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,
TEXT SIZE - +
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

Analysts Warn of Regional Proxy Conflict in Afghanistan

Analysts warn if Kabul’s neighbors do not start to cooperate, competing desires for influence could deteriorate into a bloody proxy war in the country More

Saudi Intelligence Chief Replaced

Bandar bin Sultan came under criticism for supporting al Qaida, prompting King Abdallah to wrest Syria operations away from him in February, handing them to Interior Minister Prince Mohammed bin Nayef More

Poetry Magazine editor Don Share talks what makes a good poem with VOA's David Byrd

What makes a good poem? And is poetry as viable an art form as it once was? To find out, VOA's David Byrd spoke to Don Share, the editor of Poetry Magazine. More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid