Kaesŏng industrial region

Kaesŏng industrial region
Chosŏn'gŭl :	개성 공업 지구
Hancha :	開城工業地區
McCune-Reischauer :	Kaesŏng Kongŏp Chigu
Revised Romanization :	Gaeseong Gongeop Jigu
Basic data
Surface:	66 km²

The Kaesŏng Industrial Region is a special economic zone in North Korea near the city of Kaesŏng . It has been part of the Hwanghae-pukto Province since 2003 and borders on the Gyeonggi-do Province in South Korea in the south . Operations ceased in February 2016.

history

The establishment of the joint industrial zone between North and South Korea was decided at the first inter-Korean summit, which took place in Pyongyang from 13 to 15 June 2000 under the South Korean Prime Minister Kim Dae-jung and the North Korean ruler Kim Jong-il .

The region was created on November 13, 2002 by splitting off the district of P'anmun ( P'anmun-gun ; 판문군 ; 板門郡 ) and part of the city of Kaesŏng ( Kaesŏng-si ; 개성시 ; 開城市 ) from the special administrative region Kaesŏng, a city centrally administered by the government in Pyongyang from 1955 to 2003 .

At the beginning of April 2013, following international tensions , the special economic zone was closed. The employees from South Korea were initially banned from entering the country, and shortly afterwards the entire complex with its approximately 53,000 North Korean workers was closed. In mid-August of the same year, after several rounds of negotiations, the two states agreed to reopen the industrial area. According to the South Korean Ministry of Unification, a five-point agreement on the special economic zone was concluded.

In February 2016, the industrial region was closed again, this time by the South Korean side, after North Korea had recently tested a nuclear weapon in Punggye-ri ( Hamgyŏng-pukto Province ) and launched a long-range missile in Sohae ( P'yŏngan-pukto Province ) . Affected South Korean companies protested against this move. North Korea confiscated the means of production remaining in the industrial park. South Korea then cut off the electricity and water supply to the zone on the evening of February 11, 2016.

In the course of the détente between the two Korean states that began in 2018, Kim Jong-un declared in his New Year's address in 2019 that North Korea was ready to resume operation of the industrial complex without any preconditions or consideration.

Economy and Infrastructure

The center of activities in the 66 square kilometer industrial region is the Kaesŏng Industrial Park. After the 5th inter-Korean talks on May 23, 2003, it was decided to create a duty-free zone with free trade in the area. As in the Kŭmgang-san tourist region , the Hyundai Motor Company was won as an investor .

The Kaesŏng industrial region, located on the rebuilt road and rail link between Pyongyang and Seoul , is divided into residential and tourist areas and the actual industrial park, in which 54,000 North Koreans work for 123 South Korean companies. The South Korean side invested a total of 800 million dollars.

Above all, labor-intensive and energy-saving small to medium-sized companies have been settled in order to use the comparatively low labor costs in the region for competitive production for the markets in North and South Korea and the People's Republic of China .

In 2012, $ 470 million worth of goods were produced. Among other things, textiles, clothing, household appliances and auto parts were produced.

North Korean workers have an average wage bill of $ 130 a month. The North Korean state receives around $ 100 million in foreign currency annually through taxes and license income. The minimum wage for North Korean workers in this industrial complex has been raised annually in 5 percent increments since 2007 and has been $ 67.005 since August 2012. The negotiations are conducted by the South Korean Industrial Zone Management Committee and the North Korean Central Office for the Development of Special Zones.

criticism

Factory in the Kaesŏng industrial region

The project has been criticized by South Korean sources partly because the wages of 67.005 US dollars per month (as of 2012) are not paid directly to the workers, but to the North Korean government. This deducts $ 22.50 for social benefits, the rest is converted at the official, but in practice clearly overvalued rate of one dollar to 143 won and paid out to the workers. The conservative South Korean newspaper Chosun Ilbo calculated a monthly wage of less than two US dollars.

In addition, the crisis surrounding the North Korean nuclear weapons program had shown the uncertain basis for the investments made there. Conservative circles in particular are calling for an end to cooperation with North Korea on this point too.