South Korea's government on Tuesday said it remains cautious about lawmakers' push to fully compensate local firms that operated factories at the now-shuttered joint industrial complex for their losses following Seoul's decision to close the factory park.
The government has provided 460.7 billion won ($405.7 million) out of about 500 billion won in state funds to 123 South Korean companies which ran factories at the Kaesong Industrial Complex, according to Seoul's unification ministry.
Despite the government's objection, a parliamentary committee decided last week to set aside an additional 70.3 billion won in next year's budget to help local firms cover losses over their liquid assets. A budgetary committee is reviewing the motion.
The Ministry of Unification called for prudence over lawmakers' move, saying that it could set a bad precedent for other inter-Korean economic projects by giving the impression that the government will cover all losses.
Investment in North Korea-related projects usually involves high risks as business is swayed by volatile inter-Korean relations.
"The government believes that it is better to tap existing insurance schemes and supportive measures rather than to provide full compensation to support Kaesong firms," a ministry official said.
In February, South Korea shut down the complex in the North's border city of Kaesong, once hailed as symbol of inter-Korean economic reconciliation, following Pyongyang's nuclear test and long-range rocket launch early this year.
The government said that the shutdown is estimated to have resulted in 780 billion won in loss for the companies, but a group of Kaesong firms claimed that their loss is more extensive. These companies claimed losses totaling some 940 billion won.
The complex, some 50 kilometers northwest of Seoul opened in 2004, and had served as a major revenue source for the cash-strapped North. The South Korean companies employed more than 54,000 North Korean workers to produce labor-intensive goods, such as clothes and utensils. (Yonhap)
