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Gov't set to pay insurance claims to Kaesong firms

All Headlines 14:42 August 06, 2013

SEOUL, Aug. 6 (Yonhap) -- The government is ready to pay insurance claims to South Korean firms that have factories and other assets at a suspended inter-Korean industrial park in the North Korean border city of Kaesong, officials said Tuesday.

The Kaesong Industrial complex, which had been home to 123 South Korean companies, came to a screeching halt in early April amid a spike in tensions on the Korean Peninsula. The halt is estimated to have cost the firms a combined loss of 1.05 trillion won (US$943 million), with the government putting the figure at 706.7 billion won.

Officials at the Ministry of Unification said the 18-person South and North Exchange and Cooperation Promotion Council is in the final stages of reviewing all claims made by firms that have invested in the Kaesong factory zone.

Of the 140 companies that own productions facilities or provide support services and have paid the inter-Korean economic insurance premiums, 109 have asked to be compensated for incurred losses.

"Council members will submit their views by the end of the day with a comprehensive decision on payments to be made starting Wednesday," an official who declined to be identified said. "All deliberations will be completed soon since there is a legitimate reason for companies making the claims in the first place."

According to related rules, all payments must be made within three months of the claims being filed, with the maximum total that can be handed out by state-run Export-Import Bank of Korea hovering at little over 270 billion won.

A company can be reimbursed for up to 90 percent of losses incurred on investments, with a ceiling of 7 billion won per company.

Seoul's move comes as South and North Korea have failed to agree on preconditions to normalizing the factory zone, the last remaining symbol of inter-Korean rapprochement.

The two sides engaged in six rounds of talks to normalize Kaesong in July but made no headway on the crucial issue of safeguards to prevent another work stoppage at the industrial park in the border town.

South Korea has insisted that Pyongyang must give solid guarantees that it will not take steps to close the complex again, while the North has called for the park's immediate resumption. Pyongyang has also warned that its military may take control of the complex if no understanding is reached.

Related to the payment of insurance money that will allow Seoul to exercise subrogation rights of a creditor to the factories and other assets in the border town. Speculations have emerged that once ownership of assets goes to the government, it will start taking "grave" steps that can eventually lead to a more permanent closure of the complex.

Unification Minister Ryoo Kihl-jae had warned on July 28 that Seoul can take grave measures and called on the North to accept safeguards proposed by Seoul that will prevent another unilateral closure of Kaesong.

Government watchers said that despite a lack of confirmation and Seoul's outward stance that it is committed to the development of the growth of Kaesong, South Korea could move to first cut off all power and water to the complex, followed by other actions down the line.


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