North Korea has used wages earned by its workers at the Kaesong industrial park to develop weapons, a media report said Sunday quoting a South Korean official.

The industrial zone, jointly run with South Korea just over the border in North Korea, was shut down last week amid rising tensions between the two countries.

"Any foreign currency earned in North Korea is transferred to the Workers' Party, where the money is used to develop nuclear weapons or missiles, or to purchase luxury goods," South Korean Unification Minister Hong Yong Pyo told the Yonhap News agency.

He said 70 per cent of the money the North earns from the park goes to develop nuclear and other weapons.

Some 54,000 low-paid North Koreans work in more than 124 factories, which produce textiles, clothes, household appliances and parts for machines, cars and semiconductors. Their wages were paid directly to the North's government.

Seoul shut down Kaesong in response to Pyongyang's atomic test in January and a subsequent long-range rocket launch. North Korea then expelled all South Koreans from the industrial zone and seized South Korean assets there.

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