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North and South Korea reopen Kaesong Industrial Complex

By K.J. Kwon, CNN
updated 6:45 AM EDT, Mon September 16, 2013
STORY HIGHLIGHTS
  • Kaesong Industrial Complex reopens Monday after five-month closure
  • All 123 companies operating in the zone experienced heavy losses
  • Two Koreas agreed to reopen with assurance it would no longer be "affected by political situation"

Seoul, South Korea (CNN) -- The joint industrial park, one of the key symbols of cooperation between North and South Korea, re-opened Monday after a five-month hiatus.

South Korean vehicles and freight trucks waited in traffic as they prepared to cross through customs and immigration into the North Korean city of Kaesong, where the industrial park sits.

Activity at the Kaesong Industrial Complex ground to a halt in April amid mounting tensions between the two neighbors. As tensions eased, intense negotiations to re-open the complex resumed after several false starts.

Choi Dong-jin, a South Korean who operates a jeans factory at Kaesong, expressed his relief as the shutters were finally lifted.

South Korean owners and workers wait in traffic to cross into Kaesong.
South Korean owners and workers wait in traffic to cross into Kaesong.
Is North Korea's economy working?
Will Kaesong return to normal?

"Words cannot describe how happy we were after we heard the news," Choi said.

All 123 companies operating in the zone experienced heavy losses after Kaesong's closure, and in Choi's case, the figure amounted to US$3 million.

"I've invested all of my capital in Kaesong. After the shutdown, we couldn't do any business," he told CNN from the small office in Seoul he'd been forced to operate from since April.

The Kaesong Industrial Complex, which is considered to be an important source of hard currency for North Korean leader Kim Jong Un's regime, sits just a few kilometers north of the DMZ, which divides the two Koreas.

Its closure followed a sustained escalation of tensions on the Korean peninsula, set off by North Korea's long-range rocket launch in December and an underground nuclear test in February. The subsequent tightening of sanctions announced by the U.N. Security Council resulted in increasingly menacing rhetoric from the North, who threatened to attack the South with a pre-emptive nuclear strike.

With South Korean workers and supplies barred from entering the region, the last remaining workers left Kaesong in May.

"The unexpected event happened and we couldn't keep our promises to our clients," Choi recalled. "We had our own losses, but the clients had their losses too. There was no contingency plan."

After several offers from Seoul to end the impasse, the two Koreas finally agreed to reopen Kaesong last week with an agreement that the industrial zone's operations would no longer be "affected by political situations under any circumstances."

But for some of the affected businesses, the damage may be difficult to reverse.

"Yes it is going to re-open, but the question is 'how long will it take to recover our company's credibility from the client?' Until we gain back their trust again, they won't request a large order," Choi said.

After it was opened in 2005, about US$2 billion worth of goods have been produced at Kaesong, according to the South Korean Unification Ministry, making it important to the North's ailing economy in particular. North Korean workers there earn an average of $134 per month, 45% of which are taken by North Korean authorities for various taxes.

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