South Korea is utilizing the economic advantages of Kaesong Industrial Park in North Korea. Low wages, of course, is one of the major attractions for South Korean firms, but other incentives also seem to be in place.
South Korean company presidents interviewed here predicted that their operations would be profitable this year or next. They noted that Kaesong exempts foreign investors from paying corporate income taxes for the first five years, and that the industrial park’s maximum tax rate is 14 percent, which they said was lower than comparable investment zones in China.
While there are objections being raised as to the low wages being paid to workers in North Korea, the Washington Post notes the positive aspects of this deal (note a projected dramatic impact on employment)
Southern companies making shoes, textiles, auto parts and kitchen implements employ more than 6,000 North Koreans here. The workers put in long hours at often grueling tasks, but life here nonetheless seems a cut above the poverty that is common in most of North Korea.
This year, officials in Seoul project that an additional 15,000 North Koreans will start work as more than 20 South Korean companies move in. By 2012, plans call for as many as 700,000 employees — 4.5 percent of North Korea’s entire workforce.
And maybe, just maybe, this economic cooperation is opening doors to bigger and better things:
“I have learned that it is possible to work with the South Koreans,” said Kim, briefly putting down the blue pinstriped blouse she was finishing for dispatch to a department store in Seoul, the South’s capital. “It has brought Korea closer to reunification. Together, nothing can stop us.”
Published Date: February 28, 2006