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Authorities to extend support for Kaesong-based firms

2016/02/11 10:16

SEOUL, Feb. 11 (Yonhap) -- South Korea's financial watchdog said Thursday it will present a set of measures for local companies operating in the inter-Korean industrial complex in a North Korean border city to help minimize the aftereffects of its shutdown.

The previous day Seoul announced a complete shutdown of the Kaesong Industrial Complex in response to Pyongyang's fourth nuclear test last month and long-range rocket launch earlier this week.

A total of 124 South Korean companies are operating in the jointly-run industrial complex in the North Korean border city of the same name, some 50 kilometers northwest of Seoul, employing more than 54,000 North Korean workers to produce labor-intensive goods.

Presiding over an emergency meeting to check the situation of the financial market, Financial Supervisory Service (FSS) chief Zhin Woong-seob asked financial institutions for cooperation "to refrain from retrieving loans or raising interest rates for the firms based in Kaesong and their subcontractors."

   A total of 1.11 trillion won (US$928.6 million) of loans were extended to the 124 companies based in Kaesong as of November last year, according to FSS data.

"We will set up a counseling center to minimize their possible financial damages, while monitoring the liquidity situations of each company on a daily bases," he said.

The complex, the last remaining symbol of inter-Korean reconciliation, has served as a major revenue source for the cash-strapped North since its opening in 2004, while South Korea has benefited from cheap but skilled North Korean labor. The South Korean firms annually provide about US$100 million in total to North Korean workers in wages.