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The Korean government will be flexible in applying the sanctions against North Korea announced on May 24, 2010, known as the ‘May 24 measures’, to attract foreign investment to Gaeseong Industrial Complex.
A government official said on Sunday that the May 24 measures will be enforced flexibly, with exceptions granted on sanctions that hinder foreign investment in the Gaeseong Industrial Complex.
The Korean government already flexibly responded to certain issues in 2011, a year after the May 24 measures came into effect, approving the resumption of factory construction, establishment of a fire station and emergency medical facilities and road repairs and maintenance in Gaeseong Industrial Complex.
Minister of Unification Ryoo Kihl-jae also mentioned at the Foreign Affairs and Unification Committee last week that permitting foreign companies’ new investments is not viewed as violation of the May 24 measures.
Rep. Shim Jae-Kwon of the Democratic Party said that the Ministry of Unification (MOU) noted that the normalization of the Gaeseong Industrial Complex and the May 24 measures are not directly related, and that the construction of dormitories for employees in the complex is to solve manpower shortage for South Korean companies, and therefore does not directly violate the May 24 measures.
Considering that the laws and regulations on the Gaeseong Industrial Complex were established for Korean companies, the MOU plans to encourage foreign companies to make indirect investments through a Korean subsidiary instead of making direct investments.
Indirect investment through a Korean subsidiary is virtually the same as investment by a Korean company. In this regard, if the investment promotion session in Gaeseong Industrial Complex on October 31 is successful, it is expected that the May 24 measures will be eased significantly, at least in regards to sanctions on the Gaeseong Industrial Complex.
Professor Lim Eul-chul of the Institute for Far Eastern Studies at Kyungnam University noted that it is very meaningful that the Korean government showed its willingness to make exceptions to the May 24 measures to attract foreign investment.
However, the North recently delayed the reunion event for separated families and resumed denouncing the South, so there are concerns that the government’s investment promotion efforts may be negatively affected by the straining relations between the two Koreas.
Source: Yonhap News (Oct. 6, 2013)
** This article was translated from the Korean.