Table of Contents

  • The outbreak in continental Southeast Asia has already passed eight weeks, increasing the pressure on governments to address growing public disgruntlement at slow vaccine roll outs.
  • Malaysia and Thailand, where leaders could face potentially disaffected voters or protests, are planning new stimulus programs in the next few months.
  • Governments are also promising that vaccination programs will accelerate, but their ability to deliver is vulnerable to several risks.
  • Thailand and Indonesia are putting a brave face on their efforts to reopen Phuket and Bali, respectively, by the third quarter but some delay due to the recent outbreaks and a slow uptake by foreign visitors is possible.

The imposition of movement and business restrictions in several Southeast Asian countries over the past few weeks have led to the downgrading of growth expectations for several countries. This has broadly increased the pressure on governments to speed up their vaccinations and for the worst-hit countries to implement more stimulus measures. But even these policies face substantial challenges in the months.

To some extent, the recent outbreaks and the consequent economic pain may also be modifying domestic perceptions of the tolerable levels of community transmission; domestic fatigue over lockdowns is increasing and there may be more tolerance in the region for higher levels of new cases as long as healthcare systems continue to have spare capacity (which in turn may make investment into more Covid-19 facilities a part of near-term spending programs). Cambodia, for instance, is seeing a second spike in three months, indicating that it may have relaxed restrictions too early in mid-May.

Cross-border travel restrictions may remain tight for the next two to three months, affecting labor movement as well as possibly causing a planned reopening by Thailand and Indonesia to foreign tourists starting in the third quarter to underperform.


Malaysia and Thailand have recently announced new stimulus for the third quarter to spur demand and help preserve incomes. Malaysia is planning a total MYR 5bn (USD 1.2bn) in direct cash handouts to households earning below MYR 2,500 a month and wage subsidies for 2.5mn workers in the worst-hit sectors. Thailand’s stimulus of THB 140bn (USD 4.5bn), scheduled to start in July, will take the form of co-payments for consumer purchases (THB 93bn), cash-back for higher-income consumers (THB28bn) and cash for welfare cardholders and special groups (THB 19bn).

In the Philippines, which also tightened movement and business restrictions from March through mid-May, the House of Representatives has approved a PHP 401bn (USD 8.4bn) stimulus program, but the measure seems unlikely to pass the Senate and the administration seems uninterested in pushing the upper chamber for its approval.


Southeast Asian countries are vaccinating well below their target rates. So far, the percentage of the population that has received at least one dose stands at around 6.1 % for Indonesia and Malaysia; 3.8% for Thailand and the Philippines; and 1.1% for Vietnam. The Philippines, Thailand and Indonesia, for instance, are having difficulty raising their daily vaccination rates above to above 0.15% of the population. Only Malaysia has been able to reach a daily rate close to 0.25%, but even this number has been volatile. Vietnam’s uncharacteristic misstep in failing to procure enough vaccines early on has seen its peak vaccination rate at about 0.04% over the past three months.

To address apprehensions about vaccine supplies, governments are promising faster deliveries from existing contracts, higher domestic production (in the case of Thailand and Indonesia), more supplies from the COVAX initiative and private sector purchases that would supplement public vaccination campaigns. Nonetheless, uncertainties in export policies, the availability of cold-chain infrastructure and trained personnel, and the ability of governments to convince the bulk of their population to be vaccinated remain as key risks that could lead to uneven vaccination rates throughout the region.

For instance, Siam Bioscience, the Thai firm that is the source of Southeast Asian production of the AstraZeneca vaccine and the primary source of much of Thailand’s vaccine supply, has promised to deliver 6mn doses to its home country this June. At the same time, however, a major Philippine purchaser has warned that its AstraZeneca purchases from Siam Bioscience could be delayed by several weeks from the promised June date, signaling that the Thai firm may be prioritizing its own domestic requirements — or worse, possibly not have enough for its own short-term needs. The difficulty of procuring western vaccines has provided Russia’s Gamaleya and China’s Sinovac with opportunities to market their vaccines to Indonesia, the Philippines, Vietnam and Thailand.

Vaccine hesitancy may also be a key constraint that emerges as coverage rates rise. For instance, in the Philippines, estimates of how many people may be skipping their second dose range from a low 9% to as high as 50%. In Thailand, two separate polls show that 64% of Thais are willing to be vaccinated, which is down from 83% several months ago. Vaccine hesitancy may also be contributing to the volatility in Indonesian daily vaccination rates, given that supply is less of a constraint for Jakarta compared to Bangkok or Manila. What remains to be seen is whether private-sector procurement of vaccines, which is allowed in Indonesia, the Philippines and Thailand, could overcome some of this hesitancy since companies will be encouraging their employees to undergo vaccination — assuming supplies arrive on time.

Travel and tourism

The recent outbreaks have led to a tightening of travel restrictions, as well as some flip-flopping in rules as countries attempt to calibrate the risks from cross-border transmission, especially due to the widespread fear of Covid-19 variants. This uncertainty is likely to persist for several more weeks. More crucially, Thailand and Indonesia are both aiming to have important tourist destinations reopened by the third quarter, but these aspirations may fall short initially. In the case of Thailand, the key development will be the reopening of Phuket to tourists by July, a timetable that the government is sticking to despite the recent spike in cases.

If successful, the Phuket sandbox scheme, where vaccinated travelers can enter without quarantine but must spend a defined period of time — currently seven days — within the locality before being allowed travel to the rest of the country, could be expanded to other prominent destinations such as Chiang Mai. In Indonesia, the plan is to reopen specific travel corridors with countries that have contained the spread of the virus, have high vaccination rates and are willing to offer some reciprocal benefits.

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SOUTHEAST ASIA: Vaccines, stimulus and travel reopenings

The outbreak in continental Southeast Asia has already passed eight weeks, increasing the pressure on governments to address growing public disgruntlement at slow vaccine