When completed, the Gaeseong Industrial Complex will be a large industrial complex housing factories from South Korea as well as other countries. It is being constructed on 16,340 acres in three stages; the complex itself is being built on 6,540 acres in the city and support facilities in an adjacent city on 9,800 acres.

In 2004, the pilot factory site was opened with 15 businesses. In 2005, the leasing of lots was completed for 41 acres in the first stage of development; the construction of infrastructure and buildings on the site is underway.

The South is cooperating with the North in working out institutional measures such as labor regulations for the development of the Gaeseong Industrial Complex and in expanding the infrastructure for the operation of factories. The South has provided 15,000 kilowatts of electricity to the pilot factory site since March 16, 2005, and, on December 28, 2005, it installed 228 direct telephone lines between the two Koreas after obtaining a re-export license for the U.S. communications equipment used there in compliance with U.S. Export Administration Regulations.

The Gaeseong Industrial Complex project benefits both Koreas by combining the capital and technology of the South and the land and labor force of the North. It also promotes reconciliation and understanding because 6,000 South and North Koreans are working side by side.

As it is located between Seoul and Pyongyang, Gaeseong was one of the fiercest battlefields during the Korean War and remained heavily fortified even after the Armistice Agreement was signed. However, the Gaeseong Industrial Complex is turning the place once occupied by North Korean tanks and military units into a cradle of peace and co-prosperity.

Learning from past failures in the Rajin-Seonbong and Sinuiju Special Economic Zones, North Korea sees the Gaeseong Industrial Complex as a test case for opening and has shown a very cooperative attitude. They have allowed foreigners to visit Gaeseong to enhance the international community¡¯s awareness and attract foreign investment into the complex.

The Gaeseong Industrial Complex will play an important role in building mutual confidence, a key component in creating conditions so that the North can steadily change.

The South will make continuous endeavors to make Gaeseong a successful model for tension reduction on the Korean Peninsula and inter-Korean exchanges and cooperation.