Thu, 25 Jun 2009
From: The Jakarta Globe
By Ardian Wibisono
Foreign investors are beginning to turn their eyes from the country’s mining and energy industries to health care despite heavy regulation of the sector, according to Standard Chartered Bank.

Bala Swaminathan, the bank’s South East and East Asia wholesale banking head, said on Tuesday that several regional investors had held talks with Standard Chartered about joint-venture opportunities in health care.

“Foreign investors are generally interested in mining, but the conversation is increasingly changing,” he said.

Swaminathan declined, however, to disclose any specific health sector deals that Standard Chartered was involved in until they were finalized.

The foreign investment limit for health care ventures is capped at 65 percent, according to a 2007 presidential regulation. Further, overseas investors may only invest in hospitals and nursing facilities in Medan and Surabaya.

However, Swaminathan said the government was hinting that it wanted to open up investment in the underpenetrated sector.

“Given the country’s large population, even small increases in per capita spending on medical care could result in a huge market as well as GDP increases,” he said.

Muhammad Lutfi, head of the Investment Coordinating Board (BKPM), said last year that the board and the Health Ministry were planning to revamp the country’s health and pharmaceutical sectors so they could compete with other countries and stem the flow of locals seeking treatment overseas.

“Indonesians spend about $4 billion each year abroad on medical needs. We must respond so they will get treatment in local hospitals,” Lutfi said. “The nation’s current negative investment list is inefficient for our health industry and we keep losing out to peers like Singapore.”

Swaminathan said that one of Standard Chartered’s main focuses was helping companies with the merger and acquisition process, since the global economic had crisis had opened up opportunities for larger corporations to take market share. He said that aside from foreign plans to invest here there was also interest among Indonesian companies in expanding abroad.

Standard Chartered recently advised on a $23 billion telecommunications merger between India’s Bharti Airtel and South Africa’s MTN Group.



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