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Inter-Korean industrial clusters promise maximum economic benefits: think tank
By Lee Joon-seung
SEOUL, Nov. 22 (Yonhap) -- Creating industrial clusters linking South and North Korea can maximize benefits and bolster economic cooperation, a state-run think tank said Thursday.
The Korea Institute for Industrial Economics and Trade (KIET) proposed two clusters running along the east and west coasts of the Korean Peninsula that can merge the technology and capital resources of South Korea with the competitive labor force in the North.
The proposal, made at a seminar to plot out future inter-Korea development agendas, calls for the creation of a so-called parts industry cluster on the west coast, and basic materials industrial belt on the east coast.
The parts industry cluster is expected to link Gyeonggi, Chungcheong and Jeolla provinces in the South with Kaesong, Haeju, Nampo, Pyongyang and Shinuiju in North Korea.
"North Korean cities can be developed to manufacture electronics, auto and general machinery parts that can be shipped south for assembly in South Korean plants," said Lee Seog-ki, a research fellow at KIET.
Gyeonggi and Chungcheong provinces churn out a high proportion of the country's electronics goods, like display panels. The two provinces along with Jeolla also have high demand for car parts and general machinery components, with major carmakers operating auto assembly lines in the areas.
Anju, Suncheon in North Korea already have some facilities to make car components, while Pyongyang and Nampo can make parts for general machinery and electronic goods. Pyongyang, North Korea's capital and Nampo are an ideal manufacturing base as 21 percent of North Korea's population live in the region, which also has relatively good roads and other social infrastructure.
For the east coast, Lee said cooperation can take place in steel, petrochemicals and basic materials.
"The industrial belt is to be made up of cities in Gyeongsang and Gangwon provinces joining hands with Wonsan, Kimchaek and Cheongjin in North Korea" Lee said.
The Gyeongsang Province is home to South Korea's largest steel mills, auto plants, ship yards and petrochemical factories.
Pohang, home to POSCO, can work with Cheongjin and Kimchaek to produce cheaper steel products, while petrochemical companies in Ulsan can set up plants in the port city of Wonsan.
Gangwon, province, meanwhile can engage in close cooperative ties with Rajin-Seonbong region for the development of coal and ceramic materials, the researcher said.
KIET claimed that with progress being made to resolve North Korea's nuclear ambitions, new opportunities can be created to benefit South Korean companies and enhance the country's overall competitiveness, particularly in labor intensive industries.
It said North Korean workers at the Kaesong Industrial Complex were paid 60 dollars a month, with wage gains limited to 5 percent per year. These are favorable conditions the research institute said, with annual average wage gains exceeding 10 percent for China. Kaesong is considered the crowning achievement of the June 2000 summit meeting between leaders of the two Koreas. There are currently 50 South Korean companies operating in the industrial part just north of the demilitarized zone.
KIET, in addition, outlined a at the Seoul seminar a step-by-step three stage development plan to develop North Korea.
In the first stage that runs through 2010, small-scale investment in light industries, like clothing, is recommended, followed a second phase running from 2010-2015 when North Korea can be built up as a manufacturing base for parts. In the final stage, the think tank said large scale investment can be made so production of finished goods can be made. In this phase that runs from 2016 to 2020, North Korea can become a consumer market for goods made within its borders, KIET said.
yonngong@yna.co.kr
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