By Na Jeong-ju
The government announced a plan Wednesday to provide emergency loans to firms suffering from mounting losses due to the suspension of operations at the Gaeseong Industrial Complex, using a fund earmarked for inter-Korean cooperation programs.
It also decided to roll over their debts and offer tax incentives.
These plans were included in a package of measures to rescue the ailing companies.
“We will set up additional measures in the coming weeks, if necessary, to help these firms overcome a liquidity crunch, caused by North Korea’s abrupt suspension of the Gaeseong complex,” Ministry of Unification spokesman Kim Hyung-seok told reporters.
Kim said details of the financing plans will be unveiled soon, adding they are being drawn up jointly by the National Tax Service, the Ministry of Strategy and Finance and the Financial Services Commission.
The rescue package came after President Park Geun-hye called for “pan-governmental” efforts to support the firms with plants in the complex.
“Providing assistance to these firms is a matter of Korea’s international credibility. North Korea should be held responsible for their suffering, but we can’t sit idly by,” Park said during a meeting with her secretaries, Monday. “All government agencies need to work together to draw up comprehensive supportive measures, including providing emergency funds, tax incentives and payment guarantees.”
The firms have called on Park to designate the Gaeseong complex as a “special disaster zone” and cover losses from the stoppage. The Ministry of Security and Public Administration, however, rejected this demand, saying the suspension doesn’t constitute a disaster under the related laws.
Operation of the complex in the North Korean border town came to a halt on April 9 after Pyongyang withdrew its 53,000 laborers from the zone after claiming Seoul engaged in acts to damage its sovereign dignity. It has also banned South Korean workers from crossing the border.
The use of the Inter-Korean Cooperation Fund to save the firms means there will be less money for future cooperation projects with North Korea. South Korea has been running the fund worth about 1 trillion won ($865 million) since 1990.
Earlier in the day, the National Assembly adopted a resolution calling on North Korea to lift the entry ban on South Korean workers and normalize operations at the complex.
“The complex is a symbol of inter-Korean reconciliation and co-prosperity. It should get back on track immediately,” the resolution reads.
About 800 South Koreans worked in the Gaeseong zone before the entry ban. Now, only 176 remain, according to the ministry.