Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
MERS shockwave hits Korea Inc.
Acting Prime Minister Choi Kyung-hwan wipes sweat from his cheek while speaking to CEOs of small and medium-sized companies at the Plaza Hotel in downtown Seoul, Monday. He said the ongoing MERS crisis will have a negative impact on the nation’s economy, including reductions in spending and investment. / Yonhap
By Lee Hyo-sik
By Lee Hyo-sik
Middle East Respiratory Syndrome (MERS) is sending shockwaves throughout many industries here, putting an additional burden on Korea’s already sagging economy.
According to travel agencies, hotels, airlines and other hospitality-related businesses, Monday, the spread of the highly infectious flu-like virus is beginning to have adverse effects on business as people increasingly choose not to venture out.
Retail sales have dropped over the past few weeks, while construction firms are increasingly having a hard time carrying out projects in the Middle East because employees are reluctant to fly to the region for fear of contracting the MERS virus.
“An increasing number of Chinese and other foreign tourists, who purchased our tour packages, have decided not to come to Korea, due to the spread of the MERS virus here,” a Mode Tour spokesman said. “We estimate that about 30 percent of Chinese travelers have canceled their visits to Korea. More foreign tourists will not come here if the virus continues to spread. Instead, they will go to Japan.”
In addition, more and more Koreans are canceling travel plans abroad because they fear they could contract MERS on planes.
“Basically, people do not want to stay with others in enclosed spaces,” the spokesman said. “We are concerned that MERS might reduce travel demand during the summer holiday season.”
Lotte Hotel said the number of its guests has declined by about 10 percent since May 20 when the first case of the MERS infection was reported, compared to the same period last year.
“The number of our foreign guests has decreased over the past three weeks as the country battles to contain the virus,” a Lotte Hotel spokeswoman said. “We are closely monitoring the situation and will take necessary steps to ease concerns among our customers.”
Korean Air, Asiana Airlines and other carriers, which have been on high alert over the MERS outbreak, say there has been no major cancelation of flights.
“We are monitoring the situation very closely," a Korean Air spokesman said. "Flight cancelations by Koreans and non-Koreans have remained minimal. If MERS continues here, it could prompt more people to refrain from flying.”
Asiana Airlines is also concerned that an increasing number of travelers may cancel tickets.
"If MERS continues to spread and infect more people, this will certainly dampen the upcoming travel boom in July and August," a spokesman said.
Department Stores, duty free shops and discount stores are also feeling the pinch.
Lotte Department Store said sales from June 1-6 dropped 5 percent from the same period last year. The story was pretty much the same for Hyundai Department Store and Shinsegae Department Store because people are refraining from going to public places.
E-Mart’s sales for the past seven days fell 12 percent, while Lotte Mart sales fell 12.4 percent.
In addition, construction companies are finding it increasingly difficult to do business in and with Middle East countries.
Builders, which have been struggling to secure orders from Arab countries amid continuing low oil prices, fear the MERS virus could further weaken their presence in the Middle East as employees become reluctant to work in there.
According to the Ministry of Land, Transport and Infrastructure, 12,793 Korean construction workers are in the region. Of these, 7,186, or 56 percent, are in Saudi Arabia, Kuwait, the United Arab Emirates and seven other countries where MERS infections have been reported.
Among builders, Hyundai Engineering & Construction, which has dozens of projects in Saudi Arabia and other Arab countries, is particularly concerned about the rapid spread of MERS back home. The company has been closely monitoring health conditions of its workers in the Middle East.
“No confirmed cases of MERS infection have been reported among our workers in the region,” a spokeswoman said. “We have been discouraging them from coming to Korea. We are also restraining employees from traveling from Korea to the Middle East.”