What does the VTL mean for Singapore's, Malaysia's economies?

It’s not only the tourism sector that will benefit from the air link reopening, analysts say.

The reopening of air travel between countries may also signal “more travel corridor resumptions," OCBC Bank said in its report.

The air link reopening will boost Kuala Lumpur International Airport’s productivity considering Singapore comprised nearly 10% of its 2019 throughput

According to the bank, the governments of Singapore and Malaysia were already in “active discussions” to also open iland travel between them through the Johor Causeway. 

The bridge had about 350,000 travellers crossing it prior to the pandemic.

Singapore makes up 39% of Malaysia’s visitors. Malaysia’s tourism sector, which makes up 5% of its gross domestic product, is therefore expected to also profit from the quarantine-free travel to and from Singapore.

“Even though Singapore has travel lane arrangements with a total of 16 countries, jumping on that 50-minute flight to KL may be the easiest and quickest getaway for most,” OCBC said.

Apart from tourism, Malaysia is expected to receive a fillip on foreign direct investments, considering that Singapore made up 14% of its total investments in 2020.

The quarantine-free travel between the two countries will begin on 29 November.

Read more: Singapore to launch VTL with Malaysia