Koreas in Paju, north of Seoul, April 30,
South Korean vehicles return from the inter-Korean Kaesong Industrial Complex in North Korea to the Customs, Immigration and Quarantine office in the South, just south of the demilitarized zone separating the two Koreas in Paju, north of Seoul, April 30,
VOA News
North Korea stands to lose tens of millions of dollars a year if it closes the Kaesong industrial complex, a key source of hard currency for its troubled economy.

The eight-year-old factory complex that Pyongyang jointly operates with South Korea is the last remaining direct economic tie between the two Koreas.  

The 123 South Korean companies at the facility, 10 kilometers north of the demilitarized zone separating North and South, employ 53,000 North Koreans, with the communist government taking a significant portion of the workers' salaries of about $110 a month.

The Washington D.C.-based Peterson Institute for International Economics estimates the zone yields the North about $90 million a year in wages, rents, fees and taxes - in hard cash.

Former U.S. State Department official Mitchell Reiss said he doubts North Korea intends to permanently close the facility.

"I think the zone is too important for them to shut down permanently, but as a tactic I think they tried to make a move since their previous moves had not succeeded in intimidating South Korea, the United States and others," he said.

Reiss said South Korean President Park Geun-hye's tough response to Pyongyang's brinksmanship surprised the North Koreans.

"I think what happened is that they were taken a little bit by surprise when President Park decided not to play this game, but in fact, to escalate and end it by withdrawing all of the South Korean workers," he said.

Reiss described the potential economic impact on South Korea for closing the facility as minimal.

Seoul's total estimated investment in the zone is about $840 million, with $350 million of that in infrastructure and the remainder in the factories and equipment. The South would be forced to write this off in the event of a permanent closure.

The Peterson Institute says the costs would be larger, however, citing estimates as high as $5.5 billion, resulting from the potential bankruptcies of South Korean companies located in the zone.

Last year Kaesong produced $470 million worth of textiles, automotive parts and wiring for household appliances.  

About 800 South Koreans worked at the complex, but earlier this month North Korea blocked further South Korean access to it, which forced some of the companies to suspend their operations when they could no longer transport fuel, food and raw materials from South Korea.

The North has previously closed the crossing, but in the past has reopened it after a few days.

You May Like

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid