S. Korea unveils aid plan for firms forced out of joint factory park with DPRK

South Korea announced a package of assistance measures on Friday to support South Korean companies forced out of a jointly-run factory park with the Democratic People's Republic of Korea (DPRK).

The South Korean government plans to extend loans and deter taxes and utility bills for companies having run factories at the Kaesong Industrial Zone as part of efforts to minimize possible damages after the shutdown of the complex.

Pyongyang on Thursday expelled all of South Koreans working there to operate factories in the DPRK's border town of Kaesong, shuting down the factory park and freezing all of South Korean assets.

The decision came a day after Seoul's announcement to suspend operations in Kaesong as part of punitive measures against the DPRK for its Sunday rocket launch and the fourth nuclear test on Jan. 6.

The 124 South Korean companies are expected to be hit hardest by the shutdown as they are unable to meet the deadline for goods delivery, and expected to result in a credibility crisis with clients. All finished products, manufactured in Kaesong, were forced to be left there due to the DPRK's freezing of all assets.

The companies should build new factories in South Korea to keep manufacturing goods, estimated to take at least several months at the earliest, and lots of South Koreans who worked only in Kaesong should find new jobs in the country where labor market conditions are increasingly worsening.

The South Korean government plans to extend loans for the companies to minimize possible liquidity crisis, while compensating as much as 90 percent of their losses from the forced withdrawal from Kaesong. It will also provide low-interest loans to firms struggling with temporary liquidity shortage.

Seoul will defer taxes by one year and utility bills by as long as 9 months for the companies, while providing financial assistance to employers, who maintain their workforce from Kaesong, as long as 6 months. Enditem