Indonesia Healthcare Market Goes Digital

Current situation of Indonesia’s healthcare market

As the fourth most populous country in the world, Indonesia healthcare system faces growing rates of heart disease, diabetes and other non-communicable diseases. It also has the highest rate of malnutrition (40%) among children in the ASEAN region, as cited in the 2019 UNICEF report. 

Indonesia has allocated US$3.5 billion of its 2021 budget to fund its universal healthcare coverage, depicting the government’s urgency to strengthen the Indonesian healthcare market. Indonesia’s universal health coverage started a short 6 years ago and is known as BPJS locally. It is the world’s largest universal health insurance program that covers over 200 million people, and is in need of some serious improvement.

BPJS which covers medical services ranging from simple dental check-ups to more serious procedures has made healthcare services more accessible to its citizens, thus increasing its demand and general awareness of caring for one’s health condition. However, the shortage of doctors and hospital beds remain one of the biggest challenges – there are 0.4 doctors and 1.17 beds per 1,000 inhabitants, the lowest rate in ASEAN. This poses a problem for healthcare accessibility in the country. 

But, given the rising demand for healthcare services and the recent deregulation around the healthcare sector, this opens an opportune moment for foreign investors to fill this shortfall. 

How Covid-19 has accelerated digital reforms in Indonesia’s Healthcare System

To solve this complication, in March 2021, the Indonesian government lifted limitations on foreign investment in healthcare-related sectors through its Positive Investment List.

Here are some of the important changes that were introduced.

Business Activity	Negative Investment  List	Positive Investment List
Pharmaceutical Manufacturing	85% maximum foreign ownership	Open for 100% foreign ownership
Pharmaceutical Wholesaler	Closed for foreign ownership	Open for 100% foreign ownership
Raw Pharmaceutical Wholesaler	Closed for foreign ownership	Open for 100% foreign ownership
Hospitals	67% foreign ownership (70% for ASEAN investors)	Open for 100% foreign ownership, but subject to minimum number of 200 beds
Medical Devices Distributor	Maximum 49% foreign ownership	Open for 100% foreign ownership
Medical Devices Testing	Maximum 67% foreign ownership	Open for 100% foreign ownership

Although the recent regulation did not specifically mention digital healthcare, it is worth noting its growth, as it increases healthcare accessibility, hence, paving the way for many business lines in the sector to grow.

According to Australia-based AsiaLink Business, digital healthcare revenues in Indonesia are expected to reach $973 million by 2023 at a Compound annual growth rate (CAGR) of 60%. The rapid growth of digital healthcare platforms seems reasonable given Indonesia’s high internet penetration rate of 64.8%. It is expected to reach 89.3% by 2025, with over 200 million users. 

Also, some industry players are confident of this projection as health-consciousness among Indonesians is on the rise.  According to a report by Food Industry Asia, approximately  99% of Indonesians show interest in improving their diets and approximately 89% are happy for products to be reformulated.

Given its current conditions, digital health platforms appear to be the most practical and innovative solution to increasing Indonesia’s universal healthcare program, in terms of accessibility.

Digital healthcare segmentation in Indonesia

The spectrum of digital services in the field of healthcare is vast. Hence, it has been classified into three major segments, according to the market research conducted by KEN Research:

1.       E-Pharmacy Market: In 2020, e-Pharmacy players made up 3% of Indonesia’s pharmaceutical sector, the total revenue of the sector was at US$6 billion. The sector is projected to grow 10% this year. E-pharmacies could play a bigger part as social distancing has forced many consumers to adopt and become accustomed to its services.

 2.       Online Consultation and Appointment Booking Market: By March 2020, digital healthcare providers have witnessed more than 61 million patients visit their website for virtual medical assistance. According to research by McKinsey and Company, around 44% of people who dropped their in-person routine appointments were looking forward to online consultation and 24% received appropriate care.  

3.       Healthcare IT Solutions Market: A rapid growth of Indonesia’s digital health ecosystem opens the opportunity for software developers to tap into this emerging sector. According to Ken Research, Indonesia’s hospitals, clinics and pharmacies are becoming the end users for healthcare management systems (HMS), Medical practice management software (PMS), as well as electronic medical records (EMR) to provide their own digital health solutions. 

It is quite evident from the growth in these 3 segments that Indonesia is witnessing a shift from traditional to online health services. International businesses entering the market can contribute towards its growth in the future.

How Cekindo Can Assist

With colossal market potential, numerous reforms and considerable support from the government, foreign investment in the Indonesian healthcare sector is more favorable than ever. However, breaking into a new market overseas might be intimidating. Cekindo offers a comprehensive range of solutions to ease the registration process and help you create a viable roadmap for your business. 

Our experienced legal advisors will assist in all statutory and regulatory aspects of your investment. Experts at Cekindo also help in carrying out Due Diligence activities to help you assess the credibility of the company or partner you want to invest in or work with. 

To know more about how Cekindo’s solutions can help you register your company in Indonesia, please fill out the form below or talk to an expert on our chatbot.