Author: Charlotte Gill

On June 6, a 65-year-old patient in Ostercappeln, northwest Germany, fell victim to a lung infection after a virus he contracted while away in Dubai inhibited his immune system. These events were unspectacular in that the patient was by no means the infection’s first victim – but the news was significant in that it marked the first fatality caused by the virus on European soil, and the latest chapter in this year’s whirlwind MERS saga. Relatively unknown until recently, the disease has inflicted major pains on the international community, and threatens to reawaken the same fears that blighted Asia’s growth only a decade ago.

MERS rising
According to the Centres for Disease Control and Prevention, Middle East Respiratory Syndrome – or MERS as it is more commonly known – is a viral respiratory illness that was discovered three years ago in Jordan and has since extended to nations in (and, more recently, beyond) the Arabian Peninsula. Belonging to the coronavirus family, of SARS fame, and so far known to affect patients from the ages of one to 99, the virus is quickly becoming known worldwide – and for all the wrong reasons.

MERS is yet to inspire unbridled panic to quite the same degree as its more famous cousin, yet the virus has nonetheless succeeded in ruffling a few feathers, and will continue to do so for as long as the deaths climb further into the dozens. Symptoms range from fever, coughing and shortness of breath to pneumonia and a number of gastrointestinal issues – though the most startling point by far is that there is, as yet, no cure for a virus that kills approximately 36 percent of its victims.

Over 1,000 cases have been confirmed and over 400 people killed so far, yet there has been little interest in the virus until recently. Referring to the outbreak in South Korea, the World Health Organisation (WHO) called the epidemic a “wake-up call”, with its Assistant Director, General Keiji Fukada, admitting that “we don’t understand the situation very well”. Initially contracted (as was the case in Ostercappeln) through close contact with animals, and even then only very rarely, MERS is now making its way from human to human and inspiring much instability in a growing number of nations.

South Korea’s failings
So far the virus has hit over 20 countries, though none like South Korea: in June this year, Seoul’s city mayor felt so strongly about the situation at hand that he declared “war” on the virus, and pledged to shield his people from further infection: “We will take swift and stern measures… to protect the lives and safety of our citizens”, said the man in question, Park Won-Soon.

With the country said to be the worst affected outside of the Middle East, the number of confirmed cases (as of June) had reached 41, and that of those in quarantine was fast approaching the 7,000 mark. Speaking on the administration’s failure to contain the infection, Park went to great lengths to assure all in Seoul that their safety would be better seen to. Elsewhere, the country’s Health Minister, Moon Hyong-Pyo, extended his and his employer’s apologies for any anxiety caused by the outbreak, though remained resolutely opposed to Park’s criticisms. But no matter their differences, each individual has failed to offer much in the way of comfort to the hundreds of families affected, or the millions more that have been spooked by scenes reminiscent of the 2002 SARS outbreak. Much about the virus remains unknown, and the head of the WHO, Margaret Chan, admitted as much in June. Most worrying of all, however, is that a number of new cases have managed to slip through the net entirely, indicating that the country’s control procedures have fallen short at a time when growth is already slow.

A lack of knowledge about the virus and its symptoms, both among health workers and the public at large, is thought to be responsible for the country’s failure to contain the virus, particularly in its early stages. Patients were reportedly penned in crowded emergency rooms for long periods of time, and were allowed to seek second and even third opinions from other hospitals, a phenomenon known as ‘doctor shopping’. Heavy criticism has befallen the government since the index case first slipped past airport security, and the situation has exposed the shortcomings of South Korea’s barebones healthcare sector – for starters, the country’s privately run healthcare providers, whose presence has spread in light of Korea’s ageing population, have been slow on the uptake, and the public sector is without the necessary resources to stamp out the issue.

In June, for-profit Samsung Medical Centre and Pyeongtaek St Mary’s Hospital accounted for 70 percent of all MERS cases. However, the private sector’s prohibitive cost structure means that many patients can ill afford a private room. Regardless of this oversight, none have faced heavier criticism than the government, whose failure to establish a proper strategic framework or inform the population at large about the issues has cost the country dear.

During last decade’s SARS outbreak, South Korea was held up on high as a model nation in terms of government response, with only four reported cases and no deaths. However, a culture of secrecy has bred mistrust among the public and has resulted in a record number of MERS cases – that is, until recently. With reports abound that tourists are fleeing the country, the ruling administration has taken immediate action to restore its hard earned reputation and stem its losses.

Clamping down
A quick visit to the Official Korea Tourism Organisation’s website raises a list of recommended preventative and corrective measures for safe travel in Korea, with each accompanied by a string of emergency numbers should any tourist fall ill. Yet the measures introduced recently extend far beyond simple guidelines, and so new rules have been written into law to better contain the disease.

The most significant of these was passed in late June, where authorised prison sentences of up to two years and fines of up to $18,000 were introduced for any person found guilty of breaching quarantine or lying about their condition. Primed to take effect at the end of the year, the law is in answer to the country’s poor disease control mechanisms and uncommunicative members of the public, whose past actions have put the population at risk.

South Korea’s first reported MERS case was allowed to bypass security in large part due to the patient refusing to comply with procedures, while the withholding of travel details meant that his diagnosis and the diagnosis of others was made more problematic. Likewise, another patient reportedly went golfing while a third travelled to China; incidents that, under the new laws, would warrant extremely heavy fines.

The number of state workers allocated to the task of containment has also been doubled, and officials have gone to great lengths to urge the population to stay vigilant should they suspect anything. At present, it appears that the initial spike in cases is beginning to level off, though the consequences for the country are only now beginning to show themselves: beyond the obvious health implications are many more for the economy at large, and in South Korea the outbreak is weighing on a slow growing economy.

Tourism takes a hit
The country’s Finance Minister, Choi Kyung-hwan, took to the stage in June to announce a more-than-$13bn supplementary budget with the hope that it might mitigate the impact of Korea’s gathering health crisis. In July, the government proposed an additional $10.5bn stimulus package – designed to counter falling tax revenues and slowing growth, the full package should go some way towards mending the damage done by the outbreak. The finance ministry also downgraded the country’s economic growth forecast from 3.8 percent to 3.1 percent for this year, with the currency expected to depreciate further still as the consequences take hold.

“The spread of the illness is credit negative for the sovereign, because it is dampening consumer confidence amid already-weak domestic demand, threatening to undermine an incipient recovery in economic growth”, according to Moody’s Investors Services. Although unlikely to trigger anything as serious as a credit downgrade, the impact is significant nonetheless, particularly for the services industry and for the country’s booming tourism sector. According to the Korea Tourism Organisation (KTO), more than 123,000 tourists cancelled their trips to South Korea in the first 18 days of June, and the long-lasting impact on the country’s reputation could hand the industry a serious blow.

This drop in bookings, mostly from China, Taiwan and Hong Kong, meant that arrivals were down 20 percent that month, following a 7.6 percent rise in May. Statistics also show that visits to the popular resort island of Jeju suffered a 46 percent decline in June on the year previous, with the country’s Vice Tourism Minister Kim Chong warning that a 50 percent decline in overseas visitors could reduce the country’s earnings by some $2.3bn.

Travel and tourism contributed a meagre 2.1 percent to national GDP in 2013, but the influx of tourists ever since means that any hurt for the sector could seriously slow the country’s stop-start recovery. According to the KTO, arrivals last year rose at a monthly average of 16.6 percent and the country has in recent times become China’s most favoured offshore holiday destination. The gathering MERS outbreak threatens to bring a halt to the influx, however, and reduced numbers from Asia are a particular concern, with memories of the SARS outbreak still fresh in the public’s minds.

Learning from the past
Going back to the first few years of the 21st century, SARS ranked high on the economic agenda for a continent that was only then beginning to feature on the international stage. For those hit hardest by the outbreak, occupancy rates plummeted into the single digits and growth slid to a virtual standstill. Rising fatalities, mostly in China, Hong Kong, Singapore and Vietnam, inflicted major pains on the tourism industry and threatened to stilt its development in a time when it was only just beginning to gather momentum.

Fearing that the MERS situation could cripple the country’s tourism credentials, Korean authorities have taken pains to halt fleeing travellers in their tracks

With over 900 fatalities and 8,300 reported cases attributable to the disease, SARS became the first pandemic of the century and underlined a great many of the pitfalls associated with international travel. Looking only at the spread of the disease, its impact was relatively minor (compared to AIDS or malaria, for example), though its portrayal as a pandemic did much to stoke fears in the global travel community. Suffice to say that attitudes towards the situation were informed in large part by the media, whose alarmist claims magnified its economic impact and resulted in a great many choosing not to travel.

In the case of China, the impact of the SARS epidemic was so severe that the government was forced to implement new measures to restore the damage done, in terms of both visitor numbers and international reputation. For much the same reasons, the MERS outbreak in Korea has deterred holidaymakers, and the country’s hard-earned status as an emerging holiday destination, particularly among corporate travellers, means that the sector’s revival is a more complex affair than in neighbouring China.

The country’s tourism sector relies in large part on Asian nations for its income, and an outbreak on the scale of MERS is exactly the thing to deter visitors in the surrounding region. South Korea is also generally less accommodating for travellers than some Western countries, and greater complications could prove too much for holidaymakers and corporate clients to stomach. Perched between China, the easternmost tip of Russia and Japan, the country’s strategic positioning is a major draw for corporate travellers. Combined with promising investment opportunities and a sound infrastructure network, this means that the country has fast become a corporate travel hotspot.

Although renowned for its fast moving technological prowess and budding start-up culture, South Korea is nonetheless a land of tradition, and the emerging corporate travel hub is not without its quirks: for example, it is still common etiquette for acquaintances to consume an alcoholic beverage on meeting. Customs much like this are interspersed throughout Korea’s complex corporate culture. The country’s capital, meanwhile, is home to the fifth greatest number of international conferences worldwide and the busiest airport in all of Asia, meaning that accommodation close to the city centre, even in the months prior to booking, is more-often-than-not full to capacity. In Busan, the country’s busiest port city and former capital, authorities are soon to build a new airport with the aim of boosting the city’s credentials as a northeast Asian centre for maritime logistics and finance. But outside of these two cities, there is work still to be done before the country is truly considered a formidable corporate travel destination.

Making it right
The MERS outbreak carries with it uncertain connotations for a corporate travel sector and emerging Asian economy that is yet to reach its full potential. The fallout threatens to stop any recent developments in their tracks, and while Seoul is arguably the only major city nationwide that can feasibly cater to all divisions of corporate traveller, the reputational damage wrought by the virus may encourage travellers to head for other Asian destinations.

Fearing that such a situation could cripple the country’s tourism credentials, Korean authorities have taken pains to halt fleeing travellers in their tracks. Aside from the more stringent containment measures mentioned previously, the government has also looked to remove some of the more common obstacles to entry, including plans to waive visa fees for Southeast Asian tourists in the hope that doing so might boost arrivals and sway wary travellers. This, combined with the $13bn supplementary budget and improved disease management, will do much to stem the losses in the immediate term. The challenge for South Korea, however, is not necessarily to keep visitor numbers healthy, but rather to ensure that it overrides the mistakes made in the immediate aftermath of the outbreak.

Should the country keep intact its growing reputation as an emerging corporate travel hub, then there are few doubts as to what the future could hold for a country with all the qualities it takes to succeed on the international stage.

When one considers where in the world rich, Western expatriates must face the most exorbitant living costs, the mind wanders east. The automatic assumption is a picture of wealthy bankers living in Hong Kong’s Happy Valley or Discovery Bay, or senior management figures driving 4x4s around Dubai and frequenting glitzy shopping malls. No doubt the cost of living for expats in these locations is expensive, but studies have shown that the most expensive place for expats to live is actually Luanda; the capital of Angola and the former Portuguese colony located on the Atlantic coast of Central Africa.

On Expat Blog, there is a forum dedicated to expats who are living in or considering moving to Luanda. There, one post asked how much money would be suitable when accepting a job offer in the city, to which the first response was “a lot”, unless you want to “lose your shirt here”. For years, Luanda has topped the Mercer Consultancy Group’s rankings for the most expensive city to live in for expats, a list that is produced annually and features many other African cities high in the rankings: the Chadian capital, N’Djamena, was number 10 this year, although in 2014 it came in at second. Victoria, the capital of the Seychelles, came in at 17, while Libreville, Gabon, stood at the 30th-most expensive. Cities in relatively wealthy sections of Africa – often with larger clusters of expats – generally were found lower on the list. For instance, South Africa’s Cape Town, a renowned hub for expats, featured way down the list at 200.

The Chinese alone purchase nearly two million barrels of oil a day from Angola

The rankings, of course, try to isolate costs for expats, not the cost of living for local and native residents of the city. The ranking features 214 cities globally, measuring the comparative cost of more than 200 items in each city, such as food, transport, household goods, entertainment, housing and clothing, using New York City as a base comparison.

The weight of legacy
Luanda, a city of five million people, was founded by a group of Portuguese soldiers and their families in 1575, who originally named it São Paulo de Loanda on the Ilha de Cabo. By 1605 it had become a city, and by the 17th century it had transformed into a thriving trading hub. It later became the launching pad for Portuguese colonialists who led raids inland to capture slaves, as well as a bust for the export of slaves to Brazil. The central role of Luanda in transatlantic trade led it to becoming known as the Paris of Africa.

In the 20th century, as the rest of Africa’s European colonisers gradually left and ceded home rule to Africans, the Portuguese persisted, leading to national liberation groups taking up arms against colonial rule. During the era of Portuguese rule, Luanda was a city closed to most African Angolans. After Portugal’s Carnation Revolution in 1974, the new rulers of the country disengaged from the country – as the Portuguese colonial settlers left the city, it began to fall into disrepair due to a lack of skilled workers in the city. This was soon exacerbated by Angola’s brutal 26-year-long civil war, which began in 1975 as a result of tensions between the communist-leaning MPLA and anti-communist UNITA group. The war saw the city fall further into disorder, although intervention by Cuban forces saw some skilled engineers and workers make a few vital repairs to the fledging capital. Refugees from across the country also flocked to the city during the war from areas of more intense fighting, leading to the proliferation of large slums and shantytowns around the city.

The civil war, which was to result in the death of around half a million soldiers and civilians, ended in 2002, with the MPLA emerging victorious. However, with the Cold War long over, the victorious group dropped its communist pretensions and began to look outward to foreign investment that would secure much-needed development. The long-time leader of the MPLA and President of Angola since 1979, José Eduardo dos Santos, courted international oil companies to drill and develop the country’s large oil deposits.

Battlefield to oilfield
Angola’s attempts at a revival through the development of oil, in partnership with a series of international firms, seem to be working. At present, the country is the 14th largest oil producer on the planet, pumping out 2.31 percent of the world’s total oil production. Today, the Chinese alone purchase nearly two million barrels a day from the country. Considering that, according to the US Energy Information Administration, Angola produced only 1.8 million barrels a day in 2012, suggesting a steady increase in production and capacity. Comparing favourably with Nigeria, Africa’s largest oil producer (which produces approximately 2.5 million barrels a day), Angola is among the top producers on the continent.

This history of civil war, followed by the boom in oil production, explains why Luanda is not just the capital of Angola, but also the costliest city for expats. The civil war led to widespread destruction, with infrastructure across the country either actively destroyed or simply left to fall apart. Roads, railways, and water supply facilities – already lacking due to Portuguese underdevelopment – were left devastated. As young men were continuously drafted into the opposing groups, much of the country’s productive capacity was left underutilised and underdeveloped, along with, once again, the active destruction of productive assets by military operations; be it farm land, equipment or factories. One of the worst features of the civil war was the widespread use of landmines, with millions being laid across the country. Many of these mines still remain buried in the countryside, meaning that a vast amount of otherwise fertile land is too dangerous to be considered for farming. As a result, Angola now imports 80 percent of consumer goods.

The climb to the top
The oil boom has attracted a range of senior managers in the oil industry, as well as engineers and geologists from the world’s largest oil firms; all handsomely paid and demanding all manner of articles, from simple home comforts to luxury items. While most Angolans cannot afford to purchase imported goods, this growing – and increasingly wealthy – expat community has created a market for importing such goods, being able to pay the incredibly steep prices.

The country’s poor infrastructure and lack of capacity for domestic production makes the importation of goods incredibly expensive – for instance, a bottle of Coca-Cola is purported to cost around $10, while a bottle of Crystal champagne can cost $1,200. Likewise, renting a house can set an expats back $10,000 a month – prices you would expect to see in New York or London – while a kilo of tomatoes can cost nearly $20 to import. For every good purchased, the cost of importation must be factored in, resulting in some eyebrow-raising prices for everything, from the mundane to the extravagant.

With a large amount of Angolans living on less than $2 a day, rich expats forking out $10 for a single bottle of Coca-Cola points to great levels of wealth disparity. The only hope is that the proceeds Angola receives from its oil boom – and its side effect of rich Westerners importing exorbitantly priced goods – are able to provide the funds that the country requires to rebuild its damaged infrastructure and production capacity.