SEOUL, May 20, 2009 (AFP) - Many South Korean companies at a Seoul-funded industrial estate in North Korea risk bankruptcy as worsening relations between the two governments lead to plunging orders, representatives said Wednesday.

The future of the Kaesong estate has become increasingly uncertain as ties between the two Koreas soured. The North restricted access to the estate just north of the border earlier this year.

Last Friday the communist state scrapped all agreements on wages, rent and taxes at Kaesong. It told South Korean companies to accept its demands for higher salaries and for land-use fees or leave.

"As the crisis has been lasting for more than six months now, many businesses are facing the risks of bankruptcy," said Yoo Chang-Geun, vice chairman of the Corporate Council of Kaesong Industrial Complex which represents the 106 South Korean firms there.

"Over this situation, we're lodging a strong protest with both North and South Korean authorities," he told reporters.

The estate opened in December 2004 as a symbol of reconciliation but was frequently hit by political tensions.

Seoul says the fate of a South Korean manager detained at the estate since March 30 must be settled before any other negotiations.

Pyongyang accuses the man of slandering its political system and encouraging a local woman worker to defect.

Yoo said the businesses would never withdraw from Kaesong unless the South Korean government granted them full compensation.

"We've invested in Kaesong believing in the government's assurance (that our investments will not be lost)," he said.

"We've fallen victim to policy conflicts between the former and current governments," he said, referring to Seoul's former liberal governments and the current conservative one.

Cross-border ties have worsened since the conservatives took office in Seoul in February 2008 and vowed to link major economic aid to the North's progress in nuclear disarmament.

The Seoul government and South Korean businesses have invested 730 billion won ($801) into the venture since construction began in 2002.

More than 38,000 North Koreans work at the South Korean firms, producing items such as garments, kitchenware and watches.

They are paid around US$75 ($109.64) a month including insurance.

The money goes directly to the North's state bodies, which return a portion to the workers.