SMEs should lead growth on Korean Peninsula: think tank

Small and medium enterprises should take center stage in fueling future growth in the two Koreas once cross-border tensions recede, a local think tank said Sunday.

According to a report by the Korea Small Business Institute, the Moon Jae-in administration needs to give priority to SMEs in its new economic roadmap for the Korean Peninsula.

It added that Seoul should get ready to restart bilateral economic cooperation, which has been halted in the face of North Korea's nuclear ambitions.

"This includes the reopening of the shuttered Kaesong Industrial Complex in the North," the public institute said.

Pyongyang carried out a total of six nuclear tests with the last one being detonated in Sept. 2017. The isolationist country claimed it developed missiles capable of delivering a nuclear warhead to the mainland United States.

The report stressed that the role of SMEs cannot be underestimated in promoting growth in both South and North Korea.

"Once economic exchange resumes, having SMEs at the forefront can reduce risks associated with making investments, while for the mid-to-long term such smaller companies can create a production infrastructure that can fuel more consumption going forward," the KOSBI report claimed.

It then said that policymakers must move swiftly to revise laws and regulations related to inter-Korean economic exchange.

On the issue of the Kaesong complex that was closed due to the North's escalating nuclear provocation in early 2016, the think tank said there is a pressing need to resolve matters, such as restrictions on wage hikes, how salaries are paid to workers and country of origin issue for product made at the special industrial park. South Korean companies invested in the complex located some 60 kilometers northwest of Seoul that was staffed by North Korean workers.

KOSBI then said it might be advisable to set up a joint development corporation that can determine the creation of new special economic zones in the North and establish a blueprint for sustainable growth that can benefit all sides.(Yonhap)