Seoul moves to ease financial woes of Gaeseong companies

In the wake of a complete suspension of the Gaeseong industrial park, South Korea launched a pan-government task force on Monday to craft ways to alleviate companies’ financial woes and help them map out their futures.

Fifty remaining South Koreans planned to come home at around 5 p.m. but their schedules were delayed due to “operational” matters, Unification Ministry officials said.

They followed 125 who returned the day after the government’s decision Friday to withdraw all its citizens from the factory complex.

The last returnees are mainly officials at the Kaesong Industrial District Management Committee and telecom, electricity, housing and other infrastructure companies.

The pullout came after North Korea refused a proposal for talks to normalize the last symbol of cross-border cooperation.

Factories at Gaeseong have been reeling from order cancellations, a buyer exodus and liquidity crunch since Pyongyang barred the entry of South Korean employees and cargo starting April 4 and withdrew its 53,000 employees on April 9. The remaining people had subsisted on ramen, snacks and other instant food for night shifts.

The suspension followed a weeks-long torrent of North Korean military threats since Seoul and Washington kicked off military drills last month and the U.N. levied sanctions over its nuclear test.

“Now the government must make utmost efforts at practical support for relevant firms and workers not to lose their hope,” President Park Geun-hye said at a meeting with senior presidential secretaries.

“People all around the world watched on TV our workers trying to load as many goods as possible on the roof of their cars. Now who on the planet wants to invest in North Korea in a situation where each other’s agreement comes to nothing in an instant.”

Prime Minister’s Office Minister Kim Dong-yeon convened a meeting early in the day with officials from nine state agencies to look into the extent of damage incurred at the 123 firms and discuss measures to support them.

During the meeting, they set three priorities of minimizing the corporate damage, providing the most possible support, and swiftly implementing the established plans.

Other issues on the agenda included offering loans and insurance from the inter-Korean cooperation fund.

The participating agencies are the ministries of finance, unification, industry, justice and public administration, the Financial Services Commission and the Small and Medium Business Administration.

“Most firms operating in Gaeseong are petty small and midsize businesses and due to this crisis they face a situation where normal business activity is impossible,” Kim told the meeting.

“The government needs to mobilize all available means and come up with practical support measures so that the companies will get back to normal as soon as possible.”

The government last week unveiled a comprehensive package including new loans, grace periods, early tax refunds, and delays of tax audits and due dates for tax and utility bill payment.

Prime Minister Chung Hong-won said their collective losses could reach 1 trillion won ($900 million) during a parliamentary session Friday. Some estimates from the businesses put it at up to 2.8 trillion won and projected the figure to more than double in case of an entire shutdown.

North Korea’s Rodong Sinmun, a mouthpiece of the ruling Workers’ Party, warned Monday of “final and conclusive” action if Seoul continues to deteriorate the situation, blasting its Friday decision.

“(South Korea) must know clearly that it cannot avoid its criminal responsibility for such a rash, despicable act,” it said.

By Shin Hyon-hee (heeshin@heraldcorp.com)