Developing healthcare in Indonesia

New rules allow 100% foreign ownership of hospitals and major clinics in Indonesia.  This will open up investment, especially from Asian healthcare businesses, to improve local healthcare and potentially reduce outbound medical travel. Ian Youngman assesses the changes.

A key reason that Indonesians go overseas for local healthcare, mostly to Malaysia, is the lack of healthcare at home.

Government investment in the healthcare system has not been sufficient given Indonesia’s population of 271 million. The country has insufficient healthcare facilities and medical workers, and faces significant regional disparities in terms of the quality, availability and capacity of healthcare facilities. The local economy lacks the finance and resources for major healthcare investment.

In recognition that the state needs foreign investment to develop and improve local healthcare, the New Investment List 2021 has made significant changes to foreign direct investment in Indonesia.

Asian healthcare businesses are keen to invest in Indonesia but ownership limits, location restrictions and significant red tape has stopped them. Singapore’s TE Asia Healthcare Partners has now said it will expand its speciality healthcare centres into Indonesia. In the next 18 months, the group plans to set up a cardiovascular hospital in Jakarta to link with its cardiovascular centre in Jakarta.

Indonesia’s Ministry of Health will also issue new regulations to revise the rules for the sectors that are affected. However, it may take some time to clarify how the new regulations and policies will work with these new FDI rules in practice.

Private hospitals (general and specialist hospitals) and main (specialist) clinics are among the key business sectors to be liberalised, having previously been limited to 67% foreign ownership (or 70 % for ASEAN investors)

The New Investment List removes all those foreign ownership and location restrictions.

Foreign investors should be mindful that foreign-owned hospitals must be Class A or B hospitals, and foreign-owned main clinics must be adjacent or near to a Class A or Class B hospital.

Primary healthcare facilities such as primary clinics, including general medical services clinics, private maternity facilities, residential health services, and basic healthcare service facilities, remain closed for foreign investment.