Seven South Koreans were left at the Gaeseong industrial park late Monday after the two Koreas failed to reach an agreement over back pay, income tax and telecom fees.

The last 50 South Koreans in Gaeseong initially planned to leave the suspended factory zone at around 5 p.m. but Pyongyang demanded they first pay some $7.2 million in overdue wages for North Korean workers for March, telecom bills and income taxes for businesses.

After hours of negotia the two sides agreed that 43 will return first at around 10 p.m. and the remainder will stay, according to the Unification Ministry.

The latest returnees include 18 officials at the Kaesong Industrial District Management Committee and telecom, electricity, housing and other infrastructure companies. The other seven are five committee officials including Chairman Hong Yang-ho and two employees of KT Corp.

“The remaining people will return after resolving the disputes through further discussions over details of the outstanding amount and payment methods,” a senior ministry official told reporters on condition of anonymity due to the sensitivity of the subject.

“It’s about the number. Though North Korea is basically to blame for the Gaeseong fiasco, we will give them what we ought to and demand what we deserve such as taking out end products, with the citizens’ safety being our priority.”

But he denied that the North asked for an unreasonable sum of money, adding talks will resume Tuesday.

The pullout came after Pyongyang refused on Friday a proposal for talks to normalize the last symbol of cross-border cooperation.

On Saturday, 125 South Korean workers came home in compliance with the government’s decision a day earlier to withdraw all its citizens from the border city.

Earlier on Monday, South Korea launched a pan-government task force to craft ways to alleviate companies’ financial woes and help them map out their future.

Factories at Gaeseong have been reeling from order cancellations, a buyer exodus and liquidity crunch since Pyongyang barred the entry of South Korean employees and cargo starting April 4 and withdrew its 53,000 employees on April 9. The remaining people had subsisted on ramen, snacks and other instant food for night shifts.

“Now the government must make utmost efforts at practical support for relevant firms and workers not to lose their hope,” President Park Geun-hye said at a meeting with senior presidential secretaries.

“People all around the world watched on TV our workers trying to load as many goods as possible on the roof of their cars. Now who on the planet wants to invest in North Korea in a situation where each other’s agreement comes to nothing in an instant.”

Prime Minister’s Office Minister Kim Dong-yeon convened a meeting early in the day with officials from nine state agencies to look into the extent of damage incurred at the 123 firms and discuss measures to support them.

During the meeting, they set three priorities of minimizing the corporate damage, providing the most possible support, and swiftly implementing the established plans. 

Other issues on the agenda included offering loans and insurance from the inter-Korean cooperation fund.

The participating agencies are the ministries of finance, unification, industry, justice and public administration, the Financial Services Commission and the Small and Medium Business Administration.

“Most firms operating in Gaeseong are petty small and midsize businesses and due to this crisis they face a situation where normal business activity is impossible,” Kim told the meeting.

“The government needs to mobilize all available means and come up with practical support measures so that the companies will get back to normal as soon as possible.” 

The government last week unveiled a comprehensive package including new loans, grace periods, early tax refunds, and delays of tax audits and due dates for tax and utility bill payment.

Prime Minister Chung Hong-won said their collective losses could reach 1 trillion won ($900 million) during a parliamentary session Friday. Some estimates from the businesses put it at up to 2.8 trillion won and projected the figure to more than double in case of an entire shutdown.

North Korea’s Rodong Sinmun, a mouthpiece of the ruling Workers’ Party, warned Monday of “final and conclusive” action if Seoul continues to deteriorate the situation, blasting its Friday decision.

“(South Korea) must know clearly that it cannot avoid its criminal responsibility for putting the Gaeseong complex at the risk of complete closure with such a rash, despicable act,” it said. 

By Shin Hyon-hee

(heeshin@heraldcorp.com)