Health of the Economy

Malaysia

Economic News

22 Jul 2010
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Malaysia has high hopes it can transform its well-developed health services sector into a growth industry by promoting medical tourism, while opening up the sector to greater overseas investment.



Malaysia's Tourism Ministry estimates that medical tourism could contribute $153m to the economy next year, with 625,000 overseas visitors expected to come to the country seeking treatment, well up on the 375,000 health tourists recorded in 2008 and the $85m in revenue.



In mid-July, to help promote Malaysia as a health tourism destination, the Tourism Ministry, in association with the Association of Private Hospitals, launched a glossy 240-page guide to Malaysia's health sector. Produced by the US-based publishing house Healthy Travel Media, the book gives an overview of the country's international hospitals, selected health travel agents, recovery and guest accommodations, as well as general travel information.



According to the book's author, Josef Woodman, Malaysia has much to offer as a health care destination.



"Malaysia's superior medical services are within a six-hour flight of nearly 2bn health care consumers," he said at the launch. "Malaysia is one of the top destinations as it is less expensive than Singapore or Thailand. It also has great infrastructure, is easy to get around. English is widely spoken here."



Another measure to assist the sector to reach its potential came on July 3, when the cabinet approved the setting up of the Malaysia Healthcare Travel Council. The council is intended to serve as the primary agency to promote and develop the country's health tourism industry, working closely with the private sector
.



While seeking to attract visitors from overseas, the government is also trying to draw in greater foreign investment in medical services.



As part of the reforms announced by Prime Minister Najib Tun Razak in April to open up segments of the services sector to foreign investment, the requirement for a minimum 30% Bumiputera or local ethnic Malay ownership in the health industry was removed. This would allow foreign health providers to either buy existing medical facilities or establish their own hospitals or clinics.



However, not all are pleased with the government's decision to open up the health sector, with concerns being voiced the move could lead to a deterioration in the standards of services for many Malaysians while restricting employment opportunities for local medical personnel.



According to Ahmad Shah Mohd Zin, the secretary-general of the Congress of Union Employees in the Public and Civil Services that represents state workers, the government's reforms meant overseas corporations would be allowed to set up private hospitals in Malaysia and staff them with their own doctors and paramedical personnel.



There was also the added issue of foreign-managed care organisations (MCOs) and the health management organisations (HMOs) setting up their networks and having their own insurance companies enter the marketplace to provide personal health insurance packages to locals, Ahmad Shah said in an interview with state news agency Bernama on July 31.



While the reforms might look good on paper, as they would provide competition and encourage local hospitals to improve their services, in reality the policy would undermine the existing system, he said.



"This is because there will be rampant pinching of specialists, doctors and paramedical staff from the government hospitals, thus worsening the brain drain and affecting the quality of services," Ahmad Shah warned.



The MCOs and HMOs, together with the insurance companies, will dominate the health care system, thus depriving the lower-income group of quality medical services, he said.



"In view of this, we appeal to the government to be very careful in opening up our health care services to foreigners," he added.



Officials have been quick to deny that there would be any decline in local health services standards, either due to increased foreign participation in the sector or as a result of a stepping up efforts to attract medical tourists.



There would be no adverse affects on the quality of health care provided to locals from boosting activity in the medical tourism industry, according to Tan Sri Dr Mohd Ismail Merican, Malaysia's director-general of health services. Mohd Ismail told local media on July 21 that the government would be very careful in implementing the initiative and conditions would be imposed on those providing health care services for foreigners.



While some may be cautious of both the entry of foreign operators into the health services sector and the greater emphasis being placed on medical tourism, as long as the state maintains its commitment to maintaining and improving the public health system there should be no adverse side effects from the government's new policies.

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