Singapore Finance Minister Wong: Opening up of regional travel won’t happen soon

A Singapore Airlines Scoot plane on the tarmac at Changi Airport in October 2018.A Singapore Airlines' Scoot plane at Changi Airport

Southeast Asia’s passports are likely to continue gather dust.

Singapore’s Finance Minister Lawrence Wong said Wednesday Southeast Asia isn’t likely to see free and open travel anytime soon.

“The region is still facing rolling waves of infection. And vaccination rates for many countries in the region are still not high enough,” Wong said Wednesday at the CNBC Evolve conference. “I don’t think we will be able to see open and free travel in the region in particular anytime soon.”

Within Southeast Asia, Singapore has the highest vaccination rate, with around 33 percent fully vaccinated, according to data from Bloomberg’s vaccine tracker; that compares with Malaysia’s 4.3 percent, Indonesia’s 4.4 percent, Thailand’s 2.5 percent and the Philippines 1.5 percent, the data showed.

But Wong added that countries with low and stable rates of infections from the Covid-19 virus might be able to set up faster travel lanes.

“Perhaps for vaccinated travellers, there may be some benefits in terms of shorter quarantine times,” said Wong, who is widely viewed as a front-runner to become Singapore’s next prime minister. “But for the most part, all of that is not going to add up to what we used to have pre-COVID.”

Wong deflected questions about whether Singapore would seek to create a “travel bubble” with Hong Kong.

“Each time we talk about it, it gets burst and then we all start getting disappointed,” Wong said.

“Amongst countries where the infection rates are low and stable – and there are quite a number in the region – there is a lot of interest amongst these countries, including Singapore, to establish safe travel lanes for two-way travel. So these discussions are continuing with our counterparts around the region,” he said.

Two attempts have been made to open a quarantine-less travel bubble between Hong Kong and Singapore – in November 2020 and May 2021, but both efforts were quashed due to surges in COVID-19 cases.

The quick dashing of hopes for the travel bubble has become a running joke among travel-starved residents of Hong Kong and Singapore.

Singapore is currently facing an increase in cases, with one larger cluster in an area west of the city center, with Wong adding in a Facebook post Wednesday that the city-state was evaluating the timing of easing some Covid-related restrictions.

Wong’s comments don’t bode well for the city-state’s flag carrier, Singapore Airlines.

In May, SIA reported a S$4.27 billion loss for the year ended 31 March, with group revenue plunging around 76 percent on-year to S$3.82 billion. The carrier called it the “toughest year in its history.”

The carrier announced in May it planned to issue another tranche of mandatory convertible bonds to raise around S$6.2 billion; SIA had already raised around S$15.4 billion since April 2020 due to pandemic-related losses.

 

In a research note Wednesday, Singapore bank OCBC noted that SIA had resumed around 24 percent of its pre-Covid capacity as of April, with plans to reinstate 32 percent by July 2021.

The stock price has tumbled to around S$4.92 Wednesday from as high as S$9.19 in November 2019 as the news of the Covid-19 virus began to emerge from China. But OCBC said that it viewed the share’s valuation as “rich.”

“We believe the optimism from vaccines have largely been priced in,” OCBC said; it rated the stock at Sell.

Singapore’s state-owned investment company Temasek held around 22 percent of SIA as of end-March, according to data on the carrier’s website.

To be sure, some travel executives have expressed optimism.

Tony Fernandes, CEO of Malaysia-based AirAsia, said he expected domestic travel would lead a sector recovery, noting that China had already seen a domestic recovery to around 90 percent of previous levels.

“Victory is there. We know it’s only a matter of time before Covid is controllable,” Fernandes said at the conference. “By June of next year, we’re going to see a pretty similar place to where we were when COVID hit, [around] February of last year. I think by June of 2022, we will see a much more normal world.”