Real Money’s Alex Frew McMillan crisscrosses Southeast Asia, a sun-kissed and gentle region dotted with tens of thousands of islands, miles of beaches, home to elegant villa complexes.
“As a diver I have spent many happy hours in silent meditation through exploding reefs with soft coral colored fireworks, a sea sky swept by flashes of reef fish,” he recently wrote McMillan in Real Money. “The Coral Triangle has the greatest marine biodiversity in the world.”
With COVID largely under control, island life has returned to traditional rhythms, fishing and rice farming.
“The industrial estates around the region’s capitals are buzzing with factories that are back in business,” noted McMillan. “But millions of travelers remain absent, depriving these heavily touristed countries of an essential source of income. As Southeast Asian countries quickly open up to international travel here at the end of the year, the recovery is dangerously slow. “
Part of the problem stems from a simple concept: time.
“The border lockdown happened quickly last year,” McMillan said. “Reopening them is done in stages. But resuming travel takes planning and time, a lot of time, which means airlines, airports, hotel chains, convention centers, casinos, restaurants, and all the supply chains out there. support them will remain depressed. “
This means problems for regional currencies.
“The Thai baht, Malaysian ringgit, Indonesian rupiah, Philippine peso and Singapore dollar will face sustained pressure, which will cause problems for any company trying to repay its offshore debt,” added McMillan.
Now there is now a small race between Southeast Asian countries to open up to overseas travel.
Thailand was a forerunner, with an almost total opening of its borders since November 1, unsurprisingly.
“It drew 18% of its entire economy from tourism in 2019, according to Statista, a huge share. Households that lose a fifth of their income would find themselves in scarcity, ”McMillan said. “Thailand’s tourism share has plunged to 6.8% in 2020, and I’m surprised it has reached that, to be frank.”
Despite its almost complete reopening, Thailand will only reach 4.9% of normal travel conditions by the end of this year, according to TRIPTracker.
“Singapore is doing a little better, back to 6.3% of the number of normal trips at the end of the year,” he added. Malaysia will likely only see 1.9% of normal visits by the end of this month as it launches pilot test for holiday travel to the resort island of Langkawi and opens full air travel with Singapore . “
Thai leaders first said they wanted to see a 70% vaccination rate before opening the borders, ”McMillan said. “But they gave up on that idea when it turned out to be difficult to achieve, and Prime Minister Prayuth Chan-o-cha said the country would go ahead anyway because it didn’t want to be left behind by competing travel destinations in Asia. The United States is one of the 63 nations it now endorses. “
Right now, owners of tourism related businesses are accepting any visitors they can get.
“It will be good in 2022 and maybe 2023 before a significant number of travelers return,” noted McMillan. “Three years is a very long time for a travel-related business to survive with little or no income. So when international visitors return, it will be a very different Southeast Asia that these newcomers will see. ”