Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Two Koreas at odds over rent in Gaeseong
By Yi Whan-woo
The two Koreas are wrangling over the amount of rent South Korean enterprises operating at the Gaeseong Industrial Complex (GIC) should pay to North Korea, the government said Monday.
Pyongyang claims the rent should cover all 330,000 square meters of land that it offered Seoul for free for 10 years when the GIC opened in December 2004, according to the Ministry of Unification.
The two Koreas began negotiations after the 10-year deal expired this year.
The ministry said the 127 South Korean companies at the GIC have been leasing only 92,000 square meters of land, so the North’s demand is absurd.
Under the 2004 deal, the firms are obliged to pay rent once a year after the 10-year mark passes.
Pyongyang also demands the firms to pay $1 for each square meter of land they have been leasing, while Seoul claims that this rate should be halved.
"The two sides are consistently in talks over the matter,” said the ministry’s deputy spokeswoman Park Soo-jin. “The two Koreas are seeking to complete the talks within this year.”
The prolonged negotiations between the relevant authorities ― Seoul’s Gaeseong Industrial District Foundation and Pyongyang’s Central Special Zone Development Guidance General Bureau ― have hampered the companies from paying rent starting this month.
“It’s obvious that the impoverished Pyongyang is pushing to raise the rent as much as it can while we’re trying to minimize the amount,” a ministry official said on condition of anonymity. “It’s possible the dispute will drag on to next year.”
In a 2004 agreement, the Central Special Zone Development Guidance General Bureau allowed LH, Seoul’s state-run real estate developer and Hyundai Asan, the inter-Korean business arm of the Hyundai Group, to exclusively lease the land at the GIC to South Korean enterprises.
But the three contracting parties did not specify details over rent that the business owners in the GIC should pay the North after 10 years.
They instead agreed any differences over related issues should be settled on a government-to-government basis.
The GIC has served as a symbol of inter-Korean reconciliatory efforts.
Seoul and Pyongyang, however, have been at odds when it came to finance-related issues involving the companies there. The GIC has been a major source of income for the cash-strapped and internationally isolated Kim Jong-un regime. [Politics] Gaeseong Rent