Sanctions cost South and North economies almost $11.2 billion

Posted on : 2013-11-19 13:06 KST Modified on : 2019-10-19 20:29 KST
Around 300 South Korean businesses with projects in N. Korea either out of business or on ice

By Choi Hyun-june, staff reporter

How much damage have South and North suffered since the measures were put in place in 2010? A Hyundai Research Institute report published last month, titled “North and South Korean Damages from the May 24 Measures,” estimated the economic losses since May 2010 at 9.4 trillion won (US$8.9 billion), with 2.4 trillion won (US$2.3 billion) of that suffered by North Korea.

Of the 1,100 South Korean businesses that invested in North Korean projects outside of Kaesong, around 700 have survived through 2011 after the measures were put in place. 299 businesses (27.1% of the total) involved in North Korea projects have reported to the tax office that they’ve gone out of business or suspended operations.

“The trust we built in our relationship trading with North Korea for more than decade is a huge asset that you can’t put a dollar value on,” said the head of a member company in the emergency committee on inter-Korean economic cooperation projects who spoke on condition of anonymity. “But that asset is now just about gone.”

Government statistics paint an even colder picture. According to figures released on Nov. 15, just 43 businesses were recognized as North Korea investors, with a total investment amount of 84 billion won (US$79.6 million).

“That’s about how many businesses are invested in North Korea with economic project approval, apart from simple toll processing companies,” said a source with the Unification Ministry on condition of anonymity. “We have no way of knowing precisely which businesses have actually survived.”

Though many businessmen involved in inter-Korean economic cooperation projects hoped for an improvement of relations with the inauguration of the Park Geun-hye administration, so far they haven’t gotten any opportunity to resume their operations. It has only been large corporations with no relation to inter-Korean economic cooperation that have received permission to work in the North. Recently the Ministry of Unification said that the Rajin-Hasan project is not affected by the May 24 measures.

When asked whether SMEs would be permitted to invest in North Korea through China, the ministry offered a reserved response, saying that they would consider the request according the South Korean companies’ portion of the total investment and according to the national interest.

 

Please direct questions or comments to [english@hani.co.kr]

 

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