Located in the heart of Southeast Asia, Thailand is one of the main destinations visited each year by millions of tourists from around the world due to its rich heritage and natural splendors. Apart from its cultural and natural attractions, the country is also becoming increasingly known as a famous destination for medical tourism due to its world-class medical care available at reasonable prices. Making the best of both worlds, many medical tourists also take the opportunity to visit some of the country’s many world-class attractions during their leisure and recovery time.
As the medical tourism sector continues to expand worldwide, it is expected that the industry’s total market size will reach USD 165,345 million by 2023, registering a compound annual growth rate (CAGR) of 15.0% from 2017 to 2023, according to Allied Market Research. Aligned with the steep growth of the industry, Thailand is expected to remain at the forefront of the market. Comparing the world’s top medical tourism destinations, the latest biannual report of the International Healthcare Research Center ranked Thailand 6th in the medical category of its Medical Tourism Index (MTI), while Thailand’s facilities and services were ranked 13th.
Robust subsectors
The main reason behind Thailand’s robust medical industry is its advanced subsectors. As of 2018, Thailand was home to 65 hospitals and medical organizations accredited by the Joint Commission International (JCI), the highest number in ASEAN. In comparison, Singapore and Malaysia come in second and third with 22 and 13 accredited hospitals respectively.
Apart from its global-standard hospitals, Thailand is also known as one of the largest medical device producers in the Asia-Pacific region. As of 2017, the country’s medical device export value had risen to THB 102.48 billion, a 5.9% increase from its 2016 figures, according to the Medical Device Intelligence Unit at the Plastic Institute of Thailand. On top of that, it is also forecasted that the average growth in the value of medical device exports will continue to increase by an average 9.5% YoY. Such growth clearly reflects the country’s capacity and potential for producing medical devices. Over the same period, Thailand’s import numbers have also grown from THB 48.70 billion to THB 62.39 billion, indicating an expanding domestic market.
In addition to its high number of medical device producers, Thailand’s pharmaceuticals sector also contributes significant numbers to the medical industry as a whole. In 2017, the country’s pharmaceutical market stood at THB 169 billion, showing a 5.3% growth from the previous year. It is also predicted that the value of pharmaceuticals distributed by Thai producers, which account for 95% of the total output of the Thai pharmaceuticals sector, will grow by an average of 5-6% per year as the country is currently home to more than 170 drug manufacturers, around 90% of which are accredited by the Good Manufacturing Practice (GMP).
Supporting factors
Over the past decade, Thailand has shifted gradually towards becoming an aging society. The continued trend of increasing longevity but low fertility saw the country’s population growth plummet to only 0.34% in 2018, down from around 3.1% in 1960. The National Statistical Office of Thailand has also predicted that the country will become an aged society by 2021, when Thai people aged over 60 years are expected to account for 20 percent of the country’s total population. This increasing trend of Thailand’s aging population will be reflected in higher domestic consumption of medical services and products.
In terms of human capital, Thailand has 23 accredited institutions across the country offering medical programs, while there is a reported average of 29.3 health workers per 10,000 population nationwide, according to the World Health Organization. The size of the workforce in the medical industry is expected to increase as ASEAN is now focusing on enhancing intraregional people mobility. Along with five other career groups, professionals in the medical industry, including nursing services, dental practitioners, and medical practitioners, are expected to mobilize more freely within ASEAN as supportive initiatives are being pushed forward under the ASEAN Community Vision 2025.
Apart from qualified medical schools in Thailand, the country also places an emphasis on research, development, and innovation through various governmentled institutions, including BIOTEC, the National Innovation Agency (NIA), and Thailand Science Park, to name just a few. These agencies work closely with businesses in the sector to ensure that government policies are aligned with entrepreneurs’ priorities. On the business side, cooperation between businesses in the sector is robust with many associations bringing together players in the same industry, such as the Thailand Medical Device Technology Industry Association (THAIMED).
Attractive government incentives
To support Thailand’s medical industry towards becoming a regional medical hub, the Thailand Board of Investment offers a wide range of incentives for investment projects aligned with national development objectives. The tax incentives include the exemption of corporate income tax, together with the exemption of import duty both on all machinery and on raw or essential materials used in manufacturing exported products, while non-tax incentives include the permission to bring in expatriates, permission to take or remit foreign currency abroad, and permission to own land.
For the manufacturing activities, investment in the manufacturing of medical foods or food supplements, and advanced medical devices are eligible for an 8-year CIT exemption, while active pharmaceutical ingredients (APIs); biotechnology with R&D or the manufacturing of biopharmaceutical agents using biotechnology; and R&D or the manufacturing of diagnostic kits for health can enjoy this highest-tier incentive. In addition, the manufacture of conventional and traditional medicine which achieves the GMP standard will receive a 5-year CIT exemption. For medical services, a 5-year Corporate Income Tax (CIT) exemption may be granted for practitioners of traditional Thai medical public services, while Hospitals may also receive an 8-year CIT exemption on the condition that they are located in one of the 20 provinces with the lowest income-percapita. These include the four border provinces in Southern Thailand, namely Satun, Yala, Pattani and Narathiwat. Other targeted areas include four districts in Songkhla - Chana, Na Thawi, Saba Yoi and Thepha - and the country’s Special Economic Development Zones.
Health rehabilitation centers are not eligible for CIT exemption, but will receive exemption of import duties on machinery and non-tax incentives. In order to qualify for these incentives, the health rehabilitation centers must use medical technology for medical treatment and health rehabilitation and must have continuous rehabilitation programs, including overnight treatment. Lastly, transport services for patients, physicians or medical device companies will receive a 5-year CIT exemption.
In addition to the tax incentives for specific activities, the BOI also offers non-tax incentives including the permission to own land, to acquire relevant visas/work permits for foreign staff, and to take out or remit money abroad in a foreign currency. These measures aim to ensure that Thailand remains an attractive location for foreign visitors as a medical tourism destination as well as strengthening the country’s competitiveness as a major producer of medical devices and pharmaceuticals in Asia and beyond.
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