S.Korea to compensate firms hit by sanctions on North

SEOUL - South Korea will provide financial aid to local firms that have been hit by trade sanctions Seoul has maintained on North Korea since 2010, the Unification Ministry said Tuesday.

The unprecedented compensation, totalling 7.5 billion won ($6.7 million), will go to South Korean businesses suffering from the severance of trade with the North in May 2010.

South Korea halted trade as part of a package of reprisals for the sinking of one of its warships in March of the same year, killing 46 sailors on board.

The South's aid programmes to the North were suspended and joint businesses run by South Korean firms and the North ground to a halt, including Hyundai Asan's high-profile tours to the North's Mount Kumgang.

The government has come under pressure from local businesses and opposition parties to lift the sanctions, which Hyundai Asan's contractors claim have cost them 133 billion won in investment and 280 billion won in lost sales.

A Korea Chamber of Commerce survey showed that some 200 local firms engaged in business dealings with the North had each suffered an average 1.94 billion won loss.

Kim Kyung-Hyup, a lawmaker from the main opposition Democratic United Party, told the National Assembly last month that about 800 South Korean firms have either folded up or faced bankruptcy as a result of the sanctions.

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