Kaesong Industrial Park in North Korea..this is how the game is played
Kaesong Industrial Park is being developed in the region, as a collaborative economic development with South Korea. It is located ten kilometres (six miles) north of the Korean Demilitarized Zone with direct road and rail access to South Korea and an hour’s drive from Seoul. Construction started in June 2003, and in August 2003 North and South Korea ratified four tax and accountancy agreements to support investment. Pilot phase construction was completed in June 2004, and the industrial park opened in December 2004.
In the park’s initial phase, 15 South Korean companies are constructing manufacturing facilities. Three of the companies had started operations by March 2005. First phase plans envisage participation by 250 South Korean companies from 2006, employing 100,000 people by 2007. The park is expected to be complete in 2012, covering 25 square miles (65 km2) and employing 700,000 people. As of July 4th 2008, Seventy-two South Korean firms were operating in Kaesong, and employing 30,084 North Korean workers.
Electrical power and telephone service is supplied from South Korea; 15MW of power is being supplied in 2005, with plans for a 100MW supply by 2007.
The Kaesŏng industrial park is run by a South Korean committee that has a fifty-year lease which began in 2004. Hyundai Asan, a division of South Korean conglomerate Hyundai has been hired by Pyongyang to develop the land. Thus far a dozen South Korean companies are participating in the project that employs six thousand Workers’ Party of Korea workers in eleven factories. Another twenty-eight South Korean firms have signed up to begin building factories as well. The firms are taking advantage of cheap labour available in the North to compete with China to create low-end goods such as shoes, clothes, and watches. Workers earn an average of $57 per month—half of Chinese labour costs and less than 5 percent the salaries of their South Korean counterparts.
Park Suhk Sam, senior economist at the Bank of Korea, figures the industrial zone could create 725,000 jobs and generate $500 million in annual wage income for the North Korean economy by 2012. Five years later, another $1.78 billion would tumble in from annual corporate taxes levied on South Korean companies participating in the industrial project.
The industrial park is seen as a way for South Korean companies to employ cheap labour that is educated, skilled and speaks Korean which would make communication considerably easier. However the zone still faces a number of obstacles. Among the most pressing are U.S. economic sanctions against the North, prohibiting imports of key technologies and goods —such as computers. More than 1000 South Korean firms are rethinking planned shifts of production from China and Southeast Asia to Kaesong.
In May 2009 Pyongyang announced it had unilaterally scrapped wage and rent agreements at the estate. In June they also demanded new salaries of $300 a month for its 40000 workers, compared with around $75 currently.
North and South Korean officials held talks on Thursday to salvage a joint factory park in the communist state that has become a key source of foreign cash for Pyongyang, hit by U.N. sanctions for its nuclear test.
The talks come as North Korea looks ready to launch medium or short range missiles from its east coast within days, a South Korean newspaper reported, which could further stoke tensions already high due to the North’s May 25 nuclear test.
Washington said this week it has tightened its crackdown on firms linked to the North’s lucrative proliferation of missiles, a major source of cash for the destitute state, and has sent the U.S. point man for sanctions to Asia for discussions.
The talks over the Kaesong industrial park, where about 100 South Korean companies pay $70 a month per person to employ about 40,000 North Koreans, have hit snags in previous rounds over the North’s demands for sharp raises in wages and land lease fees.
Analysts said North Korea was trying to squeeze more money out of the South Korean companies in Kaesong as U.N. sanctions imposed for its missile and nuclear tests begin to grip the state that produces few goods other than arms it can export.
North Korea has ignored the South’s demand for the release of a South Korean worker who has been held at the park located just inside North Korea for more than three months for supposedly insulting the North’s political system.
The North said in May it was cancelling all wage, rent and tax agreements for the park, once hailed as a model of future economic cooperation between the rival states technically still at war who share one of the world most militarized borders.
ok..so we are talking about south and north korea..supposed and inferred rivals and enemies yet they have this little gig going on 10 miles inside the DMZ..$50 a month sounds like a good wage doesnt it? 😦
now if the same worker went 10 miles into south korea he probably makes that in 2-3 hours..so the south needs cheap labour..why not use our friends in the north?..they have the cheap labour pool and they need dollars..lots of dollars..its even cheaper than chinese rates..and thats saying something!
how many of these south korean companies would be usa backed?
in 2008 they employed 30,000 north koreans..completion date for the park?..2012 🙂
how long can north korea stall on this project now before the need for international currency becomes to strong?
so while the usa and the south all scream “axis of evil” member at the north, they dont mind using their cheap labour..yes..this is how the game is played..right in your face..please watch the video as well