Concerns Become Reality... Korean Companies Helpless as Russian Sanctions Freeze Funds

Russia's Ruble Debt Repayment Measures
Additional Sanctions Amid Blocked Remittance Paths...Domestic Companies Face Double Hardship

[Image source=Yonhap News]

[Asia Economy Reporters Jin-ho Kim, Min-young Kim] Domestic companies trading with Russia, such as Samsung Electronics, Hyundai Motor Company, and LG Electronics, are on high alert due to the impact of sanctions against unfriendly countries. With remittance channels already blocked, Russia has taken measures requiring debt repayment in rubles, whose value has plummeted, leaving related companies caught in the crossfire like "shrimp crushed in a whale fight."

According to the business community on the 8th, about 40 domestic companies and associations currently operating or trading in Russia are closely monitoring the effects of Russia's sanctions against unfriendly countries and are carefully considering their responses.

Earlier, on the 7th (local time), Russia included South Korea and others in the list of countries that have taken unfriendly actions against Russia. The first measure against unfriendly countries is economic sanctions. For foreign creditors included in the unfriendly countries list, Russian government entities, companies, local governments, or individuals with foreign currency debts are allowed to repay those debts in rubles.

The problem is that the ruble's value has been plunging to record lows daily since Russia's full-scale invasion of Ukraine. In particular, due to Russia's exclusion from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), it is pointed out that receiving debt repayments in rubles itself is difficult.

For Korean companies operating locally or exporting products to Russia, significant restrictions on business activities are expected, and realistically, receiving export payments has become even more difficult.

Domestic companies such as Samsung Electronics and LG Electronics are not expected to suffer immediate major damage or operational difficulties, but they are paying close attention to the aftermath of the situation and the possibility of additional sanctions. An industry insider said, "Since the proportion of the Russian market in the global scale is low, there will be no immediate major damage," but added, "If the situation prolongs or additional sanctions are imposed, they will inevitably be affected." Another industry insider said, "Since remittances have been suspended and additional measures have been taken, there will be more difficulties related to payments."

Domestic construction companies operating locally are also closely monitoring the situation. Companies such as DL E&C, Hyundai Engineering, and Samsung Engineering have secured local projects in Russia and are carrying out business. The losses due to the ruble's depreciation vary depending on the currency in which each company contracted. For example, DL E&C, which secured the Baltic Complex project at the end of last year, contracted in euros.

This content was produced with the assistance of AI translation services.