Growing interest: The private sector is set to become more involved in the industry

While the Indonesian government works to build a universal health care system for its citizens, the private sector is active too. It is sitting on the sidelines waiting to see if the government programme makes sense from a business point of view, but it is still actively building up its capacity and expertise.

Private health provision in Indonesia is quickly evolving and could become internationally competitive in a short period, providing quality care and opportunities for international investors and suppliers.


The sector hopes to attract some of the 1.5m Indonesians going overseas for medical care each year. It would also like to begin serving upwardly mobile Indonesians, those who are not at the level of income that would allow them to go overseas for treatment, but are increasingly able to afford better quality in-country care, or are taking out private insurance that can support such treatment. The emerging middle class wants good health care as much as it wants consumer items. Ultimately, the sector would like to attract inward medical tourism dollars, and begin competing with the likes of Thailand, the Philippines and Malaysia. With its lower cost base, it has a potential competitive advantage.

Health care professionals also say that the government’s programme for universal care will eventually be of interest to the private sector. The reimbursement rates are very low and there is concern that payments might be delayed. Yet it is very possible that the hospital groups will find a way to make it work for them, especially in rural areas or in services that can be provided in bulk to many people. The fact is, the government is spending billions on health care, and the cash flow alone is very attractive to large hospitals.

Up To Standard

Some of the country’s hospitals already operate at international standards. For example, a number of them have been approved by Joint Commission International (JCI), which is affiliated with the Joint Commission, a US-based non-profit which accredits hospitals. The JCI-approved institutions in Indonesia are two Eka hospitals, Fatmawati General Hospital, three RS Premier hospitals, RSUP hospitals, Rumah Sakit Pondok Indah, Santosa Hospital Bandung Central and Siloam Hospitals Lippo Village.


The major medical groups in Indonesia are expanding. Siloam International Hospitals, the country’s largest private health care group, is perhaps the most active. In September 2013 it began trading on the Indonesian Stock Exchange, after an initial public offering raised $122m. The company plans to build 20 hospitals by 2015, and 40 by 2018. Also in 2013 Siloam Hospitals acquired 80% of BIMC, which has two facilities on Bali. In March 2014 the parent company, Lippo Karawaci, sold $75m worth of shares in the firm, reducing its stake from 86% to 78.9%, and said it would invest the proceeds in hospitals and infrastructure.

Kalbe Farma, the country’s largest listed drugs company, is investing Rp20bn ($2m) to build 20-25 clinics per year in the Jakarta area. In 2013 Ramsey Healthcare formed a joint venture that would combine its three hospitals in Indonesia with Sime Darby’s health care assets in Malaysia. IHH, the region’s largest hospital group, is considering investing in Indonesia, and GE says that it is considering investing in rural care in the country. Foreign investment is allowed into hospitals up to a limit of 67% of equity, though non-Indonesians can wholly own specialist clinics. Pharmaceuticals companies can be 75% foreign-owned.

The majority of medical equipment is imported, and the government has made it easier for foreign firms wishing to bring products into Indonesia. The e-Regalkes Medical Device Registration and Household Health Supplies platform was introduced in 2012. The online service allows importers and manufacturers to register equipment without going to the Ministry of Health.

Documents can be uploaded via the website. While more doctors are needed and the Ministry of Health has said it would like more doctors from overseas, the registration process is not easy, and the public and the sector both oppose importation of medical talent.

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The Report: Indonesia 2014

Education & Health chapter from The Report: Indonesia 2014

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