Is Malaysia’s medical tourism about to rebound?February 25, 2022 / By
From scenic beaches and scrumptious cuisines to now medical and surgical expertise, Malaysia has become one of the top health tourism destinations in Asia Pacific alongside Singapore, India, South Korea, Thailand and Taiwan.
In 2019, Malaysia attracted 1.3 million international healthcare tourists with a total of MYR 1.7 billion (approx.US$400 million) in hospital receipts. Highly sought-after medical procedures include cardiology, fertility treatment, oncology, orthopaedics, general health screening, aesthetics, dental and neurology.
Figure 1: Healthcare Traveller Revenue (MYR mil)
Source: Malaysia Healthcare Travel Council (MHTC)
However, in 2020 and 2021, Malaysia’s medical tourism sector recorded significant losses due to COVID-19 and the consequent closure of international borders, recording a drop in direct revenue of MYR 2.2 billion (US$500 million). During this period, especially June 2020 onwards, the government allowed only those foreign healthcare travellers who were critically ill, requiring treatment at intensive care units (ICUs) or high-dependency units. Thus, the industry players welcome the proposed reopening of Malaysia’s international borders by March this year without mandatory quarantine, as it will encourage more medical tourists to the country.
The government targets a rebound of revenue up to MYR 800 million (US$190 million) in 2022 and MYR 1.7 billion (US$400 million) in 2025 from the country’s medical tourism sector through initiatives outlined under the recently unveiled Malaysian Healthcare Travel Industry Blueprint 2021-2025. The five-year industry blueprint aims to further establish Malaysia as a leading healthcare travel destination and provide a clear guide to the country’s healthcare value chain and industry.
While figures for medical tourism have experienced a drop and are expected to rebound in the near to medium term, the healthcare sector continues to perform well. The performance of the sector has been underlined by increased funding, including venture capital, debt, equity and direct property investments into healthcare-related companies and facilities as below:
- Singapore’s sovereign wealth fund GIC Pte Ltd invested MYR 750 million (US$180 million) in cash via its wholly-owned subsidiary Greenwood Capital. The investment is for the subscription of 10 million irredeemable convertible preference shares and one cumulative irredeemable dividend convertible preference share in Sunway Healthcare. The proceeds will be used as capital expenditure for the expansion of existing hospitals and the development of new medical facilities, as well as for administrative and operational purposes.
- Navis Capital, an Asian private equity firm, completed a majority investment in Aurelius Healthcare back in May 2021. The firm subsequently purchased the 100-bed multidisciplinary Nilai Medical Centre in September 2021, which is their first property. Their second property is potentially a nearly completed 200-bed hospital, to be operational soon. We also understand that they are looking at another 4-5 opportunities in the pipeline.
- Hong Leong Financial Group Berhad (HLFG) and private equity firm TPG announced their MYR 5 billion (US$1,195 million) acquisition of Columbia Asia Hospitals in South East Asia. This transaction will include 17 Columbia Asia Hospitals and one clinic each in Malaysia, Indonesia and Vietnam. Their 11 hospitals located in India are not part of this transaction. This move will mark the group’s first foray into healthcare.
The expected rebound in medical tourism supported by regional and global demographic trends will likely prolong continued interest in Malaysia’s healthcare sector.