By Yoon Ja-young
The nuclear test by North Korea is expected to halt economic exchanges between South and North Koreas which have already remained sluggish during the past few years.
The Unification Ministry is considering partially limiting the entry to the Gaeseong Industrial Complex. "In that case, only those directly related with the businesses operating in the complex will be permitted entry," an official at the ministry said Thursday, citing the safety of the nationals.
Established in the North Korean border city of Gaeseong in 2004, the complex has been symbolizing the reconciliation of the two Koreas, supplying cash to North Korea while South Korean firms have been benefiting from cheap but skilled labor.
In 2013 April, however, North Korea unilaterally shut down the complex for several months with relations between South and North turning thorny following the third nuclear test by the North. The suspension incurred over a 1 trillion won loss for businesses operating in the complex. Currently, a total of 124 businesses are operating in the Gaeseong complex, hiring 54,702 North Koreans.
The businesses at the Gaeseong complex are operating as usual despite the nuclear test, according to the council of South Korean companies in the zone. The unification ministry has also been monitoring the complex but reported no irregularities.
As the Gaeseong complex usually operated normally despite rising tension except for the 2013 suspension, companies expect the same this time.
The economic exchanges between South and North Koreas, however, have been stalled following North Korea's deadly torpedoing of South Korea's Navy Corvette Cheonan in 2010 March. It led to the so-called May 24 sanction by the government, which halted trade and fresh investment to North Korea.
While maintaining the sanctions, the government has been drawing a blueprint for economic cooperation between the two Koreas on condition that North Korea gives up its development of nuclear weapons.
It includes President Park Geun-hye's proposal to set a Northeast Asia Development Bank, where countries will fund development of North Korea in case it gives up nuclear development. The government also has set a long-term strategy to introduce a market economy into the communist regime through economic cooperation programs.
Following the nuclear test, however, the government may change its plans. President Park Geun-hye said "North Korea must pay the price they deserve" for the fourth nuclear test. The government may consider decreasing cooperative measures or strengthening sanctions on the regime, in cooperation with other countries.
Hong Soon-jik, a senior researcher at Hyundai Research Institute, said it would take more time to see fruits in economic cooperation due to the nuclear test.
"In the first half of the year, there was not much to expect. With the Key Resolve joint exercise between South Korea and the United States scheduled for the end of February and political events such as election and party convention to follow in both the South and the North, it is hard to expect progress," he said.
Hong added that as the government joins international measures against North Korea, it wouldn't be expanding economic cooperation or promote Gaeseong complex.
The nuclear test by North Korea is expected to halt economic exchanges between South and North Koreas which have already remained sluggish during the past few years.
The Unification Ministry is considering partially limiting the entry to the Gaeseong Industrial Complex. "In that case, only those directly related with the businesses operating in the complex will be permitted entry," an official at the ministry said Thursday, citing the safety of the nationals.
Established in the North Korean border city of Gaeseong in 2004, the complex has been symbolizing the reconciliation of the two Koreas, supplying cash to North Korea while South Korean firms have been benefiting from cheap but skilled labor.
In 2013 April, however, North Korea unilaterally shut down the complex for several months with relations between South and North turning thorny following the third nuclear test by the North. The suspension incurred over a 1 trillion won loss for businesses operating in the complex. Currently, a total of 124 businesses are operating in the Gaeseong complex, hiring 54,702 North Koreans.
The businesses at the Gaeseong complex are operating as usual despite the nuclear test, according to the council of South Korean companies in the zone. The unification ministry has also been monitoring the complex but reported no irregularities.
As the Gaeseong complex usually operated normally despite rising tension except for the 2013 suspension, companies expect the same this time.
The economic exchanges between South and North Koreas, however, have been stalled following North Korea's deadly torpedoing of South Korea's Navy Corvette Cheonan in 2010 March. It led to the so-called May 24 sanction by the government, which halted trade and fresh investment to North Korea.
While maintaining the sanctions, the government has been drawing a blueprint for economic cooperation between the two Koreas on condition that North Korea gives up its development of nuclear weapons.
It includes President Park Geun-hye's proposal to set a Northeast Asia Development Bank, where countries will fund development of North Korea in case it gives up nuclear development. The government also has set a long-term strategy to introduce a market economy into the communist regime through economic cooperation programs.
Following the nuclear test, however, the government may change its plans. President Park Geun-hye said "North Korea must pay the price they deserve" for the fourth nuclear test. The government may consider decreasing cooperative measures or strengthening sanctions on the regime, in cooperation with other countries.
Hong Soon-jik, a senior researcher at Hyundai Research Institute, said it would take more time to see fruits in economic cooperation due to the nuclear test.
"In the first half of the year, there was not much to expect. With the Key Resolve joint exercise between South Korea and the United States scheduled for the end of February and political events such as election and party convention to follow in both the South and the North, it is hard to expect progress," he said.
Hong added that as the government joins international measures against North Korea, it wouldn't be expanding economic cooperation or promote Gaeseong complex.
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