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NORTH KOREA NEWSLETTER NO. 238 (Nov. 29, 2012)

N. Korea to Seize Assets of Kaesong Firms for Failure to Pay Tax

SEOUL (Yonhap) -- North Korea recently created a rule to confiscate the assets of South Korean firms operating in the Kaesong Industrial Complex that fail to comply with controversial tax regulations unilaterally adopted in August, a Seoul official said on Nov. 27.

   "The North has newly added a clause ... allowing forcible confiscation from companies that do not pay their taxes within the deadlines," the official said on condition of anonymity.

   The rule also allows the North to claim collateral for unpaid taxes, with the country free to sell the collateral, according to the official.

   The South's government and South Korean firms in the Kaesong complex protested the moves, saying the tax rules were unilaterally drawn up by the North without consent from Seoul.

   Seoul is in talks with Pyongyang to persuade the country to withdraw the recent tax rules, the official said.

   South-North tensions have risen over the joint industrial zone in the North Korean border city of Kaesong since Pyongyang unilaterally adopted and implemented its revised tax rules last August.

   The revision allows the North to levy abnormally heavy taxes on accounting irregularities by South Korean firms and wield other punitive measures.

   Following the revisions, the North unilaterally levied a total of US$160,000 in taxes on nine of the 123 South Korean firms in the industrial zone designed to strengthen inter-Korean economic cooperation by allowing deep-pocketed South Korean companies to hire cheap North Korean labor.


Lee: Sea Border with N. Korea Should Be Defended like Land Border

SEOUL (Yonhap) -- President Lee Myung-bak said on Nov. 27 South Korea's western sea border with North Korea should be defended as unshakably as its land border with the communist nation, stressing the issue can never be a matter of political bickering.

   Lee made the remark during a lunch meeting with top military commanders amid allegations that his predecessor, late former President Roh Moo-hyun, made remarks undermining the legitimacy of the sea border during his 2007 summit with the North Korean leader Kim Jong-il.

   The allegations have been an issue ahead of next month's presidential election as they could work against the main opposition Democratic United Party's candidate, Moon Jae-in, a key Roh aide who served as his chief of staff at the time of the summit.

   Moon's party has strongly rejected the allegations that Roh told the North's leader that Seoul would not insist on the Yellow Sea border, called the Northern Limit Line or NLL, which Pyongyang refuses to recognize as a legitimate maritime border.

   "Though the political circles say this or that about the NLL, it should be defended the same way we defend the DMZ. There is no question about it," Lee told the commanders, referring to the Demilitarized Zone that separates the two Koreas, according to senior presidential press secretary Choe Geum-nak.

   "This is the way to defend the Republic of Korea (ROK/ South Korea) and inter-Korean peace. This cannot be subject to controversy," he said. "There is no ruling party, no opposition party on the issue of national security, though they may differ on social welfare, the economy and other issues."

   National security is also key to drawing foreign investment, he said.

   The winner of the Dec. 19 election should be firm on national security issues, he said.

   Lee also warned that North Korea could launch provocations at any time and the South should be ready for such possibilities, calling Pyongyang the "most belligerent" nation that can "break whatever promises it has made" depending on its strategies.

   "We cannot safeguard peace only by words alone. Having a firm mindset about what we would do in case of provocations is the way to deter provocations," he said. Like financial crises, national security issues should be handled in a "swift, accurate and sufficient" fashion, he said.

   North Korea has never recognized the NLL, which was drawn unilaterally by the U.S.-led United Nations Command when the 1950-53 Korean War ended, and demands that the line be drawn farther south.

   Areas near the border have been the scene of a number of bloody inter-Korean clashes. The two sides fought naval gun battles in the area in 1999, 2002 and 2009. In 2010, the North torpedoed a South Korean warship in the area and shelled a South Korean border island.