Kaesong Industrial Region
| Kaesong Industrial Region | |
|---|---|
 |
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 Map of North Korea highlighting the region. |
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| Korean name | |
| Chosŏn'gŭl | 개성 공업 지구 |
| Hancha | 開城工業地區 |
| McCune–Reischauer | Kaesŏng Kongŏp Chigu |
| Revised Romanization | Gaeseong Gongeop Jigu |
| Short name | |
| Chosŏn'gŭl | 개성 |
| Hancha | 開城 |
| McCune–Reischauer | Kaesŏng |
| Revised Romanization | Gaeseong |
| Statistics | |
| Area | 66 km2 (25.5 sq mi) |
| Government | Industrial Region |
| Dialect | Seoul |
| Notes | |
| Split from Kaesŏng Directly Governed City in 2002. |
Kaesŏng Industrial Region is a special administrative industrial region of North Korea. It was formed in 2002 from part of Kaesŏng Directly Governed City.
Kaesŏng Industrial Park is being operated in the region, as a collaborative economic development with South Korea. It is located ten kilometres (six miles) north of the Korean Demilitarized Zone with direct road and rail access to South Korea and an hour's drive from Seoul. Construction started in June 2003, and in August 2003 North and South Korea ratified four tax and accountancy agreements to support investment. Pilot phase construction was completed in June 2004, and the industrial park opened in December 2004. [1]
In the park’s initial phase, 15 South Korean companies constructed manufacturing facilities. Three of the companies had started operations by March 2005. First phase plans envisaged participation by 250 South Korean companies from 2006, employing 100,000 people by 2007. The park was expected to be complete in 2012, covering 25 square miles (65 km2) employing 700,000 people. As of June 2010, 110 factories were employing approximately 42,000 DPRK workers and 800 ROK staff.[2] Companies operating or under construction in the complex are seeking to hire an additional 26,000 North Korean workers. Construction of dormitories and other infrastructure for the additional workers is on hold as the Lee Myung-bak administration has prioritized movement on North Korean nuclear issues. Electrical power and telephone service is supplied from South Korea; 15MW of power is being supplied in 2005, with plans for a 100MW supply by 2007.
The Kaesŏng industrial park is run by a South Korean committee that has a fifty-year lease which began in 2004. Hyundai Asan, a division of South Korean conglomerate Hyundai has been hired by Pyongyang to develop the land.[3] The firms are taking advantage of cheap labour available in the North to compete with China to create low-end goods such as shoes, clothes, and watches. Workers earn an average of $57 per month—half of Chinese labour costs and less than 5 percent the salaries of their South Korean counterparts.[3]
Park Suhk Sam, senior economist at the Bank of Korea, figures the industrial zone could create 725,000 jobs and generate $500 million in annual wage income for the North Korean economy by 2012. Five years later, another $1.78 billion would tumble in from annual corporate taxes levied on South Korean companies participating in the industrial project.[4]
The industrial park is seen as a way for South Korean companies to employ cheap labour that is educated, skilled and speaks Korean which would make communication considerably easier. However the zone still faces a number of obstacles. Among the most pressing are U.S. economic sanctions against the North, prohibiting imports of key technologies and goods, such as computers.[3] More than 1000 South Korean firms are rethinking planned shifts of production from China and Southeast Asia to Kaesong.
In May 2009 Pyongyang announced it had unilaterally scrapped wage and rent agreements at the estate. In June they also demanded new salaries of $300 a month for its 40000 workers, compared with around $75 currently. [5] Several months later, a visit to North Korea by the Hyundai Group chairwoman led to a resolution to the North's demands, with mild wage increases and no change in land rents. As North Korea seeks additional foreign investment, however, this episode has severely weakened trust and heightened concerns of possible investors.
In May 2010, due to the ROKS Cheonan sinking incident and South Korea's response, North Korea severed ties with South Korea and shutdown the Consultative Office in the zone,[6] however existing activities in the zone maintained production activities,[7] and transport and telephones to South Korea are operating normally.[8]
[edit] See also
[edit] References
- ^ N Korean Industrial Complex Made Ready For Seoul's Investment, Northeast Asia Peace and Security Network, 2004-06-30. Retrieved 2008-01-18.
- ^ S. Korean firms in Kaesong to ask for emergency funds, Yonhap, 2010-06-17. Retrieved 2010-06-19
- ^ a b c An Oasis of Capitalism, Newsweek, 2005-09-19. Retrieved at the Internet Archive on 2008-01-19
- ^ Bridging the Korean Economic Divide, Business Week, March 8, 2006. Retrieved 2008-01-19
- ^ N Korea demands millions News24
- ^ Thatcher, Jonathan (May 25, 2010). "Text from North Korea statement". Reuters. http://www.reuters.com/article/idUSTRE64O3YU20100525.
- ^ "Seoul Decides to Continue Kaesong Project, Humanitarian Aid". The Chosun Ilbo. 25 May 2010. http://english.chosun.com/site/data/html_dir/2010/05/25/2010052501206.html. Retrieved 2010-05-25.
- ^ Kim So Yeol (26 May 2010). "North Korea Responds to Firm South Korean Stance". The Daily NK. http://www.dailynk.com/english/read.php?cataId=nk00100&num=6417. Retrieved 2010-05-26.
[edit] External links
- Official Website: Hyundai Asan, the South Korean firm responsible for creating the Zone
- (North Korea Google Earth) See the Kaesong Industrial Zone and other DPRK infrastructure on Google Earth.
- Official website: Kaesong Industrial District Management Committee(KIDMC) of South Korea (Korean)
- Work to Start on Kaesong Industrial Park, People's Daily, November 4, 2002
- South Korea Begins Supplying Electricity to N.K. Industrial Park, Yonhap News, March 17, 2005
- Despite U.S. Attempts, N. Korea Anything but Isolated, Washington Post, May 12, 2005
- Kaesong, model for Korean cooperation, United Press International, May 30, 2005
- North-South Korea Trade Increased to Record $1.1 Bln in 2005, Bloomberg, January 23, 2006
- U.S. rejects free trade in Kaesong products, JoongAng Daily, February 9, 2006
- A One-Hour Commute to Another World, Los Angeles Times, February 28, 2006
- "Kaesong zone a troubled Korean jewel" Asia Times Online, April 6, 2006
- "Companies in Kaesung Delegate Management over to North Korea" Daily NK, May 17, 2007
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