COVID-19 outbreaks: the challenge facing the fight against poverty

The COVID-19 pandemic has had manifold impacts on the poor in ASEAN member states. Upping vaccination rates will go a long way, writes Phi Minh Hong.

The COVID-19 epidemic is raising concerns about increasing poverty levels in the world and reversing the gains achieved in the fight against poverty. ASEAN, which has been largely successful in fighting poverty, is not an exception. Before the pandemic, developing countries in the bloc recorded a decline in poverty. The proportion of the population living below the international poverty line of US$3.2 per day declined from 47.6 per cent in 2005 to 14.6 per cent in 2019. The number fell even more drastically for the extreme poverty line of US$1.9 per day, from 17.6 per cent to 2.2 per cent in the same period.

Due to the lack of data from household surveys, it is hard to quantify the impact of COVID-19 on poverty from the beginning of the outbreak. However, recent reports by experts point to an increase in global poverty. According to this year’s Economic and Social Survey of Asia and the Pacific, the developing Asia-Pacific region’s gross domestic product contracted by 1.0 per cent in 2020. About 140 million full-time jobs were lost, this driving an additional 89 million people back into extreme poverty. In 2021, the picture will likely turn more optimistic. The latest updated estimates show that countries in the Asia-Pacific region can reduce the number of people in extreme poverty and return to the pre-epidemic trend. This optimism stems from the fact that major countries, including China, have achieved laudable successes in vaccination and are gradually easing COVID-19 prevention measures.

However, with the appearance of many variants of COVID-19 with a high degree of transmission, we need to have a more cautious outlook. Countries in ASEAN are seeing fresh waves of the pandemic, accompanied by delays in the vaccination process. In Indonesia, for example, the number of daily new cases hit a peak of 50,039 on 18 July. As of 17 July, the country’s vaccination rate (those who have received two doses of the COVID-19 vaccine) stood at a mere 6 per cent. Even Vietnam, which had previously enjoyed a relatively good record fighting the pandemic, saw a record of 16,954 new confirmed cases on 3 August. Vietnam is also playing catch-up with regard to vaccinating its population. In ASEAN, it has the lowest vaccination rate, at a mere 6.7 per cent on the same date.

Within ASEAN, only three member states have vaccination rates which are higher than the global average of 30 per cent. Singapore — a high-income economy — has the highest vaccination rate in the region, at 78 per cent as of 5 August. Two other ASEAN states with developing economies are faring relatively well in terms of vaccination rates. Cambodia and Malaysia have a vaccination rate of 47 per cent on the same date. A failure to ramp up vaccination rates can put excessive pressure on the poverty reduction capabilities of countries with low rates of vaccination.

To their credit, ASEAN governments have, from the outset of the pandemic, sought to protect their poor. They launched a series of support programmes, including social care services, cash transfers, food and other in-kind distributions to poor households and vulnerable people. These measures proved to be effective in the short term. Unfortunately, the assistance was not accessible to all of the poor. In Indonesia, one-third of the poorest households — those with incomes in the lowest 40 per cent of the population — did not get cash assistance of any kind. Although they are not considered to be extremely poor, these groups are still vulnerable because they could slide into extreme poverty when a crisis persists. In Vietnam, many people in need have claimed that complex processes are stopping them from getting support.

Applying digital platforms would be a crucial solution to scaling up social assistance programmes, especially “targeted” programmes for specific groups, because data can help with transparency and delivery. In Thailand, anecdotal evidence has demonstrated the benefits of a simple online application in addressing aid programmes for informal sector workers (i.e., own-account workers, unpaid family workers in several sectors such as accommodation and food services, retail, transport and agriculture). Thanks to the application, more than 15 million informal sector workers have been rendered eligible, five times higher than what the government expected. Thanks to the deep mobile internet penetration in Myanmar, many vulnerable people, such as pregnant women, can access assistance programmes. However, when the epidemic re-emerges in waves, these short-term solutions might put additional budgetary pressure on governments, in particular developing countries with relatively nascent social protection systems like Cambodia and Laos.

In the end, speeding up vaccination programmes remains the most important thing to keep economies humming. This would help to limit the spread of the virus and dampen the impact on the poor. For export-led growth economies in the region, virus infections in industrial parks or export processing zones will hinder the production process, disrupt the supply chain and hence affect the economy. Ensuring the smooth operation of industrial zones will help economies to recover, which in turn will contribute to dampening the negative impact of COVID-19 on poverty. Thanks to ongoing vaccination campaigns in China and the United States, there has been a gradual recovery of demand in these two major economies. The recovery in these two markets will help export-intensive countries in ASEAN, and as a result, help alleviate poverty.

Besides improving the effectiveness of social protection programmes, countries also need to maintain and strengthen longer-term measures for sustainable poverty reduction after COVID-19. Governments should further promote strategies to help the poor diversify their livelihoods and to improve the quality of labour, such as providing vocational training for lower-income groups and ethnic minority workers. Given that COVID-19 has led to the promotion of online training systems, such forms of training should also be applied and expanded so that the rural poor can access diverse training courses. In addition, the development of e-commerce will also help the rural poor to sell their own products to distributors and urban consumers. If anything, the challenge posed by the pandemic should give ASEAN governments ample reason to explore ways to protect and sustain lesser-endowed citizens in their respective countries.

Dr Phi Minh Hong is a Graduate Fellow at the ASEAN Studies Centre, ISEAS–Yusof Ishak Institute.

Banner image: Nurse administers COVID-19 vaccines to locals at Phang Nga Hospital, Phang Nga Province, Thailand - July 21, 2021. Credit: wandee007, Shutterstock.

This article originally appeared on the ISEAS-Yusof Ishak Institute's online journal Fulcrum on August 12, 2021.