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Gov't plans additional compensation for Kaesong firms

All Headlines 13:46 May 28, 2017

SEOUL, May 28 (Yonhap) -- South Korea seeks to make additional compensation to companies that operated in the now shuttered industrial complex in North Korea's border town of Kaesong, an official said Sunday.

The unification ministry official, who asked not to be named, said the ministry reported the plan during its briefing to the presidential State Affairs Planning Advisory Committee, President Moon Jae-in's de facto power transition team, on Friday.

Moon's government was launched earlier this month without a preparatory period as he became president in a by-election triggered by the March 10 ouster of his scandal-hit predecessor, Park Geun-hye.

In February 2016, South Korea closed down the Kaesong Industrial Complex in the North Korean border city of the same name in response to Pyongyang's nuclear and missile test early last year. Since then, the Seoul government has provided 507.9 billion won (US$453.8 million) to the South Korean firms at the complex, which is equivalent to 72.5 percent of their estimated damage of 700.5 billion won, although actual support differs by businesses depending on their insurance programs.

The firms, however, have been insisting that the compensation they have received is not enough and have been asking for additional support.

The unification ministry is reportedly planning to cover the companies' liquid asset losses, such as their manufactured products, according to the official. So far, 121.4 billion won, or 63 percent of liquid asset losses, were reimbursed.

"Liquid asset damage impacts subcontractors and cooperative firms of the South Korean businesses at the complex," the official said. "The measure can also help small businesses."

For losses to investment assets, such as land and factories, the government has so far repaid the firms 386.5 billion won, but the unification ministry also plans to give additional support in this area.

The ministry estimates that more than 190 billion won is needed to fully cover all the South Korean companies' losses.

"We are reviewing the situation to cover all the damage that has been confirmed," the official said. "However, we have yet to finalize the details and the scale of the compensation."

This photo taken on May 26, 2017, in Paju, Gyeonggi Province, shows the Kaesong Industrial Complex in North Korea. (Yonhap)

The official also said the unification ministry is pushing to help businesses that were damaged by the Mount Kumgang tour program suspension and the May 24 Measure. On May 24, 2010, Seoul imposed sanctions banning inter-Korean exchanges to punish North Korea for the torpedoing of a South Korean warship.

For these firms, the government helped them get special loans three times, but has yet to give direct support.

Under the Park Geun-hye administration, the ministry also planned to give support to these firms but failed to get the green light from financial authorities. Industry insiders said the atmosphere is changing with President Moon taking office.

The ministry said once it finalizes the compensation plan, it will try to use the money from the inter-Korean cooperation fund to help the businesses.


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