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Tourism race back on in Asia

Economist, ANZ Research

2021-11-26 03:00

The race to reopen borders ahead of the upcoming tourism season is accelerating in Asia, with an increasing number of economies welcoming vaccinated foreign tourists without quarantine.

While the reopening momentum is encouraging and positive for the economic outlook, there remain several headwinds in the near term.

Overall, the prospect of international travel resuming on a material scale in Asia has brightened as higher vaccination rates will embolden more governments to loosen restrictions and also bolster travellers’ confidence.

Thailand, which has one of the region’s most tourism-dependent economies, has led the way. Since early November, quarantine has been waived for fully vaccinated tourists from 63 jurisdictions (called the “Test and Go” scheme).

Other fully vaccinated tourists can enter Thailand through the “Living in the Blue Zone” scheme, whereby they can roam freely within one of the 17 “Blue Zone” areas (including Phuket and Bangkok) and head off elsewhere in the kingdom after seven nights.

India welcomed individual tourists from November 15, and fully vaccinated arrivals do not have to quarantine. Others are required to self-isolate for seven days, do a test on day eight, and continue to self-monitor for another week.


The rest of the region is adopting a more cautious stance.

Singapore has launched a vaccinated travel lane (VTL) scheme, which allows two-way quarantine-free travel with select economies. A total of 21 lanes have been announced so far.

Indonesia has allowed vaccinated foreign visitors from 19 countries to Bali and Riau islands, but with a three-day quarantine requirement (down from five).

Malaysia reopened its popular beach destination Langkawi to vaccinated foreign tourists without quarantine on November 15, and has a VTL with Singapore that will start on November 29.

Vietnam opened five popular tourist destinations to vaccinated foreign visitors without quarantine, including Phu Quoc, on November 20.

Hong Kong is taking a targeted approach, given the heavy dependence of its tourism sector on mainland Chinese visitors. On the other hand, the reopening to global travel will take a back seat as the authorities need to first align Hong Kong’s pandemic-control measures with mainland China’s in order to pave the way for bilateral quarantine-free travel. There are plans for a small-scale reopening with neighbouring Guangdong province and a daily quota in December, before an expansion of the program in February 2022.

Economy Open for tourism Quarantine required
Thailand Yes Partial
India Yes Partial
Singapore Partial Partial
South Korea Partial Partial
Indonesia Partial Yes
Hong Kong Partial Partial
Malaysia Partial Partial
Vietnam Partial Partial
Mainland China No Yes
Philippines No Yes
Taiwan No Yes

Source: Travel Sites, ANZ Research. As of November 24 2021.


However, there are several factors that will hold back the pace of recovery.

• Home restrictions in key source markets

Border policy is only one side of the equation. Quarantine requirements for travellers upon their return also play a role.

In this aspect, Asia’s cautious reopening and the limited number of reciprocal quarantine-free options among the region’s economies will pose a constraint for tourism recovery, given that intra-regional travel accounted for the bulk of travel flows in the region before the coronavirus outbreak.

For instance, although Thailand has reopened to 63 jurisdictions that collectively account for almost 90 per cent of its pre-pandemic arrivals, two-way quarantine-free travel is not yet in place for many of its top tourism source markets.

Mainland China’s strict border controls in particular are a significant headwind to Asia’s tourism recovery, given its importance as a key source of tourism revenues to many of the smaller economies in the region. It is the top source of foreign visitors for Hong Kong, Singapore, South Korea, Thailand, Taiwan and Vietnam.

But as things stand, its zero-COVID stance suggests its borders won’t reopen meaningfully until at least after the Winter Olympics in February 2022.

Asia's key tourism markets

Economy Top-five source of arrivals
M CHN HKG & MAC (74%), TWN (4%), KOR (3%) JPN (2%) USA (2%) 
HKG M CHN (78%), TWN (3%) MAC (2%), USA (2%), JPN (2%)
IDN MYS (19%), M CHN (13%), SGP (12%), AUS (9%), TLS (7%)
IND BGD (21%), USA (14%), GBR (10%), JPN (8%), TWN (4%)
MYS SGP (39%), IDN (14%), M CHN (12%), THA (7%), BRN (%5)
PHL KOR (24%), M CHN (21%), USA (13%), JPN (8%), TWN (4%)
SGP M CHN (34%), JPN (19%), TWN (7%), USA (6%), HKG (4%)
KOR M CHN (34%), JPN (19%), TWN (7%), USA (6%), HKG (4%)
THA M CHN (25%), MYS (10%) IDN (5%), KOR (5%), LAO (5%)
TWN M CHN (23%), JPN (18%), HKG & MAC (15%), USA (5%), MYS (5%)
VNM M CHN (32%), KOR (24%), JPN (5%) TWN (5%), USA (4%)

Source: National Tourism Statistics, ANZ Research

• Entry requirements

International travel is no longer as straightforward as the pre-COVID-19 era. There are more procedures and costs involved, which differ across destinations.

Examples include administrative procedures, testing requirements, and mandatory insurance of a minimum coverage. Destinations with greater requirements may be less appealing to prospective visitors.

• Local COVID-19 situation

The domestic virus situation and associated restrictions will also influence the appeal of a destination. Many economies in the region still have fairly restrictive COVID-19 containment policies in place due to either elevated virus cases or low vaccine coverage, and these restrictions will deter some visitors.


These challenges will need to be overcome before any return to pre-pandemic normal. Looking at economies further ahead of the tourism reopening curve can shed some light on the potential pace of recovery as more restrictions are removed.

Spain is one of Europe’s tourism hotspots, and its reopening experience has been encouraging. Its grand reopening in June got off to a slow start, but subsequently gained momentum as more restrictions were eased and confusion over travel rules diminished.

As of September, tourist arrivals have returned to more than 50 per cent of pre-pandemic levels, and authorities expect a full recovery by 2022.

To be clear, it will be difficult for Asian tourism sectors to replicate Spain’s success in the near term. Aside from a high vaccination rate and lower entry restrictions, Spain’s tourism reopening has also been supported by reciprocal reopenings with its key source markets.

Still, the prospect of international travel resuming on a material scale in Asia has become more promising as higher vaccination rates will eventually embolden more governments to further relax restrictions both in terms of domestic businesses and entry policies.

Based on current border policies and plans, Thailand and India are better placed to capture travel demand given their relatively more open stance towards tourists.

Thailand’s still elevated COVID-19 cases, virus-related curbs and fairly stringent testing requirements are headwinds, but the recovery should accelerate if the current downtrend in infection numbers is sustained and the government continues to lift restrictions, as it has signalled.

Meanwhile, India has the advantage of fewer testing requirements and domestic restrictions as well as a lower dependency on tourism markets with stricter border controls, but its modest vaccination rate may be a drawback in the near term.

Krystal Tan is an Economist at ANZ Research

This story is an edited excerpt from the Asia Macro Weekly: Asia tourism - the race to reopen, published November 12, 2021. Click HERE to read the full document.

Tourism race back on in Asia
Krystal Tan
Economist, ANZ Research

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