KPJ Healthcare Berhad

Medical tourism sector to hit RM lb mark this year

Based on statistics from the Malaysia Healthcare Travel Council, in 2010, health tourist arrivals in Malaysia totalled 393,000, generating RM380 mil in revenue for medical tourism. Fast forward five years, this is estimated to be worth about RM1bil this year, with the number of tourists coming for medical treatment expected to touch 930,000.

Some time ago, KPJ Healthcare Bhd announced it aimed to develop its medicaltourism
division. Currently, the group's medicaltourism revenue accounts for about 5% of KPJ's total revenue. KPJ aims for medical tourism to contribute 25% to revenue by 2020.

According to Frost & Sullivan, the majority of medicalhealth visitors in Malaysia come from Indonesia (accounting for 69%) and Singapore (12%). The weakened ringgit against the Indonesian rupiah and the Singapore dollar is working in favour of Malaysia's medical tourism.

From an average exchange rate of 3,750 rupiah per ringgit in the second half of last year, the ringgit has depreciated by about 5% to 3,550 rupiah per ringgit. Similarly for the Singapore dollar, with the exchange rate averaging RM2.502.55 per Singapore dollar in H2 last year, the ringgit has since weakened by about 7% to the current RM2.70.

Notwithstanding whether KPJ can ensure receipts from its medical tourism will account for 25% of revenue, the medical tourism sector's outlook is brightening and is set to grow at a faster pace, with the weaker local currency accelerating the growth rate, local private hospital operators are expected to be at the forefront of benefit from this growth.