The Unification Ministry will give South Korean companies hit by the suspension of inter-Korean trade and economic cooperation some W7.5 billion (US$1=W1,119) in financial assistance, a spokesman said Tuesday.
"There's a need to help all firms affected by economic sanctions on the North imposed on May 24, 2010 [in the wake of the sinking of the Navy corvette Cheonan in March that year] and by the suspension of package tours to Mt. Kumgang," the spokesman said. The ministry will give them emergency cash pay from the Inter-Korean Cooperation Fund.
A total of about 650 firms will benefit. They include about a dozen that had invested in the North for two years before the sanctions, and about 600 companies that did business with it for one year before the sanctions. Hyundai-Asan, the struggling tour operator that ran the Mt. Kumgang package programs, and its 30-odd affiliates are also among the beneficiaries.
They will get somewhere between W5 million and W20 million each depending on the volume of investment or transactions.
Since the sanctions were imposed, the government has also given affected firms low-interest loans worth W56.9 billion, but this is the first cash handout.
The government's decision has come in for some criticism from people who feel companies that invest in North Korea have only themselves to blame. Prof. Cho Dong-ho of Ewha Womans University said, "There's a natural 'North Korea risk' as far as business is concerned. Nobody twisted their arm to do business with the North. They all went in with their eyes wide open, so it's nonsense to give them taxpayers' money just because it didn't work out."
A former ministry official said the firms are in the predicament now because North Korea refuses to apologize for killing a South Korean tourist in Mt. Kumgang, sinking the Cheonan, and shelling Yeonpyeong Island. "The government has been taken in by left-wing sophistry which blames the economic sanctions for souring inter-Korean relations and devastating South Korean firms."