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(LEAD) S. Korea to help firms troubled by Kaesong zone woes

All News 12:56 February 12, 2016

(ATTN: ADDS more details in 8-12 paras)

SEOUL, Feb. 12 (Yonhap) -- South Korea said Friday it will provide emergency liquidity to smaller firms at the joint industrial complex in North Korea to help minimize their financial losses stemming from the closure of the factory zone.

On Friday, North Korea expelled all South Korean nationals from the Kaesong Industrial Complex in the North's border city and froze factory assets by South Korean firms in retaliation for Seoul's decision to shut down the complex.

Earlier this week, South Korea shut down the industrial park in response to the North's latest nuke test and long-range rocket launch, bringing an end to the last remaining symbol of inter-Korean reconciliation.

"We expressed very grave regret over the North's move. North Korea should take all responsibility for what will happen from now on," Unification Minister Hong Yong-pyo said at a press briefing.

The minister warned North Korea not to damage South Korean assets at the factory zone.

A total of 124 South Korean firms were operating factories at the complex, employing more than 54,000 North Korean workers to produce labor-intensive goods such as clothes and utensils.

The government said that it will provide emergency liquidity to ailing firms on the principle that its supportive measures will be provided "swiftly and sufficiently."

Officials said the government will extend the maturity of loans borrowed by firms suffering from a cash shortage.

Also, the government said it will defer the payment of national and local taxes and public utility bills, such as electricity.

The support measures come as the Kaesong-based firms are expected to see large damages.

When the industrial park was closed in 2013 for 160 days, South Korean firms reported a combined loss of 1.05 trillion won (US$873 million).

The companies, however, claim the actual damage will be greater considering the loss of business partners and credibility.

sooyeon@yna.co.kr
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