Seven S. Koreans Denied Exit From Joint Plant by North Korea

Photographer: Kim Jae-Hwan/AFP/Getty Images

South Korean cars returning from the Gaeseong joint industrial complex in North Korea, arrive at a gate of the inter-Korean transit office in Paju on April 30, 2013. Close

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Photographer: Kim Jae-Hwan/AFP/Getty Images

South Korean cars returning from the Gaeseong joint industrial complex in North Korea, arrive at a gate of the inter-Korean transit office in Paju on April 30, 2013.

Seven South Koreans were denied exit requests, as 43 others received approval yesterday to leave an industrial zone jointly run with North Korea, according to a text message from the Unification Ministry.

Those remaining at the Gaeseong industrial complex will be allowed to depart after payment of some wages owed North Korean workers, according to an official with the South Korean ministry who declined to be named, citing government policy.

The other 43 crossed the border at midnight and safely returned to South Korea, the ministry said. They were among the last 50 who had stayed at the industrial zone since North Korea blocked South Korean access to the installation on April 3.

Withdrawing the workers will sever one of the last channels of inter-Korean contact and shutter a plant that has been an important source of income for North Korea. The departures come amid weeks of tension on the Korean peninsula since Kim Jong Un’s regime in February conducted an atomic test and threatened preemptive nuclear strikes against its enemies.

“Gaeseong is a symbol not only of possible inter-Korean reconciliation but of North Korea’s potential as a trustworthy business partner,” said Park Young Ho, senior research fellow at the state-run Korea Institute for National Unification in Seoul. “No country will want to invest in or do business with the North when Gaeseong, the last remaining proof that the North can separate business from politics, is shut.”

Photographer: Chung Sung-Jun/Getty Images

A South Korean worker meets his mother after arriving from the Gaeseong joint industrial complex in North Korea at the inter-Korean transit office in Paju, South Korea on April 29, 2013. Close

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Photographer: Chung Sung-Jun/Getty Images

A South Korean worker meets his mother after arriving from the Gaeseong joint industrial complex in North Korea at the inter-Korean transit office in Paju, South Korea on April 29, 2013.

Military Drills

North Korea recalled all of its workers from the factory park on April 8 to protest U.S. and South Korean joint annual military drills, which conclude today. South Korean President Park Geun Hye’s decision to withdraw the workers was “inevitable” after North Korea refused to engage in talks over the facility, Unification Minister Ryoo Kihl Jae said April 26.

Agreements between the two Koreas have “burst like a bubble,” Park said at a meeting yesterday with senior advisers, according to a statement on her website. “Who in the world will want to invest in North Korea now?”

Companies at the complex, about 10 kilometers (six miles) north of the demilitarized zone on the border between the two countries, have produced more than $2 billion of goods since Gaeseong opened in 2005, according to Unification Ministry data. North Korea generates $100 million in annual profits at Gaeseong, while South Korea makes quadruple that amount, according to Yang Moo Jin, a professor at the University of North Korean Studies in Seoul.

Photographer: Seokyong Lee/Bloomberg

The South Korean Army's observation post in the Demilitarized Zone offers a view of the Gaeseong Industrial Complex in North Korea, seen from Paju, South Korea. Close

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Photographer: Seokyong Lee/Bloomberg

The South Korean Army's observation post in the Demilitarized Zone offers a view of the Gaeseong Industrial Complex in North Korea, seen from Paju, South Korea.

Gaeseong Complex

North Korea hasn’t allowed supplies of food or medical equipment into the complex since April 3. Gaeseong has remained open during previous periods of tension, including tests of nuclear weapons and missiles in both 2006 and 2009, and the 2010 deaths of 50 South Koreans in a ship sinking and the shelling of a South Korean border island by the North.

South Korean companies operating in Gaeseong have urged the government to break the impasse and provide compensation to help revive their businesses.

The Export-Import Bank of Korea revived its pledge to expand financial aid to companies running plants in the complex, the state-run lender said in an e-mailed statement April 27, without giving details. The bank has provided 300 billion won ($271 million) of aid, including lower lending rates and higher ceilings on loans, it said.

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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