North Korea said on Monday that it "believes that the South Korean authorities totally abandoned the protection of property and interests of enterprises" in the Mt. Kumgang resort and will "legally dispose of all the South Korean properties including real estate, equipment and vehicles" there, according to the North's official Korean Central News Agency.
It added that all South Korean facilities in the resort are sealed off and assets are prohibited from being taken out of the country as of Monday. It also ordered all South Korean staff to leave the country within 72 hours.
Earlier the North seized the properties after the South suspended lucrative package tours to Mt. Kumgang in the wake of the fatal shooting of a South Korean tourist there in 2008.
The Unification Ministry in a statement said, "While placing top priority on the safety of our nationals residing there, we will take determined steps, including legal and diplomatic measures. The government cannot accept this and demands that things are returned to their original state."
South Korean real estate and equipment in Mt. Kumgang are worth an estimated W484.1 billion (US$1=W1,084) based on investments. Most of them belong to erstwhile tour operator Hyundai Asan.
Seven Hyundai Asan staff and seven workers from an affiliated company have remained in the resort to take care of the facilities. South Korea plans to bring them back before Wednesday.
The greatest concern for South Korean officials is the potential conflict over power generators Hyundai Asan installed at Kosong Port to supply electricity to the resort. Since 2008, Hyundai has been operating only one of them to supply power for the remaining staff. If Asan halts the power generators, North Korea cannot use the facilities in the resort. This may be why the North has threatened to take "stern measures" should South Korea "cause damage to assets" left in the resort.
While freezing the South Korean assets, North Korea has been trying to organize tours to Mt. Kumgang on its own. Some analysts say the North hopes to get another country to operate the tours to generate hard cash. Until the tours were suspended in 2008, North Korea made US$487 million from Hyundai Asan.
Asan is helplessly watching the events unfold. "We voiced our regret over the move to North Korean officials, but the truth is that we do not have any alternatives," a staffer said. "We have to be careful since we are doing business in North Korea."
Meanwhile, the Unification Ministry said on Monday that a committee overseeing inter-Korean exchanges has completed its review of providing W5.05 billion worth of emergency supplies to aid North Korean flood victims after record rainfall on the Korean Peninsula this summer. The ministry said humanitarian aid will be pursued separately from other issues, but the move faces criticism from conservatives in the South.