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Companies increasing output at newly reopened inter-Korean factory park

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(Globalpost/GlobalPost)

SEOUL, Sept. 17 (Yonhap) -- S. Korean companies are gradually moving to increase output at the reopened inter-Korean factory park in North Korea that was closed down for over five months, sources said Tuesday.

The two Koreas agreed on Aug. 14 to reopen the Kaesong Industrial Complex that has been closed since early April amid heightened tensions on the Korean Peninsula. The complex, located some 60 kilometers northwest of Seoul and just north of the demilitarized zone that separates the two countries, remains the last remaining symbol of detente and economic cooperation between the two Koreas.

Hong Yang-ho, the head of the Kaesong Industrial District Management Committee (KIDMAC) told reporters that companies are operating at around 65 percent of full capacity, up from 53 percent when they began trial runs on Monday.

The South Korean representative of the committee that provides administrative support for the factory park said compared to the day before, when 33 companies out of 123 did not start work, the number of non-operational factories dipped to 26.

"Of those in operation, 28 reported they are at 100 percent production capacity vis-a-vis 24 on the first day," the chairman said.

The official also said 315 South Koreans entered the Kaesong Industrial Complex from the South, augmenting the 459 who stayed overnight, with about 150 expected to stay for the night, despite the start of the three-day-long Chuseok, or Korean Thanksgiving holiday.

Many companies have already said that with the exception of everyone taking the day off on Thursday to mark the traditional holiday, production and maintenance work will continue.

Hong then said that 35,027 North Korean workers reported for duty Tuesday, up from 31,474 the day before. It is equivalent to roughly 65 percent of the 53,000 North Koreans who worked at Kaesong before it was shut down, he added.

He said that as it was reported on Monday, South and North Korean officials will continue to hold meetings to set up a permanent secretariat to help run the factory park and arrange an investor relations event for foreign companies in late October.

"The key point (of the talks) is to prevent another shutdown of the complex and to strive for internationalization," he said. Seoul has maintained that internationalizing Kaesong can act as a safeguard against unilateral action by the North.

The official added that internationalization may not be an easy process because it is linked to improving access, communications and customs rules, adopting internationally acceptable labor standards and tax codes.

Related to the developments on the second day of operations, some company managers said they will probably not be able to increase output to any significant level at present because they have not secured new orders.

"At present we do not know when production will resume in earnest," said one executive of a textile company, who declined to be identified.

He added that the company had to spend a lot of money on making repairs to production facilities.

Another said the decision by the North not to levy taxes until the end of the year really did not mean anything because some companies probably won't be able to turn a profit before then. Reflecting this, Jaeyoung Solutec said it lost 20 billion won (US$18.4 million) because of the closure. The molding and optics company said it needed more time to fully get its operations up to full capacity.

Despite the problems at hand, Kim Yong-tae, the head of SK Apparel's Kaesong plant said he was glad that the complex has been reopened for business.

"The company suffered considerable losses, yet it started production because it possessed large quantities of production materials at hand in Kaesong," he said.

The executive said compared to the past, the North Korean workers seem to be more enthusiastic.

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