Disruptions

Three of our editors returned to work yesterday after a week of home quarantine. They had gone on separate trips to Europe and upon their return just telecommuted, in case they had tracked in the novel coronavirus from their travels.

This kind of hassle is wreaking havoc on the travel industry. People are putting off travel and avoiding large gatherings. Already, key parades during Baguio City’s popular Panagbenga flower festival had to be put off.

Jojo Clemente III, president of the Tourism Congress of the Philippines, estimates the direct losses in tourism receipts at P20 billion if the coronavirus disease (now called COVID-19) contagion lasts until March.

The World Health Organization says researchers are rushing a vaccine for COVID-19. Even in a rush, however, the best estimate of the period for releasing any properly tested vaccine is 18 months, according to WHO officials.

In the meantime, the WHO has declared a “public health emergency of international concern” and tagged COVID-19 as “public enemy No. 1.” And now community-level and human-to-human transmission could raise the contagion level to new heights, according to the WHO.

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The other day, WHO country representative Rabindra Abeyasinghe told “The Chiefs” on Cignal TV’s One News channel that there were promising signs that the contagion was decelerating in China. This was despite the death toll in China hitting 1,113 as of Tuesday since COVID-19 was first reported in Wuhan City on Dec. 30 last year. Nearly all the deaths were recorded in Hubei province, whose capital is Wuhan.

On Wednesday, however, the number jumped to 1,355 – a record 242 fatalities and 14,840 new patients in just one day in Hubei, bringing the total in China to nearly 60,000 – following the adoption of a new methodology for diagnosis. Beijing has sacked top political leaders of Hubei. The spike fueled speculation that China was underreporting its cases.

Dr. Rabi told us that the WHO is closely monitoring the impact on disease control of China’s unprecedented lockdown of entire cities in Hubei.

That kind of lockdown is possible under the Communist Party of China. Communist Vietnam imposed a similar lockdown yesterday on a commune of 10,000 residents northwest of the capital Hanoi. Obviously, this kind of lockdown will be a far more challenging undertaking in the Philippines.

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It’s not just the travel industry: other sectors are starting to feel the impact of the COVID-19 scare and the shutdown of the world’s second largest economy.

Even electricity supply could suffer. A power plant operator, for example, is seeing its coal imports disrupted because shippers have suspended operations.

You’re familiar with the quip – God created the Earth; everything else is made in China. A China on indefinite sick leave means a seriously disrupted global supply chain that affects practically all industries.

It’s not the first time that we’re seeing this type of disruption. When the Iceland volcano Eyjafjallajokull (Pinoy pronunciation eya-fyatla-yokutl) erupted in April 2010, it forced the largest air-traffic shutdown since World War II in much of northern Europe. The weeklong shutdown, with intermittent airport closures in various countries for about a month, halted supply deliveries particularly of high-precision gadgets and parts that are needed for the production of motor vehicles and electronic gadgets elsewhere on the planet.

Production schedules could not even be reworked with reliability because of the unpredictability of volcanic eruptions. We saw a milder disruption after Taal Volcano’s phreatic explosion last month.

This time, it’s the country with the largest industrial output that has shut down, and no one knows how long it will last.

Already, the Organization of Petroleum Exporting Countries is cutting its oil demand projections. Hyundai Motor Co. has suspended its production in South Korea due to the lack of wiring harnesses, which the company reportedly sources mainly from China.

Hyundai’s dilemma could make global companies rethink their heavy dependence on China for their production needs. This crisis is likely to lead to corporate strategies for diversification of their foreign sources of supplies and services.

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South Korea is the largest importer of goods and services from China, according to the World Bank. Japan ranks second, followed by the United States, Germany, Australia, Brazil, Vietnam, Malaysia, Russia and Saudi Arabia.

Local industries worldwide will also feel the slowdown. The United States, with which Beijing is locked in a trade war, is the biggest exporter of goods and services to China, with the value of the US exports in 2018 placed at $480 billion, according to the World Bank.

Hong Kong is the second largest exporter to China, followed by Japan, South Korea, Vietnam, Germany, India, the Netherlands, the United Kingdom and Singapore. The tiny city-state exported $50 billion to China compared to our $8.82 billion in the same year. Our imports from China, on the other hand, amounted to $22.01 billion in 2018, according to the Philippine Statistics Authority.

In this area, we won’t be hit as much as China’s bigger trading partners by the impact of COVID-19. But we are already feeling the impact in our travel industry. Travel bookings have been canceled not just by people from China and its administrative regions but also those from several other countries. Many international travel plans have been put on hold even by people in the Philippines.

Jojo Clemente told The Chiefs that the travel industry is projecting the crisis to last about six months, during which industry players hope to drum up domestic tourism.

What if the crisis extends way beyond that?

With a COVID-19 vaccine still a year and a half away, and people worrying about airborne transmission of the killer virus despite repeated assurances by the WHO that there is no recorded case of such transmission so far, it’s likely that the travel industry is facing its annus horribilis.

What would that mean in terms of losses in tourism receipts? Jojo Clemente shudders at the potential costs.