ASEAN Tourism Recovery: More Than Reopening Borders

Hu Yukun

For ASEAN countries， the COVID-19 conundrumthis spring has becomeeven more difficult，exacerbated by theOmicron variant andRussia-Ukraine conflict.

The region’s key tourismindustries have been amongthe hardest hit， and are nowregarded by these governments as the launch pad for economic recovery.

Now that the answer，reopening borders tointernational tourists， isbecoming increasingly clearto leaders of these countries，that move is only the easy part.Unilateral effort by ASEAN alone will hardly boost its tourism topre-pandemic levels.

When Border Control Becomes Unaffordable

In early 2020， Southeast Asia was one of the first regions tobe affected by the outbreak ofCOVID-19“because of its closegeographical proximity andbusiness travel， tourism， andsupply chain links to China，”according to the Organisationfor Economic Co-operation and Development （OECD）. By earlyMay 2020， nine of 10 ASEANcountries had closed theirborders， blocking entry of allforeign visitors.

The travel ban soon provedextremely costly. Before thepandemic， the GDP contribution of tourism in the region hadreached US$393.12 billionin 2019， approximately 12.4percent. In Cambodia alone，the figure was 32.7 percent. Noone doubted that the inabilityto receive international tourists would deal a devastating blow to the region’s tourism and overall economy.

A March report from theAsian Development Bank （ADB） calculated how badly the world’sfifth largest economy hadsuffered. Behind the around 4percent regional GDP declinein 2020， severely disruptedtourism played a significantpart. In Thailand where tourism normally accounts for a fifthof the country’s GDP， the sharedropped by almost two-thirds to 6.78 percent that year， resulting in its GDP shrinking by 6percent.

Findings from Fulcrum，ISEAS – Yusof Ishak Institute’snew analysis site， are evenmore astonishing： From 2019to 2020， international touristarrivals and tourism receiptsfell by 82 percent and 78 percent respectively in Southeast Asia，making tourism in the regionone of the most impactedsectors.

In 2021， Southeast Asia’seconomic recovery was slowerthan predicted， while tourismremained far from normal ascountries did not lift all travelrestrictions. According toGanneeshRamaa， vice president of the Malaysian Association ofTour and Travel Agents （MATTA）， despite positive domestic travel sales， Malaysia’s tourist andhospitality sectors continued to contract last year.

As Deutsche Welle called it last December， Malaysia’s tourismsector“faced collapse” as anexpected rush of internationaltourists never happened despite the government’s efforts togradually open its popular tourist attractions such as Langkawiand work with internationalairlines to restore long-dormant connections.

ASEAN countries desperately need speedy recovery of tourism， and it is not just about GDPfigures. Ordinary people in thisregion cannot afford to wait any longer.

ADB’s report showedanother alarming finding： Ina region with a population ofmore than 680 million， thepandemic pushed 4.7 millionpeople into extreme povertylast year， which means theycould earn less than US$1.90a day. Citing the InternationalLabour Organization （ILO）， italso estimated that 9.3 millionSoutheast Asians becameunemployed that year， and jobscarcity was predicted to be 4.1million in 2022， far from a strong enough recovery.

Again， one of the majorobstacles is tourism. Before the pandemic， the number ofjobsin Southeast Asia directly linked to this industry had increasedby around 46.5 percent to nearly 16 million. In just one year，countries like the Philippines，Thailand， and Vietnam lostnearly a third of tourism sectorjobs， affecting more than 1million people， explained ILO in its research last November.

While people are losing theirjobs as a result of closures ofhotels and tourist attractions，ten-year high inflation causedby the Russia-Ukraine conflictis making life even harder.Sacrificing tourism for Omicron control now seems too high aprice to pay， so hard choices arebeing made with little hesitation.

Hard Choice， Easiest Step

“It often takes some time to attract tourists after thereopening period，” said TranDoan The Duy， director general ofVietravel Travel Company.“Tourism businesses， especially thoseinvolved in international tourism，should increase their promotionand advertisements. It’s necessaryto promote both domestic andinternational tourism to ensuresustainable growth of the tourismindustry.”

When Vietnam decided to fullyopen its borders to foreign visitors this May， Tran was cautiously optimistic.As an industry veteran， he is well aware that opening the borders is only thefirst， and easiest， step.

In the first quarter of 2022， Vietnam received nearly 91，000 internationaltourists， up 90 percent against lastyear. The country’s tourism industryaims to receive 65 million visitorsincluding 5 million from othercountries. Compared with more than18 million foreign arrivals in 2019， along way remains to reach the“goodold days.”

The same has happened in otherASEAN countries. Receiving as manyinternational tourists as the pre-pandemic level requires more than the unilateral effort from these countries， because opening the door is one thing， but attracting guests to come andconsume is another.

Tourists from China haveconstituted one of the biggest sharesof foreign arrivals for years （22 percentin 2019）. Before 2020， China was thelargest source of tourists for Thailand， the second-largest for Indonesia，and the third-largest for Malaysia.Obviously， the return of Chinesetourists is“key for these destinations to be sustainable in the long run，” said Haiyan Song， associate dean of HongKong Polytechnic University’s School of Hotel and Tourism Management， to Fortune in February.

However， because of the currentglobal pandemic situation， China hasbeen sticking to the dynamic Zero-COVID policy， and Chinese peopleare advised to avoid non-essentialoverseas travel. Considering therequired quarantine on their returnand the affected consuming power as a result of the downward pressure on the domestic economy， Chinese touristsare still unlikely to flock to ASEANcountries in the near future.

The outbreak of Russia-Ukraineconflict might also thwart the efforts of these governments. Russia is anothermajor source of tourists to ASEANcountries. Before the pandemic， Russia was the sixth largest source of tourists to Vietnam and seventh largest toThailand. And their consuming power was even stronger： For Thailand’stourism industry， Russians were thethird largest source of revenue.

Even this February when the conflict broke out， Russians contributed 8.6percent of tourism arrivals to Thailand，making Russia the largest source of tourists that month.

As more international sanctionsare being imposed， this source is also at stake. Almost all the international flights of Russian airlines have been canceled， making it much morecomplicated to travel from Russia totourist destinations. The resultingruble depreciation and high inflation make international travel even more expensive for Russian tourists.

Even the lack of access tocredit cards could make theiroverseas consumption much moreinconvenient， and sanctions onRussian banks mean they are not able to withdraw money in other countries， further discouraging them fromtraveling overseas.

Alongside factors from outsideSoutheast Asia， ASEAN countries have to deal with other domestic challenges ahead， especially the rising inflationin their markets， which is of courseexacerbated by the current situationin Russia and Ukraine. If the costs ofboth running business and touring are too high to bear， the effect of an openborder will only be further offset.

Fully reopening borders is thefirst step ASEAN countries must taketowards a vision of tourism normality.Then， Southeast Asia must becomebetter prepared to navigate morecomplicated challenges， both domestic and global.