Malaysia’s healthcare sector, particularly medical tourism, has provided a catalyst for growth in FDI, writes a UK researcher in an international publication.
PETALING JAYA: The Malaysian healthcare system has received much praise from a leading political analysis publication, in both the public and private sectors.
Citing the UN Development Programme’s praise of Malaysia as a “shining example for other developing countries”, a researcher with Newcastle University writes in Global Risk Insights (GRI) about how despite some of the problems facing the country, the healthcare system is on the right track to register massive growth.
“Deemed essential to the Malaysian economy, the government has prioritised healthcare spending, injecting RM23 bilion into healthcare in 2016 – approximately 10% of the annual budget.
“Malaysia’s healthcare system consists of two tiers: a state-owned universal healthcare system for national citizens runs alongside a private sector that serves more affluent citizens and international patients.
“Due to projected demographic shifts – chiefly Malaysia’s ageing population, increasing life expectancy and the growth of non-communicable diseases – demand for healthcare is expected to grow,” Alexader Macleod writes in a special report entitled, “Malaysia’s healthcare sector provides a catalyst for growth”, in GRI.
Breaking down the healthcare sector targets under the Economic Transformation Programme (ETP) launched in 2010 by Prime Minister Najib Razak, Macleod says that one key target that has flourished is medical tourism.
“At the International Medical Travel Journal’s (IMTJ) Medical Travel Awards 2016, Malaysia swept up an array of awards for the second consecutive year, including ‘Destination of the Year’.
“Within the tourism sector, Malaysia’s fifth-largest industry, the medical sub-sector expanded by over 20% a year from 2011-2014.
“Revenues from medical tourism in 2010 totalled RM380 million. Although initially projected to grow annually by 10% up until 2020, actual growth figures are closer to 30%,” he said, suggesting however, that the fallout from the 1MDB scandal in the past two years may have had some impact, with the number of medical tourists reducing to 860,000 in 2016, which was lower by about 22,000 compared with 2014.
“The government nonetheless, has revived ambitions for 2017, targeting approximately one million healthcare travellers.”
One of the key factors in the confidence for Malaysia’s medical tourism growth, ironically is the decline of the ringgit.
“Medical tourists will be attracted by Malaysia’s national currency, the ringgit, which has depreciated significantly since 2015 due to pressures caused by weak oil prices, slowing economic growth and uncertainty concerning Malaysia’s future relationship with Washington.
“Medical tourists in Malaysia are predominantly from Indonesia, with others coming from Bangladesh, China, India, Japan, the United Kingdom and increasingly, the Middle East (Saudi Arabia and the UAE),” Macleod says, highlighting a report by the Oxford Business Group which notes Malaysia’s broad availability of halal food, halal medicines and treatments, and prayer spaces as key attractions for visitors from such countries.
According to him, Malaysia’s biggest competition comes from Thailand, which had received 2.81 million medical tourists in 2015, far exceeding the numbers coming to Malaysia.
However, Macleod was optimistic about the future for Malaysia what with the ongoing efforts of the Malaysian Healthcare Travel Council (MHTC), established in 2009, and the anticipated construction of healthcare hubs in Penang, Melaka and Johor.
“The substantial population of overseas Malaysian students gives it another advantage over Thailand. Doctors working in Malaysian hospitals will for the most part have been trained in western institutions, and will be required to speak fluent English.
“Specialists from abroad are also being encouraged to work in the private hospitals as well as operate stand-alone clinics.
“This increases the supply of doctors and investment available for private facilities, which are likely to shoulder greater responsibility for Malaysian healthcare in the future,” he said.
Investment in healthcare
Macleod also posits the outlook for foreign investment in the healthcare sector being very promising with the healthcare hubs in Malacca, Penang and Johor being part of the 11th Malaysia Plan.
“Malacca in particular was identified as a potential healthcare hub due to its high volume of visitors (serving over 500,000 medical tourists in 2014, that is more than half the total 860,000).
“International patients tend to spend more than locals on healthcare, and so these hubs will provide strong markets for pharmaceutical manufacturers.
“These hubs will provide cost-competitive locations for the main private healthcare providers (IHH Healthcare, KPJ Healthcare, and Ramsay Sime Darby Healthcare),” he said, adding these are just a few areas in which Malaysian healthcare is going from strength to strength.
Speaking of the overall contribution to the nation, Macleod says healthcare contributed RM1 billion to the national gross national product (GDP) last year, and the outlook is bright with it expected to grow by another 33% this year.
“This success is remarkable in light of Malaysia’s political troubles, although the government seems to have weathered that storm for now.
“In any case, FDI is streaming into Malaysian healthcare, reflecting external confidence in an economic sector bursting with potential.” -FMT
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