As countries turn inward, pandemic threatens the foundations of globalization
TOKYO — From his apartment in Manila’s Bonifacio Global City, Eric Go can still see planes going past his windows. Like many in Southeast Asia’s middle class, Go, who grew up in the U.S. and works for an e-commerce company, has been used to near-seamless mobility: ride-hailing, low-cost airlines and direct flights back to his family in New York.
“It was never really an issue. I can hop on a plane and go wherever I want to go. That’s how I see freedom,” he said. “It’s like, OK, there’s turmoil in Manila, or it gets too hot, I can leave. And now I can’t leave at all.”
Since the COVID-19 crisis intensified in mid-March, Go has been trying to get back to his parents in the U.S. But the few flights still running have become prohibitively expensive, and since most require long layovers, the risk of being stuck indefinitely in transit is high. All around the world, borders are slamming shut as governments try to contain a global pandemic that has already killed more than 40,000 people.
In the Asia Pacific, China, India, Singapore, Taiwan, Vietnam, New Zealand and Australia have all barred nonresidents from entering. Others, including Japan, have suspended visa waivers and imposed quarantines on most arrivals. Whole cities are on effective lockdown — streets empty, businesses shuttered.
The suddenness with which these measures dropped into place is shocking for those who have only known an era of globalization and relative plenty. While Go’s parents remember troops on the street in Manila and shortages in the shops, he has never experienced this level of uncertainty. “The normal amenities that you’d have in life have been stripped away. … The question you ask is, how is it going to be next week? Will we still have bread next week? Will we still have eggs?” he said. “I have never experienced an egg shortage in my life. I’ve never had a curfew in my life.”
Even just a month ago, outside of a handful of countries, the daily disruptions were mundane. Businesspeople peered into phone screens on Zoom calls and Google Hangouts; spam folders were crammed with canceled invites to forums, seminars and news conferences that now feel like artifacts from another era.
Today, with the pandemic still out of control, a third of the global population is in some form of lockdown. Workforces have been atomized, schools closed, families scattered. Medical treatments are on hold. Weddings, graduations and reunions are delayed indefinitely. Sports events, from school tournaments to the Tokyo Olympic Games, have been postponed. Jobs lost. Businesses closed, possibly never to reopen. Deaths. Hundreds of thousands of individual traumas that add up to profound social, cultural, economic and political dislocations that will outlast the crisis.
“With the virus, the implications are huge. There are financial implications, there are social implications, there are health implications, there are implications on supply chains. Everything is impacted,” said Sumit Agarwal, the Low Tuck Kwong distinguished professor of finance at the National University of Singapore. “People will have to think about new trade routes, new production capacity. … We will have to rethink what borders are.”
Lockdowns
On March 17, the Heritage Foundation, a U.S. think tank, declared Singapore the “freest economy” in the world. Less than a week later, the city-state all but sealed its borders. The Causeway, the road and rail bridge that links the island to Malaysia, was shut to the 400,000 people who cross every day for work. Nonresidents were banned even from transiting through Changi Airport, until this week one of Asia’s busiest travel hubs. The national flag carrier, Singapore Airlines, cut 96% of its routes.
Singaporean graduate student David Tan caught one of the last flights out of the U.S., paying $1,000 to fly from his home in New Mexico via LAX.
“If I had stayed, I would have been relatively safe. But the longer I stayed, the harder it would have been to get out,” he said, sounding remarkably cheerful over the phone on the first day of his government-mandated 14-day self-quarantine. “You’re making all of these decisions in a short time frame. You don’t have the time to plan everything. Everything is very spontaneous. It was an extremely stressful period.”
The flight was full of airline staff in uniform being relocated back to Singapore, and U.S.-based Singaporeans making the calculation that they would rather wait out the pandemic at home — close to their families, and where health care is more affordable, should the need arise.
“If I fall ill in the U.S., even though I do have health insurance, a trip to the [emergency room] will set me back a significant chunk of money,” Tan said. “Hospitalization would set me back a lot more. Put it this way: $1,000 to fly back to Singapore is really a saving.”
Across the world, people have had to make these calculations, desperately trying to get themselves home and their families together. Hong Kong — number two on the Heritage Foundation’s list — closed its land border with mainland China in February. From March 25, it also barred nonresidents from entering.
There, Shakib Pasha, who runs a group of restaurants and bars, was able to get his parents back into the city from Bangladesh before the lockdowns began — although he still hasn’t been able to see them, for fear of spreading the virus. “They travel back and forth. They were leaving things to the last minute, but we pushed them to come back,” he said. “It was my sister’s birthday yesterday, but I couldn’t go. … We’re just avoiding each other as much as possible for the next two weeks.”
Pasha’s regular market research trips are on hold. A pop-up shop in Singapore he had planned for the first quarter of the year is now indefinitely postponed. In Hong Kong, he has had to cut back his business, alive to the reality that everyone making their way back to the city is a potential source of infection. “We’re having to look at everything and ask — is this safe to do now?” he said.
Asian economies that have relied on their openness to thrive — as financial and corporate hubs, such as Singapore and Hong Kong; as keystones of global supply chains, such as Taiwan, Bangladesh and Vietnam; or as tourist centers, like Thailand — have had to rapidly and comprehensively isolate themselves.
“Now what we are getting to see is an almost complete paralysis of the global economy. I think that’s how I’d describe it,” said Amitendu Palit, senior research fellow at the Institute of South Asian Studies at the National University of Singapore. “In my lifetime, I can’t recall a situation where we have actually seen such restrictions on movements of people.”
Palit, who sits on the World Economic Forum’s group on trade, said that the sudden changes to global mobility are already prompting companies to rethink their supply chains.
Over the past couple of years, Southeast Asian countries, particularly Vietnam, have been able to attract manufacturers who have shifted out of China to avoid U.S. tariffs, imposed as part of the White House’s “trade war” with Beijing.
Even before that, manufacturers took advantage of low tariffs between Southeast Asian countries to arbitrage labor costs and government support. A gearbox for an automobile assembled in Vietnam or India can move across borders five or six times, with value added at each stage. The pandemic could “collapse” that system, Palit said…
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