Why Invest in Health in Indonesia

What determines the health of a nation? How does one determine the burden of disease that the population has? Is it the average life expectancy? Or is it a series of statistics reflecting child and maternal mortality/morbidity? While the most accurate answer is likely a combination of these suggestions and others, child and maternal mortality statistics are frequently used to ascertain the state of a population’s health.

Indonesia is the 4^th most populous nation on earth and is the largest economy in Southeast Asia. Sustained year-on-year economic growth over the past 30 years, apart from a difficult period after 1997’s Asian Economic Crisis, has seen the country make major improvements in its health system. However, it is struggling to achieve important health outcomes, especially among the poor strata of the population. Indonesians are living longer with an average life expectancy of 68 years in 2009, contrasted to 32 years in 1953. During a similar period, Indonesia has reduced its child mortality rate by more than a third, yet maternal mortality rates of 4 mothers’ deaths out of every 1000 live births is about double that of the Philippines, three times that of Vietnam, and four times that of Thailand.

While child nutrition had improved up to the year 2000, it has stagnated since and is even increasing in some provinces. Key determinants of health such as female literacy and access to clean water and sanitation remain strikingly low among the poorest population groups. The significant geographical disparities may apply be highlighted with 25 out of every 1000 children dying before the age of 5 in Bali and Yogyakarta, while in Gorontalo closer to 100 out of every 1000 children fail to reach 5 years of age.

This can be explained by not only continuing, but also new, challenges that the country is facing due to demographic, epidemiological and nutritional transitions that are increasing the demand for healthcare. The aging population now has to deal with the disease burdens usually seen in both the developing world (communicable disease and malnutrition) and the developed world (chronic disease, diseases of lifestyle and cancers). This transition will demand a different, and more expensive, health system. Despite substantial increases in public health spending in recent years, overall health spending in Indonesia remains low and continues to be inequitably distributed between and within provinces, while World Bank analyses reveal major inefficiencies.

With the sustained economic growth forecasts for the region and the striking deficiency in healthcare as compared to its regional peers, there has been significant interest in foreign investment into Indonesia and its healthcare sector in particular. This interest has been stoked by a proactive 2010 government decree, which raised the foreign owner limit on certain sectors, including the health sector. Some investors have tipped Indonesia to rank beside the burgeoning BRIC countries of Brazil, Russia, India and China due to its big market potential and rich natural resources. However, bureaucratic red tape, corruption and overlapping regulations have continued to hobble foreign investment.