While financial markets have responded strongly to the emergency-use authorization of various coronavirus disease (COVID-19) vaccines in several countries, the economic impacts will take much longer to materialize. One reason for this is that vaccinating 60% or more of populations to achieve herd immunity will take time. Reaching herd immunity is critical given the possibility that those vaccinated may still be infectious, despite being immune to the disease. Combined with a host of other uncertainties, quarantine-free travel is unlikely anytime soon. Therefore, waiting for an unpredictable and prolonged process to play out before opening borders is inefficient and costly. The next steps are to turn unilateral air travel passes into reciprocal ones, or “travel bubbles,” and then to turn these bilateral bubbles into multilateral ones, or “travel balloons.”
Air travel passes build upon travel corridors or “green lanes,” which allow travel with testing but without quarantine for select groups, like businesspeople, under strict conditions, such as requiring them to have pre-arranged itineraries. To have a significant impact on the economy, however, air travel passes unilaterally extend these terms to all travelers. In the Association of Southeast Asian Nations (ASEAN), Singapore has been leading efforts for pursuing air travel passes with partners that have controlled community transmission. These include Australia; Brunei Darussalam; several cities in the People’s Republic of China; New Zealand; Taipei,China; and Viet Nam.
There are all kinds of unilateral but restrictive travel arrangements in ASEAN countries that have been operating successfully. To move them forward, the first step is to expand their coverage to turn them into unilateral air travel passes, and then to get partners to reciprocate to create travel bubbles. For this to happen, perceptions of health risks associated with opening borders need to converge across countries. Some governments need to overcome an inherent bias against opening borders. That is, even when differences in infection rates suggest that inter-country movement is less risky than intra-country movement, borders remain mostly closed while the easing of domestic movement continues. The factors underlying this bias need to be addressed before travel corridors can be upgraded to travel passes and then travel bubbles.
Following that, and to avoid replacing a proliferation of travel passes with travel bubbles, a consolidation of these bilateral arrangements into a regional one—a travel balloon—could be pursued. For instance, the Singapore–Viet Nam or Singapore–Brunei Darussalam travel pass arrangements, once successfully upgraded to a bubble, could be pilot-tested to include other countries with similar or lower infection rates. This could start by consolidating the two, so that travel between the spokes, Brunei Darussalam–Viet Nam, as well as with the hub, Singapore, is quarantine-free. It could then be progressively expanded to include Cambodia, the Lao People’s Democratic Republic (Lao PDR), and Thailand, for instance. An expanded travel bubble, or a travel balloon, involving up to six ASEAN countries—Brunei Darussalam, Cambodia, the Lao PDR, Singapore, Thailand, and Viet Nam—could magnify the economic benefits without significantly raising health risks, if implemented according to a plan.
The plan should involve the harmonization of COVID-19 screening and quarantine protocols to preserve the integrity of the risk mitigation controls across countries while facilitating seamless movement to reap maximum benefits from the increase in scale. Harmonization should prevent distortions, such as those similar to trade deflection in a free trade agreement, where the integrity of a system can be compromised through entry via a “back door” country with the least stringent set of controls or requirements.
Protocols, such as the exemption of quarantine, need to be mutually recognized across participating countries to avoid duplication and encourage movement between them. Mutual recognition should increase both intra- and extra-regional flows. For example, Thailand’s recent Special Tourist Visa, which opens up its tourism sector to the world but does not waive quarantine, will be more beneficial to Thailand and the region if it is part of a proposed travel balloon. This is because a European tourist, for instance, is more likely to visit Thailand and other countries in the region if the two-week quarantine on arrival in Thailand does not have to be repeated in Cambodia, the Lao PDR. or Viet Nam. The deterrent effect of a two-week quarantine is reduced when it enables travel to more than one country in the region.
An ASEAN-wide travel balloon is unlikely at this stage because of significant differences in infection rates. It is doubtful that countries that have controlled community transmission will recognize quarantine periods undertaken in countries that have not. The ASEAN countries that have higher infection rates could, however, chose to recognize quarantines observed within the six-country travel balloon, even if reciprocity is denied them. This is equivalent to each of the four countries creating an air travel pass with the countries in the travel balloon. Even without reciprocity, these four countries could benefit economically because they could receive a larger number of travelers on a relatively safe basis through the one-way arrangement.
The agreement should include an open accession clause, which would allow new members to join if health conditions in those countries change in a way that meets those specified in the agreement. Similarly, the agreement should enable the suspension of members should health conditions deteriorate to an extent deemed unsafe for quarantine-free travel. The recent deferment of the Singapore–Hong Kong, China travel bubble attests to the ability of such arrangements to have built-in safety clauses that kick in as soon as circumstances warrant.
Once set up, the institutional mechanism can help deal with emerging issues, such as vaccinations, on a consistent basis. While countries may differ in terms of how and when they chose to recognize vaccinations, let alone different vaccines, these issues need to be addressed in a way that does not deter travel in the short term while harmonization is pursued to narrow differences in the longer term. A well-functioning travel balloon could do that.
The potential that travel balloons present for opening up travel in the region to hasten the transition to a new normal is clear, but this needs to be done gradually yet expeditiously. A cautious and incremental approach will enable such balloons to give a boost to economic growth, yet have enough safeguards that will kick in should infections head north again. The wait for the vaccine may be over, but ASEAN countries cannot afford to wait for it to work before opening borders.
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