The second-ever summit between the leaders of South and North Korea is expected to add momentum to
the ambitious future plans for a joint industrial zone run by the two Koreas, analysts said Thursday.
Wrapping up three days of summit talks in Pyongyang, South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il signed a wide range of agreements on peace and co-prosperity, which includes the expansion of the industrial complex in the North Korean border city of Kaesong.
South and North Korea "agreed to complete the construction of the first-phase project of the Kaesong Industrial Zone at an early date," and "to start its second-phase development," according to the joint declaration released by the North's official Korean Central News Agency.
To better support the industrial complex, located just north of the heavily fortified border separating the two Koreas, Roh and Kim agreed to begin a cross-border cargo railway service between Munsan of the South and Pongdong of the North.
The railway, which the two Koreas conducted a test run on last year before the North's nuclear test in October, passes the Kaesong Industrial Complex.
"I think the substance of the results is more than I originally expected," said Paik Hak-soon, a North Korea analyst at Sejong Institute in Seoul, referring a wide range of deals on economic cooperation, including a peace zone around the Korean peninsula's disputed western sea border.
The expansion of Kaesong industrial zone, which the South started funding in the wake of the first-ever summit in 2000, had been postponed after North Korea test-fired missiles last July, sparking international condemnation.
Twenty-six South Korean firms are operating factories at the North Korean complex, employing about 15,000 North Korean workers, who earn some US$60.4 a month.
Along with a tourism project to the North's scenic mountain, the South Korean government cherishes the economic enclave as a symbol of reconciliation and cooperation launched after the 2000 summit.
Under plans to complete the project by 2012, some 2,000 South Korean companies would hire around 500,000 North Korean workers at the industrial park.
For the first-stage of the project, building the site of 3.3 square kilometers which is due to be completed by the end of this year, the South Korean government, Hyundai Asan Corp. and state-run Korea Land Corp. spent a total of 264.1 billion won ($288.2 million).
The second-stage plan calls for South Korea to build a bigger site of 8.3 square kilometers, which will also house homes and other commercial facilities.
The two Koreas are expected to begin construction of the second site in Kaesong as early as next year, according to officials at Korea Land Corp. No details of the second investment were given.
This week's summit coincided with a breakthrough in international talks on North Korea's nuclear program.
On Wednesday, China's foreign minister announced North Korea agreed on the disablement of its nuclear program by the end of this year under a deal at the six-nation talks, which involve the two Koreas, the United States, China, Japan and Russia.
However, some analysts accused Roh of simply transferring wealth for the North's regime.
"While the agreement contains clear benefits for the North, the South's interests from the investment are so vague," said Yoo Ho-yeol, a professor at Korea University in Seoul.
Michael Green, a former White House official now at the Center for Strategic and International Studies think tank, said Korean companies "might be investing based on sentimentality or politics rather than careful political risk management."
"The key is to not simply transfer wealth that props up the regime (which Kaesong and Kumgang may be doing), but rather to find ways to empower North Koreans as workers and to courage real economic reform," Green said, referring the industrial complex and tourism project.
(Yonhap)
