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(News Focus) Kaesong reopening paves way for smooth long-haul run

2013/09/11 15:25

By Lee Joon-seung

SEOUL, Sept. 11 (Yonhap) -- The agreement reached by North and South Korea to reopen their shuttered factory park in the communist country next week paves the way for its sustainable development without disruptions and for improved bilateral relations, local observers said Wednesday.

The agreement to start Monday the test-run production at the Kaesong Industrial Complex, with the aim of fully normalizing operations thereafter, effectively ends the five-month standoff over the future of the inter-Korean industrial zone that remains an important symbol of reconciliation between the two Koreas.

Earlier in April, the North, citing heightened tensions on the Korean Peninsula, ordered all its 53,000 laborers to not report to work. Much to the chagrin of South Korean businessmen with factories at the complex, for several months, the two sides met for talks but failed to reach agreement to reopen the factory zone located just north of the demilitarized zone.

On Aug. 14, however, the sides finally agreed to resume operations at the factory park and to create a joint managing body to prevent the complex from being shuttered again. They agreed to strive for a "progressive development" of the complex, or a sustainable growth pursuant to international standards and without interruptions to its operations.

The monumental accord was followed by several working-level talks this month involving the newly establish management committee and its sub-committees, during which the sides agreed on an exact date for resuming production there -- Sept. 16.

North Koreans going to work at the Kaesong Industrial Complex. (Yonhap file photo)

North Korea watchers and government officials claimed that the reopening -- while not resolving all outstanding issues -- is a significant step toward adjusting inadequate rules and guidelines that have held back the growth, hindered competitiveness and prevented internationalization of the special economic region.

"The understanding reached can contribute to the building of trust and lead to sustainable growth in cross-border relations," the Ministry of Unification said in a press release. It added that with the headway made so far, measures to push for development of the factory park has reached levels that can promise more progress down the line.

The so-called Korean Peninsual trust-building has been the cornerstone of President Park Geun-hye's North Korea policy initiative.

During the marathon negotiations, Seoul and Pyongyang agreed to take measures to improve communication, travel and customs rules to better meet the needs of businesses. At the same time, they concurred on setting up a functioning dispute arbitration panel.

The two sides also concurred on the need to hold investor relations event in Kaesong next month to attract overseas investors.

On the easing of travel and communication restrictions, Kim Ki-woong, Seoul's chief negotiator to the talks, said setting up a system to use radio-frequency identification devices (RFIDs) can greatly ease movement to and from the complex for South Korean businessmen.

He said the North has also agreed to permit greater Internet access that has been a stumbling block for Kaesong's growth.

"Technicians said that Internet connectivity and RFIDs can be set up in a few months if the North agrees," the official said.

If such changes are made, people can go to the North anytime during a given date, with a preregistration process being greatly reduced from the current three days to one.

Echoing this view, Lim Eul-chul, a research professor at Kyungnam University, said RFID systems can make a huge difference in working conditions at Kaesong.

The understanding to allow Internet access and use mobile phones that will be broached during future talks can further increase business operations at the border park.

On the investor relations session, Seoul will invite foreign companies doing business in Seoul and move to hold such events abroad depending on their responses. At present, only companies that have a corporate body in South Korea can invest in the park.

The unification ministry said that while there are no plans to expand the Kaesong park for now, there is still quite a lot of room for foreign companies to build factories there.

"Internationalization is critical because the two sides can show they are serious about striving for peace and cooperation," said Yang Moo-jin, a political scientist at University of North Korean Studies.

Seoul and Pyongyang also concurred on the creation of a permanent secretariat to support the activities of the joint committee that will run the complex in the future.

Such developments have been warmly received by the business community.

Chung Yang-geun, chairman of the Committee to Promote Inter-Korean Economic Cooperation, said companies were elated that the factory park will finally open after five months of being closed. He expressed hope that Seoul will take steps to lift other investment restrictions.

Other businesses said that the North's decision to waive taxes is a step in the right direction to ease the burden on companies that are already hard-pressed to secure orders from wary buyers.

Regarding concerns that crucial issues regarding the protection of South Koreans in the North, the government said no agreement was yet reached.

It said that talks on this matter that outline rights of people detained for offenses should be resolved at sub-committee talks set for Friday.

South Korean vehicles form long lines as people get ready to go to the Kaesong Industrial Complex in North Korea. (Yonhap file photo)

Overall, policymakers said that the agreement on Kaesong should be viewed as an ongoing process and promises to ensure smooth operations at Kaesong, which remains the last large economic link between the two Koreas. In recent talks, the North has shown signs that it wants accommodate Seoul's demands, they said.

"Agreements should be viewed as tools to prevent another shutdown at Kaesong and reduce risks that have prevented its internationalization," a government insider said. Notwithstanding criticism, he said, the location of the factory park near the demilitarized zone and cheap labor costs can make it an attractive destination for foreign companies wanting to do business in the South.

He said more talks are planned to get the North to adhere to the agreements signed and make certain that Kaesong will not be closed for military or political reasons in the future.

yonngong@yna.co.kr

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