ASEAN: Regional Trends in Economic Integration, Export ... - USITC

Malaysia and Indonesia, and has advertised throughout the region, targeting markets such
as China and Vietnam. 41
Intra-ASEAN travel by these growing populations of medical travelers has been
facilitated by increased capacity in interregional air transportation, and may benefit in the
future from more efficient visa procedures. In 2005, the ASEAN transport ministers
initiated a plan—the ASEAN Open Skies agreement—to accelerate the liberalization of
air travel. This agreement allowed regional budget airlines to enter the market and offer
more flights between ASEAN destinations, such as Kuala Lumpur and Singapore or
Kuala Lumpur and Rangoon (Burma). 42 Additionally, one of the initiatives set forth in the
Roadmap specified reduced visa requirements to simplify the cross-border movement of
patients within the ASEAN region, 43 although it is unclear if advances have been made
on this issue.
By providing the organizational framework (through the AFAS) for regional cooperation
and liberalization, ASEAN appears to have made progress in facilitating both increases in
overall healthcare investment and further regional integration. Historically, governments
have tended to maintain barriers to foreign healthcare establishments because they are
often perceived as infringing on national sovereignty. 44 However, the seventh package of
commitments in services in the AFAS, which was implemented in 2009, substantially
liberalized commercial presence restrictions, largely removing equity limitations. 45 For
instance, some countries such as Indonesia have liberalized regulations to permit foreign
firms to hold majority shares; in Indonesia, foreign equity up to 51 percent is permitted.
Vietnam also liberalized its regulations to allow 100 percent foreign ownership, although
there is a minimum capital requirement of $20 million for hospitals. 46 Given the
relatively recent implementation of these commitments, it is likely that the full impact of
the rule changes on regional investment flows have not yet been captured in ASEAN
member data.
In addition, member governments have begun efforts to support this process by
participating in bilateral agreements on healthcare to encourage regional trade and
investment. For example, Brunei signed memorandums of understanding (MOUs) 47 on
healthcare training and healthcare services with Singapore in 2004 and 2007,
respectively, and a MOU on healthcare services with Thailand in 2010. 48 Singapore also
41 See the discussion on investment below for further information on regional expansion of healthcare
providers. KPJ Healthcare Berhad Web site, “Hospital Network”; World Eye Reports, “Healthcare Tourism
on the Rise,” November 14–15, 2010.
42 Industry representative, interview by USITC staff, March 7, 2010; Xinhua News Agency, “Myanmar,
Malaysian Airlines Increase Flight Capacity,” October 6, 2005; Airline Industry Information, “Tiger Airways
Increases Capacity on Singapore-Kuala Lumpur Route,” September 29, 2008; ASEAN Secretariat, “Eleventh
ASEAN Transport Ministers Meeting,” November 17, 2005.
43 ASEAN Secretariat, “Appendix 1,” n.d.
44 Arunondchai and Fink, “Trade in Health Services in the ASEAN Region,” 2007, 2.
45 Industry representative, interview by USITC staff, March 9, 2010. Acquisition of an existing firm, or a
controlling interest, is reportedly the easiest way for healthcare firms to enter a market, as it requires less
investment in infrastructure and leverages local knowledge of consumption patterns and culture. Industry
representative, interview by USITC staff, Singapore, March 9, 2010.
46 ASEAN Framework Agreement on Services, 2007.
47 A memorandum of understanding (MOU) is a binding document that expresses mutual accord on an
issue between two or more parties. “Memorandum of Understanding,” Business Dictionary.com, n.d.
(accessed June 27, 2010).
48 Ministry of Health, Singapore, “MOU between Singapore and Brunei Ministries of Health to Promote
Trainings,” December 6, 2004; Chee, “Medical Tourism in Malaysia,” 2007, 20.
6-10