May 7, 2021


SOUTHEAST ASIA: An important month ahead for the continental countries

BY Bob Herrera-Lim

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  • Several continental Southeast Asian countries are dealing with an increase in Covid-19 cases and increased public apprehension of variants and potentially strained health care systems.
  • Recognizing the economic cost of broad lockdowns, most of these governments are attempting targeted measures.
  • However, if Cambodia, Malaysia and Thailand are unable to bring their numbers back to the near-zero levels of a few months ago, they may start to tolerate moderate levels of domestic transmission.
  • Porous borders are in focus because of the current outbreaks and the longer-term effect may be increased disruptions or delays in cross-border movements, which could affect light manufacturing industries such as garments.

The continental Southeast Asian countries — Cambodia, Laos, Malaysia, Thailand and Vietnam — that had avoided major outbreaks last year have seen their highest daily new case numbers during the past few weeks. However, even though these are only a fraction of the worst-hit economies globally, apprehension is growing within these countries that, left unchecked, the increase in serious cases could eventually overwhelm their health care systems. India’s experience is now commonly cited within the region as a cautionary tale, and there is broad concern about how variants may be fueling their own outbreaks.

The responses have been varied:

  • Cambodia: City-wide lockdowns covering Phnom Penh and neighboring Takhmao since mid-April have been lifted in favor of more targeted geographic restrictions, but parts of Sihanoukville and Poipet remain under restrictions. Distribution of food aid has been a public issue and media are now barred from areas with the highest number of cases, signaling how sensitive the government is to domestic perceptions of its handling of the crisis.
  • Laos: A lockdown that started in a handful of provinces and the capital Vientiane in mid-April now covers the whole country until 20 May.
  • Malaysia: Cities, towns and districts are covered by varying degrees of movement control orders (MCOs) as the government tries to avoid broader state-level lockdowns. The persistence of cases makes it more difficult for the opposition to argue that the state of emergency should be lifted.
  • Thailand: Localized restrictions on entertainment venues, schools and other areas for public gatherings are being implemented in most cities where outbreaks are concentrated. But provinces are also implementing travel restrictions more extensively than in the past.
  • Vietnam: Hanoi and other cities are implementing measures ranging from school closures to sealing off pedestrian districts and nighttime markets. Cinemas and other entertainment areas are also being closed. Inbound travel restrictions have also been tightened.
SOUTHEAST ASIA: An important month ahead for the continental countries 1

The month of May could therefore be very important for many of the region’s economies. In the best cases, their governments will bring down new cases to the single or double digits, practically restoring them to last year’s situation. However, in the worst-case scenarios, the numbers would continue to rise, and importantly with more deaths being reported, which would likely cause governments to reimpose broader controls on movement and business even at great economic cost. This would be most problematic for Cambodia, as the even limited lockdowns of the past few weeks have fueled domestic dissent from workers who have lost their jobs and complain of inadequate public help. The government has already banned media coverage in the worst-hit zones in the capital. This would also be a problem for Thai Prime Minister Prayuth Chan-ocha, who is now being criticized for the government’s seeming over-reliance on local AstraZeneca licensee Siam Biosciences, which is also owned by the monarchy. Although Thailand has so far dodged a serious outbreak, its vaccination rate is below that of Indonesia, Cambodia and Malaysia.

A more ambiguous outcome would be if daily case numbers only gradually decline or stabilize but remain well above the numbers that these countries have been accustomed to over the past year. In this situation, Laos and Vietnam are less likely to relent on restrictions and may continue to aim for near-zero case numbers. The situation would be different for Cambodia, Malaysia and Thailand, where governments are more sensitive to possibly increasing public disenchantment in response to more economic pain. In this case, these governments may recalibrate their policies away from aiming for zero or near-zero domestic transmission.

And even if the region’s governments are eventually able to bring down Covid-19 cases, one longer-lasting concern from the current spike is that land travel restrictions could continue to be tight because of the perception that variants are spread through travel. This is potentially a problem for labor and transportation-dependent sectors that can be found in several of the countries.

For instance, Cambodia has set up economic zones near its border with Thailand to encourage Thai firms to relocate to areas that are roughly a four-hour drive from Bangkok and through which products are shipped. On the other side, Thailand set up factory zones near the Cambodian border to be able to employ lower-cost migrant workers who commute from towns across the border. Service workers in the food industry regularly commute between Myanmar, Cambodia and Thailand. Prior to the pandemic, there were an estimated 1.2mn Cambodian workers in Thailand, and the number is likely being underestimated, especially if those in the food services industry is counted. Myanmar, Indonesian and Cambodian workers are prevalent in the fishing fleets of Thailand. Vietnam, which shares a border totaling roughly 3,000km with Cambodia and Laos, is also tightening its controls. About 100,000 Vietnamese are estimated to live and work in Cambodia. It would also mean that Thailand will be reluctant to accept refugees from Myanmar in case the conflict further escalates, further adding to the humanitarian crisis now happening.

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