Malaysia could become South-east Asia’s preferred medical-tourism destination

MALAYSIA could become the preferred regional hub for medical tourists seeking quality healthcare at a lower price, industry watchers said, with planned reforms benefiting private healthcare providers to varying degrees.

The Malaysia Healthcare Travel Council (MHTC), an agency under the country’s health ministry which aims to boost medical tourism, has noted that the number of healthcare travellers is already recovering to pre-pandemic levels.

MHTC data showed Malaysia drew around 850,000 healthcare travellers last year, generating revenue of RM1.3 billion (S$379.4 million). This was an improvement from 2021 figures, but still lagged the 1.2 million visitors and RM1.7 billion recorded in 2019.

Analysts from BMI, a unit of research provider Fitch Solutions, expect Malaysia’s private-healthcare expenditure to grow by a five-year compound annual growth rate of 7.3 per cent. This is expected to be supported by growing healthcare demand, and the country’s efforts to boost its medical-tourism industry.

These efforts were outlined in MHTC’s Malaysia Healthcare Travel Industry Blueprint 2021-2025. Plans include continuing to attract customers from its main medical-tourist market, Indonesia; the digitalisation of the health sector to reach out to foreign patients; and building capacity in areas such as fertility provision and aged care.

Recent investments have already been effective. CGS-CIMB analyst Tay Wee Kuang noted that the gap between healthcare infrastructure in Malaysia and that in Singapore – long the preferred medical destination in South-east Asia – has started to narrow.

Meanwhile, several other factors have helped Malaysia gain favour among medical tourists.

“Global inflationary pressures have led to rising costs that are becoming out of reach for medical tourists in Singapore,” Tay said.

High travel fares and hotel rates have also compounded costs for foreign patients, he added. This is especially a concern for foreign patients who need to spend a longer time in the country in which they are being treated, as well as those who bring their families along.

“Singapore still remains popular, but it is starting to lose its shine.”

DBS analyst Rachel Tan said healthcare costs in Malaysia are still relatively affordable, and patients benefit from foreign-trained medical professionals practising in the country.

“We believe Malaysia has huge potential to grow its medical-tourism industry, given its quality of medical services at relatively reasonable price points, location and multilingual convenience.”

A national electronic medical records system, to be implemented by 2026, may also help.

“Implementing a digital health strategy is critical for a country… (as) it supports medical tourism (and) the efficiency of the services that can be provided,” said BMI analyst Ben Yau.

Even as Malaysia benefits from improved medical tourism receipts, however, analysts are less than sanguine about the impact on private healthcare providers.

DBS’ Tan said proposed reforms of Malaysia’s healthcare sector, if successful, are more likely to indirectly benefit medical tourism, as they will bring up the healthcare quality and service in Malaysia as a whole.

Digitalisation, for instance, would boost telemedicine, which could in turn be beneficial for medical tourism, as it helps with marketing to foreign patients, she said.

CGS-CIMB’s Tay believes increased sustainable financing options could help certain private players to develop their capabilities more quickly.

The government has said it is looking at ways to sustainably finance public healthcare including, among other things, public-private partnerships.

Nevertheless, the impact would still be limited. “This could be negligible for more regional players like IHH Healthcare, who have been steadily investing into building their own capabilities over the years,” he said. 

IHH Healthcare , listed on both Bursa Malaysia and the Singapore Exchange, has diversified operations in Singapore, India, Turkey, Hong Kong and Malaysia. Each market has a different profile of patients. 

In its latest annual report, IHH Healthcare said its hospitals across the region are “well-placed to attract foreign patients seeking elective or high-acuity treatments”, and it is increasing its range of medical services to suit travellers.

Both CGS-CIMB and DBS’ analysts noted that medical tourists have contributed just 5 per cent or less of IHH’s Malaysia revenue.

This number could change in the future, however, as the company is now “positioning its hospitals to capture the growing market of medical tourists” in Malaysia, CGS-CIMB’s Tay said.