Border reopening hinges on vaccine confidence

More than 5% of the Hong Kong population have been vaccinated since February.

Hong Kong’s tourism sector continues to suffer as the COVID-19 pandemic prevents it from opening the city’s borders to tourists; but the government has hopes that getting the outbreak under control through the vaccination programme is the key.

“The government signaled that any significant relaxation of containment measures would require the vaccination rate reaching the target of 50% of the population,” the OCBC Treasury Research said.

“The government was said to downplay the hopes for travel bubbles with Mainland China or other countries as well,” it added.

Chief Executive Carrie Lam early this week renewed her call to the public to participate in the vaccination programme, noting that the earlier they get vaccinated the faster Hong Kong restore their lives to normal.

The government has so far inoculated 403,000 persons as of 23 March, of whom some 252,800 received Sinovac vaccine, whilst the other 150,200 received BioNTech vaccine. More than 16,000 individuals have also made reservations to get the vaccines. This translates to over 5% of the Hong Kong population receiving the vaccines since its started the programme on 26 February.

“Unless residents restore confidence in the vaccines and allow the vaccination program pick up pace, we see little hope of border re-opening, which is crucial to Hong Kong’s economic recovery,” the OCBC said.

Tourist arrivals in February plunged 97.2% YoY as it welcomed only 5,500 tourists due to travel restrictions, according to the Hong Kong Tourism Board. Of this number, 3,799 were from Mainland China.

The board had announced in early March that the full-resumption of cross-border travel will be unlikely in the next three to six months.

Meanwhile, the OCBC sees a more positive outlook in terms of Hong Kong’s financial technology development.

This comes as Hong Kong Monetary Authority Chief Eddie Yuen mentioned plans to establish a new financial infrastructure.

“Specifically, the HKMA is expecting to launch Commercial Data Interchange in 2023, which will facilitate the companies to share the digital footprints with commercial banks,” the report read.

In addition, HKMA is studying cross-border payment with Central Bank Digital Currency (CBCD) with the People’s Bank of China, Bank of Thailand, and the Central Bank of United Arab Emirates (CBUAE).

“This may be expanded to the international trade settlement in the capital market in the future,” the OCBC said. “Taken all together, it reflects the acceleration of Fintech development in Hong Kong.”

In February, the HKMA and the CBUAE signed a memorandum of understanding (MoU) enhancing their collaboration in fintech development between the two jurisdictions. Through the MoU, CBUAE joined the multiple CBDC project.