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South Korea Businessmen Protest Over Kaesong

South Korean owners who run factories in the suspended inter-Korean Kaesong Industrial Complex, attend an emergency meeting held by the council of South Korean companies operating in the industrial park, in Seoul, South Korea, Friday, Feb. 12, 2016.

South Korean companies that were forced to shut down operations in the Kaesong Industrial Complex in North Korea in 2016 have petitioned the government in Seoul to investigate reports that Pyongyang has reopened the facility without their consent.

The North/South joint venture with South Korea was suspended last year to punish the Kim Jong Un government for conducting nuclear and missile tests, and to cut off a possible source of funding for Pyongyang’s illicit weapons development program.

Unconfirmed reports

Last week, the North Korea propaganda web site Meari indicated operations have resumed at the Kaesong facility, and another propaganda web site, Uriminzokkiri posted a comment saying, "It is nobody's business what we do in an industrial complex where our nation's sovereignty is exercised."

The South Korean Unification Ministry could not confirm that the complex has been reopened, but did say that recent bus movements and illuminated street lamps in the site have been observed.

The Corporate Association of Kaesong Industrial Complex that represents the 123 South Korean manufacturing companies that operated factories in the North Korean facility said Thursday it wants to send a delegation to inspect their property.

“It is our asset, which we invested in according to North Korean law, and procedures set by both governments of the two Koreas. So as owners with rights to the assets, it is necessary for us to check the situation and status of our assets and find out whether the complex is really being operated or not,” said Kim Seo-jin, with the Kaesong Industrial Complex Association.

However it is unlikely North Korea would agree to allow the business owners’ request to visit their facilities, given the heightened tensions over Pyongyang's nuclear and missile programs.

To make the complex fully operational again, North Korea would also be hard pressed to replace the electricity supply that came from South Korea, according to the Kaesong business owners.

Inter-Korean cooperation

When it first opened in 2004, the Kaesong complex, located about 54 kilometers northwest of Seoul, was intended to promote inter-Korean development and give North Korean workers a taste of life in the south, including snack foods like the cakes known as Choco Pies and toiletries that were resold as luxury items in the North.

The South Korean companies that operated in Kaesong also benefited by employing low wage North Korean workers to produce labor-intensive goods, such as clothes and utensils.

Pyongyang responded to Seoul’s decision in 2016 to suspend Kaesong operations by imposing military control over the site, freezing all assets of the Kaesong companies, and deporting the remaining South Korean managers and staff still there.

The closure of the Kaseong factories put over 54,000 North Korean employees out of work.

The Kaesong association estimated its members left behind over $600 million in equipment and raw materials, and many of the Kaesong companies have been unable to recover without access to the low wage labor available in Kaesong.

“That's one of reasons why they want to reopen the complex. They sincerely want to reopen of the complex through immediate normalization of inter-Korean relations,” said Kim with the Kaesong Industrial Complex Association.

When Kaesong was shut down in 2016, the conservative government of then President Park Geun-hye claimed 70% of the $100 million in wages paid each year, which was given directly to the government in Pyongyang to distribute to the workers, was diverted to finance the North’s illicit nuclear weapons program.

However an official with the current pro-engagement administration of President Moon Jae-in has said there is no evidence that North Korea diverted Kaesong wages to its weapons programs.