Two Koreas to re-open factory park in trial run

Seoul: North and South Korea have agreed to re-open a shuttered industrial park on a trial basis starting on Monday, the South's Unification Ministry said in a statement, in a sign of a further thaw between two countries that remain technically at war.

Pyongyang appears to have softened its tone after threatening Seoul with retaliatory nuclear attacks earlier this year for what it termed "provocative" joint military exercises with the United States.

The industrial zone is located a few kilometres inside North Korea and was closed when Pyongyang pulled its 53,000 workers out in April amid rising tensions.

North and South Korea have agreed to stage reunions between families separated by the 1950-53 Korean War for the first time since 2010, in a sign that Pyongyang and Seoul are taking tentative steps towards confidence-building measures.

In February, North Korea set an immediate challenge to incoming South Korean President Park Geun-hye by staging its third nuclear test in response to stricter sanctions imposed by the United Nations after a long-range missile test by the North.

Pyongyang cut off all links with the South after the nuclear test was condemned and said it was ready for war.

The two Koreas will aim to attract foreign investors into the Kaesong industrial zone, a rare source of foreign currency for the North, the ministry said. The Unification Ministry is responsible for handling inter-Korean relations for the South.

In a bid to compensate for losses incurred by the shutdown, factories there will be exempt from taxes for the rest of this year, the ministry statement said.