S Korean firm quits joint complex

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A South Korean company has become the first firm to pull out of a joint industrial complex set up in North Korea as a symbol of reconciliation.

The manager of Sskin Net, a Seoul-based fur maker, said worsening ties between the two countries had led to cancelled orders and fears for workers' safety.

About 100 South Korean companies operate from the Kaesong complex.

Tensions between the two Koreas have been raised recently by the North's recent nuclear and missile tests.

Worker detained

Kaesong opened in 2005 as a symbol of co-operation between two Koreas, combining South Korean technology and management expertise with cheap North Korean labour.

Some 38,000 North Koreans are employed at more than 100 South Korean firms operating at the border complex.

An atmosphere of suspicion persists on both sides of the border

But its fate has been in doubt since last month, when North Korea threatened to scrap all contracts on running the joint complex and said it would write new rules of operation.

Tensions were also frayed when a South Korean manager was detained in March for allegedly criticising the North's communist system and trying to persuade a female North Korean worker to defect.

Sskin Net President Kim Yong-Gyu, who opened his factory in 2007, said the biggest factor in his decision to pull out was the safety of workers.

"We made the decision as deteriorating ties between the two Koreas resulted in cancelled orders and raised concerns over the security of company staff," he told Yonhap news agency.

A spokesman of South Korea's Unification Ministry, Chun Hae-sung, also acknowledged that the firm's decision was "partly affected by the recent situation in the Korean peninsula".

In the wake of the missile tests and nuclear test last month, South Korean and US troops have gone on heightened alert and the UN has condemned Pyongyang's actions.

In return, the North has renounced the truce that ended the Korean war in 1953 and threatened the South with possible attack.