First pullout from inter-Korean industrial park raises concerns

First pullout from inter-Korean industrial park raises concerns
By Kim Hyun
SEOUL, June 9 (Yonhap) -- The withdrawal of a South Korean company from an
inter-Korean industrial park triggered concerns Tuesday that it may be only the
beginning of a greater exodus amid damaged cross-border relations coupled with
global economic gloom.

Sskin Net, a leather clothing company, notified the Kaesong Industrial Complex
Management Committee in Seoul on Monday that it will withdraw factory equipment
from the park in the North's border town of Kaesong, citing concerns about the
safety of its employees and a decrease in sales. The withdrawal was the first
since the joint venture opened in 2004.
The firm's owner, Kim Yong-gyu, said North Korea's detention of a South Korean
worker employed at the joint park was the biggest factor in his decision.
"We used to have five workers stay there to manage the factory, but now we manage
with only two," Kim Yong-gu, who opened his factory at Kaesong in 2007, said over
the telephone. "Even if the possibility (of such detention) is just 0.1 percent,
I feel it would be a crime to send my employees there."
Businesses operating at the joint park say their anxiety has considerably risen
since the detention of an engineer from Hyundai Asan Corp. on March 30. North
Korea has refused to allow access to the worker, identified only by his family
name Yu, saying an investigation was underway on charges of "maliciously
slandering" the North's political system.
In a separate case, the North on Monday sentenced two U.S. journalists, detained
for illegal entry in the border with China, to 12 years in a labor camp.
The Kaesong joint venture, just an hour's drive from Seoul, hosts 106 South
Korean firms producing clothes, kitchenware, electronic equipment and other
labor-intensive goods. More than 40,000 North Koreans are employed there.
Once hailed a win-win idea for the North's frail economy and the South's small
firms, the venture now faces an uncertain future. After a government-level
meeting ended without a breakthrough in April, North Korea issued a statement
declaring all contracts governing the joint park "null and void." It said the
North will unilaterally raise wages and set land fees and that South Korean firms
should leave if they can't accept the new terms.
Officials of the two Koreas are set to meet again at the joint park on Thursday,
but there are few signs for a breakthrough.
The Kaesong Industrial Council that represents the firms investing in the zone
dismissed the emerging concern that there may be more pullouts.
"It's true that there's anxiety, but I don't think all of the businesses need to
be disturbed by a single company's withdrawal," Yoo Chang-geun, vice chairman of
the council and owner of SJ Tech Co., an electronic equipment firm, said.
Government data suggests political tensions are already weighing heavy on
business performance. Combined overseas shipments out of Kaesong park were
US$7.15 million in the January-April period, down 56 percent from $16.27 million
during the same period a year ago, according to data from the Unification
Ministry.
The companies' output also slipped 6.6 percent from last year's $79.83 million to
$74.54 million, despite the increase in the number of firms at the joint park
from 72 to 106.
hkim@yna.co.kr
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