The government is working hard to provide assistance to the companies that operated in the suspended Gaeseong Industrial Complex, but officials of these companies are complaining about insufficient government measures to compensate for their losses.

The government has formed a special task force consisting of officials from relevant ministries. The team has come up with a package of measures after holding one-on-one consultations with all of the 123 companies that have factories in Gaeseong.

The package included providing emergency liquidity assistance of up to 500 million won ($414,000) to each company and extending the maturity of state loans borrowed by those companies.

The government also plans to provide 285 billion won in total compensation to small and medium-sized enterprises covered by the state-run Inter-Korean economic cooperation insurance.

These measures, however, are hardly enough to compensate for the damage these companies have to suffer. The companies estimate their combined damage at more than 2 trillion won (about $1.7 billion), double the loss of 1.05 trillion won they reported in 2013 when the industrial park was closed for 160 days due to North Korea’s protest against a joint military exercise between South Korean and U.S. forces.

In 2013, they could bring a considerable amount of their assets and property from their plants in Gaeseong, but not this time, as Pyongyang expelled all South Korean officials just one day after Seoul announced an indefinite shutdown of the industrial park.

The biggest problem for these companies is the difficulty of setting up new plants due to the large wage differential between North Korean and South Korean workers. In Gaeseong, they paid an average monthly wage of $150 to $200 to North Korean workers. In the South, however, the wages are almost ten times higher. 

So the government needs to provide assistance for these firms to operate here at a lower cost. But many companies are likely to be forced to relocate to foreign countries, such as Vietnam, where labor is much cheaper than here. For these companies, the government needs to provide necessary information and administrative support.

The government also needs to provide generous financial support to these companies, as the benefits provided by the non-profit Inter-Korean economic cooperation insurance are small. To make matters worse, about 40 percent of the companies are not insured.

Private lenders need to extend cheap loans to these firms, while large corporations that source parts and components from Gaeseong-based firms are also advised to provide a helping hand to their distressed partners.