Travel surge to aid regional growth
Southeast Asia pins hopes on Chinese tourists after three years of COVID-19 doldrums
China’s easing of COVID-19 control measures will give a much-needed boost to Southeast Asian economies after disruptions caused by the pandemic over the past three years, experts say.
A rise in private consumption in China following the changes is good news for members of the Association of Southeast Asian Nations because their closest neighbor is also their biggest export and tourism market.
Yeah Kim Leng, professor of economics at Sunway University in Kuala Lumpur, said Southeast Asia has waited for a long time for the return of Chinese tourists because they contributed significantly to the region’s tourism industry before the pandemic.
“The emergence of the tourism sector from its three-year doldrums caused by the pandemic will be fast-tracked by (changes to) China’s COVID-19 policy and the normalization of social and economic activities throughout the region,” Yeah said.
French investment bank Natixis has said that before the pandemic Chinese tourists had become an integral part of global tourism, their spending share doubling to 16 percent between 2010 and 2019. The return of Chinese tourists “can be beneficial for many tourism-dependent economies and sectors, especially in Asia”, the bank said.
United Overseas Bank of Singapore says the return of Chinese tourists to Southeast Asia will buttress the region’s growth this year. It estimated that spending by Chinese tourists will account for as much as 9.2 percentage points of the regional economy. The bank, citing data from the online travel booking service provider Trip.com, said outbound flight bookings from China rose 254 percent on Dec 8, a day after Chinese officials announced they were easing pandemic restrictions. Southeast Asian nations were among the top destinations.
Southeast Asia has long been a favorite destination for Chinese tourists. United Overseas Bank said that more than 32 million Chinese travelers visited the region in 2019, equating to 22 percent of all visitors to the region. Nearly 17 percent of Chinese tourists’ $1.5 trillion global travel receipts were spent in the ASEAN region in 2019.
From Bali to Manila to Sihanoukville, officials and tour agencies have personally welcomed and feted Chinese tour groups that arrived during the recent Spring Festival holiday.
More than 30 percent of Chinese travelers in ASEAN went to Thailand in 2019, and analysts expect Thailand to remain the top beneficiary of China’s outbound tourism.
Yuthasak Supasorn, governor of the Tourism Authority of Thailand, said Chinese tourists contributed much to Thailand’s tourism industry.
“Although the number of tour groups from China is still far less than before the pandemic, we believe we will have more Chinese tourists back in Thailand soon,” Yuthasak said.
ASEAN economies reported robust growth last year, albeit on a low 2021 base, as eased COVID curbs in their nations spurred revenge spending.
Malaysia’s GDP grew 8.7 percent, and the Philippine economy grew 7.6 percent, a 46-year high.
Apart from consumption, growth in exports has boosted GDP in countries such as Indonesia. The region’s biggest economy grew 5.31 percent last year, a nine-year high. Vietnam’s economy grew 8.02 percent, a 25-year high.
Despite such robust figures, economic officials in the region said that growth will be tempered this year by a global recession, higher inflation and geopolitical conflict. The International Monetary Fund forecast that the combined growth in the five biggest ASEAN economies (Indonesia, Malaysia, the Philippines, Singapore and Thailand) will slow to 4.3 percent this year, from 5.2 percent last year.
However, China’s new COVID-19 control measures can cushion the impact of the external headwinds to Southeast Asia, analysts said.
Manu Bhaskaran, chief executive of the consultancy Centennial Asia Advisors in Singapore, said that apart from helping in the recovery of the region’s travel and tourism industry, increased consumption in China can boost demand for imported commodities.
“Southeast Asian countries export commodities and intermediate goods to China, such as all kinds of components, so there will be a benefit.”
As Chinese demand for commodities recovers, there will be a higher demand for imported oil and metals, boosting revenues for Southeast Asian commodity exporters, Bhaskaran said.
Yeah of Sunway University said China is an important market for Southeast Asian exports, accounting for more than 16 percent of the region’s exports in 2021.