Seoul to raise insurance payouts for losses at Kaesong

By Tony Chang
SEOUL May 22 (Yonhap) -- The South Korean government decided Friday to raise the
maximum insurance payout for companies operating in an inter-Korean industrial
complex to reassure businesses after Pyongyang annulled all contracts governing
the venture.
Pyongyang announced last week it was invalidating contracts with South Korea on
the operation of the Kaesong industrial park. Opened in 2004 as a symbol of
reconciliation and funded by Seoul, the complex located in a North Korean town
just north of the heavily fortified border faces its biggest crisis yet.
More than 40,000 North Koreans work at Kaesong for 106 South Korean firms,
producing items such as garments, kitchenware and watches at the complex that
combines the capitalist South's technology with the North's cheap land and labor.
The South Korean Unification Ministry said in a statement that the government has
decided to raise the maximum payment for "economic cooperation insurance" to 7
billion won (US$5.6 million), up from the current 5 billion won.
The insurance covers companies' facilities investments in case of an abrupt
shutdown of the complex. The date for the changes to go into effect will be
determined following coordination with related government agencies, the ministry
said.
The ministry also said it plans to revise the insurance regulation so companies
will be eligible for payment one month after closing. Currently, they become
eligible after three months.
The decision came amid increasing calls by conservatives in the South for the
government to prepare to pull out of the joint park if the North unilaterally
revises the contracts. In a parliament meeting, Unification Minister Hyun In-taek
reasserted that his government is not considering withdrawal, but will continue
to press for dialogue with Pyongyang to resolve the dispute.
"The South and the North should cooperate for the stable development of the
Kaesong industrial complex and resolve all issues through dialogue," Hyun told
lawmakers.
The government also decided to provide 2.36 billion won to build a new
inter-Korean logistics management system to efficiently manage the flow of goods
across the border.
The Kaesong complex, just an hour's drive from Seoul, is the last surviving
reconciliatory project between the two Koreas. All tourism programs to the
North's attractions were suspended last year due to unraveling political
relations.
odissy@yna.co.kr
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