Japan's travel ban could impact Korean firms

Worker are seen inside a Samsung Electronics semiconductor plant in Hwaseong, Gyeonggi Province. Courtesy of Samsung Electronics

By Kim Hyun-bin

Local companies are bracing for possible difficulties after Japan strengthened travel restrictions on people traveling there from Korea, a move that could hinder some companies' capabilities in maintaining their production lines and implementing and exporting new technologies.

Prime Minister Shinzo Abe announced the new travel restrictions that impose a 14-day quarantine period and also suspend a visa-waiver program for Koreans, including invalidating visas already issued. They will remain in place through the end of the month.

The move could cause difficulties for companies exporting goods amid concerns that the restrictions could be extended if the epidemic continues.

Companies are looking into ways to minimize losses and find alternatives as Japan is a key export partner in the region.

Many firms, especially in the semiconductor and display sectors, could be affected as key specialists and engineers who maintain and repair newly installed equipment, will have a difficult time entering Korea after the government here imposed reciprocal travel restrictions on people traveling to the country from Japan.

“In the initial stages of installing equipment both Japanese and Korean engineers visit production lines to test and tune the equipment. Personnel exchanges are imperative and without them, it could cause a setback in operations,” an official at a local semiconductor firm said.

The dependence on Japanese equipment is still high. According to the Export-Import Bank of Korea 44.6 percent of semiconductor manufacturing equipment used here is made in the United States and 28.2 percent is from Japan. Most Japanese equipment is sophisticated and complex and local firms use it in their next generation semiconductor production lines such as in Extreme Ultra Violet (EUV) manufacturing.

Since the travel ban was enforced Monday, the industry is keeping an eye on developments, but has not seen any major setback so far as visa restrictions do not apply to exports.

“There have been no restrictions on exports, so currently there have been no noticeable changes, but we are keeping an eye on how the situation progresses,” the official said. “Relations between Korea and Japan have always been entangled politically and could easily worsen the business atmosphere. We do not view the situation lightly as Japan is the second largest regional market for us after China.”

Most firms have also restricted overseas business trips due to the COVID-19 outbreak, and utilized remote communication as many people work from home, which experts believe has minimized damage from the travel bans.

However, if the travel restrictions are extended, it could cause major setbacks in supply and operations, which will force companies to change long-term business plans.

Industry watchers say currently Vietnam, India and Japan have restricted entry of Koreans, which could create shifts in investments and exports.