Poor foreign investment health

August 27, 2012 | 09:58
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Despite mammoth development potential, foreign investment in Vietnam’s healthcare sector remains modest.

Tran Quoc Khoa, head of the Ministry of Health’s (MoH) Private Medical Examination and Treatment Division, said Vietnam was home to six operating 100 per cent foreign-invested hospitals with the total investment capital of $94 million and some 30 foreign invested general and specialised clinics worth $14.4 million. These hospitals and clinics are mainly located in large cities such as Hanoi, Ho Chi Minh City and Danang.
“The above figures show foreign investment in the field of medical examinations and treatments in Vietnam is too little as compared with its huge development potentials,” Khoa noted.

He said private companies, particularly foreign businesses, often picked up large cities to invest in as there was a big demand and high living standards. Private hospitals and clinics require higher payments as compared with state-run ones so the public in provinces, especially in rural and remote areas, cannot afford such high costs.

“We have encouraged some private investors, including foreign ones to invest in other localities but they said they could not because there were a few patients,” Khoa said.  

Ravindran Govindan, chairman of Singapore-based Mercatus Capital Pte - which is seeking to take part in some medical infrastructure projects in Vietnam, said although it was worth looking at Vietnam with the country’s big population of 90 million and energetic and intelligent people, laws and rules in the country were unclear and presented investment risks. 
Meanwhile, Nguyen Ba Cuong from the Ministry of Planning and Investment’s  Foreign Investment Agency said that previous infrastructure development projects, including hospitals, were often sourced from the state budget or official development assistance. But, from this year the country started slashing public investment and focused on attracting private investment, particularly foreign direct investment in development infrastructure system, including projects in the healthcare sector.  

Khoa said most state-run hospitals in cities and provinces were overloaded, while developing public hospitals was difficult. Therefore, the MoH was working out a project on easing overload in public hospitals, which included the content of prioritising private medical service providers.

“This is a big opportunity for foreign investors to pump their capital in the healthcare sector in Vietnam,” Khoa added.      

According to the MoH, Vietnam has 137 private hospitals, including six 100 per cent foreign-invested ones, accounting for 12 per cent of the country’s total number and beds at the private hospitals make up only 10 per cent.  

Recently, Malaysia-based Columbia Asia opened its new hospital in Vietnam – the latest addition to the group’s regional portfolio. The Columbia Hospital-Binh Duong is the 22nd healthcare facility of the group in the region and the third in Vietnam, following the establishment of two clinics in Ho Chi Minh City.

Hoa Lam-Shangri-La Healthcare Company, a Singapore-Vietnam joint venture, is also building a $400 million International Hi-Tech Healthcare Park in Ho Chi Minh City, which is expected to be operational by the end of this year.  

Last year, Fortis Healthcare agreed to pay $64 million for a 65 per cent stake in Hoan My, one of the leading healthcare groups in Vietnam with six hospitals and many clinics across the country.

Hospital plan in fine health

Canada-based Triple Eye Infrastructure Corporation is expecting to gain an investment certificate to build an international-standard hospital in northern Hai Duong province.

“I gonna say given the support we already got from the local government in Hai Duong and the support we already seen in higher government authorities, I’m thinking that we could probably see the licence application fast tracked and the certificate for the hospital will come true,” Triple Eye Infrastructure Corporation general director Marc Kealey told VIR last week.

Triple Eye Infrastructure Corporation is a company specialised in healthcare infrastructure in Canada and in association with Vietnam’s Dai An Joint Stock Company, it several months ago proposed to build a 200-bed international hospital in Hai Duong, worth $160 million. This is the first investment project of Triple Eye in Vietnam and the first international hospital in Hai Duong.

Vietnam’s healthcare system is currently overloaded, however, this also offers potential opportunities for foreign investors to build hospitals in Vietnam.

Kealey said he saw profitable healthcare sector investment in Vietnam as the lack of high-qualified hospitals in the country saw many Vietnamese spend money on overseas healthcare services.

He said the money spent outside Vietnam for healthcare could reach $5 billion.
“We look at in this context that we could repay money back to the hospital, we could design and build hospital and do all procurements,” added Kealey.

Given the strong support of leaders in Hai Duong province and good relationship with Dai An Joint Stock Company, Kealey said the joint venture planned to break ground of this project in the first quarter of next year and the construction work would complete in 2015.

In recent years, some foreign and domestic investors have recognised the potential of Vietnam’s healthcare sector, but most selected big cities like Hanoi and Ho Chi Minh City.

For Triple Eye, Hai Duong – about 60 kilometres north east of Hanoi – is a good location.

“How do we recoup patients to the hospital? People from Hanoi will come to Hai Duong and from Haiphong to Hai Duong. We believe the expansion of the Highway 5 will make it a better location. It’s fantastic, the opportunity is great. I think we picked the right location and the right partner,” said Kealey.

By Kieu Linh


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