Coronavirus: Global situation

S-E Asia sees reopening a better choice amid pain of virus curbs

Region realising it can ill afford economic consequences of further lockdowns

HANOI • Even as they struggle with one of the world's worst Covid-19 outbreaks, nations across South-east Asia are slowly realising they can no longer afford the economy-crippling restrictions needed to squash it.

On the factory floors of Vietnam and Malaysia, in the barbershops of Manila or office towers of Singapore, regulators are pushing forward with reopening plans, as they balance containing the virus with moving people and money.

That is leading to experiments including military-delivered food, sequestered workers, micro-lockdowns and vaccinated-only access to restaurants and offices.

In contrast to Europe and the United States, which have already moved down the reopening path, the region's low vaccination rates leave it among the world's most vulnerable to the Delta variant.

But with state finances stretched by previous rounds of stimulus and dwindling monetary policy firepower, lockdowns are becoming less tenable by the day.

"It's a tricky balance between lives and livelihoods," said Ms Krystal Tan, Australia & New Zealand Banking Group economist, noting that even Singapore has struggled with infection spikes despite a world-leading vaccination rate.

The risks of stop-start reopenings are higher in the rest of the region, where coverage is considerably lower, Ms Tan said.

South-east Asia's factory shutdowns have rippled across the world to create supply chain hiccups, with carmakers such as Toyota Motor slashing production and clothing retailer Abercrombie & Fitch warning that the situation is "out of control".

The daily death rate in many South-east Asian countries has surpassed the global average. Yet officials are increasingly worried about what it means economically if restrictions linger too long despite slow inoculations.

Malaysia cut its 2021 growth forecast in half to 3 per cent to 4 per cent as daily cases hit records. Thailand's hoped-for tourism revival is swiftly vanishing.

Even where the outlook appears impressive - Vietnam is set to grow 6 per cent this year and Singapore officials see theirs as high as 7 per cent - there is increasing pressure to address global supply-chain blockages and to avoid dampening foreign investor appetite.

According to OCBC Bank economist Wellian Wiranto, South-east Asian nations are being worn down both by economic costs from successive rounds of lockdowns and an increasing exhaustion among their populations as the crisis drags on.

"Any hope of a broad border reopening that can facilitate trade and tourism flow across various Asean countries is going to remain a distant pipe dream," he said.

When it comes to impacts on global supply chains, stakes have been among the highest in Vietnam, where increasingly stringent lockdowns are exacting high costs on manufacturers and exporters while failing to halt Delta's spread.

The country's trade ministry warned this month that it risks losing overseas customers because of tough restrictions that have shuttered factories. The European Chamber of Commerce in Vietnam estimated that 18 per cent of its members have relocated part of their production to other countries to protect their supply chains.

Patience among the region's public is wearing thin, especially as they have battled the virus for longer than most of the world.

Street protests against the Thai government that predate Covid-19 have evolved into pandemic-related rallies. The plight of the working poor in Vietnam is increasing pressure to reopen. Elsewhere, businesses are becoming more vocal about difficulties in long-term planning due to a lack of certainty around government policies.

As a result, there is a growing shift in South-east Asia to treat Covid-19 as endemic, with the likes of Malaysia, Indonesia and Thailand emulating Singapore's strategy to learn to "live with the virus".

Indonesia, the region's biggest economy, is focused on the long game. Ministers are attempting to cement rules like a years-long mask mandate rather than implementing on-off mobility curbs. They are also rolling out "road maps" for specific areas like offices and schools to outline more permanent rules in the new normal.

Reporting the number of daily cases is now becoming less important than their severity.

In place of national or regional lockdowns, the Philippines wants mobility curbs in more targeted zones - like the street or house.

Only those with vaccine cards can enter malls and places of worship in Jakarta, or head to the cinemas in Malaysia. Restaurants in Singapore are required to check the vaccination status of diners.

While this strategy may reduce the damage to the broader economy, the risk is that an unequal distribution of vaccines may unfairly disadvantage lower-income residents.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 14, 2021, with the headline 'S-E Asia sees reopening a better choice amid pain of virus curbs'. Subscribe