Update Country Report Maldives 04 May 2021

• The Economist Intelligence Unit has brought forward its timelines for vaccination rollout in China, Cambodia, Bhutan, the Maldives, Malaysia, Sri Lanka and several Pacific islands to reflect greater supply and vaccination rates than our initial conservative expectations.
• India's ban on vaccine exports, introduced in the second quarter of 2021, will create particular challenges for vaccination efforts in developing countries in Asia, which were relying on India for supply via the World Health Organisation-led COVAX Facility.
• Alongside limited exports by other vaccine producers, including the US and the EU, demand in Asia for Chinese and Russian vaccines will increase.

This is an update to The Economist Intelligence Unit's outlook for the rollout of coronavirus (Covid-19) vaccines in Asia, which was published in January. Our timeline projects how long it will take for countries to vaccinate 60% of their populations (the minimum threshold we expect to be necessary to achieve herd immunity against the virus, although the exact threshold remains uncertain). The model factors in the size of the population; the number of healthcare professionals; and the number of vaccine doses each healthcare professional can administer on a daily basis, using current and projected vaccination rates as a benchmark.

Key changes to our vaccine timeline for Asia

The timelines we set out originally were conservative. On the whole, this has proved to be an accurate prediction, given the challenges that have emerged in relation to both supply and demand. Manufacturing and logistical bottlenecks, along with vaccine hesitancy in a large number of Asian countries, have impeded the speed of rollout. Many governments in the region have scaled back initially optimistic rollout expectations, and no major Asian economy has kept pace with global leaders (such as Chile, Israel, the UAE, the US and the UK), as measured in terms of doses received per capita.

However, against our conservative initial assumptions, the outlook for several countries in Asia has improved since January. One notable change is to the timeline for China, as we now expect a faster vaccination rate in urban areas (which account for around 60% of the population). China achieved a peak daily vaccination rate of 7m in the first quarter, and we expect the average rate to approach this level again later in the year. This should ensure that China passes the 60% threshold in the second quarter of 2022, against our previous forecast of the third quarter, However, the rollout will probably slow once efforts shift to rural areas, which are harder to access, meaning that vaccination of the remaining population will take longer (until end-2022).

We now expect Bhutan and the Maldives to achieve widespread vaccination by end-2021, helped by India's initial prioritisation of vaccine shipments. In the first quarter of the year India ensured early access for both countries to enough vaccine doses from the Serum Institute of India (SII) to cover 30-35% of their populations (counting two doses per person)-a move intended to recognise and maintain India's diplomatic relations with the two countries.

This enabled Bhutan and the Maldives to start vaccinating, and the relatively small size of their populations will keep their vaccination timelines short. The Maldives has also approved and begun to use vaccines from Pfizer/BioNTech (US/Germany) and Sinopharm (China) in the light of uncertainty over future exports of India-manufactured vaccines (the SII halted exports in April to redirect supply to India's domestic population), which should ensure its inoculation programme can continue. Bhutan and the Maldives will enjoy a head start in reopening their tourism sectors to international tourists, along with Hong Kong, Macau and Singapore, which we also expect to achieve widespread vaccination this year.

We have also brought forward the timelines for several Pacific islands that have secured supplies earlier than expected. Their small populations also work to their advantage. The US is assisting with vaccine rollout in Palau, the Marshall Islands and the Federated States of Micronesia, while France is supporting French Polynesia and New Caledonia. Australia, China and New Zealand have also been active elsewhere in the region in either delivering or promising supplies. Meanwhile, Malaysia and Sri Lanka began their immunisation programmes earlier than expected, in the first quarter of 2021. This has brought their timelines for widespread vaccination forward to the third quarter of 2022 and the fourth quarter of 2023 respectively. We have advanced Cambodia's timeline to the third quarter of 2023, as assistance by the armed forces has sped up vaccination.

We have also made some downgrades to our forecasts. Vietnam's vaccination rate has been slower than expected, and the government's targets for vaccine procurement in 2021 are modest, prompting us to lengthen its timeline until the fourth quarter of 2022. Taiwan, which we originally expected to achieve widespread vaccination by end-2021, has now been pushed back to the first quarter of 2022. The downgrade takes into account the export restrictions imposed since February on vaccines and their inputs by governments in Europe and the US, where Taiwan was planning to procure most of its supply.

The impact of India's vaccine export ban

A second wave of the coronavirus began in India in February 2021, caused by a more infectious variant strain. The Indian government has since put pressure on the SII to reduce vaccine exports in order to reroute supplies to the domestic population. The SII announced in April that it would not export any doses until May, and in May it extended this until June; we believe that the institute will not be in a position to resume large-scale exports until the fourth quarter of 2021. While there has been no halt to exports by India-based Bharat Biotech, its vaccine, Covaxin, has only been approved in five other countries, meaning there is little external demand. COVAX sources around 80% of its supplies from India and will struggle to stick to its distribution schedule, despite a partial exemption from the export ban. This will create vaccine access challenges in developing Asia, although for many of the lowest income countries in the region we had already assumed that widespread vaccination would not be achieved until after 2025 (if at all).

We have not altered our forecast for India, and still expect the country to achieve widespread vaccination in the fourth quarter of 2022. Despite the current health emergency and export restrictions, production capacity will take time to increase, while the logistics of vaccinating a large rural population remain complex. Our initial assumptions still therefore continue to hold.

China and Russia look to fill vaccine vacuum

India's export restrictions will lead to greater uptake in Asia of vaccines produced in China and Russia. Those two countries are seeking to take advantage of the "vaccine vacuum" to cement and expand their diplomatic ties and influence. In Asia there are 19 countries using Chinese vaccines and nine using Russia's Sputnik V. Chinese and Russian vaccine producers have also set up production facilities in multiple locations; Sputnik V will be produced in a dozen countries globally, including India and South Korea in Asia. Meanwhile, there will be production lines for the various Chinese vaccines in ten countries, including Indonesia and Malaysia.

Russia's vaccine diplomacy is primarily a means for the country to deepen its influence in friendly states and to extend its reach in places where it has not been particularly active. Asia is one of the key regions Russia is targeting. This strategy does not come without risks, however. In 2021 the country will struggle to deliver as many vaccines as it has pledged because of production delays and restricted shipment capacity.

South-east Asia is a particular focus for China, which has prioritised the region in its Belt and Road Initiative. Some of the country's largest vaccine donations have been to this region, with 1.7m doses pledged to Cambodia and 1m doses pledged to the Philippines (of around 16.5m doses donated in total). The region is important to China because of the South China Sea issue; China needs support from members of the Association of South-East Asian Nations (ASEAN) to prevent the body from challenging its claims in the dispute. Meanwhile, South-east Asian countries have also been relatively willing to purchase Chinese vaccines, with Indonesia and Malaysia placing orders for 125m doses and 14m doses respectively, and allowing Sinovac to set up local production facilities.

Once India and various Western countries lift their export bans, Chinese and Russian pharmaceutical companies will face increased competition. We expect Chinese and Russian companies to push for more supply agreements before this takes place, and to cut prices to win market share.