[Lee Kyong-hee] Restarting the Kaesong industrial park

On Feb. 10, 2016 — the last day of the Lunar New Year holidays — owners of South Korean companies operating at the Kaesong industrial park received an unexpected phone call from the Ministry of Unification. They were instructed to gather at 2 p.m. for an emergency briefing. At 5 p.m. the same day, then-Unification Minister Hong Yong-pyo announced that the complex would be shut down the following day.

The decision was abrupt and unilateral, underscoring the vulnerability of the first joint inter-Korean economic venture. President Park Geun-hye reportedly ordered the immediate suspension to “prevent Pyongyang from diverting its revenue from the venture to nuclear and missile development.” The previous month, North Korea had conducted its fourth nuclear test and soon afterward launched a rocket to place a satellite into orbit — actions widely suspected of being disguised ballistic missile technology tests.

Despite the arguably justifiable rationale, the announcement struck many like a thunderbolt. Once a symbol of cross-border hopes for peace and shared prosperity — and a window into a future of unification — the Kaesong industrial park came to a sudden halt after 12 years of operation. For those directly involved, particularly the 124 South Korean manufacturers running factories there, what followed was nothing short of a nightmare.

Tenant firms were permitted to send only one employee each to the complex the following day, with a single vehicle, to retrieve whatever belongings they could within a few hours. Their pleas for a week to salvage equipment and accounting records were rejected. Requests for just three days were also denied. They evacuated hastily, like war refugees, uncertain whether they would ever be allowed to return.

South Korean businesses were forced to abandon production and management facilities, machinery and finished goods, incurring combined losses estimated at around $200 million. For those leaving, the separation from their North Korean coworkers was equally heartrending. At the time of closure, approximately 55,000 North Koreans from Kaesong and nearby areas worked at the complex, alongside about 300 South Korean managers and staff.

Over the years, they had built camaraderie that transcended deep-rooted ideological and systemic divides. As Kim Jin-hyang, former president of the now-defunct Kaesong Industrial District Foundation, has observed in numerous media interviews, workers and managers there “experienced virtual unification within their workplace” each day.

Given the seven decades of hostility between the two Koreas, such interpersonal understanding and empathy among ordinary civilians was a remarkable achievement — one that cannot be fully measured in monetary terms alone. At the same time, contrary to widespread criticism among some South Koreans that the project amounted to “ladling out” benefits to the North, the economic engagement brought tangible gains to both sides.

A 2019 report by the International Crisis Group, titled “The Case for Kaesong: Fostering Korean Peace through Economic Ties,” concluded that the complex was a win-win proposition. According to the analysis, South Korean firms operating there between 2007 and 2014 outperformed comparable companies in terms of revenue, capital and profits, many of which had chosen to manufacture there instead of in China or Vietnam.

“The Kaesong industrial park was the most successful joint economic venture undertaken by North and South Korea,” the report states. “Reopening the manufacturing zone, with improvements to efficiency and worker protections, could help broker wider cooperation and sustain peace talks on the peninsula.”

This assessment is echoed by a recent survey of South Korean small and medium-sized enterprises, in which 87 percent of former Kaesong tenant firms gave positive evaluations of the complex’s economic performance and said they would consider returning if it were reopened.

Cautious hope for resumption has begun to surface as the Lee Jae Myung administration makes conciliatory gestures aimed at breaking the deadlock in inter-Korean relations. Yet the circumstances surrounding the peninsula leave little room for easy optimism.

UN Security Council sanctions imposed since 2016 in response to North Korea’s nuclear and missile programs clearly prohibit the revival of the complex. Kim Jong-un, emboldened by strengthened ties with Russia and China, has redefined South Korea as a “hostile enemy state,” rejecting both ethnic affinity and the prospect of reunification. North Korea has also been using the facilities in the Kaesong complex without the South’s authorization and has destroyed connecting infrastructure.

In the meantime, Washington would certainly be uneasy about any arrangement that generates hard-currency revenue for Pyongyang before it abandons its nuclear ambitions. Public indifference in South Korea presents another formidable obstacle.

Global political uncertainty — heightened by the unpredictable policy maneuvers of US President Donald Trump — is further destabilizing the peninsula’s security environment. Ironically, this volatility could also create an opening, given the seemingly undiminished personal interest of both Trump and Kim in reviving their summit diplomacy.

It may therefore be time for leaders on both sides of the border to reflect deeply on the nation’s future and to seek a path toward peaceful coexistence beyond war and division. Restarting the Kaesong industrial park could serve as a practical step toward easing tensions and restoring meaningful cooperation. With its many enduring advantages, Kaesong remains a singular — perhaps irreplaceable — venue for inter-Korean economic partnership.

Lee Kyong-hee

Lee Kyong-hee is a former editor-in-chief of The Korea Herald. The views expressed here are the writer's own. — Ed.