hankyoreh

The Park Geun-hye administration ordered the closing of the Kaesong Industrial Complex in Feb. 2016 following North Korea’s fourth nuclear test which took place the previous month. (Hankyoreh Archive)

Since operations at the Kaesong Industrial Complex were suspended in Feb. 2016, some tenant companies at the complex have been using substitute factories in Cambodia, Vietnam, and other countries in Southeast Asia, but they are also facing difficulties with issues such as the local workforce, a new report shows.

According to a report by the Unification Ministry titled “Management Status of Overseas Factories by Kaesong Industrial Complex Tenant Companies” that was acquired by Park Byeong-seok, a lawmaker with the Democratic Party on Oct. 8, a total of 51 of the 124 tenant companies are operating 74 factories overseas. These figures include the 34 companies that were forced to move overseas after Kaesong was shut down. The report shows that 85%, or 29, of the companies that set up factories in Southeast Asia after the shutdown are heading to Vietnam because of the labor cost.

An analysis by officials from the Unification Ministry who carried out an onsite survey in Vietnam and Cambodia from Aug. 27 to Sept. 1 showed that these factories’ work increased by as much as 20% or 30% to handle the volume from Kaesong soon after the shutdown, but that currently they are focusing on “maintaining the status quo” since labor productivity is lower than it was at Kaesong. When the Unification Ministry investigators visited Cambodia at the end of August, they found that three out of four substitute factories there were considering withdrawing. The substitute factories that relocated from Kaesong to Southeast Asia are reportedly asking for emergency loans and other government loans to resolve their financial difficulties.

“The overseas production facilities of the Kaesong Complex tenant companies need a thorough inspection. A comprehensive survey of each company should be used to arrange assistance to lessen their financial difficulties,” Park said.

By Um Ji-won, staff reporter

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