Foreign investors will be expected to improve overall health care in the country. (SP Photo/Sigid Kurniawan)

Indonesian Health Care Market Projected to Grow to $363b


SEPTEMBER 08, 2015

Jakarta. Indonesia's spending on national health care will exceed $300 billion in the next decade, providing ample opportunity for foreign health care providers that are willing to cope with a fragmented market, small margin and complicated relations with stakeholders, according to a new report by Roland Berger Strategy Consultants.

The report, titled "Capturing the Business of Health — Opportunities and Challenges for International Healthcare Providers in Indonesia," was published on Tuesday. It estimates that Indonesian spending on health insurance will increase 18-fold to $363 billion in 2025, from $20 billion in 2010.

Indonesia has been building a universal healthcare system since early 2014 and by March this year, more than 142 million people were insured under the system, BPJS Kesehatan. In four years, all the country's 267 million people will be insured, the report said.

"In this scenario, national health care expenditure would be breathtaking ... That would make Indonesia one of the largest health care markets in the world within ten years," Yoshihiro Suwa, principal at the Roland Berger Jakarta office, said in the report.

Still, for foreign health care providers to benefit from this massive projected growth, they need to adept to market diversity, a limited supply of state-of-the-art medical care and an uncertain return on investment, Suwa said.

The report also suggested potential new entrants have to be flexible in the face of dealing with a wide variety of patients from different regions and with different incomes. There are also widely differing service preferences, discrepancies in medical facilities in various regions and a general lack of trust in the health care system.

"A one-size-fits-all approach will not work," said the report.

To win trust, foreign firms also must demonstrate commitment to the Indonesian government by improving the local health care system, even if this means smaller margins.

"In the longer term, this win-win approach will create a stronger bond with Indonesian stakeholders who are looking for companies that genuinely want to help establish a credible Indonesian health care service," the report said.

The government runs most of the hospitals and clinics across the archipelago, but there are a handful of companies like listed Siloam Hospitals and Mitra Keluarga Karyasehat who operate big hospitals, as well as entrepreneurial doctors who own midsize private clinics.

The country now allows foreigners to own up to 67 percent in a hospital business.