South and North Korea have formally signed a land lease agreement for the Gaesong Industrial Complex.

The two sides inked the accord Tuesday morning in the North's border city of Gaesong, the construction site of the South-North joint industrial park.

Under the contract, the Korea Land Corporation and Hyundai Asan, the South Korean operators of the industrial park, will break ground for the construction of a pilot complex and clear the land for the first phase of the project later this month.

Last week, South and North Korea reached a tentative agreement on the land leasing deal. Seoul agreed to pay 18.3 billion won or 16 million U.S. dollars for the use of the industrial park's one million pyong or 3.3 million square meters of land. The amount includes the lease and expenditures needed to tear down existing facilities.

The Korea Land Corporation and Hyundai Asan will begin selling plots of land in the pilot complex in the first half of 2004 to South Korean business firms, so that they can set up shop there in the second half of the year.