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Skift Take
It’s good to be cautious, but Thailand may pay the price of being cautious to a fault. Having already lost out on the first-mover advantage, will the delay in reopening deal a major blow to the already-fragile economy of Southeast Asia’s biggest tourism hub?
An emotional moment unfolded at Malaysia’s Johor Bahru as many waited patiently for the clock to strike 12 on Thursday night.
Often described as the one of the world’s busiest land crossings, the Johor Causeway — connecting Singapore and Malaysia — fully reopened to welcome vaccinated Malaysians back into the country for the first time in two years.
April 1 marked an important day in the recovery of tourism in Southeast Asia. Moving away from the vaccinated travel lanes, Singapore on Friday also transitioned to a new Vaccinated Travel Framework to help facilitate a seamless travel experience for arrivals into Changi.
After two years of disruption, the Southeast Asian tourism economy is finally limping back towards recovery. However, a destination conspicuously missing in this reopening story is the biggest tourism hub of the region — Thailand.
Even though Thailand has been open to foreign tourists with special tourist visas since October 2020, the number of foreign tourist arrivals has been disappointing. The government also launched two tourism recovery pilot programs in July 2021 — the Phuket Sandbox and Samui Plus.
In November, the authorities announced full reopening. However, following an Omicron surge in December, Thailand quickly closed its borders. In February this year, the Test & Go program was resumed again.
From Friday, international arrivals under any of the entry schemes in Thailand — Test & Go, Sandbox, and Alternative Quarantine — will be allowed to enter the country without any proof of a negative RT-PCR test.
However, under all three programs, medical insurance covering health costs over $20,000, and registration for the online Thailand Pass are required, irrespective of vaccination status. Arrivals are also required to get tested on Day 1 and Day 5, while those arriving under the Alternative Quarantine program would need to quarantine for five days.
A Tourism Council of Thailand poll that surveyed 200 overseas travellers this year showed that 71 percent found the process around the PCR test on arrival cumbersome.
And all this when destinations like Vietnam and Cambodia have fully reopened to international tourists with no quarantine requirements.
The Early Birds
In line with the full reopening of Vietnam’s borders in February, arrivals to the country surged 89 percent to 91000 in the first quarter of 2022. In 2021, tourist arrivals plunged 96 percent to 157,000 arrivals. In 2020 international visitor arrivals went down 79.5 percent and total tourism receipts decreased by 58.7 percent – a decrease equivalent to about $19 billion.
Before the pandemic outbreak, Vietnam witnessed a breakthrough growth of tourism with international arrivals going up to 18 million in 2019. This was the fastest growing globally according to a UNWTO report. Tourism contributes 9.2 percent to the Vietnam GDP.
Not to be outdone by Vietnam’s border reopening news, Cambodia too reopened to fully vaccinated international travelers in mid-February. Since the onset of the pandemic, the country saw an over 80 percent drop in international tourism, with a significant effect on tourism businesses and direct jobs in the tourism industry.
Cambodia received almost 152,000 international tourists in the first quarter of 2022, marking a 114 per cent surge year-on-year.
Philippines also relaxed mobility restrictions allowing fully vaccinated international travelers to enter the country in February. Following this reopening, inbound visitor arrivals in Philippines reached 102,031 as of March 16, a high note for the country since its closure of borders at the onset of the pandemic in March 2020.
Indonesia may soon join the race. A successful two-week trial in the Bali, Batam and Bintan islands paves way for a broader quarantine-free reopening of the country’s borders. Tourism Minister Sandiaga Uno has hinted at reopening in May, after Eid.
And Then There Are the Numbers
According to a report by the Asian Development Bank, Southeast Asia’s overall international tourist arrivals increased by 58 percent in July to September 2021 compared to the same period in 2020, but remained 64 percent below 2019 levels.
Gross domestic product (GDP) contributions from the industry have displayed continuous increases throughout the past decade until it halved in 2020 due to the global pandemic.
The tourism sector has been a key driver of Thailand’s economic growth for many years. In 2019, revenue from international tourists accounted for 11 percent of GDP. However, the number of foreign tourists in Thailand plunged from 39.9 million in 2019 to 6.7 million in 2020 and 0.4 million in 2021, causing foreign tourist receipts to drop by around 90 percent and forcing businesses to shut down and lay off workers.
Thailand’s GDP in 2020 contracted by 6.1 percent, its worst performance since the 1997 Asian financial crisis. The economy in the first half of 2021 expanded by only 2 percent due to a significant resurgence in Covid infections.
The Thai government has also talked about using Covid-19 as a catalyst to overhaul the tourism sector. In a bid to move away from mass tourism, the government plans to attract tourists with more spending power. High-income tourists — those who earn more than $60,000 per year — tend to account for only a small portion of Thailand’s international arrivals (8 percent in 2019).
With big source markets like China and Russia closed, Thailand needs to think fast. The wait-and-watch game may not bode well for the country’s tourism-reliant economy.
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