Traditionally, healthcare has been seen as a burden on various economies. However, in recent times, Malaysian healthcare has defied this belief by showing tremendous economic potential via a rapid expansion and promotion of medical tourism. This growth is largely attributed to the cheap, yet high-quality care that many private medical institutions in Malaysia offers.
Malaysian healthcare has long existed as an interesting and relatively successful industry. In essence, there is both a public and private healthcare sector, where public healthcare still holds a majority in the sector. In recent years however, the private sector has rapidly grown.
Healthcare is also a prioritised sector in Malaysia due to the rise of an ageing population and increases in non-communicable diseases within society. As a result, in 2016, the government spent 10% of its annual budget (approximately RM 23.5bn) solely on healthcare. This investment also came with reasonable returns, seen in 2016 where healthcare contributed RM 1bn, with an expected 33% increase in return this year (MOH , 2016).
Potential for economic growth is huge in Malaysia. According to Ministry of Health (MoH), they have shown that healthcare was the fastest growing industry from 2000-2009. The establishment of the 2010 Economic Transformation Programme to help Malaysia achieve high-income status had also identified healthcare as 1 of 12 National Key Economic Areas (NKEA), thus enabling this sector to receive substantial government support and funding. The focus also stresses on increased collaboration between public-private sectors alongside attracting investment in key manufacturing and service industries. (Global Risk Insights, 2017)
Clearly, healthcare is an integral part towards the government’s long-term vision for the nation. Nevertheless, doubts have been cast over the feasibility of heavily-subsidised treatment, leading to mounting pressure to restructure the healthcare system and allow private facilities to play a greater role (ISEAS, 2015). Current trends are aligning with this need, which is great for investors who will benefit from the progression of the system.
As a result of the ETP, medical tourism has began to flourish. Unlike traditional tourism sectors, medical tourism distinguished itself as the act of travelling to a foreign country to receive medical care, whether it is due to cheaper medical expenses or the availability of medical technology in the designated country which is unavailable in the origin country. Noted by the Economic Intelligence Unit (EIU), within the tourism sector (Malaysia’s fifth largest sector), the medical tourism subsector had increased by over 20% a year from 2011-2014. Revenues from 2010 totalled to RM 380m, and is projected to grow annually by 10% up to 2020 (though current figures are closer to 30%). (Global Risk Insights, 2017)
Recent scandals such as the 1MDB scandal however, had impacted the progression of the business in 2015 and 2016. In 2016, Malaysia only received 886,000 tourists; well below numbers seen in 2014. Nevertheless, the government has set high hopes for 2017 by targeting 1 million healthcare travellers (Global Risk Insights, 2017). Clearly, the vision for medical tourism is seen to be healthy irrespective of external circumstances.
Originally, Singapore was the leading medical tourism leader in Southeast Asia; nonetheless, due to rising medical costs and hikes, demands there have dropped. In terms of patient numbers, Thailand would be the main threat to Malaysia, seeing their significantly larger (2.81m foreign patients in 2015) share of the market (MOH, 2016). However, this situation is soon to change due to the depreciation of the national currency, which makes Malaysia an even more attractive medical tourism destination.
Opportunities for Growth
As part of the NKEA, Malaysia has implemented a number of plans to simultaneously improve the economy while furthering medical development. One such plan, is to pursue generics export opportunities. This essentially means to become a major pharmaceutical export towards OIC (The Islamic Conference) countries, as understandably, Malaysia cannot be cost-competitive in relation to larger, more economically prosperous countries such as China and India (MOH, 2016).
This is an exceptionally great plan, as this takes advantage of the credibility and quality Malaysian pharmaceutical holds within the OIC. For instance, Malaysia is the only country holding the highly credible PIC/S (Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme) membership while holding a credible halal platform (MOH, 2016). Through this, alongside local agreements and mutual recognition agreements, Malaysia will undoubtedly be able to enter and be successful in a large market.
In addition, healthcare services are also another sector that is likely to be explored through the scheme. The 11th Malaysia Plan (the development plan for Malaysia from 2016-2020) had designated key areas, namely Melaka, Penang and Johor, to be host core healthcare services targeted at medical tourists. They would also provide strong markets for many pharmaceutical companies as international patients tend to spend more on healthcare compared to locals (ISEAS, 2015).
Amongst the more interesting regions would be Johor. Seeing how it had failed to meet expectations for economic plans, the government decided to try to change its luck through renovating it as a medical hub and hopefully attract different companies there. So far, a number of big companies have shown interest, namely Biocon, Ramsay Sime Darby Healthcare and KPJ Healthcare (Global Risk Insights, 2017).
In light of all the scandals and economic downfalls that had befallen Malaysia, the fact that the medical industry is still growing is quite a success. Economic potential in this sector is extremely promising, and should Malaysia capitalise on their advantages in the region and their position in the IOC, it has a potential to become a truly successful medical hub and a great source of economic strength.
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Etp.pemandu.gov.my. (2017). Healthcare. [online] Available at: http://etp.pemandu.gov.my/[email protected] [Accessed 7 Aug. 2017] Macleod, A. (2017). Special Report: Malaysia’s healthcare sector provides a catalyst for growth. [online] Newcastle University: Global Risk Insights. Available at: http://globalriskinsights.com/2017/04/malaysia-healthcare-sector/ [Accessed 4 Aug. 2017]. Ministry of Health, Malaysia (2017). NKEA Penjagaan Kesihatan. Putrajaya: Ministry of Health, Malaysia, pp.553-587. Poh Onn, L. (2015). What Lies Ahead for Malaysian Healthcare?. ISEAS Economics Paper, [online] pp.3-5. Available at: https://www.iseas.edu.sg/images/pdf/ISEAS_Economics_Working_Paper_2015-04-01.pdf [Accessed 8 Aug. 2017].
Etp.pemandu.gov.my. (2017). Healthcare. [online] Available at: http://etp.pemandu.gov.my/[email protected] [Accessed 7 Aug. 2017]
Macleod, A. (2017). Special Report: Malaysia’s healthcare sector provides a catalyst for growth. [online] Newcastle University: Global Risk Insights. Available at: http://globalriskinsights.com/2017/04/malaysia-healthcare-sector/ [Accessed 4 Aug. 2017].
Ministry of Health, Malaysia (2017). NKEA Penjagaan Kesihatan. Putrajaya: Ministry of Health, Malaysia, pp.553-587.
Poh Onn, L. (2015). What Lies Ahead for Malaysian Healthcare?. ISEAS Economics Paper, [online] pp.3-5. Available at: https://www.iseas.edu.sg/images/pdf/ISEAS_Economics_Working_Paper_2015-04-01.pdf [Accessed 8 Aug. 2017].
Researched by – Luanne Lai