The government on Tuesday approved a proposal for the revision of its inter-Korean exchange act that will allow cross-border projects to receive financial support in case of their suspension, the unification ministry said.

The revision to the South-North Exchange and Cooperation Act, passed in a Cabinet meeting on Tuesday, also requires Cabinet approval when an exchange project is at risk of being suspended.

The need for such support has been raised since Seoul decided in 2016 to abruptly halt the operation of a joint industrial complex in the North's border town of Kaesong amid chilled cross-border ties. The suspension caused losses to South Korean companies operating there.

The revision also requires the unification minister to specify the reasons for rejecting applications to visit North Korea, the ministry said.

Under the current law, a South Korean resident wishing to visit North Korea must get approval from the minister, but no specific reason is provided when their application is rejected.

The revision requires the specification of the legal grounds for rejecting submitted applications.

Earlier, the ministry had sought to allow South Korean citizens to have incidental contact or brief encounters with North Koreans without reporting such meetings to authorities. But it was not included in the revision.

Currently, all inter-Korean contact should be approved in advance or reported to the government afterward.

The revision to the act, first enacted in 1990, comes as South Korea is trying to expand cross-border exchanges amid little progress in denuclearization talks between Pyongyang and Washington and constraints by global sanctions on the communist state.

The revision bill will be sent to the National Assembly for approval. (Yonhap)