Indonesia Expat - - Featured - BY ERIN COOK

A Check- Up on In­done­sia's Health­care Sec­tor

Pres­i­dent Joko ‘Jokowi’ Wi­dodo has led a push for more for­eign in­vest­ment and a loos­en­ing of bu­reau­cratic reins in a num­ber of key sec­tors in the grow­ing In­done­sian economy. While big ticket in­dus­tries, like oil and gas and tourism, have led the charge an in­creas­ing num­ber of in­vestors and mar­ket watch­ers are pick­ing an un­likely sec­tor as the safest bet for strong, sus­tain­able growth – health­care.

A mas­sive pop­u­la­tion, in­fra­struc­ture de­vel­op­ment and a bur­geon­ing mid­dle class have made In­done­sia an at­trac­tive lo­cale for some of the world’s top health­care firms, ac­cord­ing to a re­cent re­port from in­ter­na­tional banking firm BNP Paribas.

“A favourable macroe­co­nomic en­vi­ron­ment, a ris­ing mid­dle class and rel­a­tively low health­care mar­ket penetration and spend­ing should lead to greater de­mand in this sec­tor. In­done­sia has an un­der­served health­care mar­ket, with low hos­pi­tal bed and doc­tor ra­tios rel­a­tive to the size of the pop­u­la­tion,” the re­port, en­ti­tled In­done­sia’s health­care: the next fast- grow­ing in­dus­try, said.

The Econ­o­mist In­tel­li­gence Unit went a step fur­ther in its global health­care sec­tor white pa­per re­leased ear­lier this year in June, sug­gest­ing that for coun­tries which suf­fer from high in­ci­dents of pub­lic cor­rup­tion – like In­done­sia, but also Thai­land and Rwanda – pri­vate in­vest­ment can of­ten prove to be both the cheaper and more ef­fec­tive method of pro­vid­ing health­care.

The Econ­o­mist spoke with Yalis Ilyas, a lead­ing pro­fes­sor at the Univer­sity of In­done­sia’s School of Pub­lic Health, who sug­gested the gov­ern­ment would do bet­ter in sup­port­ing pri­mary health­care for the coun­try’s poor­est peo­ple, rather than spread­ing it­self too thin in ex­pand­ing ba­sic ser­vices to the 250 mil­lion strong pop­u­la­tion.

“We need more money, but we need it for com­mu­nity health,” Ilyas said. “The most im­por­tant thing is the qual­ity of care.”

A study from Ernst and Young In­done­sia looked at the top four ways a for­eign in­vestor could best tap the po­ten­tial of the health mar­ket.

“One of the ma­jor ob­sta­cles to cre­at­ing a qual­ity health­care sys­tem for the whole coun­try is the se­vere lack of qual­i­fied spe­cial­ists and nurses, es­pe­cially in ru­ral ar­eas,” the re­port found. “Sev­eral hos­pi­tal op­er­a­tors in­ter­viewed for this study con­curred that the shortage of qual­i­fied per­son­nel is a huge prob­lem, es­pe­cially in high- skill fields such as ra­di­ol­ogy.”

With the in­tro­duc­tion and in­te­gra­tion of the ASEAN Eco­nomic Com­mu­nity, Ernst and Young ex­pects plenty of space for in­vest­ment in train­ing and ed­u­ca­tion in the com­ing years.

Se­condly, the re­port tips ‘in­no­va­tive so­lu­tions’ as a huge un­tapped source. Cit­ing ev­i­dence of a de­crease in in- and out-pa­tient num­bers amid high costs and lengthy treat­ments, Ernst and Young pre­dicts smart and savvy in­no­va­tions in the med­i­cal treat­ment field will cre­ate bet­ter out­comes for pa­tients and in­vestors. Man­age­ment ex­per­tise, like many sec­tors in In­done­sia, is also eyed as a pos­si­ble op­por­tu­nity for in­vestors.

“The In­done­sian health­care sec­tor is also strug­gling with a shortage of good man­age­ment teams. This is where for­eign in­vestors can add real value and in­crease prof­itabil­ity: ne­go­ti­at­ing bet­ter deals (vol­ume dis­counts and pay­ment terms) and hav­ing a more ef­fi­cient model to man­age costs and work­ing cap­i­tal can have a sig­nif­i­cant im­pact on the bot­tom line,” the re­port found.

Fi­nally, the sheer size of the po­ten­tial mar­ket should be in­cen­tive enough alone for for­eign in­vestors, the re­port re­vealed.

“Ac­cord­ing to the 2015 Frost & Sul­li­van Health care Out­look, the In­done­sian health­care sec­tor is ex­pected to triple from US$ 7 bil­lion in 2014 to US$21 bil­lion in 2019.”

Like­wise, BNP Paribas points to an in­crease in gov­ern­ment spend­ing in phar­ma­ceu­ti­cals and a re­form which now al­lows full for­eign own­er­ship of phar­ma­ceu­ti­cal firms as a mas­sive in­cen­tive for for­eign in­vestors to en­ter the mar­ket.

“Ac­cord­ing to the 2015 Frost & Sul­li­van Health care Out­look, the In­done­sian health­care sec­tor is ex­pected to triple from US$7 bil­lion in 2014 to US$21 bil­lion in 2019.”

Newspapers in English

Newspapers from Indonesia

© PressReader. All rights reserved.