S Korea charters flights to factories to reboot supply chains

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South Korea is operating special flights for business people with factories in foreign countries as a breakdown of the world’s visa and travel systems caused by coronavirus wreaks havoc on multinational operations.

At least five flights have been dispatched since late March, taking hundreds of engineers and executives to critical manufacturing facilities in China, Vietnam and eastern Europe owned by tech companies Samsung and LG as well as carmaker Hyundai and their suppliers.

Park Ki-young, deputy trade minister, told the Financial Times: “Our businessmen with overseas plants are in trouble . . . We have seen more demand for such flights than we expected, so we plan to continue to run these operations until the pandemic is brought under control.”

The problem is acute for several of the companies that are in the midst of plant expansions and refurbishments, including one of Samsung’s memory chip factories in China.

South Korea, Asia’s fourth-largest economy and one of the world’s top 10 outbound investors, has been hit hard by the coronavirus. For a time it was the worst-affected country outside China.

Despite its success in containing the outbreak over the past two months and government support to keep airlines afloat, travel restrictions on Koreans by 150 countries has severed companies’ access to their sites around the world.

The chartered flights were mostly funded by large companies and only possible after some countries granted one-off visa approvals.

They have become doubly critical because Seoul’s trade officials and diplomats have been unable to build international support for a new system of visas to allow business people to travel if they can prove they are not at risk of spreading Covid-19.

“It is not easy for each country to agree and set such mechanisms in place immediately, given the current pandemic situation,” Mr Park said. “Approval for businessmen could spark opposition [in some countries] over virus protection because it could be seen as meaning all business trips are allowed unconditionally.”

One such proposal involved modelling or expanding the Apec business travel card system. The card usually reduces immigration hurdles across many Asia-Pacific countries but, in an example of the impasse, has temporarily lost its validity for entering China.

International trade and economic groups, including the OECD, have warned that multilateral efforts to combat the risk to global supply chains have been insufficient given the severity of the problems.

Stephen Jacobi, a trade expert, noted joint commitments made in recent weeks to keep supply chains open during the crisis by a group of Asia-Pacific countries — Canada, Australia, Chile, Brunei, Myanmar, Singapore and New Zealand — as a positive development.

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But he added that a wider-ranging agreement would be difficult because of an “absence of leadership” at groups such as the G20 and G7.

“If something like a ‘trusted traveller scheme’ were to get off the ground, it would require much greater co-operation between trading partners than we are seeing right now,” said Mr Jacobi, executive director of the New Zealand International Business Forum.

“It is about leadership, political will and trust. Trying to get everybody on the same page would require a big diplomatic effort.”

The World Trade Organization has forecast global trade will plunge by as much as 32 per cent this year and Lee Jae-yoon, an analyst at Yuanta Securities, a Seoul brokerage, said while Korean companies were facing serious problems running their overseas operations, the broader hit to consumer demand globally loomed as a “bigger problem”.

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