South Korea has decided to disband the sole government-run foundation tasked with handling matters concerning the now-shuttered Kaesong industrial park, once a pivotal inter-Korean cooperation project, amid simmering tensions between the two Koreas.

The Unification Ministry issued a public announcement on Thursday regarding the dissolution of the Gaeseong Industrial District Foundation, which was first established in 2007 under the auspices of the ministry, announcing the decision nearly eight years after the closure of the Kaesong industrial park in February 2016.

"The foundation deems it practically unfeasible to fulfill its fundamental mandate of supporting the development and operation of the industrial complex, given that the current circumstances, including a shift in North Korea's attitude toward denuclearization, have not materialized," the ministry said in a statement.

"The decision to dissolve the foundation was made after comprehensive consideration including the operational efficiency of the foundation and the overall situation of the industrial complex."

Around 58.4 billion won ($44.67 million) was allocated for the foundation's operations between 2017 and 2023, with an expenditure of 7 billion won recorded in the previous year. The National Assembly, in response, had urged the correction of the "excessive scale of operation and expenditures," the ministry said.

The Unification Ministry has revealed plans to offer a legislative preview for the amendment proposal to the Enforcement Decree of the Law on Support for the Kaesong industrial park later this month. After finalizing the amendment by the end of March, the official decision for dissolution will be made through a board meeting of the foundation.

However, the ministry has affirmed its commitment to persist in tasks aimed at supporting companies that operated factories in the Kaesong industrial park, including protecting their property rights. These responsibilities will be transitioned to another government agency after the disbandment.

The dissolution of the foundation is a key component of the ministry's extensive restructuring and downsizing initiative, undertaken following President Yoon Suk Yeol's directive for a comprehensive organizational overhaul in July of last year in light of the prolonged deadlock in inter-Korean relations.

The Park Geun-Hye government suspended the operation of Kaesong industrial park in February 2016 in response to North Korea’s nuclear testing and the launch of the Kwangmyongsong-4 satellite in violation of multiple UN Security Council resolutions. At that time, the government said the majority of North Korean workers' income at the Kaesong industrial park was being funneled to the North Korean regime.