INTRODUCTION

1.1   INTRODUCTION

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This chapter starts with an overview on medical
tourism in Malaysia. Nowadays, policymakers from both developed and developing country
starts to encourage the growth of economic through medical tourism industry.
But, the real relationship between medical tourism and economic growth is still
ambiguous. Even though medical tourism can spur the economic growth through
increase in foreign exchange, tourist arrival and investment but still it can
also lead to negative externalities which can effect the economic growth either
direct or indirectly. Without a doubt, relying on medical tourism to
effectively increase economic growth remains as an important research question.
So, a study should be conducted conducting a study on how factors in medical tourism affects the
economic growth in Malaysia. With the result that will be generated, a
strategies can be form to attract more foreign tourist around the globe for
medical purpose.

 

This chapter will thoroughly explains background of
study, motivation of study, problem statement, objectives of the study,
significance of study and organization of study.

 

1.2 BACKGROUND OF STUDY

            What is the definition of medical
tourism? According to Meghan, Wong and Chan (2014) in their writing, medical
tourism can be defined as all activities that are related to travel or hosting
a tourists to stay minimum one night at the destination for the purpose of
maintaining, improving or restoring health through medical intervention. Medical
tourism is not new and has started since the Asian Financial Crisis. During that
time, a number of Indonesian came to Malaysia’s private hospital to seek for reasonable
yet high quality of healthcare.

            According to Burkatt (2007), during
the seventeeth century, mostly people travelled to spas and hospital in Nile came
from richer family. In other word we can say that during those time where
getting on airplane was only for the upper class family, travelling was hard
enough especially travelling for medical purpose. Nowadays, travelling across
the border can be done at the tip of our finger as in Malaysia, we have Air
Asia which offers us the lowest price in flight ticket across the Asean. Plus,
travelling for medical purpose are mostly made because of its affordable cost,
high quality in medical facilities, its good services and also type of
destination. According to Hazilah (2012), people from developing country tend
to go to US or developed country where they have better equipped medical
facilities and are more advanced in term of technology.   However, there are also trend where people from developed country
such as US came to developing country to seek for medical purposes. Although
they have a tip top facilities and technologies but the high cost had caused
most of them to travel to the other part of the world where they have cheaper
cost but still high quality of facilities. Hazilah (2012) said that in Britain,
the long queue of the waiting list of National Health Service (NHS) for surgery
has causes the patients to find any other alternative in other country. She
also said that two regions which is known as benefitted from medical tourism is
Latin America and Asia country. Unlike Britain, Malaysia has almost no queues
for most of its medical treatment (Wonderful Malaysia, 2017). According to
Patients Beyond Border (2016), the healthcare has become so expensive and
estimated approximately 1400,000 million Americans will travel outside US for
medical purpose.

            According to Malaysia Healthcare
Tourism Council, a forecasts has made regarding Malaysia medical tourism market
which is expected to grow at a compounding annual growth rate (CAGR) of 30.05%
over the next eight years which by the end of 2024 it can reach as much as US$
3.5 billion from US$424.96 million in 2016. Also, based on Transperancy Market Research,government
activities and lower cost of medical services compared to the same offered in
developed countries of North America and Europe is the core factor of foreign
countries to choose Malaysia. Other than that, with the rising influx of
tourists arrival from Middle East and North Africa (MENA) and other neighboring
countries and partly due to the economic factors such as tax exemption on
revenue generated from foreign patients and low exchange rate between RM and
any other currencies.

            (“Medical tourism to generate RM1.3b revenue in 2017”, 2017) reported
that Malaysia expected to hit RM 1.3 billion in revenues by 2017 which will be
contributed from medical tourism alone. It is also reported that Malaysia has been
listed as the most popular places to go for medical tourism purpose followed by
Singapore and Thailand. Medical tourism first gained his name when Cuba tried
to attract more foreign patients in order to gain more foreign exchange during
its crisis in 1989 to 1993. Fortunately, Malaysia has tried the same technique
during the Asian Financial Crisis and has successfully rising up from the
declining GDP. 

The
latest Budget 2018 presentation had announced that government will allocated an
amount of RM 30 million in order to spur the growth of Malaysia’s healthcare
travel industry. Plus, this is in line with the National Key Economic Areas
(NKEA) where it identified healthcare travel as a set to drive Malaysia as a
high-income nation by 2020. Plus, the allocation is for the initiatives to
promote Malaysia as the Asian Hub for Fertility Treatment, IVF and Cardiology
as well as the ‘Flagship Hospital Programme’.

Based
on the 2018 Budget, many initiatives has been done to promote this medical
tourism industry. First, in conjunction with the Asian Hub for Fertility, IVF
and Cardiology, there will be a collaboration with the Department of
Immigration Malaysia to facilitate the entry of medical traveller through
Malaysia Healthcare Traveller Programme (MHTP) by introducing the eVisa
(Medical) through online application services. Second, through the ‘Flagship
Hospital Programme’ private hospital will be given initiative to increase the
quality care and service, patient safety, quality management and service
experience to accelerate the growth. It will also help the private hospital to
be internationalized for the tourism purpose. Thirdly is the double tax
deduction for accreditation expenses to be extended for ambulatory care centre
and dental clinics and lastly the exemption of income on value of increased
export for healthcare services rate to be increased from 50% to 100% for
private healthcare from YA 2018 to YA 2020.

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