The Palau government is banning entry to people from areas that the World Health Organisation lists under its SARS travel advisory amidst fears it's not equipped to deal with an outbreak.
The directive, which will last one month, prevents two airlines' biweekly flights from Taiwan which supplied about 30 percent of the tourist numbers in April.
The ban will have a big impact on the tourism industry but officials say the cost of dealing with SARS, or Severe Acute Respiratory Syndrome, far outweighs a temporary loss of revenue.
The directive also stops passengers from travelling to Palau from mainland China, Taiwan, Singapore or any other listed SARS-affected through regional hubs such as Guam and Manila.
The only way for people to enter Palau from affected areas is to wait 14 days in a SARS-free zone.
The director of the Bureau of Clinical Services, Dr Gregory Dever, says the SARS infrastructure on Palau is rudimentary and consists of an old barracks near the airport which has been converted into a quarantine facility.
Palau is seeking funding from the U.S. to improve its medical capabilities.