South Korea to pay out $400M in compensation for Kaesong shutdown

SEOUL, May 27 (UPI) -- The decision to terminate the Kaesong Industrial Complex is coming with a hefty price tag for Seoul.

South Korean businesses forced to shut down operations at the jointly operated factory park in North Korea are to receive about $440 million in compensation.

A Seoul task force on Kaesong said the measure is designed to support companies and South Korean expatriates who have lost income from the shutdown, local newspaper JoongAng Ilbo reported.

In February, Seoul decided to suspend operations at Kaesong, the last inter-Korea channel of exchange with Pyongyang, in response to North Korea's fourth nuclear test and long-range rocket launch.

Around the time of the shutdown, Seoul estimated about $852 million of South Korean investments into North Korea-based factories and infrastructure had been frozen.

The factory park was profitable. According to Seoul data, more than $515 million worth of textiles, electronic parts and other goods were produced in 2015.

Of the 303 South Korean businesses that operated in Kaesong or were affected by the shutdown, 261 reported a total of $796 million in damages.

But the government said after checking with accounting firms the actual damage came to about $655 million.

The $440 million goes toward compensating loss incurred from frozen assets or investments left behind in the North.

Other compensation measures are still under investigation, the unification ministry stated Friday.

Businesses are also eligible for compensation covering the "physical and psychological damage" to livelihoods incurred due to the sudden termination of the factories. That payment is to be made over the course of six months, according to Seoul.

Business owners have said they were "shocked" or "enraged" in the aftermath of the shutdown.