|Ho Chi Minh City has called for investment in over a dozen public-private partnership ventures in local healthcare
The biggest privately-run hospital in the central region, Quang Khoi, is currently completing necessary procedures for development of a new facility to cash in on growing healthcare demands.
Licensed by the Ministry of Health (MoH) to reform from a clinic to a general hospital in 2018, it has developed strongly ever since.
“We will kick off the 2.5-hectare construction soon and put the new buildings into operation in 2023, with a capacity of 100 beds and a 200-capacity entertainment area for the elderly,” Nguyen Van Khoi, board chairman at Quang Khoi General Hospital, told VIR.
The facility was one of 16 privately-run hospitals that the MoH planned to establish in 2018 as part of efforts to meet targets of increasing sickbed ratios per 10,000 people.
It also is an example of an investment movement among domestic private businesses in the health sector, which has been been in need of huge capital for future development amid State budget constraints and growing demands for high-quality health services.
In 2020 the prospects for private domestic and overseas ventures continues to open wider on the back of the sector’s development strategies, market demands, and the EU-Vietnam Free Trade Agreement (EVFTA).
To increase access to healthcare, one of the key tasks for the health sector is to increase the ratio of beds per 10,000 people. It plans to continue to call for private businesses to join its efforts, thus raising the ratio to 26 in 2020, up from 23.56 in 2015, regardless of those at grassroots health facilities. Of the total, the threshold at privately-run health units is 2, up from 1.5 in 2015.
“The health sector is carrying out heavy tasks amid the challenges. Thus, we are encouraging private investors to join to fulfill our targets,” a senior MoH official told VIR. “We are considering and appraising procedures for some public-private partnership (PPP) projects in healthcare infrastructure and medical equipment. We are willing to welcome private investors to join.”
As a result, cities and provinces have been developing their healthcare systems and calling for private financiers from home and abroad to join. For instance, Hanoi planned to develop 15 new hospitals over five years by the end of 2020, with 5,000 beds worth VND8.6 trillion ($373.9 million) in total.
The city has especially been prioritising 100 per cent foreign-invested facilities with services using advanced technology, while encouraging investment in new urban areas.
In similar moves, Ho Chi Minh City has called for private investment in the local sector across 14 PPP ventures with the total investment capital of VND15 trillion ($652.17 million).
Elsewhere, mergers and acquisitions (M&A) are a promising avenue for domestic private businesses, and especially for multinational corporations (MNCs).
Industry insiders forecast that private investment in the sector will be more bustling this year, when State Capital Investment Corporation will divest stakes in a number of leading pharmaceutical players such as two of the three-biggest pharma groups in the country, in Traphaco and Domesco.
“In our advisory practice, we continue to receive trade facilitation inquiries from across Asia including Singaporean clients for market expansion and acquisition opportunities in Vietnam,” explained Shanmuga Retnam, vice chairman of the Singapore Business Association in Vietnam.
“We are currently reviewing the establishment of a green bank, innovation valley, and greenfield hospital projects which are essential infrastructure in Vietnam.”
In fact, Vietnam has been seeing a strong wave of M&A investment since 2015, and especially since the revised Law on Pharmacy took effect in 2017, which gives priority to domestic businesses in tenders for providing pharmaceuticals for public hospitals and health insurance. Some of the notable transactions involved Japan’s Taisho’s acquisition of DHG Pharmaceutical JSC, and Abbott’s acquisition of Domesco and Glomed.
Looking towards, the EVFTA, which will give more market access to EU investors, is expected to lure more MNCs to make the investments in this sector.
Pham Van Hoc, chairman of Hung Vuong General Hospital in the northern province of Phu Tho, said that the room for private investment in healthcare remains wide open.
In Latin America and Asia, private healthcare makes up 20-30 per cent, while in the United Kingdom it is 10 per cent, 24 per cent in Thailand, and 93 per cent in India, but in Vietnam the figure only sits at 5.4 per cent.
According to experts at the World Bank and International Finance Corporation, other countries alongside Vietnam are facing growing pressures on public services, especially healthcare. Thus attracting private investment via PPP is considered as the optimal solution for healthcare sector development.
Despite the importance, attracting private investment in healthcare remains a tough task because of a lack of regulatory frameworks, qualified human resources, cumbersome procedures, difficult land access, and unclear mechanisms in using the state budget in such projects.
While the Law on Medical Examination and Treatment 2009 was a motivation for private investment increase in the sector, some shortcomings remain. In addition, for years the lack of a circular guiding Decree No.63/2015/ND-CP on the PPP model has remained a concern for some time.
Tran Tien Quan, general secretary of the Vietnam Private Hospital Association, said that private investors are strongly interested in the healthcare sector. However, they are mostly concerned about the legal policies. They are waiting for changes in the legal policies to make future investment.
Quan, who is also deputy general director of Hop Luc Group – a big healthcare developer, is also facing the similar difficulties. Hop Luc now operates two hospitals of 1,200 sickbeds in total. “We strongly crave for further development. If we have favourable conditions with fair and transparent policies, more clinics will be developed into hospitals.
The concerns are now expected to be solved in the near future as the amendments to the 2009 law will be submitted to the National Assembly (NA).
Alongside that, the Ministry of Planning and Investment is completing the draft Law on PPP after meeting with senior economists and experts to get their comments for the latest version only a few days ago, with a number of breakthrough changes in the years-long concerns over form of PPP the form of investment, minimum requirements, state approval of plans, investment incentives and protection, with and land use support are being included.
For instance, according to the latest PPP draft, health remains one of the limited sectors subjective to PPP investment, while some others are removed, thus creating an official legal framework for PPP in the healthcare sector.
Regarding investment guarantee, investors of such projects will be ensured the right to access land, use the land, and other public assets.
Specifically, the state will hand over or lease land or allow them to use other public assets to implement PPP contract.
What is more, PPP businesses will enjoy the incentives in tax, land-use fee, land-leasing fee, and more in line with the prevailing rules on tax, land, and investment.
As scheduled, the draft law on PPP will be submitted to the NA for approval in May, pinning high hopes of bigger opportunities for the domestic private businesses and MNCs.