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Southeast Asia is under heavy economic pressure and risks lifting the epidemic blockade
Sep 15 , 2021

From factories in Vietnam and Malaysia to barbershops in Manila to office buildings in Singapore, Southeast Asian governments are promoting reopening plans to strike a balance between controlling the epidemic and maintaining the flow of personnel and capital. To this end, a series of measures have been implemented, including food transportation by the army, isolation of staff, micro blockade and allowing only vaccinated people to enter restaurants and offices.

unlike Europe and the United States, which also chose to reopen, Southeast Asia has a very low vaccination rate and is one of the most vulnerable areas in the world to delta virus. However, the weakening of the vitality of the previous rounds of economic stimulus plan and monetary policy has worsened the already tense national finance, and the blockade policy has begun to waver.

Krystal Tan, an economist at Australia and New Zealand Banking Group Co., Ltd., said that even Singapore, which has the highest vaccination rate in the world, has been struggling with the peak of infection. Reopening in other Southeast Asian countries and regions with lower vaccination rate will mean higher risk.

The blockade may hit the economy hard and affect the global supply chain

The average daily mortality rate in many Southeast Asian countries has exceeded the global average. However, Southeast Asian governments are increasingly worried that the economic belt will be hit hard if the restrictive measures last too long but the vaccination speed is slow.

Due to the record number of confirmed cases in Japan, Malaysia cut its economic growth forecast for 2021 by half to 3% - 4%.

The recovery momentum of Thailand's key industry - tourism is also rapidly disappearing.

The lockout of factories caused by the blockade also spread to the world, resulting in problems in the supply chain. Carmakers including Toyota cut production sharply. Clothing retailer Abercrombie & Fitch warned that the situation was "out of control".

Vietnam and Singapore, which set their economic growth expectations at 6% and 7% respectively, are facing increasing pressure to solve the problem of global supply chain congestion and avoid dampening foreign investors' interest in Vietnam.

Vietnam has the greatest risk in terms of its impact on the global supply chain. Vietnam's blockade has become more and more strict, which has made manufacturers and exporters pay a huge price, but failed to stop the spread of delta virus.

Vietnam's novel coronavirus pneumonia mortality rate is 2.54%, far higher than the global average of 0.2%.

Vietnam's trade ministry warned this month that many factories have been closed due to strict restrictions, and Vietnam is likely to lose overseas customers. The European Chamber of Commerce in the country estimates that 18% of its members have transferred some products to other countries to ensure the protection of its supply chain, and more members are expected to follow suit.

Overseas Chinese Bank economist wellian Wiranto pointed out that with the continuation of the crisis, Southeast Asian countries are overwhelmed by the economic costs brought by successive rounds of blockades and the increasing fatigue of the people.

We will continue to introduce new epidemic prevention measures to ensure the smooth reopening of the economy

In particular, Southeast Asian countries have fought against the virus for a longer time than most countries in the world. As a result, they have not only failed to reduce confirmed cases, but also exacerbated unemployment. In this case, the patience of the people in Southeast Asia is running out, and the government has to choose to change.

Indonesia, the largest economy in Southeast Asia, is focusing on long-term measures. The government is trying to strengthen regulations, such as the mandatory provision of masks for several years. Indonesia has also developed a "road map" for specific areas such as offices and schools in order to formulate longer-term rules under the new normal.

The Philippines is trying to implement travel restrictions in more targeted areas to replace national or regional blockades, even including streets or houses. Vietnam is also experimenting with this measure. Hanoi has set up a travel checkpoint, and the government has formulated different restrictive measures according to the virus risk in different areas of the city.

In Jakarta, the capital of Indonesia, only people with a vaccine card can enter shopping malls and places of worship. In Malaysia, only people with a vaccine card can go to the cinema. Singapore requires restaurants to check the vaccination status of diners. In addition, in Manila, the government is considering the use of "vaccine foam" in the workplace and public transport, which allows fully vaccinated personnel to travel or travel freely on destinations without isolation.

 

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