Kaesong Industrial Region
Encyclopedia
Kaesŏng Industrial Region is a special administrative
industrial region
of North Korea
. It was formed in 2002 from part of Kaesŏng Directly Governed City
.
. 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.
As of June 2010, 110 factories were employing approximately 42,000 DPRK workers and 800 ROK staff. Companies operating or under construction in the complex are seeking to hire an additional 26,000 North Korean workers. Construction of dormitories and other infrastructure for the additional workers is on hold as the Lee Myung-bak administration
has prioritized movement on North Korean nuclear issues.
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.
, a division of South Korean conglomerate Hyundai
has been hired by Pyongyang to develop the land. 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.
, 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.
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.
Several months later, a visit to North Korea by the Hyundai
Group chairwoman led to a resolution to the North's demands, with mild wage increases and no change in land rents.
incident and South Korea's response, North Korea severed ties with South Korea and shut down the Consultative Office in the zone, however existing activities in the zone maintained production activities, and transport and telephones to South Korea are operating normally.
which is on the Pyongbu Line
. There is rail access to South Korea via the Gyeongui Line
but it is not known what restrictions apply. An agreement to re-establish rail freight services between North and South Korea was made in November 2007.
Administrative divisions of North Korea
The administrative divisions of North Korea are organized into three hierarchical levels. Many of the units have equivalents in the system of South Korea. At the highest level are nine provinces, two directly governed cities, and three special administrative divisions. The second-level divisions...
industrial region
Industrial region
Industrial region or industrial area refers to a region with extremely dense industry. It is usually heavily urbanized.-Brazil:*ABCD Region, sometimes called ABC is an industrial region made up of seven municipalities with the greater metropolitan area of São Paulo, Brazil.-Korea:*Kaesŏng...
of North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...
. It was formed in 2002 from part of Kaesŏng Directly Governed City
Kaesong
Kaesŏng is a city in North Hwanghae Province, southern North Korea , a former Directly Governed City, and the capital of Korea during the Koryo Dynasty. The city is near Kaesŏng Industrial Region and it contains the remains of the Manwoldae palace. It was formally named Songdo while it was the...
.
Kaesŏng Industrial Park
Kaesŏng Industrial Park is being operated in the region, as a collaborative economic development with South KoreaSouth Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
. It is located ten kilometres (six miles) north of the Korean Demilitarized Zone
Korean Demilitarized Zone
The Korean Demilitarized Zone is a strip of land running across the Korean Peninsula that serves as a buffer zone between North and South Korea. The DMZ cuts the Korean Peninsula roughly in half, crossing the 38th parallel on an angle, with the west end of the DMZ lying south of the parallel and...
with direct road and rail access to South Korea and an hour's drive from Seoul
Seoul
Seoul , officially the Seoul Special City, is the capital and largest metropolis of South Korea. A megacity with a population of over 10 million, it is the largest city proper in the OECD developed world...
. 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.
Initial phase
In the park’s initial phase, 15 South Korean companies constructed manufacturing facilities. Three of the companies had started operations by March 2005. First phase plans envisaged participation by 250 South Korean companies from 2006, employing 100,000 people by 2007. The park was expected to be complete in 2012, covering 25 square miles (64.7 km²) employing 700,000 people.As of June 2010, 110 factories were employing approximately 42,000 DPRK workers and 800 ROK staff. Companies operating or under construction in the complex are seeking to hire an additional 26,000 North Korean workers. Construction of dormitories and other infrastructure for the additional workers is on hold as the Lee Myung-bak administration
Lee Myung-bak government
The Lee Myung-bak government is sixth consecutive government of the Sixth Republic of South Korea. It was officially launched on February 25th, 2008, under Lee Myung-bak's victory in the 2007 presidential election...
has prioritized movement on North Korean nuclear issues.
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.
Organization
The Kaesŏng industrial park is run by a South Korean committee that has a fifty-year lease which began in 2004. Hyundai AsanHyundai Asan
Hyundai Asan is an arm of the South Korean conglomerate Hyundai Group and a major investor in North Korea. The company manages a number of projects, including the Kumgang-san tourist resort and road/rail building operations...
, a division of South Korean conglomerate Hyundai
Hyundai
Hyundai ) is a global conglomerate company, part of the Korean chaebol, that was founded in South Korea by one of the most famous businessmen in Korean history: Chung Ju-yung...
has been hired by Pyongyang to develop the land. The firms are taking advantage of cheap labour available in the North to compete with China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
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.
Predictions
Park Suhk Sam, senior economist at the Bank of KoreaBank of Korea
The Bank of Korea is the central bank of South Korea and issuer of South Korean won. It was established on June 12, 1950 at Seoul, South Korea.The Bank's primary purpose is price stability. For that, the Bank targets inflation...
, 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.
Obstacles
The industrial park is seen as a way for South Korean companies to employ cheap labour that is educated, skilled and speaks KoreanKorean language
Korean is the official language of the country Korea, in both South and North. It is also one of the two official languages in the Yanbian Korean Autonomous Prefecture in People's Republic of China. There are about 78 million Korean speakers worldwide. In the 15th century, a national writing...
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
Southeast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
to Kaesong.
Wage and rent agreements
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.Several months later, a visit to North Korea by the Hyundai
Hyundai
Hyundai ) is a global conglomerate company, part of the Korean chaebol, that was founded in South Korea by one of the most famous businessmen in Korean history: Chung Ju-yung...
Group chairwoman led to a resolution to the North's demands, with mild wage increases and no change in land rents.
ROKS Cheonan incident
In May 2010, due to the ROKS Cheonan sinkingROKS Cheonan sinking
The ROKS Cheonan sinking occurred on 26 March 2010, when the Cheonan, a South Korean Navy ship carrying 104 personnel, sank off the country's west coast near Baengnyeong Island in the Yellow Sea, killing 46 seamen...
incident and South Korea's response, North Korea severed ties with South Korea and shut down the Consultative Office in the zone, however existing activities in the zone maintained production activities, and transport and telephones to South Korea are operating normally.
Transport
Kaesong Industrial Region is served by Panmun StationPanmun Station
Panmun Station is a railway station located in the Kaesong Industrial Region in North Korea. It is served by the Pyongbu Line which is the southern half of the North Korean portion of the Kyongui Line which once ran from the former capital of Korea, Seoul, to Sinuiju in northern Korea....
which is on the Pyongbu Line
Pyongbu Line
The Pyongbu Line is the southern part of the Kyongui Line railway in North Korea, running from Pyongyang to Kaesong, near the border with South Korea. This line theoretically connects Pyongyang to Busan in South Korea but, in reality, it ends at Kaesong because of the Korean Demilitarized Zone...
. There is rail access to South Korea via the Gyeongui Line
Gyeongui Line
The Gyeongui Line is one of the oldest railway lines in Korea. When opened in 1906 it linked Seoul in what is now South Korea to P'yŏngyang and Sinŭiju in what is now North Korea...
but it is not known what restrictions apply. An agreement to re-establish rail freight services between North and South Korea was made in November 2007.
External links
- Official Website: Hyundai Asan, the South Korean firm responsible for creating the Zone
- (North Korea Google Earth) See the Kaesong Industrial Zone and other DPRK infrastructure on Google Earth.
- Official website: Kaesong Industrial District Management Committee(KIDMC) of South Korea
- Work to Start on Kaesong Industrial Park, People's DailyPeople's DailyThe People's Daily is a daily newspaper in the People's Republic of China. The paper is an organ of the Central Committee of the Communist Party of China , published worldwide with a circulation of 3 to 4 million. In addition to its main Chinese-language edition, it has editions in English,...
, November 4, 2002 - South Korea Begins Supplying Electricity to N.K. Industrial Park, Yonhap News, March 17, 2005
- Despite U.S. Attempts, N. Korea Anything but Isolated, Washington Post, May 12, 2005
- Kaesong, model for Korean cooperation, United Press InternationalUnited Press InternationalUnited Press International is a once-major international news agency, whose newswires, photo, news film and audio services provided news material to thousands of newspapers, magazines and radio and television stations for most of the twentieth century...
, May 30, 2005 - North-South Korea Trade Increased to Record $1.1 Bln in 2005, BloombergBloomberg L.P.Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...
, January 23, 2006 - U.S. rejects free trade in Kaesong products, JoongAng Daily, February 9, 2006
- A One-Hour Commute to Another World, Los Angeles Times, February 28, 2006
- "Kaesong zone a troubled Korean jewel" Asia Times Online, April 6, 2006
- "Companies in Kaesung Delegate Management over to North Korea" Daily NK, May 17, 2007