Taiwan Braces Itself for Latest COVID Storm

The highly transmissible Omicron variant poses clear risks that must be managed, but a roadmap for reopening is still needed.

The capricious coronavirus is full of unpleasant surprises, the latest being the ultra-transmissible Omicron variant that threatens to upend Taiwan’s mostly COVID-free existence. With around 18,000 total recorded cases and 850 deaths as of mid-January, Taiwan has kept the pathogen at bay better than most other countries.

When Omicron first emerged in South Africa late last year, Taiwan was riding high. Thanks to some of the strictest border controls in the world, effective contact tracing, and rigorous testing, it had built an effective defense against the Delta variant, Omicron’s predecessor. Some scientists say Delta causes more severe disease than other variants.

Even the ever-cautious Central Epidemic Command Center (CECC) felt confident enough to declare on December 7 that Taiwan had achieved “COVID-zero status.”

It soon became clear that the victory was short-lived. Omicron’s infectiousness coupled with an uptick in overseas arrivals for the Lunar New Year holiday have resulted in an unprecedented number of imported cases and the return of community transmission. While the numbers – in the dozens – are low by global standards, for a country accustomed to living without COVID, they are an unpleasant reminder of the virus’s tenacity.

Should Omicron breach Taiwan’s defenses, there could be widespread economic fallout even if the island’s nearly 75% two-dose vaccination rate – expected to reach 80% by mid-February – protects most of the population from serious illness.

“One of the reasons the Taiwan economy performed so well in 2021 was that the manufacturing sector was not affected by COVID,” says Liang Kuo-yuan, president of the Taipei-based economic think tank Yuanta-Polaris Research Institute. “Nobody can guarantee that the same story will be repeated this year. If Omicron can be transmitted so quickly, maybe some factory workers will be infected. In that case, it will create a lot of trouble for the manufacturing sector.”

An Omicron outbreak would crimp consumption as well, especially in case of return of Level 3 restrictions, which ban indoor dining and require KTVs, saunas, bars, nightclubs, gyms, and various other leisure facilities to shut their doors. Many restaurants in Taiwan are just getting back on their feet. Some would struggle to survive another three-month soft lockdown. 

“Omicron could be a disruption, but because the infection rate is still not high compared to the rest of the world, up to this moment it is still okay. It’s a factor of uncertainty,” Liang says.

If Taiwan can corral Omicron as it has other coronavirus variants, Liang reckons the economy could grow at a brisk 4% clip this year. “We will be moving from accelerating to cruising speed, still good but not as strong as 2021,” when GDP growth reached 6.28%, the highest rate since 2010.

Even in the absence of a major Omicron disruption, consumption may still lag if Taiwan cannot ease restrictions and begin reopening the country, said Iris Pang, ING’s chief economist for Greater China, in an October research note. The impact of last year’s stimulus vouchers intended to boost consumer spending “has been marginal, with more people dropping out of the workforce,” she wrote. “That’s also a reason why the unemployment rate has fallen (people have stopped looking for a job) even though the labor market has not fully recovered.”

Noting that stimulus vouchers “are not a long-term solution,” Pang said that “what’s needed is the reopening of borders to revitalize the tourism industry.” 

While all countries are struggling to coexist with the coronavirus, Taiwan’s de facto elimination strategy puts it in a particularly challenging situation. Elimination remains appealing to the Tsai Ing-wen administration given the policy’s popularity with the public. Indeed, the tourism sector is the only industry openly pressing the government to ease border controls.

With Taiwan’s strict border controls still in place, some worry that the inconvenience to international businesses may deter some from choosing Taiwan as a place to invest.

At the same time, while Taiwan’s ability to cope with a COVID outbreak has improved considerably over the past two years, the government’s messaging about the pandemic has largely remained the same. Each day the CECC’s press conference reports on total case numbers and details about the sources of infections. The focus is on the present, with little said about future directions.

“I believe the Taiwan government’s calculations are based on what is acceptable to the public in terms of risks to their families and hospitals’ capacity to treat those who are seriously ill due to COVID and other conditions,” says Dr. Jason Wang, a professor of pediatrics and health policy at Stanford University. “The government can also change the public’s perception about risks using updated evidence and data – it’s part of communications.”

Dr. Chan Chang-chuan, an epidemiologist who is the former dean of the College of Public Health at National Taiwan University, says that the government “seems to overweigh the number of new cases.” That “is unfortunate, he says. “The focus should be on new hospitalizations and deaths.”

He acknowledges the infectiousness of Omicron, but notes that given the more than 70% two-dose vaccination rate that Taiwan has achieved, “the immunity of the population is very different from last year and there are also therapeutics available now.”

With that in mind, Chan urges the government to adjust its COVID containment strategy. One way to do so would be to transition from reliance on expensive, slow, and sometimes inaccurate PCR tests to adoption of simple, inexpensive rapid saliva testing that can be done at home for those with no or mild symptoms. “The PCR test can tell you if a person has been infected but that person may lack the ability to transmit the virus to others, which is very important” to determine, he says. “If the test is overly sensitive, then you may end up with questionable positives.”

Juliet Morrison, a virologist at the University of California, Riverside, told The New York Times in an August 2021 interview that any test with a cycle threshold (CT) greater than 35 is too sensitive. The CECC sometimes reports cases at that level. For instance, a domestic case reported on October 16 had a CT of 37.3.

Key to coexisting with COVID will be empowering people to manage mild cases themselves, as they do with other endemic viruses, Chan says. “The answer is not to put everybody into a negative pressure isolation chamber in a hospital. Most people will be able to test themselves with a rapid saliva test and isolate at home until they have recovered.”

Reconnecting with the world

As of mid-March, Taiwan will have been closed to almost all non-citizens and non-residents for two years, while all arrivals have had to undergo a 14-day quarantine and seven days of self-health management. The prolonged closure is often discussed in terms of its impact on the tourism industry, but its effects are more profound.

Frederic Rocafort, an attorney at the Seattle-based law firm Harris Bricken, which works with Taiwanese manufacturing clients, says that East Asia’s tough approach to COVID containment is hindering business operations. “With COVID, we’re really seeing many issues come up,” he says. He cites lockdowns preventing some facilities in the region from operating, “people getting stuck in places like Vietnam,” and difficulties when people need to make business trips to Taiwan. “It’s such a nightmare, especially when you have strict restrictions” at both ends of a trip.

Rocafort notes that in normal times, Taiwanese manufacturers often rotate top-performing managers regionally to give them opportunities to develop their careers. The pandemic has forced a pause on that practice, an unfortunate development for both the managers and the companies.

Taiwanese manufacturers are also put at a disadvantage in the ability to attend trade shows. “If you’re a Taiwanese exporter, you need to go to trade shows to promote your company” and talk to both customers and suppliers,” Rocafort says. “If in order to go to a trade show in the U.S. for four or five days, you have to subject yourself to two weeks of quarantine, you perhaps will send fewer people and not your key decision-makers,” whom most companies cannot afford to have sequestered in a hotel room for 14 days.

Rocafort sees an economic benefit for Taiwan if it can ease some restrictions, as some companies are rethinking their operations in China due to Beijing’s own ultra-strict measures to fight the virus plus the impact of increased U.S.-China trade competition. “We have clients right now looking for alternatives to China, and for some industries Taiwan can be an option. But if you can’t go there to take a look or, more broadly, it appears that Taiwan is doing this zero-COVID thing, it is going to place Taiwan at a disadvantage.”

To date, Taiwan has been mum about a reopening roadmap, although it has taken incremental steps to ease certain restrictions, such as implementing the 7+7 quarantine option that allows the second half to be spent at home for those whose residences meet the CECC’s stringent requirements.

Among those conditions is one that obligates people in home quarantine to bathe, eat, and sleep separately from others in their household unless everyone traveled overseas together. If they did not, then the residence must be large enough to allow the person or persons who traveled overseas to isolate themselves from those who did not. The typical Taiwanese urban apartment would not be large enough (not enough showers and bedrooms) to meet these requirements.

The step to adopt the 7+7 approach, taken before the arrival of the Omicron variant, signaled that the government was considering relaxing its strict quarantine policy, says NTU’s Chan. Now the arrival of Omicron presents the government with the need to make a choice, he says. “From now [mid-January] until the end of the Lunar New Year holiday, there will be a time that Taiwan can move toward greater openness or greater restrictions.”

Stanford’s Dr. Wang says that Taiwan should begin to develop a strategy for easing border restrictions based on scientific evidence of viral spread and the severity of disease, results of repeated testing at the border, and public acceptance. 

“There is a crossover point where additional quarantine days do not make it safer,” he says. “The current 14-day quarantine can be shortened with risks managed.”