Kaesong industrial complex to reopen as tensions ease between North and South Korea

Closure of border unit was a major blow to heavily indebted economy of North

North and South Korea have agreed to reopen a jointly run industrial park the North shut down in April amid rising tensions, the latest sign of easing animosity between the rivals.

Seoul's unification ministry, which handles affairs between the two countries, said operations at the industrial park, located just a few miles inside North Korea, would resume some time after a trial run starting on Monday.

The Koreas also plan reunions this month of families divided by the Korean War, and last week restored a military communications channel at the border.

The agreement comes after a development last month when, after seven rounds of talks, one of which ended in a scuffle, the Koreas agreed they would work toward opening the factory park.

The complex in North Korea's third-largest city, Kaesong, was the last remaining symbol of inter-Korean co-operation until Pyongyang pulled its 53,000 workers.

The unification ministry said in a statement that South Korean companies operating at Kaesong would be exempt from paying taxes imposed for operations this year.

The two Koreas also plan to hold an international investors' information session at Kaesong in October in a bid to attract foreign companies to the park, the statement said. Chief SouthKorean delegate Kim Kiwoong said the two Koreas hope to begin providing internet and mobile phone connections to the park this year and would hold more talks on that.

North Korea's state media later confirmed work would restart at Kaesong.

While tensions are easing now, North Korea, citing a routine military drill between the US and South Korea, along with UN sanctions over its February nuclear test, unleashed an outburst of threatening rhetoric in March and April.

The industrial park combined South Korean initiative, capital and technology with cheap North Korean labour. It was also a rare source of hard currency for North Korea, though the impoverished country chafed at suggestions that it needed the money Kaesong generated.

North Korea is estimated to have received $80 million (£50 million) in workers' salaries last year, an average of $127 (£80) a month per person, paid in US currency, according to the unification ministry in Seoul.

The shutdown has also been hard on the South Korean entrepreneurs who invested up to 10 years and millions of pounds in Kaesong and were forced to wait, their assembly lines idle, while the governments negotiated. Many felt they had invested too much to abandon their factory investments or the cheap North Korean labour.

Kaesong hosted small and medium-sized, labour-intensive industries, often clothing and electronics companies. The number of South Korean companies swelled to more than 120. Last year, the factories produced goods worth $470 million (£300 million).

The decade-old industrial park had survived previous periods of tension, including attacks blamed on Pyongyang that killed 50 South Koreans in 2010, and the shutdown of other big co-operation projects. By the end of 2012, South Korean companies had produced $2 billion (£1.2 billion) of goods in the previous eight years.

AP

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Recruitment Genius: Medico-Legal Assistant

£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

Ashdown Group: (PHP / Python) - Global Media firm

£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

The Jenrick Group: Quality Inspector

£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas