Business

North Korea workers fail to turn up at Kaesong

  • 9 April 2013
  • From the section Business
South Korean workers arrive with products from the Kaesong joint industrial complex in North Korea at the inter-Korean transit office in Paju, South Korea
More than 120 South Korean firms operate at Kaesong Industrial Complex

North Koreans have failed to report for work at Kaesong Industrial Complex, suspending one of the few points of co-operation between the Koreas.

The complex is a joint industrial park and there are more than 120 South Korean companies that operate there, employing 53,000 North Korean workers.

It is seen as a crucial source of hard currency for North Korea.

The move is the latest in a series of provocations that have raised tensions in the Korean peninsula and the region.

"As of now, no North Korean workers have reported to work this morning," a spokesperson for the South Korean Unification Ministry said.

The ministry added that 77 South Korean workers would leave the zone on Tuesday, but 479 were still inside Kaesong.

Investment risk

The complex was launched in 2003 and was largely funded by South Korea.

Seoul has said the purpose of the complex was to develop a joint industrial park where South Korean companies could manufacture their products using North Korean labour.

It said that would help North Korea start to reform its economy, which is in a dire state, and ease tensions between the two Koreas.

South Korea has given incentives to companies to try and encourage them to set up operations there. These include political risk insurance to cover losses in their investment.

As a result, if the project is threatened, South Korea also tends to lose.

South Korean President Park Geun-hye said the boycott by North Korea would harm the country's credibility.

"Investment is all about being able to anticipate results and trust and when you have the North breaking international regulations and promises like this and suspending Kaesong while the world is watching, no country in the world will invest in the North," she told a cabinet meeting in Seoul.

Last symbol

"I don't know what to do, honestly. I can't simply tell my workers to leave or stay," an executive from a South Korean clothing firm told the Reuters news agency.

"North Korean workers didn't talk a lot, but they appeared to have complaints about Kaesong being closed," the agency also quoted South Korean worker Sing Dong-chul as saying.

"They worried whether they would be working or not."

Seen as a litmus test of relations on the Korean peninsula, Kaesong also provides hard currency for the North through taxes and workers' wages.

South Korean companies pay more than $80m (£52m) a year in salaries. As a whole, the Kaesong complex produced $470m worth of goods last year.

It accounts for nearly all inter-Korean trade.

The BBC's Lucy Williamson, reporting from Seoul, said that for almost a decade the joint industrial zone has chugged on, through North Korean nuclear tests, rhetoric, and even military clashes with the South.

But now the last symbol of joint inter-Korean co-operation is effectively suspended, she says.

North Korea has blocked access to South Koreans working there since Wednesday.

Tough sanctions

On Monday it said it would withdraw all its own employees and suspend operations in the zone. A decision would come later on whether it would shut it down for good.

North Korea has expressed anger at South Korean media reports that the North would not shut down Kaesong because its struggling economy is heavily dependent on the complex.

The United Nations imposed tough sanctions on North Korea last month following its third nuclear test.

Pyongyang has responded to this and to joint military exercises between South Korea and the US with escalating rhetoric. It has threatened to use nuclear weapons and said it would restart a nuclear reactor.

The North has also shut down an emergency military hotline between Seoul and Pyongyang.

Last week, it warned it would not be able to guarantee the safety of foreign embassy staff after 10 April, and that countries should begin evacuating their diplomatic staff.

Over the weekend, the US cancelled a scheduled test of its Minuteman 3 ballistic missile, citing concerns that it could be misinterpreted by Pyongyang.

Meanwhile, Japan said it has deployed US-made Patriot anti-missile batteries in Tokyo and other parts of the country to guard against North Korea launching ballistic missiles.

Prime Minister Shinzo Abe said that the government was "fully prepared to protect the lives and safety of the Japanese people".

"North Korea is still continuing its provocative actions towards the international community, but we must take measures in a calm manner by cooperating with other nations," Mr Abe said.

"In particular, we believe it is necessary to implement the latest sanctions resolution by the UN."

No one here in Japan thinks Pyongyang is really preparing to attack Japan, says the BBC's Rupert Wingfield-Hayes in Tokyo.

But it may try to fire a missile over the top of Japan in to the Pacific Ocean, and if it does, Tokyo has made it clear it will shoot the missile down, our correspondent adds.