By Jung Sung-ki
Staff Reporter
Expenses for the reunification of the two Koreas will range from $850 billion and $1.3 trillion if it comes between 2015 and 2040, a National Assembly report said Sunday.
The Assembly-mandated report made by a research institute at Chung-Ang University in Seoul said the amount of the ``reunification cost,'' which is expected to account for about 6 percent of South Korea's gross domestic product (GDP), will be affordable for the South.
The report was based on a scenario in which per capital gross national income (GNI) of North Korea would reach half of South Korea's in the next 10 years after reunification, and the cost limited to the economic sector shared by the two Koreas during the period.
About $858 billion will be needed between 2016 and 2025 if the two Koreas are reunified in 2015, while some $991 billion will be required for a 2020 reunification, according to the report.
If South and North Korea are reunified in 2025, about $1.15 trillion should be spent for the next 10 years, while some $1.32 trillion is to be required for a 2030 reunification, it said.
If the Koreas opt to remain divided permanently, it will cost $1.31 trillion for 30 years from 2016 to 2045, $1.49 trillion from 2026 to 2055 and 1.88 trillion from 2031to 2060, the report said.
South Korea could meet the expenses through reductions in military expenditures, taxes and state bonds, or low-interest loans from international financial institutions, it said. In that case, the burden on the South Korean people would be around 3 percent of the GDP, it said.
``It would be burdensome for the South Korean people, but our country has the economic power to cope with the unification cost,'' Professor Shinn Chang-min who led the research said. ``South Korean people overcame the 1997-98 Asian financial crisis in only five years, when the GDP fell 40 percent at once.''
Shinn said if South Korea invests in domestically produced goods in North Korea after reunification, the South's GDP growth rate could reach 11.25 percent.
The two Koreas have been divided since the 1950-53 Korean War, which ended in a truce, not a peace treaty, leaving the two countries technically at war.