ASEAN Healthcare Industry to See Bigger Cost Challenge in the Future

ASEAN Healthcare Industry: Growth and Challenge Comes Forth

Cross-border provision of healthcare services in the ASEAN region has blossomed during the last few years with the emergence of medical tourism, particularly in Malaysia, Singapore and Thailand.

The positive economic growth experienced by the region has allowed more people to seek medical services elsewhere to get the best treatment possible. Under the ASEAN 12 priority integration sectors that paved the way for the AEC development, one of the prioritised sectors is cross-border trade of healthcare products.

It is then clear that ASEAN has recognised the healthcare sector as increasingly important in the development and establishment of the AEC. In the AEC Blueprint 2015, healthcare services were mentioned as one of the four prioritized services sector to be substantially liberalised by 2010, together with air transport, e-ASEAN and tourism.

Post 2015, with the increasing importance of healthcare, ASEAN member states have agreed to lay out the strategic measures to ensure that development and integration of this sector is systematically implemented. Health cooperation is also an area highlighted under the ASEAN Socio Cultural Community (ASCC) pillar as important to improve the regions resilience against diseases.

Therefore, there may be some form of cross-sectoral cooperation in the healthcare sector in the future. This report aims to review the progress made in the cooperation of integration in healthcare products sub-sector, and in the liberalisation of the healthcare services sub-sector. It will also attempt to analyse the measures under the AEC Blueprint 2025 and propose some recommendations that could improve the current implementation.

The future of healthcare sector in ASEAN is quite promising given the positive projection on the healthcare spending in the member states. By comparison, the average spending per capita in ASEAN is very low compared to that in advanced countries. For example, the average healthcare expenditure in the OECD countries was USD 4,471 in 2014, while the figure for ASEAN was only USD 643, suggesting a large potential for growth in the region.

However, some challenges remain for ASEAN member states to tackle. From the human capital point of view, ASEAN has not really encouraged the mobility of medical, dental and nursing professionals across the region, despite the commitments as exemplified in the MRAs, which has negatively affected supply of talents in some countries7.

When crossborder movement can be allowed, the issue of inadequate supply of doctors and nurses in some areas can be addressed, and quite possibly, all member states would be able to participate in the medical tourism industry to attract patients from outside of the ASEAN region.

ASEAN currently does not have a standardized regional qualification and curriculum in the medical education, resulting in varying standards and skill base, and therefore limiting trade of services.

Solidiance, an Asia-focused management consulting, released a white paper titled “The ~USD 320 Billion Healthcare Challenge in ASEAN” exploring the future cost challenge and value opportunities available in the ASEAN-6 nations.

As healthcare cost in nearly all ASEAN nations are outpacing the economical growth, Solidiance predicted the total healthcare spending would increase from around US$ 425 billion to around US$ 740 billion in 2025. The US$ 320 billion increment must be addressed by ASEAN-6 governments and stakeholders in a move to sustain the future of healthcare industry in Southeast Asia.