Thailand Risks Becoming the Next Seychelles as Tourists Return

Less than 100 days before it plans to throw open its borders to international visitors, Thailand is in the grip of a worsening Covid outbreak and a sluggish vaccine rollout.

It’s a position familiar to other travel-reliant countries facing the unenviable task of rescuing crucial tourism industries decimated by 18 months of pandemic while guarding against the risk that an influx of international travelers could inflame the spread of the virus.

That’s been the case in the Maldives and Seychelles, tropical-island paradises that have seen record surges in infections since opening their borders despite having vaccinated about 70% of their populations. In contrast, at current rates it will take Thailand almost a year to reach that level.

Thailand Risks Becoming the Next Seychelles as Tourists Return

Before the pandemic, tourism contributed about 20% of Thailand’s gross domestic product -- double the global average. The pandemic-sized hole in the industry has impacted more than 7 million workers, ranging from street-food hawkers to taxi drivers and hotel-room cleaners to tour guides. One of the country’s main sources of foreign currency has dried up in the process.

That makes opening the border a “calculated risk” worth taking for the government. Thailand “can’t wait for a time when everyone is fully vaccinated or for when the world is free of the virus,” Prime Minister Prayuth Chan-Ocha said last month when he unveiled the Oct. 14 reopening date. While infections may rise, “the economic needs of the people” must be taken into consideration, he said.

“We can’t close the borders, especially in Asia with the sheer size of the population,” said Bill Barnett, managing director at hospitality consultancy C9 Hotelworks Ltd. “These are subsistence economies and they can’t survive long term like this. At the end of the day, you have to put rice in people’s bowls.”

In a precursor to the broader opening, vaccinated tourists were this month allowed to travel to the resort island of Phuket without needing to quarantine. As of July 15, more than 5,400 people arrived there, with 10 of them testing positive for the coronavirus.

Thailand Risks Becoming the Next Seychelles as Tourists Return

Prayuth himself had to isolate at home for a week after coming into close contact with a person who later tested positive for coronavirus during events held to mark Phuket’s reopening. On Thursday, Prayuth attended an event virtually to mark the reopening of Samui, another resort island, where visitors only have to quarantine for three days.

Thailand has reported an average 7,600 new infections a day in the past week, more than the total number of cases recorded in all of 2020. The surge in Covid patients, driven by the highly-contagious delta variant, has overwhelmed hospitals, with deaths rising to new record highs each week since June 27. The central bank said that it may revise down its 2021 GDP growth forecast because the outbreak has worsened, with a key private-sector group recently lowering its growth estimate to just 0%-1.5%.

Other countries are also welcoming back travelers to support ailing economies, despite virus resurgences.

Sri Lanka last week relaxed entry requirements to revive a tourism industry that contributed almost 5% of GDP before the pandemic. The government is seeking to boost its foreign-exchange holdings before more than $2.5 billion of dollar debt comes due in the next 12 months. The island nation will allow most vaccinated tourists to quarantine for just one day while a Covid test is processed. They can then move between hotels in a travel bubble and visit approved sites.

Long-Term Damage

Health experts warn that restarting the tourism sector amid an active outbreak of the more infectious delta variant, in combination with low testing and vaccination regimes, could worsen the economic damage in the long run, regardless of location.

“With a prolonged outbreak, the socio-economic impact will be the worst that people have ever experienced,” said Thira Woratanarat, an associate professor at Chulalongkorn University’s Faculty of Medicine in Bangkok. “The problem is the majority of people won’t be able to cope because resources have already run low.”

Other tourism hotspots that have opened their borders are also grappling with a spike in Covid cases, forcing them to tighten entry requirements. The British Virgin Islands, which started welcoming tourists in December, said this week that all visitors must take a test upon arrival and quarantine until a negative result is received because of an uptick in infections.

Greece, which like Thailand got about one-fifth of its GDP from tourism pre-Covid, lifted most of its restrictions ahead of the peak European summer travel season. The move attracted criticism from leaders such as Germany’s Angela Merkel, including for accepting visitors inoculated with Chinese and Russian vaccines that don’t have EU approval.

Thailand Risks Becoming the Next Seychelles as Tourists Return

Some restrictions have since been tightened, including the banning of unvaccinated people from bars, cinemas and theaters, including on the popular Greek islands, after infections started to take off in late June, driven by the spread of the delta variant.

For Thailand, a hurried reopening may prove to be the catalyst for another wave of the virus, Chulalongkorn University’s Thira said.

“As the outbreak continues and budget and resources have been used up, Thailand may be forced to loosen all curbs and the infections will rise,” he said. “That’s the worst-case scenario.”

©2021 Bloomberg L.P.

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