Indonesia Opens Hospital Sector to 100 Percent Foreign Investment Under Omnibus Law

Jakarta, INTI - Indonesia's hospital sector is now accessible to 100 percent foreign investment following the implementation of the Omnibus Law. The newly introduced Government Regulation 47/2021 (GR 47/2021) under the Omnibus Law has reduced the requirement for the number of beds in hospitals owned by foreign investors.

With the country's expanding middle-class and the push for universal healthcare, Indonesia's healthcare industry is poised for continuous growth. It boasts the world's largest universal healthcare program, covering over 200 million individuals.

Foreign investors eyeing opportunities in Indonesia's hospital sector should take note of the latest provisions outlined in Government Regulation 47 of 2021 (GR 47/2021) under the Omnibus Law.

GR 47/2021 modifies the bed requirement for hospitals under foreign ownership and mandates all hospitals to offer support services, including laboratory, blood, and nutrition services.

Historically, due to inadequate infrastructure and funding in Indonesia's healthcare system, many Indonesians sought medical treatment abroad, particularly in Singapore and Malaysia. The annual costs associated with outbound medical tourism are estimated to exceed US$6 billion.

However, with the onset of the pandemic and subsequent travel restrictions, Indonesians have increasingly turned to local hospitals. Consequently, the government has endeavored to enhance the regulatory framework to attract more investment and improve the industry's capacity and service offerings.

Liberalization of Indonesia's Hospital Sector

Under the Omnibus Law, several sectors of Indonesia's economy, including certain segments of the healthcare industry, have been liberalized. Hospitals are now open to 100 percent foreign investment, up from 67 percent for non-ASEAN investors and 75 percent for ASEAN investors.

Moreover, the Omnibus Law has streamlined the business licensing process through a risk-based licensing system. Hospitals, classified as high-risk businesses, require a registration number (Nomor Induk Berusaha – NIB) and a license, subject to fulfilling specific conditions and verifications by the government.

Main clinics offering specialized healthcare are also open to 100 percent foreign investment, while basic healthcare pratama clinics are reserved for local small and medium-sized enterprises.

Classification of Private Hospitals

GR 47/2021 maintains the classification criteria for hospitals, distinguishing between general hospitals and specialist hospitals. General hospitals provide services across all areas and types of diseases, while specialist hospitals focus on specific types of diseases or specialties.

Compliance and Obligations

Private hospitals in Indonesia must comply with minimum room requirements and provide various services as mandated by GR 47/2021. Failure to adhere to these obligations may result in sanctions, including fines and license revocation.

Market Potential

Indonesia presents a significant market for hospitals and healthcare facilities, with ample opportunities for foreign investors, especially in second-tier cities. With the ongoing expansion of the middle-class and universal healthcare coverage, the healthcare industry is expected to witness sustained growth.

In conclusion, Indonesia's healthcare sector presents lucrative prospects for foreign investors, with the government's efforts to liberalize regulations and attract investment paving the way for enhanced service delivery and industry expansion.