North-South economic cooperation firms, affected by the long-term suspension of projects due to the halt of Mount Kumgang tourism and the May 24 measures, are urging the government to comprehensively address remaining investment losses and loan issues through a complete settlement.
The North-South Economic Cooperation Association held a meeting on September 22 at the Ministry of Unification's press room in Seoul, where they made their appeal.
Chairman Choi Yo-sik stated in a plea that "companies in the inland areas have been unable to operate for 16 years, while those involved in Mount Kumgang have not been able to access their investments for 18 years. We must acknowledge that the policy decision made in 2018, which was based on the premise of resuming economic cooperation, must now shift towards liquidation due to changing circumstances."
Mount Kumgang tourism was suspended in July 2008 following the shooting incident involving tourist Park Wang-ja. In 2010, the government implemented the May 24 measures as part of independent sanctions against North Korea following the sinking of the Cheonan warship, which restricted inter-Korean trade, new investments in North Korea, and the operation of North Korean vessels in South Korean waters. Consequently, activities of companies engaged in trade and investment in North Korea, excluding the Kaesong Industrial Complex, were effectively halted.
The government had previously provided three rounds of special loans to these companies and, in 2018, offered direct support for the first time to those affected by the suspension of Mount Kumgang tourism and the May 24 measures. Following damage assessments, support was allocated from the Inter-Korean Cooperation Fund amounting to 122.845 billion won for 95 companies, including 40 related to Mount Kumgang tourism, 40 involved in inter-Korean trade, and 15 engaged in facility investments.
For liquid assets such as raw materials and finished products, companies received up to 70 million won, covering 90% of the damage. For investment assets, the support criteria applied to companies in the Kaesong Industrial Complex that had not previously subscribed to economic cooperation insurance were used.
As a result, companies that invested in facilities in Mount Kumgang and the North received only 45% of the verified damage amount for their core investment assets. The association claims that larger companies faced even lower support ratios due to a cap of 35 million won per company, which diminished the actual support relative to their investment amounts.
The association argues that some companies invested before the introduction of economic cooperation insurance in 2004 and faced difficulties obtaining necessary permits and documentation from North Korea even after the insurance was implemented, effectively limiting their ability to subscribe. They contend that applying the same support criteria as for Kaesong Industrial Complex companies, which had subscribed to insurance, is unreasonable. With the likelihood of resuming North-South economic cooperation diminishing, they are demanding a complete resolution of remaining investment costs and related debts.
Additionally, they explained that due to a lack of documentation, depreciation, and the support cap per company, the recognized amounts for investment assets have significantly decreased, resulting in an average compensation rate of around 10% compared to the original investment.
According to the association, of the approximately 1,050 related companies at the time of the suspension of North-South economic cooperation, only 385 remain operational today. Among these, around 50 to 60 companies involved in Mount Kumgang and inland investments are seeking additional settlements due to insufficient compensation from existing support. The association estimates that over 40 billion won is needed to settle the remaining investment costs, asserting that 90% of investment losses should be compensated up to 70 million won per company based on the insurance criteria.
The association noted that companies accepted government support plans with the hope of resuming economic cooperation, but the prolonged severance of inter-Korean relations and North Korea's declaration of being a "hostile state" have made it difficult to expect a resumption of business activities.
Chairman Choi emphasized, "We cannot resolve these issues through repeated support for operational costs or consolation payments. This time, we need to settle all remaining issues at once so that business owners no longer have to seek government support."
The association cited the aging of business owners and their financial struggles as reasons that can no longer be postponed. They stated, "Six individuals involved in North-South economic cooperation have already passed away due to financial difficulties and illness. The remaining business owners are now in their seventies and approaching their eighties. It is time to end this prolonged suffering and resolve these issues once and for all."
The Ministry of Unification expressed understanding of the difficulties faced by business owners but stated that additional support would require consultations with relevant departments. A Ministry official told reporters, "We are listening to the voices of North-South economic cooperation firms and are working to assist them, and we empathize with their situation. However, specific actions will require active consultations with relevant departments."
* This article has been translated by AI.
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