S. Korean firms demand more compensation as hopes for N. Korea business fade
Members of the Association of Inter-Korean Economic Cooperation Organizations hold a press conference in front of Cheong Wa Dae in Seoul, July 10, demanding the government offer further compensation including a debt write-off. Korea Times photo by Wang Tae-seog
South Korean companies involved in inter-Korean economic projects on Tuesday called for additional compensation and debt write-offs, saying they want to close their businesses for good.
The Association of Inter-Korean Economic Cooperation Organizations demanded the government write off their debts and offer further compensation for investment assets frozen in the North.
The demand comes as they no longer see any chance of normalizing inter-Korean ties, let alone resuming economic projects, amid deteriorating ties between Seoul and Pyongyang.
"The scars from the shift in inter-Korean relations are still ongoing," Choi Yo-sik, head of the association, said at a meeting with reporters at the government complex in Seoul.
"Investment assets left behind in North Korea have sat untouched," he said, "with no access granted," since the government froze all inter-Korean exchanges on May 24, 2010, following the North's sinking of a South Korean warship.
Of roughly a thousand South Korean companies once involved in cross-border businesses, 385 remains in operation. Some 50-60 of them have joined the call for additional compensation and support in winding down their businesses, according to the association.
Jung Tae-won, president of clothing manufacturer GP, called the outstanding debt and interest "one of the biggest reasons" that many firms simply cannot close down.
"Once we close the business, the debt falls on us as a personal loan," he said.
In 2018, the government compensated companies involved in Mount Kumgang tourism and other inter-Korean projects at 45 percent of their investment assets, applying the same scheme used for firms operating in the Kaesong Industrial Complex that did not hold inter-Korean economic cooperation insurance.
Choi said companies accepted the offer because they believed operations could resume, given the government's pledge at that time to revive inter-Korean projects.
He claimed that the 45 percent compensation was in fact never fully realized, putting the actual figure at around 10 percent.
The hope for better relations, he also said, has since evaporated under North Korea's policy of branding inter-Korean ties as those between two hostile states.
The association estimated roughly 60 billion won ($44.2 million) would cover the compensation.
"What business would ever invest again if the current inter-Korean economic project is left in such a mess," Choi said.
Members of the association staged a protest by having their heads shaved in July in front of Cheong Wa Dae in protest against what they called the government's "torture of false hope" over the past decade.