April 5, 2012

A Postcard from the Asia Pacific

Malaysia Medical Tourism – Penang’s Comeback

The Malaysian port city of Penang, which was the leading light to seafaring merchants in the 18th century, is now pioneering Malaysia’s medical tourism industry.

More than 200 years ago British merchants sailing in the Indian Ocean found the island called Penang to be an excellent stopover. Situated in the Straight of Malacca, the Malay Sultanate-controlled Penang would be the ultimate trade center that would connect India, Britain’s strategic and largest market, to other tradeposts like Indonesia, Malaysia and even China.

As the British leased Penang and developed the port on the island, sailors from all directions gathered to trade in items like coconuts, pepper, and betel-nuts among other commodities. As Chinese, Indian, Arab and Armenian merchants communed on the sandy beaches of the island, Penang transformed into a cosmopolitan trading city. Soon Penang emerged as the poster child of globalization of another era.

But Penang lost out in the mid-20th century. When the British left and the island became a part of Malaysia at that time, the world seemed to have lost its enthusiasm for free trade. Penang, which had a majority ethnic Chinese population, also became a casualty of Malaysia’s nationalist policies that favored ethnic Malays. The rise of neighboring Singapore overshadowed many of Penang’s traditional strengths in maritime trade. The port city’s business atmosphere was not as vibrant as it once was.

Nonetheless, the port city is making a comeback. The current wave of globalization that is sweeping the emerging markets has given a second chance to Penang as well. None of Penang’s industries represent this change as dramatically as the city’s medical tourism industry. Since 2003, the number of patients visiting Malaysia for medical treatment has almost jumped four times to nearly 400,000 in 2010, thanks to Penang. Medical tourism industry is nothing new in the region, with Singapore and Thailand drawing almost a million patients a year. However, Penang’s medical facilities are considered more affordable even though its medical technology and services are considered just as good. Moreover, the country’s specialization in the fields of cardiovascular and orthopedic treatments naturally makes it appealing for cost-conscious customers, according to research firm Frost and Sullivan. While an open-heart surgery in the U.S. could cost nearly $100,000, Penang’s best hospitals are able to do the same procedure for one-tenth the cost.

Penang’s success has prompted Malaysia to take its medical tourism industry quite seriously. It has earmarked nearly 35 large hospitals in the country to specialize in providing medical care to foreigners. A significant number of these hospitals are situated in Penang. Thus far, Penang’s medical tourism industry has largely provided services to citizens from neighboring countries like Indonesia and other Southeast Asian countries such as Vietnam and Cambodia. But the number of patients from Europe and the U.S. are also on the rise. While patients from foreign countries save a substantial amount of their money in their currency, Malaysia still sees huge gains from whatever precious little the foreigners manage to spend on their medical leave. Remarkably, Malaysia estimates that patients from overseas spend nearly $362 per day, more than double the $144 a Malaysian patient would spend per day.

Penang, the only state within Malaysia to be headed by an ethnic-Chinese leader, is showing the way to do business. It has largely subjected all the government contracts to competition and has also dismantled some of the special privileges to ethnic Malays. Not surprisingly, Penang is now considered one of the most transparent states in Malaysia and foreign direct investment in the state is rising.

When British settled in Penang two hundred years ago, malaria, a deadly disease then, killed many. Penang even earned the derogatory title ‘the white man’s grave’. Now though, the Malaysian port city of Penang, which was the leading light to seafaring merchants in the 18th century, has transformed into a place that can provide affordable treatment for just about any dreaded ailment of the modern age.