SOUTH KOREAN President Yoon Suk Yeol has defended his government’s contentious plan to use local funds to compensate Koreans enslaved by Japanese companies before the end of World War II.

Mr Yoon said on Tuesday that it was crucial for Seoul to build future-oriented ties with its former colonial overlord.

President Yoon said the government wanted to “respect the positions of victims while also seeking ways that would align with the common interests and future development of both South Korea and Japan.

“It’s clear that future-oriented co-operation between South Korea and Japan will preserve freedom, peace and prosperity not only for the two countries, but also for the entire world.”

But the plan has met fierce opposition from forced labour victims, their supporters and liberal opposition politicians, who have called it a diplomatic surrender and demanded direct payments and a fresh apology from Japan over the issue.

The plan would offer reparations through a state-run foundation to a group of forced labour victims who had won landmark lawsuits against their former Japanese employers.

Japan has insisted all compensation issues were settled by the 1965 treaty that normalised relations between the two countries after it had colonised the Korean Peninsula for 35 years until the end of World War II.