South Korea has started the process of shutting down operations of the joint factory park in North Korea's western border city of Kaesong in response to Pyongyang's recent nuclear test and long-range rocket launch.
South Korean firms have that they will come up with a set of measures to support its firms operating at Kaesong to help minimise any fallout from the shutdown of what is the last cooperation point between the two Koreas.
South Korea is separate from, and hostile to, North Korea since the end of the Korean War (1950-53).
Since it opened in 2004, Kaesong has become a bellwether for relations between the two Koreas. In April 2013, the North shut down the complex for four months after Seoul and Washington staged military drills together.
The shutdown was “an inevitable measure to make North Korea pay a price for its wrong behaviour” and to prevent South Korea’s resources from being used for North Korea’s nuclear and missile programmes,” Prime minister Hwang Kyo-ahn said in a Cabinet meeting, quoted by the Yonhap news agency.
Mr Hwang called on the foreign ministry in Seoul to make efforts to make sure that the UN Security Council can slap strong and effective sanctions on North Korea for its nuclear and missile tests, and also urged the defence ministry to maintain military readiness in the event of further provocation from the North.
Tensions in East Asia have increased since North Korea launched a long-range rocket on Sunday, one month after Pyongyang drew international condemnation for conducting its fourth nuclear test.
“It was inevitable for the government to suspend the operation of the Kaesong Industrial Complex in light of the current situation,” said Kim Moo-sung, chairman of the ruling Saenuri Party.
Some 124 South Korean companies operate in the Kaesong zone, which is located 50 kilometres northwest of Seoul and employs 54,300 North Korean workers to produce labour-intensive goods, such as clothes and utensils.
It has become a major revenue source for the cash-strapped North, with South Korean firms paying up to €90 million in annual wages to the North Koreans.
In response, North Korea said it would expel all South Korean nationals from Kaesong and freeze all assets of South Korean firms operating there in retaliation for Seoul’s suspension of the complex.
The North ordered all South Koreans to immediately leave Kaesong, and froze all assets including equipment and products made by South Korean companies, and designated the area a military zone. It also ordered that two inter-Korean communication hotlines be cut off, according to a statement from the North’s Committee for the Peaceful Reunification of Korea.
The announcement came one day after reports that North Korea executed its army chief of staff, Ri Yong Gil, the latest in a series of purges by North Korean leader Kim Jong-un.
