The COVID-19 pandemic has placed countries further apart after local and international travel restrictions were implemented to mitigate the spread of the virus. For economies that greatly depend on tourism, more than two months of halted operations caused significant loss to their gross domestic product (GDP). However, as travel bans start to lift in countries that are slowly recovering from the effects of the pandemic, domestic tourism is showing potential in revitalizing economies, particularly in Southeast Asia.
As of May 29, Vietnam currently has 327 confirmed cases with zero virus-related deaths. Considering its 97 million population and geographical and economic proximity to China, the country has been successful in diminishing the spread of COVID-19. Its government recently launched the “Vietnamese people travel to Vietnam destinations” program to stimulate domestic tourism in their region, which will run until the end of the year, centered on locals’ specific tourism needs during the pandemic. Internal travels are highly encouraged while incoming flights are still suspended as hotels, resorts, airlines and travel agencies offer up to 50 percent discount.
However, domestic spending only constitutes an estimated 40 to 45 percent of tourism’s 12 percent partaking in Vietnam’s GDP last year. With limited household finances, the Vietnamese government needs to encourage not just national travels but also increased local spending.
On the other hand, Thailand with 40 million tourist arrivals last year was the most visited country in Southeast Asia. According to Oxford Business Group, over 17 percent of Thailand’s direct and indirect GDP is obtained from tourism, six percent of which are from domestic tourists. The Thai government’s 2020-2021 loan of BT1 trillion or $31.3 billion is expected to be channeled towards industry-reviving incentives and subsidies.
In the case of the Philippines, 12.7 percent of its 2018 GDP is derived from tourism with 110 million domestic tourists in the same year, an increase of 14.1 percent from 2017. The local government is working on re-establishing domestic tourism by polishing safety measures, social distancing regulations and other health protocols. Fourteen billion pesos of the P27.1 billion COVID-19 stimulus package is dedicated to the Department of Tourism’s programs and projects. Estimates, however, suggest that around $9 billion will be taken out of tourism this year.
Domestic travels are expected to dampen the major losses of emerging economies but are unlikely to fully compensate for the impact international travel restrictions have incurred. The International Monetary Fund (IMF) expects the 2020 global economy to decline by three percent and emerging markets by one percent, a major blow on lower- to middle-income countries whose tourism heavily relies on foreign visits. High rates of unemployment during the pandemic also put a strain on household finances, putting travel among the least priorities. In a scenario where the pandemic subsides in the second half of 2020, with containment restrictions unwinding, economic activity normalizing and policy supports ensuing, the IMF predicts that the global economy will rise by 5.8 percent in 2021.
After domestic travel, selective international travels seem to be the next viable step after health and safety restrictions slowly ease. Some countries are already looking into “travel bubble” plans where they will open their borders to countries that have significantly limited the spread of the virus. Estonia, Latvia and Lithuania have already worked on this movement halfway through May. Vietnam is already considering the same idea with Australia and New Zealand as well as with some key tourist markets in China and South Korea. The Indonesian government is also planning a phased foreign travel reopening in Bali between June and October once improvements on controlling the virus are sustained.
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