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Foreign firms show interest in Kaesong complex: official

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(Globalpost/GlobalPost)

SEOUL, Oct. 25 (Yonhap) -- Foreign companies have shown steady interest in investing in an inter-Korean factory park in North Korea, which may contribute to the internationalization of the business zone, a government official said Friday.

Transforming the Kaesong Industrial Complex into a globally competitive one is part of the agreement reached between Seoul and Pyongyang to resume its operations on Sept. 16. All work was halted in early April amid heightened tensions on the Korean Peninsula.

"Companies from such countries as China, Russia, Australia and Germany have made inquiries about possible investments," said the unification ministry source, who wanted to remain anonymous. "While companies did not want their interests to be made public at present, executives were making detailed inquiries."

"The interest shown does not mean an investment is imminent, but it does mean foreign companies are viewing Kaesong as an option," he said.

The two sides had agreed to hold an investors relation (IR) event for foreign companies late this month, but this was called off after no headway was made on such issues as easing movement to and from Kaesong to South Korea, setting up Internet connectivity and other safeguard issues that foreign companies are keen to check before making investments.

He said that in order for foreign companies to make investments down the line, it is critical to make headway in creating the right business conditions.

"Despite a lack of headway made so far at the various rules-setting sub-committees, we expect the North to engage in talks soon," the insider said.

The source said that Seoul is open to a new date being fixed for the IR event if overall conditions conducive to foreign investments improve.

The official added that while negotiations may take time, Seoul plans to hold talks to get products made in Kaesong to receive tariff benefits if they are shipped to the United States and the European Union. South Korea has free trade agreements with both trading partners.

A South Korea-U.S. committee on outward processing zones is set to take place next month where the Kaesong issue will be touched upon. Two similar talks with the EU made no headway, mainly because of the North's nuclear program.

The official, meanwhile, said that despite the full reopening of the complex, Kaesong is currently operating at roughly 80 percent of capacity.

"Of the 123 companies with factories, 119 have started production with 44,000 North Koreans being employed. The number of workers used falls short of the 53,000 used before operations were disrupted," he said.

He said reflecting the slowdown, Kaesong companies asked 15,360 workers to report for overtime duty earlier this week, compared to the 25,000 daily average in March.

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