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Despite anticipated hurdles, the recent talks of peace on the Korean Peninsula have brought hope among regional governments and politicians in the South to have their regions designated special economic zones that can serve as hubs for exchanges across the border.
Establishing a “special economic zone for unification” was one of President Moon Jae-in’s pledges during his election campaign in spring 2017, with a plan to develop border villages into industrial complexes with a combination of the South’s capital and the North’s labor — similar to Kaesong industrial park.
The plan Moon had envisioned was to connect South Korea’s Paju in northern Gyeonggi Province with the North’s border town Kaesong, North Hwanghae Province, and Haeju, South Hwanghae Province, located on the westernmost edge of the Korean Peninsula.
Taking cue from a recent thaw in relations between the two Koreas, the municipalities have moved to take the upper hand in spearheading potential exchanges.
Last month, Gyeonggi Province Gov. Lee Jae-myung asked Cheong Wa Dae to designate the northern parts of the province as a special economic zone during a meeting with Senior Political Affairs Secretary Han Byung-do. Lee expected the northern parts, mainly Paju, to act as a key venue to connect the two Koreas.
Mayor Choi Jong-whan of Paju, located just south of Panmunjeom on the 38th parallel, also developed a blueprint last month with regard to the establishment of the zone within the city. The plan highlights building infrastructure connecting the South and the North, including the extension of high-speed rail system KTX at Munsan Station, which is the closest station to the border with North Korea. It also includes remodeling of the Gyeongui Line, which previously connected the two Koreas.
By connecting industries, logistics and transportation of the South and North, the regional government hopes to develop the city as a hub for the economic exchanges of the two Koreas.
“Establishing a special economic zone in Paju means we can build a complex for international peace and cooperation within the city. The zone is expected to draw participation from other countries, including the US, China, Japan and Russia, for the peace of Northeast Asia,” Mayor Choi said.
Politicians are also ramping up efforts to develop border villages. Currently, six bills related to a special economic zone for unification are pending in the National Assembly’s Foreign Affairs and Unification Committee.
Rep. Park Jung of the ruling Democratic Party of Korea, who proposed a bill for designating Paju as a special economic zone, said, “The potential of the neglected border regions has been growing recently amid the thaw in inter-Korean relations.”
“When the city is designated as a special zone, we can lure investment from international organizations, such as the Asian Infrastructure Investment Bank and Asian Development Bank,” Park said. He said a cultural tourism zone can also be created as it is located near the Demilitarized Zone, which has become a thriving natural habitat.
According to a report released by the state-funded Gyeonggi Research Institute, if the North follows through with denuclearization and related parties establish a peace treaty, Gyeonggi Province will act as a base for economic cooperation of the two Koreas given its geographic location.
“The peaceful unification of the Korean Peninsula will be an opportunity for Gyeonggi Province’s sustainable prosperity and development, and the province should be ready to embrace the change,” said Kim Dong-seong, a researcher at the institute.
The institute predicted that when a 3.3 million-square-meter special economic zone for unification is formed, it would contribute to creating about 70,000 new jobs and 9 trillion won ($8.04 billion) in production inducement.
Paju is not alone in attempts to drum up a mood for potential economic exchanges of the two Koreas. Port city Incheon, located in northwestern South Korea just to the west of Seoul, is also moving to create an industrial cluster jointly operated by the two Koreas.
Mayor Park Nam-choon has vowed to form a special economic zone within the city by connecting its large island of Ganghwado with North Korea’s Kaesong and Haeju.
Rep. Yoon Kwan-seok from the Democratic Party proposed such bills in cooperation with the Transportation Ministry and expected the bills to be passed within this year. “When the revised bill is implemented, a special economic zone would be created within the port city with the funds from the state-run Korea Land & Housing Corporation and Incheon,” Yoon said.
Some, however, have opined that before the special economic zone for unification is formed, the resumption of the Kaesong industrial park should come first. Operations of Kaesong industrial park — often seen as an indicator of relations between the two Koreas — has been suspended since February 2016 following the North’s rocket launch and nuclear test.
“The move to create a special economic zone for unification seems too early at a time when a dialogue on the resumption of Kaesong industrial park has not even begun,” said Shin Han-yong, chief of the committee for the industrial park. The companies involved say the cost of the damages from the suspension are estimated at around 1.5 trillion won.
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