SEOUL: North Korea raked in more than $120 million a year from a symbolic cross-border industrial zone that Pyongyang and Seoul are pushing to re-open as part of nuclear negotiations, a report said Monday.
The Kaesong Industrial Complex — where around 55,000 North Korean workers churned out products ranging from watches to clothes for some 125 South Korean companies — was one of the most visible signs of reconciliation that followed the first inter-Korean summit in 2000.
But it was shuttered by the South’s then-conservative government in 2016 in response to a nuclear test and missile launches by the North, saying profits from Kaesong were funding Pyongyang’s provocations.
The South’s current President Moon Jae-in has dangled re-opening the complex as an incentive for Pyongyang to engage in denuclearization talks, but doing so is complicated by the web of international sanctions imposed on the North over its weapons programs.
At their Pyongyang summit in September, Moon and North Korean leader Kim Jong Un agreed to “normalize” operations at Kaesong when conditions were “ripe,” but negotiations between Pyongyang and Washington are now deadlocked and Northern media have pressed the South to implement joint economic projects.
The International Crisis Group called on Monday for the complex to be reopened with “a modest deal involving sanctions relief.”
Doing so would create “much needed momentum for stalled peace talks and serve as a reminder to both North and South Korea of the benefits of building a sustainable peace on the peninsula,” it added in a statement.
The factory zone gave the North foreign investment in its infrastructure, employment for its people and “much-needed revenue in hard currency,” it said in a report, while the South Korean businesses involved enjoyed cheap but high-quality labor — wages in China were 2.9 times higher in 2014.
In 2015, the year before it closed, South Korean firms paid the North around $123 million for their workers, ICG calculated.
The North taxed the sums at 30 percent and paid the workers 70 percent of the remainder in essential foodstuffs and coupons for state-run shops, the report said, citing the firms in Kaesong and the South’s unification ministry.
The rest was paid “in local currency at an artificially low official exchange rate,” it added.
Currently the North’s official exchange rate is around 80 times lower than the market rate. If a similar ratio applied to the Kaesong workers, they will have received in cash only around one quarter of one percent of the value paid to the North for their services, AFP calculates.
Profits from Kaesong were equivalent to only about 10 percent of what the North made from coal exports to China, ICG said, but “were nevertheless important... to a regime that needed all the cash it could get.”
“In this sense, reopening Kaesong would unquestionably be a concession to the North,” it added.
North Korea made $120 million a year from joint factory park: report
North Korea made $120 million a year from joint factory park: report
- The Kaesong Industrial Complex was one of the most visible signs of reconciliation that followed the first inter-Korean summit in 2000
- Around 55,000 North Korean workers churn out products ranging from watches to clothes for some 125 South Korean companies
Closing Bell: Saudi benchmark index closes lower at 10,540
RIYADH: Saudi equities ended Wednesday’s session lower, with the Tadawul All Share Index falling 55.13 points, or 0.52 percent, to close at 10,540.72.
The sell-off was mirrored across other indices, with the MSCI Tadawul 30 Index retreating 5.79 points, or 0.41 percent, to close at 1,393.32, while the parallel market Nomu slipped 74.56 points, or 0.32 percent, to 23,193.21.
Market breadth remained firmly negative, as decliners outpaced advancers, with 207 stocks ending the session lower against just 51 gainers on the main market.
Trading activity moderated compared to recent sessions, with volumes reaching 123.5 million shares, while total traded value stood at SR2.72 billion ($725.2 million).
On the sectoral and stock level, Al Moammar Information Systems Co. led the gainers after surging 9.96 percent to close at SR172.30, extending its rally following a series of contract announcements tied to data center and IT infrastructure projects.
Al Masar Al Shamil Education Co. climbed 4.89 percent to SR27.48, while Naqi Water Co. advanced 3.36 percent to SR58.50. Al Yamamah Steel Industries Co. and Al-Jouf Agricultural Development Co. also posted solid gains, rising 3 percent and 2.86 percent, respectively.
Losses, however, were concentrated in industrial names. Saudi Kayan Petrochemical Co. fell 3.67 percent to SR4.73, while Makkah Construction and Development Co. slid 3.44 percent to SR80.
Saudi Tadawul Group Holding Co. retreated 3.28 percent to SR147.50, weighed down by broader market weakness, and Saudi Cable Co. declined 3.18 percent to SR143.
Alkhaleej Training and Education Co. rounded out the top losers, shedding just over 3 percent.
On the announcement front, BinDawood Holding announced the signing of a share purchase agreement to acquire 51 percent of Wonder Bakery LLC in the UAE for 96.9 million dirhams, marking a strategic expansion of its food manufacturing footprint beyond Saudi Arabia.
The acquisition, which remains subject to regulatory approvals, is expected to support the group’s regional growth ambitions and strengthen supply chain integration.
BinDawood shares closed at SR4.68, up 0.43 percent, reflecting a positive market reaction to the overseas expansion move.
Meanwhile, Al Moammar Information Systems disclosed the contract sign-off for the renewal of IT systems support licenses with the Saudi Central Bank, valued at SR114.4 million, inclusive of VAT.
The 36-month contract is expected to have a positive financial impact starting from fourth quarter of 2025, reinforcing MIS’s position as a key technology partner for critical government institutions. The stock surged to the session’s limit making it the top gainer.
In a separate disclosure, Maharah Human Resources confirmed the completion of the sale of its entire stake in Care Shield Holding Co. through its subsidiary, Growth Avenue Investments, for a total consideration of SR434.3 million.
The transaction involved the transfer of 41.36 percent of Care Shield’s share capital to Dallah Healthcare, with Maharah receiving the full cash proceeds.
Despite the strategic divestment, Maharah shares closed lower, ending the session at SR6.12, down 1.29 percent.
