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23 Nov 2009

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ASEAN Health Sector Liberalization, 2010: Windfall to Thai Medical Care (Business Brief No.2691)

ASEAN health trade liberalization will likely benefit Thai exports of pharmaceuticals to four emerging markets in ASEAN, especially the CLMV (, , and ). Relevant exports to those four countries should show higher growth after they reduce related tariffs to duty-free status in 2012, particularly on exports to , and , key export markets for pharmaceutical products.

Nevertheless, ’s export value of pharmaceutical products is relatively low. Our export volume of other health care-related products exported to ASEAN markets, such as medical equipment and medical supplies, are not high. is a net importer of this category of products. ( is the only ASEAN country that is a net exporter.) Thai latex and surgical groves are building greater acceptance in the world market because the majority of these are exported to non-ASEAN markets, such as the , EU and . However, the trade value between and ASEAN countries is quite low.

KASIKORN RESEARCH CENTER views that ASEAN health service liberalization will benefit Thailand because it will enhance the opportunities for Thai medical care business investment into ASEAN countries, thanks to ASEAN cancellation of all pre-conditions to health service markets and expansion of ASEAN investors’ shareholdings of up to 70 percent beginning in 2010. Positive factors that would support Thai entry into ASEAN medical business would include our potential in the excellent management of Thai hospitals that have attracted the highest number of foreign patients in ASEAN. Bright opportunities are likely ahead for Thai medical care business in the newer ASEAN members of , , and , because their economies will likely grow well.

In addition, medical services in those countries are insufficient to needs. Entering the market in and could also attract Chinese residing in border areas connected to and , who might use our medical services if available in those two countries. The impact of ASEANtrade and investment liberalization and the development of transportation logistics into the Indochina region will help facilitate travel within the region via land transportation, thus offering greater opportunities to Thai private sector hospitals to expand into other cities in Thailand and support a growing number of foreign patients wishing to use medical care services in Thailand.

Nevertheless, the expansion of our medical care services may face some challenges in personnel shortages within ASEAN, an investment destination – including . It is expected that the effectiveness of liberalization in the movements of medical personnel within ASEAN in 2015 will be quite limited and we may face challenges caused by competition with and that also aim to expand such investments within ASEAN and would like to become hubs for medical care within this region, too.

Meanwhile, the expansion of Thai private hospitals into other ASEAN countries may aggravate personnel shortages domestically and affect our ability to become a major Asian medical service hub attracting foreign patients to . It is expected that the problem of competition in attracting medical personnel between service providers domestically, government and private sector, will continue to intensify, particularly if there is an inadequate government budget for medical personnel development. The government should formulate a strategy to develop personnel and relevant infrastructure in cooperation with the private sector.

Appropriate strategies should be considered, such as giving equal access to medical services to all people in need, as well as environmental changes, support for the growth of the private sector and maintenance of an appropriate number of personnel at government sector facilities. The participation of the private sector in jointly absorbing the cost of medical personnel development may also be needed.

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