Even as they battle one of the world’s worst Covid-19 epidemics, countries in Southeast Asia are slowly realizing that they can no longer afford the crippling economic restrictions needed to crush it.
In factories in Vietnam and Malaysia, in barbershops in Manila or in office towers in Singapore, regulators are pushing reopening plans forward, seeking to balance containing the virus while keeping people and money moving. This leads to a series of experiments, including food delivered by the military, sequestered workers, micro-locks, and restricted access to vaccines to restaurants and offices.
Unlike Europe and the United States, which have already gone down the path of reopening, the region’s low vaccination rates leave it among the most vulnerable in the world to the delta variant. But with public finances strained by previous rounds of stimulus measures and the reduction in the firepower of monetary policy, lockdowns are becoming less and less tenable day by day.
“It’s a delicate balance between life and livelihood,” said Krystal Tan, economist for Australia and New Zealand Banking Group Ltd., noting that even Singapore has battled spikes in infection. despite a vaccination rate among the best in the world. The risks of stop-start reopens are higher in the rest of the region, where coverage is considerably lower, Tan said.
Plant closures in Southeast Asia have reverberated around the world to create supply chain problems, with automakers including Toyota Motor Corp. cutting production and clothing retailer Abercrombie & Fitch Co. warning that the situation is “beyond our control”.
The daily death rate in many Southeast Asian countries has exceeded the global average, pushing them to the bottom of Bloomberg’s Covid resilience rankings.
Yet officials are increasingly concerned about what it means economically if restrictions persist for too long despite slow inoculations. Malaysia halved its growth forecast for 2021 to 3% to 4% as daily cases hit record highs. Thailand’s hoped-for rebound on a critical recovery in tourism is quickly fading away.
Even where the outlook looks impressive – Vietnam is expected to grow 6% this year and Singapore officials are forecasting 7% growth – there is growing pressure to address bottlenecks in the global supply chain and avoid curb the appetite of foreign investors for the dynamic region. .
According to the economist of Oversea-Chinese Banking Corp. Wellian Wiranto, the countries of Southeast Asia are exhausted both by the economic costs of the series of successive shutdowns and by a growing sense of exhaustion among their populations as the crisis continues.
“Any hope of a wide reopening of borders that can facilitate trade and tourism flows through various ASEAN countries will remain a distant pipe dream,” Wiranto said.
When it comes to impacts on global supply chains, the stakes have been among the highest in Vietnam, where increasingly stringent lockdowns have cost manufacturers and exporters dearly while not stopping the spread of the disease. delta.
The country’s commerce ministry this month warned it was at risk of losing foreign customers due to severe restrictions that have closed factories. The European Chamber of Commerce in Vietnam has estimated that 18% of its members have relocated some of their production to other countries to ensure their supply chains are protected, and more are expected to follow.
Public patience is dwindling across the region, especially as they have been battling the virus for longer than most countries in the world. In Malaysia, social angst helped force regime change after prolonged shutdowns fueled job losses but failed to reduce cases.
Street protests against the Thai government that precede Covid have turned into rallies linked to the pandemic. The plight of the working poor in Vietnam – far from promising middle-class jobs for multinational companies – is increasing pressure on the government to reopen.
In Singapore and the Philippines, companies are increasingly vocal about the challenges of long-term planning due to lack of certainty about government policies.
As a result, there is now a growing shift in Southeast Asia to treat Covid-19 as endemic, with countries like Malaysia, Indonesia and Thailand emulating Singapore’s strategy for learning to “live with the virus.” “.
Indonesia, the region’s largest economy, is focused on the long game. Ministers are trying to cement rules like a multi-year mask tenure rather than implementing intermittent mobility restrictions. They are also rolling out “roadmaps” for specific areas like offices and schools to set more permanent rules in the new normal.
Reporting the number of daily cases now becomes less important than their severity. This is especially true for the two most vaccinated countries in Southeast Asia: Singapore, which ranks among the best in the world with over 80%, and Malaysia, with around half of the population fully vaccinated.
Instead of national or regional lockdowns, the Philippines is seeking to enforce mobility restrictions in more targeted areas – down to the street or even the house. Vietnam is also testing this strategy, with Hanoi instituting travel checkpoints, as authorities vary restrictions based on virus risk in different areas of the city.
Only vaccination card holders can enter shopping malls and places of worship in Jakarta, or go to cinemas in Malaysia. Restaurants in Singapore are required to verify the vacancy status of diners. In Manila, authorities are considering “vaccine bubbles” for workplaces and public transport.
While this strategy may reduce damage to the wider economy, the risk is that unequal distribution of vaccines – in Malaysia, for example, to economically vital states rather than poorer areas – unfairly disadvantages them. low income residents.
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