Consulting Report Series <COVID-19: The Vaccinated World 2021 Risks and Opportunities in Asia>

Jaehyung Choi & SeongJae Shin

February 7, 2021


Many societies are suffering from the disproportionate impact inflicted by the COVID-19 pandemic. Similarly, the political and economic consequences of this pandemic have been significant across Asia. Governments in this region are taking a wide range of immediate responses to contain the pandemic, to mitigate the socio-economic issues, and to procure the vaccines. However, the rapidly designed and implemented Coronavirus-related measures could not satisfy everyone in various industries. The limited capacity of these policies has exacerbated existing concerns over governance and revealed new political risk challenges. At this point of the pandemic, the most realistic strategy for Asia- especially ASEAN+3 member states - in mitigating Covid-19 is to contribute to building a vaccinated world. Therefore, this report will examine the international and regional Covid-19 response policies and analyze the political risks of vaccine procurement strategies in Asia with an in-depth focus on ASEAN members: China, Japan, and the Republic of Korea.

COVID-19 Response Policy

COVID-19 demonstrated the difficulty and unrealistic aspects of a global policy response in combating a pandemic. Moreover, it revealed the limitations of providing policy assistance at the international level. Throughout the pandemic, the World Health Organization (WHO) had a central role in leading the response efforts. Yet, WHO's effectiveness in tackling such an issue also depended on its members. Thus, the only effective action taken by the organization that had a global impact was the declaration of COVID-19 as a pandemic. Much like other continents, countries in Asia each developed COVID-19 response policies rather than solely depending on international organizations. Likewise, the lack of collective effort in Asia has forced the WHO member states to respond to the coronavirus with their own methods. Regional talks amongst ASEAN+3 members began after China, Japan, and the Republic of Korea have domestically established pandemic response measures and had the situation under control to some extent. During the period of no assistance from international and regional organizations, the COVID-19 cases in Asia became unmanageable. Currently, the only hope to recover the region from this pandemic appears to be the vaccines. Thus, the vaccine procurement and distribution methods in the region are of utmost importance.

International and Regional Efforts for Vaccine Procurement in Asia

One of the few international responses to the pandemic is the G20 up-and-running global collaboration initiative, Access to COVID-19 Tools (ACT) Accelerator, which intends to accelerate the development, production, and equitable access to COVID-19 tests, treatments, and vaccines. A pioneering effort to provide all countries with equitable access to COVID-19 vaccines called COVAX was introduced as the vaccine pillar of the ACT Accelerator. Despite the COVAX efforts to assist the lowest-income countries through building capacity to fairly distribute 2 billion doses by the end of 2021, the project is struggling to meet its expectations. Consequently, Asian countries had to nationally procure vaccines or turn to the higher-income countries in the region for further assistance to achieve herd immunity. As one would expect, instead of opting for a regional response, these countries were preoccupied with developing their national vaccine procurement strategy instead of collaborating with neighbouring states .

Vaccine Rollout and Country Economic Impact of Vaccinations through Q2 2021: Prospects

The WHO expects Asian countries with Covid-19 vaccine procurement agreements to start the vaccination process by mid or late 2021. However, the vaccination will not instantly stop the virus from spreading in the short term. Several unknown factors complicate the path towards herd immunity.It is unclear how long the immunity will last, whether vaccine development can keep up with the speed of virus mutation, how challenging the vaccine distribution will be, and how skeptical the public may be towards vaccination. On a positive note, in Asia, anti-vaccine sentiment is expected to be minor. According to the World Economic Forum survey, more than 75% of Chinese and Korean respondents said they would get vaccinated. In countries like the United States (69%), South Africa (53%), Russia (43%), and France (40%), the rates are considerably lower. If the measures such as testing, contact tracing, and quarantine are not consistently implemented alongside the vaccination, herd immunity will be delayed.


According to Bloomberg, as of 15 January 2021, China has bought foreign vaccines covering 16% of its population. Besides, China has its own vaccine named Sinovac. However, it barely passes the threshold for being recognized as an effective vaccine. According to a clinical trial that was conducted in Brazil, Sinovac showed 50.4% effectiveness. It showed that the vaccine is significantly less effective than what the original data suggested. China has administered 9 million doses until now. 0.64 people per 100 are now vaccinated. With this speed, herd immunity will not be achieved until the end of this year.

Over the Q3 and Q4 of 2020, China's exports showed outstanding growth. As China successfully controlled the virus when Europe and the United States (US) was still struggling, Chinese factories absorbed the increased demand for manufactured goods spurred by the pandemic. The increased demand, combined with massive financial relief and lockdowns in other developed economies, resulted in exponential export growth. Chinese exports grew by 9.9% year on year in September, 11.4% in October, and by a striking 21.1% in November. Although the growth rate declined, the trend continued until December. Interestingly, growth took place despite increasing trade tensions between the United States (US) and China. Total exports to the US were up 45.5% year on year in November. Exports to the EU were up 25.9%.

However, it is uncertain whether the unexpected consequence of the pandemic will continue after the vaccine rollout. Tommy Wu, an economist from Oxford University, expects China's export performance to be less strong in 2021. Many of the purchases made by Europe and US have a one-off nature. As the number of COVID-19 cases drops, so will the purchase of medical equipment and personal protective gear. Also, he adds that service consumption will be brought back, and in turn, demand for goods will decrease in relative terms.

Despite the expected slowdown of exports, the World Bank forecasts China's economy to grow by 7.9% in 2021. The Chinese government's various stimulus measures such as the special treasury bonds, lower lending rates, and tax exemptions will help bring back consumer spending and business investment confidence. China has controlled the virus faster than expected, and its COVID-19 response has been mostly successful. Nevertheless, considering the sporadic surge of COVID-19 cases happening throughout different regions, the vaccination project's failure may turn down the trajectory of Chinese economic growth.


Japan has procured the highest number of vaccine doses per 100 people among Asian countries. Being able to vaccinate 151 million people, current vaccine contracts cover 120% of its population. Moreover, the Japanese Sionogi vaccine is now in its final clinical trial, and it plans to roll out 30 million doses by the end of 2021. Although Japan has more than enough vaccines, it will take some time before the country can register them. Japanese approval of the Moderna vaccine is unlikely to occur before May due to local clinical trial requirements, casting doubt over a nationwide rollout before the Tokyo Olympics.

According to a survey conducted by NHK, 55%-63% of respondents said the Tokyo Olympics should be either canceled or postponed. Regardless of the negative public opinion, the Japanese government is determined to host the Olympics. Japanese authorities officially announced last month that the games' postponement last year and additional costs for COVID-19 measures amounted to 294 billion yen. This will increase the Games' total cost to 1.644 trillion yen, which is the largest ever for the Olympics. According to Professor Miyamoto from Kyushu University, the loss of 1.4 trillion yen occurs even when the games take place. The professor estimated that if the games are canceled, the total economic loss for Japan as a whole would be about 4.5 trillion yen.

The Japanese government raised its real-term economic growth forecast for 2021 to 4%. The change reflects the government's belief that a massive stimulus package will help boost economic growth. Some newly introduced measures such as the Green Fund for the environment and Digital Fund for digitalization will give the economy an additional boost. However optimistic the Japanese government may be, much of economic growth depends on controlling the virus. The newly introduced emergency declaration that covers 11 regions may drag down economic growth in 2021 to 2%. The 11 Japanese provinces make up 60% of Japan's GDP and 55% of the Japanese population.


South Korea has secured vaccines that can cover 90% of its population. South Korea is also developing its own vaccine. Domestically, six vaccines are under trial, and 15 drugs are being developed. The first batch of vaccines will be rolled out in February. The Korean government has selected up to 36 million people to vaccinate first. This includes priority recipients such as medical staff, elderly, elderly care facility workers, adults aged 50-64, and prisoners. The government plans to achieve herd immunity by vaccinating 36 million people before September.

The Korean economic recovery will take a K-shape, which means that the speed of recovery will vary depending on the type of industry. Companies' recovery rates in digital and green sectors will be faster than traditional businesses. Already, many small and medium-size business owners in the travel and service industries have filed for bankruptcy. Also, among individuals, those with high assets will benefit from the economic recovery faster than those who do not. In turn, the polarization will negatively affect the economy as the overall domestic demand will not return to the pre-pandemic level.

Although the pandemic is widening the gap between large and small businesses, as well as wealthy and low-income people at an unprecedented pace, the Korean economy is expected to grow relatively faster than other developed economies. Among some other factors, semiconductor exports will lead the overall growth. The Asian Development Bank and the Organisation for Economic Cooperation and Development (OECD) expect the Korean economy to grow by 3% in 2021 under the condition that the infection cases remain low.

The Association of Southeast Asian Nations (ASEAN)

ASEAN falls short of having a unified regional approach to vaccine procurement. The number and types of vaccines that each ASEAN country has secured vary greatly. Except for Indonesia (50%), Malaysia (25%) andThailand (19%), the doses of vaccines that other ASEAN countries have procured cover less than 10% of their population. Indonesia, which has the highest number of coronavirus infections in the region, has secured 3 million doses of China's Sinovac vaccine and will soon start vaccinating. Thailand will receive its first 2 million doses of the Sinovac vaccine from China over the next three months, and the first delivery is expected to arrive in late February. Singapore became the first ASEAN country to start vaccination in December 2020, with the BioNTech-Pfizer vaccine. Malaysia has signed an agreement with the pharmaceutical company AstraZeneca in late December to procure 6.4 million doses of the vaccine. The Philippines, the country with the second-highest infection rate among ASEAN countries, has decided to procure 2.6 million doses of the vaccine developed by AstraZeneca. Vietnam will receive at least 30 million doses of AstraZeneca’s vaccine this year.

The region's overall GDP shrunk by 4.2% in 2020. The service sector, such as the tourism industry, has been hit harder by the pandemic than the manufacturing sector. In order to alleviate the negative economic effect on businesses that the pandemic has caused, ASEAN countries have agreed to facilitate intra-ASEAN business trips. The agreement, however, only covers essential business trips. It does not benefit the international movement of ASEAN's 10 million migrant workers. Also, the region's internal travel, which accounts for 40% of all trips made within the ASEAN territory, does not benefit from the agreement. Without an ASEAN-level agreement that allows region-wide internal travel, a significant economic recovery resulting from a regional deal is not likely. Such a deal seems, however, not feasible at the moment as ASEAN countries are at different stages of the pandemic. Also, considering the fact that there is no unified vaccine procurement or rollout plan, ASEAN's role in pandemic response and economic recovery will remain insufficient.

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