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

Video Migrants Caught in No-Man's Land In French Port

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching 'Fortress Europe' More

Video Westgate Mall Attack Survivors Confront Painful Memories

On anniversary of terror attack, survivors discuss how they have coped with trauma they experienced that day More

New Hints That Dark Matter Exists

New evidence from International Space Station hints at existence of dark matter and dark energy More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Migrants Caught in No-Man's Land Called Calaisi
X
Lisa Bryant
September 19, 2014 5:04 PM
The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video CERN Accelerator Back in Business

The long upgrade of the Large Hadron Collider is over. The scientific instrument responsible for the discovery of the Higgs boson -- the so-called "God particle" -- is being brought up to speed in time for this month's 60th anniversary of the European Organization for Nuclear Research, known by its French acronym CERN. Physicists hope the accelerator will help them uncover more secrets about the origins of the universe. VOA’s George Putic reports.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video Russian Economy Reeling After New Western Sanctions

A new wave of Western sanctions is hitting Russia’s economy hard. State-owned energy firms continue to bleed profits and Russia’s national currency plunged to a new low this week after the U.S. and the European Union announced new sanctions to punish Russia's aggressive stance in eastern Ukraine. But as Mil Arcega reports, the sanctions could also prove costly for European and American companies.
Video

Video Belgian Researchers Discover Way to Block Cancer Metastasis

Cancer remains one of the deadliest diseases, despite many new methods to combat it. Modern medicine has treatments to prevent the growth of primary tumor cells. But most cancer deaths are caused by metastasis, the stage when primary tumor cells change and move to other parts of the body. A team of Belgian scientists says it has found a way to prevent that process. Zlatica Hoke has more.
Video

Video Mogadishu's Flood of Foreign Workers Leaves Somalis Out of Work

Unemployment and conflict has forced many young Somalians out of the country in search of a better life. But a newfound stability in the once-lawless nation has created hope — and jobs — which, some say, are too often being filled by foreigners. Abdulaziz Billow reports from Mogadishu.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid