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(LEAD) S. Korean firms in Kaesong stay watchful after Kim's death

All Headlines 16:22 December 19, 2011

(ATTN: UPDATES with responses from Hyundai Asan, federation chair in para 5-7, 12-13)

SEOUL, Dec. 19 (Yonhap) -- South Korean companies in an inter-Korean industrial park in North Korea are operating normally but "keenly watching" government responses following the death of the North Korean leader, officials said Monday.

"We are waiting for directions from the government as there is not much that individual firms can do," said an official at a South Korean firm that has operated in the Kaesong Industrial Complex since 2004.

"We are operating as usual," said another businessman in Seoul who has a company in Kaesong, speaking after a phone call with employees in North Korea.

The South Korean business community in the North Korean border city learned of the death of Kim Jong-il, who died of a heart attack on Dec. 17, only after an urgent dispatch was released by North Korean state media at noon, one South Korean businessman added, speaking on condition of anonymity.

Hyundai Asan, a major player in the inter-Korean business and key investor in the Mount Kumgang resort, echoed views expressed by smaller companies.

"Since we do not know how events will unfold in the future, we will continue to monitor the situation," said a senior-ranking official at Hyundai Asan, an affiliate of conglomerate Hyundai Group.

"There will be a number of variables stemming from Kim's sudden death, but one thing is clear: We will follow the government's policy."

There are 123 South Korean firms that operate in the industrial complex, mostly small and medium-sized firms producing clothes, utensils and watches, as well as electronic and machinery parts.

Following the reported death of Kim Jong-il, South Korea's Unification Ministry said 902 South Koreans reside in North Korea, including 879 in the industrial complex.

The death of the 69-year-old leader who ruled the reclusive state with an iron fist since 1994 fueled concerns about the future of the South Korean companies operating in the North Korean border city.

"Political instability in North Korea does affect companies operating in Kaesong," said an official at a company that operated in the border city for five years. "In the short-term, there are worries about the negative impact."

Some played down the possibility of Kim's death causing an upheaval at the Kaesong complex.

"I don't expect to see major chaos at Kaesong," said Kim Ki-mun, chairman of the Korea Federation of Small and Medium Business, in a telephone interview. "Companies will continue normal operations for the immediate future."

Another South Korean industry official, who has done businesses in North Korea for 10 years, expressed cautious hope that the event may bring positive change to the tense inter-Korean ties.

The shared complex, which marries South Korean capital and technology with cheap labor from the North, is seen as a last symbol of inter-Korean rapprochement and a key legitimate cash cow for North Korea.

More than 47,000 North Korean workers are employed at the inter-Korean complex.

ylee@yna.co.kr
(END)

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