Minister Sorry for Gaesong Payments

South Korean Unification Minister Lee Jong-suk apologized yesterday for some domestic companies’ remittances to North Korea’s Gaesong Industrial Complex violating the foreign currency transaction law.

“I apologize for the illegal remittance issue, which was caused by mismatch between law and reality,” the Minister said in a regular briefing held yesterday at the Central Government Complex in Seoul.

“South Korean companies doing business in the Gaesong Industrial Complex are considered North Korean firms by law, but companies and the government had looked over this point in the initial stage. However, all remittances made have been delivered to Korean firms and there is no problem now as we have revised relevant guidelines,” he added.

The foreign currency transaction law requires companies to report to the Bank of Korea when their remittances to North Korea exceed a certain amount of money, because the trade with the North is regarded as an overseas trade. However, companies that have entered the Gaesong Industrial Complex did not report their remittances to the Bank.

After belatedly realizing illegality of such transactions, the government legalized such practices by adding a special clause about a third party payment to the foreign currency management guideline at the end of June this year to exempt those companies from reporting to the central bank.