There's potential in Vietnam's healthcare market for foreign investors but the obstacles are manifold.
When Ms. Vu Hong Linh was diagnosed with cancer six months ago her family immediately sent her to Singapore for treatment. They had heard about the greater success rate of cancer treatment in the city state and also feared that such treatment in Vietnam would be fraught with difficulty, with local hospitals having too few doctors and too many patients. Ms. Linh has undergone several radiation sessions in Singapore and her cancer, doctors believe, has been brought under control.
Ms. Linh, 31, is just one of about 40,000 Vietnamese who head overseas to receive medical care, many of them reluctantly. Spending on healthcare services in Vietnam has continued to rise steadily over the years despite the economic difficulties, making the sector attractive to investors. Although there are no reliable official figures, of the $12 billion spent in 2013 about half came from people’s pockets, with $1 billion spent by wealthy local people on treatment overseas. In a country where demand for medical care has risen in line with prosperity, some foreign investors are indeed reportedly seeking to tap into the market.
For many years healthcare in Vietnam was closely regulated by the government. Since the country opened up to privatization, however, the healthcare sector has become an area of interest for foreign investors. Vietnam represents a potentially large healthcare market and there are many challenges facing its healthcare sector that foreign investors hope to address through investment.
It’s true that Vietnam is desperate to draw foreign investment into its healthcare sector in general and hospitals in particular. The government has expressed support for foreign investors because it wants to alleviate the pressure on the public hospital system and improve overall healthcare quality. Under the country’s WTO commitments, foreign investors can establish 100 per cent foreign-invested hospitals or set up business cooperation contracts with Vietnamese partners. As confirmed by officials from the Ministry of Health, there are no restrictions on qualified foreign doctors practicing in the country.
Unlike many other lucrative investment fields in Vietnam such as real estate, finance or tourism, the healthcare sector has been largely ignored by foreign investors in the past. But this has gradually changed. One of the largest foreign investment projects in the country this year is the $225-million Dai An Vietnam - Canadian International Hospital Corporation project. The Canadian investor Triple Eye Infrastructure Corp. received a license to set up the joint venture with Vietnam’s Dai An JSC Co. this year, to build an international-standard hospital with 200 beds at the Dai An Industrial Park in the northern province of Hai Duong. Once open in 2016, the hospital is expected to serve around 20,000 workers at the park as well as local residents.
International-standard hospitals developed by agreement between a local company like Dai An and Triple Eye could be of significant benefit to Vietnam, according to Mr. Marc Kealey, Principal of the Triple Eye Corporation. “It behooves us as Canadians to try and find alternatives within our own system to help Vietnam realize her potential in a global world where health dollars should stay close to home,” he said, adding that options for healthcare are being considered in Vietnam by investors in other countries like Malaysia, China, France and the US and they are being closely examined to see how they can work.
The benefit of the Canadian proposal, Mr. Kealey went on, is that the policy framework for private sector hospital projects, or PPPs, has worked in Canada and may be adopted in Vietnam. “Private sector investment in healthcare is the way to go in countries like Vietnam as it matures,” he said. “State-run systems without adequate capitalization are never good. And as economies grow, so too does the choice for those with the means.”
Among the foreign investors involved in Vietnam’s healthcare sector, analysts believe that those from neighboring countries are the most interested. In 2013 the Singapore-based international business group the Chandler Corporation spent $99 million on acquiring 80 per cent of the Hoan My Medical Corporation, the largest hospital chain in Vietnam. In the coming year foreign hospitals from Thailand, Indonesia and Malaysia may make similar moves. Local media have reported that the Indonesian conglomerate the Lippo Group wants to build 15 hospitals in Vietnam, while Thailand’s Bumrungrad Hospital is also seeking investment opportunities in the country.
In particular, Malaysia’s IHH Healthcare Bhd is actively on the lookout to acquire hospitals in the ASEAN region and, hence, Vietnam. “If 10 per cent of the population can afford private healthcare, that represents 9 million people,” a company representative was quoted as saying, and the company also wishes to provide consultancy and management services in the country. Although it is not in any rush, the company has found opportunities and is now scouting sites in Hanoi.