Kaesong Closure Hits South Korean Deals

The closure of the Kaesong joint-industrial zone has begun to hit deals between South Korean manufacturers and foreign buyers, Yonhap reported Saturday.

An Indian company has scrapped a deal with South Korean auto parts maker Daewha Fuel Pump Industrial Ltd after it failed to deliver parts because of the suspension of operations, the agency said.

It is the first such move to be reported since the North blocked access to the Kaesong site on April 3 amid soaring military tensions on the Korean peninsula.

The unidentified Indian company told Daewha it would switch to a U.S. supplier, asked for equipment to be returned, and demanded its investment to be repayed, Daewha official Choi Dong-hun was quoted as saying by Yonhap.

But Choi said the impact would be minimal as Daewha's business deal with the Indian company accounted for less than one percent of its sales in 2012 of 28 billion won ($25 million).

On Friday, North Korea rejected a new request by businessmen from the South to deliver food and supplies to their staff inside the closed industrial zone, which lies 10 kilometers (six miles) inside the North's.

South Koreans in the industrial zone were told they could leave when they wanted, but as of early Saturday, there were still 190 remaining.

North Korea withdrew all its 53,000 workers, suspended operations in the zone on April 8 and rejected Seoul's offers of dialogue to resolve the situation.

Kaesong was established in 2004 as a rare symbol of inter-Korean cooperation.

Neither of the Koreas has allowed previous crises to significantly affect the complex, which is seen as a bellwether of stability on the Korean peninsula.