SINGAPORE -- As the number of coronavirus cases continues to mount, Asian nations have begun putting together financial aid packages for local businesses hit hard by the epidemic, which originated in China.
The immediate economic impact of the outbreak is already apparent in tourism, and stock markets around the region have highlighted investors' gloom. Some analysts say factory suspensions and travel restrictions could weigh on Asian supply chains.
In a Monday meeting with economic ministers, South Korea's Finance Minister Hong Nam-ki said the government will set up a financial assistance program for exporters this month to help them get through the rough patch and to find new markets. China is South Korea's largest export destination.
For industries that mainly serve the domestic market, the Finance Ministry plans to make more funds available and help them cut operating costs, Hong said.
Meanwhile, Singapore said on Saturday it is preparing an aid package to help local companies stay solvent and keep employees working. The assistance will include addressing short-term cash flow needs and providing wage subsidies, the government said.
The government will announce specifics on Feb 18 as part of its draft budget for fiscal 2020, which starts in April. Tourism-related businesses such as airlines, hotels and tour agencies are likely to receive help.
"The situation is rapidly evolving. Depending on how the situation progresses, the impact on our economy could intensify," said Heng Swee Keat, deputy prime minister and finance minister, in a Facebook post. "The government is prepared to support our firms and workers in the event of a broad-based economic slowdown. We will continue to monitor this closely and implement decisive measures as needed," Heng said.
Thailand's economic ministers have also endorsed measures to keep the country's tourism industry ticking over after the country last week cut its 2020 growth forecast for gross domestic product from 3.3% to 2.8%, due mainly to the effects of the outbreak.
The measures include requiring state-owned banks such as Krungthai Bank, Government Savings Bank, and the Bank of Agriculture and Agricultural Cooperatives to provide soft loans and suspend principal and interest payments from borrowers for six months. The steps are aimed at helping companies struggling with tight finances due to the epidemic.
The Finance Ministry is pushing to temporarily lower the excise tax on jet fuel for domestic flights. Tour operators may also be granted suspensions on income tax payments for six months. The Transport Ministry is set to lower landing fees.
Prime Minister Prayuth Chan-ocha's cabinet is expected to approve the measures on Tuesday. Additional steps to boost domestic travel will be discussed at the cabinet meeting as well.
"Within ASEAN, Singapore and Thailand will probably be the most impacted, and will likely see some growth downgrades," according to a report from Maybank Kim Eng, in light of Thailand's popularity with Chinese travelers and Singapore's role as a regional transport hub.
South Korea, Singapore and Thailand and Japan have each confirmed more than a dozen cases of coronavirus infection. Japanese Prime Minister Shinzo Abe said in a meeting with officials on Saturday that the virus has had a significant impact on Japan's economy and society, including the tourism industry. The government will take all possible measures to deal with that impact, Abe said.
The World Health Organization last week declared the spread of the virus an international public health emergency and governments began taking stronger measures, such as the banning entry of some people who have recently been to China, in hopes of preventing the spread of the virus.
"Since 2003 [during the SARS epidemic], China's regional influence has increased substantially via manufacturing supply chains and via tourism flows," J.P. Morgan economist Sin Beng Ong said in a note published Monday.
"In the manufacturing sector, unlike tourism, inventory drawdown could smooth out near-term supply shocks. But should the outbreak escalate and factory shutdowns extend, this could pose a more severe supply shock, reverberating through China and through the region via supply chains, particularly in tech," he said.
The outbreak of severe acute respiratory syndrome knocked 0.47% off Singapore's gross domestic product in 2003, and reduced it by 0.15% in Malaysia and Thailand, according to the Brookings Institution, a U.S. think tank.
Additional reporting by Masayuki Yuda in Bangkok and Kim Jaewon in Seoul.