From, Gulf Business: June 2009
Initially targeted at satisfying local demand, the numerous private hospitals are becoming more popular among foreigners. According to the Association of Private Hospitals in Malaysia, the number of foreigners seeking healthcare services has grown from 75,210 patients in 2001 to 296,687 in 2006, which generated a total of USD 59 million in revenue. The number of foreign patients at private hospitals shot up to 341,288 in 2007 and an estimated 501,000 in 2008.
According to the Association of Private Hospitals in Malaysia, the number of medical tourists is projected to grow by around 25% annually over the next 3 years.
Malaysia is a relative newcomer to medical tourism. A survey conducted by Nuvire Investor found that the country is among the world's top 5 most attractive medical tourism destinations. Malaysia ranks third behind Panama and Brazil, followed by Costa Rica and India at the fourth and fifth positions respectively According to the survey foreign patients and investors were attracted to Malaysia's favourable exchange rate, political and economic stability and its high literacy
Malaysia stands out as a value-for-money alternative offering relatively advanced treatment at very competitive prices. Being a Muslim country, Malaysia aims to capture the halal market segment, targeting developed and Middle Eastern countries.
Government Support:
In an effort to stimulate development of the private healthcare system in Malaysia and to reduce dependence on public hospitals, the government has offered incentives to further enhance private healthcare services in the country the tax incentives offered include tax exemption on any capital expenditure involving the costs of building new hospitals or acquiring any building for hospital premises. In terms of human development, private healthcare providers are eligible for tax exemptions on expenditure incurred in the training of medical personnel.
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Datin Paduka Siti Sa'diah Sheikh Bakir, Managing Director of KPJ Healthcare
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In the Spotlight:
KPJ Healthcare Berhad
With a network of 19 hospitals in Malaysia, three in Indonesia, two in Saudi Arabia, and one in Bangladesh, KPJ Healthcare is one of the leading private healthcare providers in Southeast Asia and the absolute leader in Malaysia. The group's public listing in late 1994 marked the beginning of a rapid growth and development period.
Thanks to an aggressive and well-executed expansion strategy KPJ has been growing steadily with an impressive growth in 5-year revenue and net profit CAGR of 36.1% and 37.8% respectively In 2007 the company charted a milestone achieving revenue exceeding RM 1 billion (USD 280 million). Sustained growth led to achieving another milestone last year, when profit before tax crossed the RM 100 million (USD 28 million) marks
A key strategic move in setting up the Shari'ah compliant Al-Aqar Real Estate Investment Trust (REIT) in 2006 propelled KPJ's growth. By December 2008 the group had injected 11 of its properties into the REIT, unlocking total asset worth of some USD 180 million. Plans to include 9 more properties in 2009 have already been approved by Malaysia's Securities Commission.
Listed on the main board of Bursa Securities, the Al-Aqar REIT is the world's first listed Islamic REIT and Asia's first healthcare REIT. Al'Aqar's mature assets, 100% occupancy and strong cash flow continue to attract investors. Its latest syndicated Ijarah facility of up to USD 70 million, compliant with Malaysian and GCC standards, is expected to attract investors from the Middle East. As part of their development strategies, KPJ is planning to list the Al-Aqar REIT in the Gulf region.
KPJ (5878.MY)
KPJ's growth so far has been fueled mainly by strengthening their position in stable domestic and regional markets, making the group's performance relatively "immune" to rapid fluctuations in the flow of foreign patients typical for times of epidemics or sluggish economic growth. KPJ's management sees enormous possibilities for growth in medical tourism, and with current occupancy of around 64%, the group's hospitals in Malaysia have the capacity to meet growing demand from overseas patients. Offering cutting edge medicine, latest technology, and supreme customer care, KPJ has already set a strong foothold in Malaysia's growing medical tourism industry
KPJ has carved its niche in high-tech healthcare and is very well positioned to continue capturing a substantial share of its current markets and to develop new ones. Accumulated critical mass gives the group clear competitive advantages in terms of scale, scope, and size.
The management team envisions continuous growth through acquisition and joint ventures at home and abroad, enhanced productivity and developing loyal customer base. The group is also looking to diversify into niche segments such as food preparation, home nursing, and ambulance services.
Based on its current 5-year business development strategy KPJ has identified education as its second core business and future growth catalyst. Established to serve KPJ's needs during the early nineties, today KPJ International College of Nursing and Health Sciences is a reputed education institution with over 1,200 students in 13 programmes. The group has already acquired several plots of land for further expansion of their education division.
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Share Performance
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"Excellence is a Journey not a Destination"
Interview with Datin Paduka Siti Sa'diah Sheikh Bakir, Managing Director of KPJ Healthcare:
Datin Paduka Siti Sa'diah Sheikh Bakir has been involved in KPJ Healthcare since its inception in 1978, and assumed the Group Managing Director position in March 1993. She serves as the chairman of various hospitals in the KPJ Group, as well as director of a number of companies within Johor Corporation. Datin Paduka is also a board member of MATRADE, Malaysia's foreign trade promotion agency, a member of the National Patient Safety Council within the Malaysian health ministry and an independent director of Bursa Malaysia, the Malaysian stock exchange. In addition she is the President of the Malaysian Society for Quality in Health (MSQH), and a director of Kumpulan Waqaf An-Nur, a non-governmental organisation dedicated to providing healthcare services to the less fortunate.
A proactive visionary Datin Paduka and her team have led KPJ through steep growth and learning curves, from the Group's humble beginning with a single hospital in 1981 to a sophisticated healthcare provider managing over 3,000 beds in 4 countries and treating almost 2 million outpatients and 200,000 inpatients annually
With a growing number of patients from Malaysia and abroad, what are the strategic development directions for KPJ?
Datin Paduka: KPJ's main asset is our know-how During the 27 years of successful development we have built our own system for managing hospitals, which has proven to give
Datin Paduka Siti Sa'diah Sheikh Bakir
Outstanding outcomes in medical, service, and financial terms, both at home and abroad. The future of KPJ is dedicated to utilisation, continuous development, and adaptation of our management capabilities.
In performance terms, 2008 will remain as another very successful year in KPJ's history our objective is to keep the growth momentum through gradual expansion at home and abroad. We are looking into a wide array of possibilities ranging from greenfield projects to joint ventures and hospital management. As far as priority markets are concerned, we see a lot of potential at home, in Malaysia, as the healthcare industry is undergoing consolidation and restructuring as it matures. Other markets of strategic importance remain Southeast Asia and the Middle East. We are also looking into possibilities in Australia and Europe. I am positive we will manage to sustain positive growth in the years to come.
KPJ has achieved remarkable performance in foreign markets. What is the competitive edge of KPJ outside Malaysia?
Datin Paduka: We have the full package - our partners can rely on us for everything from hospital conceptualisation to daily management. In addition we remain true to our core business - KPJ is all about healthcare. Our diversification strategy is planned and executed not only with the objective to solidify the bottom line, but to complement our core business and make the organisation more resilient and competitive. As an example, our nursing college has proven to be a very successful endeavor in itself, while guaranteeing that KPJ has sufficient quality human capital to support our growth.
Where do you see Malaysia's unique proposition in the growing international healthcare arena?
Datin Paduka: First and foremost, medicine in Malaysia is on the international level. Most of our doctors are trained abroad, we offer procedures that require the latest technology and advanced medical expertise. All this comes at very competitive rates.
As a nation we are very hospitable, which translates into supreme care and personal attention for each of our patients. As an Islamic country Malaysia can easily respond to the special needs of Islamic patients. In addition, Malaysia is a unique destination in itself - a melting pot of cultures and religions, which overseas patients can experience during their stay here and combine their treatments with a relaxing and unforgettable holiday
With all elements already in place, I feel that a greater degree of cooperation among the private hospitals, Ministry of Health and Ministry of Tourism will help position Malaysia as a preferred healthcare destination.
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