North Koreans work in South Korean apparel company Shinwon's factory in the Kaesong Industrial Complex.
Most South Korean companies doing business at the Kaesong Industrial Complex in North Korea have performed much worse than their local rivals, a lawmaker said at a parliamentary audit of the Export-Import Bank of Korea on Monday.
Grand National Party lawmaker Lee Hahn-koo, who sits on the National Assembly's financial and economic committee, said that 13 out of 16 companies that established offices at the Kaesong complex with loans from the state-run Export-Import Bank's inter-Korean cooperation fund before 2006 have suffered losses for two straight years.
The debt ratio of the 16 companies was 438.8 percent on average in 2006, almost double the 223.7 percent ratio in 2005. Their average capital stock was W830 million (US$1=W907) in 2006, less than half the W1.69 billion average in 2005. The value of their assets also fell around 18 percent from W5.48 billion to W4.49 billion over the same period. Only sales increased by W490 million to W790 million. The figures indicate that overall, companies at the complex saw losses rather than gains.
All 16 companies posted losses in 2005, Lee said. Although the situation improved in 2006, 13 still suffered losses, with three in a state of capital impairment.
"If local manufacturers posted losses in two consecutive years and had a more than 400 percent debt ratio, would the Export-Import Bank of Korea loan money to them?" Lee said. He recommended the bank stop providing loans from the inter-Korean cooperation fund to help stabilize the situation.