Dental News - Change and opportunity in the Indonesian health care sector

Dental Tribune International

Fri. 22. September 2017

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Held just recently in September, the inaugural event of the Indonesia Dental Exhibition and Conference (IDEC) proved an all-round success. For many international exhibitors, the trade show presented an excellent opportunity to explore new business partnerships and gain a foothold in the country’s emerging medical and dental industry—a market that is expected to change significantly in the next several years. The following article takes a closer look at the Indonesian health care sector and its development potential.

Blessed with a diverse landscape and a rich cultural history, Indonesia is one of the most fascinating countries in Asia. And yet, although its natural treasures do not fall short of the attractions of nearby countries, the number of foreigners visiting Indonesia has remained considerably lower than Singapore or Malaysia.[1] Of course, the reasons for this are multifaceted. Nonetheless, Indonesia’s weaker performance in the tourism industry is just one example of the country’s immense potential that is evident in many areas, not least in its medical and dental care industries.

Up until a few years ago, the health care sector, especially dental care, was a severely underserved market. Looking back only one decade, Indonesia had one of the lowest population–dentist ratios in the world.[2] Generally, health care has long been viewed as a low priority in the country, with little preventative care and a lack of comprehensive medical insurance. However, while the country definitely has some catching up to do, it has already begun to do so.

In an attempt to improve the insufficient health care sector, the country has initiated reforms that are set to transform the country and create promising opportunities for the dental industry in the years to come. One of the most significant measures is the universal health insurance coverage, Jaminan Kesehatan Nasional (JKN), which was introduced in 2014 and is intended to cover all Indonesian citizens by 2019.

JKN will change the health care sector dramatically. Currently, less than two-thirds of the population has health insurance. Once fully implemented, it will be mandatory for all Indonesians to join JKN, paying a share of their monthly salary as an insurance premium. For those who have no regular income, this will be publicly funded. With JKN, potentially over 86 million additional people (about the population size of Germany and eight times that of Sweden) will have improved access—and, in some cases, first-ever access—to the health care system and most certainly make use of it.

This example perfectly illustrates Indonesia’s one characteristic that has shaped its past and will most likely transform its future: it is huge and up until now was never fully able to exploit the associated market potential.

The fourth most populous country in the world (and a member of the G20), Indonesia is as wide as the US from San Francisco to New York and home to over 260 million inhabitants who live scattered across ten thousands of large and small tropical islands. Its size and atypical topography pose a variety of infrastructural challenges and have thus affected the development of the health care sector in the past, but these are also likely to help Indonesia become one of the most dynamic medical markets in the future, experts have predicted.

To understand this connection, one only needs to apply a bit of maths. According to market analysts, the ASEAN countries are expected to be among the most promising emerging medical device markets owing to increasing economic growth, big populations and large emerging middle classes. Of the ten member states, regarding population numbers, Indonesia alone represents one-third of the whole market and hence has the greatest development potential.

In light of this, one also has to keep in mind that the Indonesian medical device market currently is still fairly underdeveloped. Considered internationally, its volume is about that of the Hungarian market—a country with a population size of only about 4 per cent that of Indonesia.[3] This demonstrates the country’s potential provided it utilises it timely.

One of the greatest driving forces for change in the health care sector will be the country’s growing middle class. The recent increase in its gross domestic product, which is associated with changes in lifestyle and a demand for higher health care standards, among other things, has already played a major part in the rise of health expenditure, which has already quadrupled, increasing from US$20.42 per capita in 2002 to US$107.24 in 2012.[4]

To cope with this growing demand, both public and private health care providers have recently started expanding and upgrading their services throughout the country.3 Since 2011, hundreds of new hospitals have been built, predominantly in specialised and private care. According to a government report, about 5,000 new community health centres are to be built and the number of hospital beds increased by more than 330,000 by 2025.[3]

Naturally, the extended and new facilities will all need to be equipped, creating a great deal of opportunity for international companies to enter the market, especially in the dental industry. At present, as much as 85 per cent of the equipment used in Indonesian dental care is imported.[5] Both the expansion of and increase in health care facilities, as well as the growing demand for advanced health care, equipment and medical devices, will provide profitable opportunities for companies in the dental and medical industries and surgical equipment segment, market analysts have predicted.

The Indonesian government’s plans for increased public spending and improved level of health care services and the expansion of individual health care facilities will progressively require medical units to operate in a cost-efficient manner. Minimally invasive treatments and high-tech devices can support this efficiency—again providing lucrative business opportunities for foreign manufacturers wishing to enter the Indonesian market.

In the dental industry, for example, segments predicted to be lucrative include orthodontics and dental equipment for scaling and polishing and whitening.[6] To enter the promising market, foreign companies will need to make contact with dental clinics, individual practitioners and, of course, the Indonesian dental association, Persatuan Dokter Gigi Indonesia, which represents more than 27,000 local dentists and is a major mouthpiece for the dental community.

Also key for success will be visibility and communication, which are most easily achieved at trade shows and conferences where the profession is gathered and networking opportunities are abundant. In this sense, the staging of IDEC in Jakarta—the first comprehensive dental event in Indonesia—is more than just a regular dental show. It is an event presenting challenges and opportunities side by side.

Editorial note: A list of references is available from the publisher.