Medical Tourism in Developing Countries

Would You Like a Safari With Your Lasik Surgery? ● 85in foreign exchange and state-of-the-art technology (whether in diagnosticservices or airline reservations systems). As a result, it enables the medicaltourist industry to take off while at the same time improve both healthservices and general tourism services. In order to attract foreign investment,developing countries are flexible with respect to the conditions they set onforeign investment. In most cases, they require a joint venture with adomestic firm. Foreigners accept that when investing in health care or tourism,because joint ventures provide local access and connection and knowledgethat facilitate production. However, rules and regulations differbetween the health sector and tourism.Medical TourismAlthough all member states of GATS limit foreign presence in the establishmentof new hospital facilities, the nature and extent of those limitationsdiffers greatly. In India for example, ever since liberalization of the economy(discussed in chapter 5), there are no caps on direct foreign investmentin health services. However, there are prohibitions on foreign nationalsproviding services for profit (and they must be registered by the Medical/Dental/Nursing Council of India.) 79 In Malaysia, foreign companies haveto set up joint ventures with individuals or corporations, and foreign sharecannot exceed 30 percent. 80 That percentage is higher in other countries,including Thailand, where foreigners are not allowed to own private hospitalsexcept in joint ventures with Thai partners. 81 In fact, the Ministry ofTrade limits foreign participation to 49 percent of total investment. This isnot an issue as direct foreign investment in the health sector is tiny—during1992 to 1998, it was 0.26 percent of total number of shareholders and0.57 percent of the total value of investment.What is the evidence of foreign investment in medical tourism? As RichardSmith noted in his study of foreign investment and trade in health services,“Given the rapid development of this area, there are little empirical data.” 82Nevertheless, some secondary information is included below. In India, thereis evidence that there is a lot of foreign investment in new hospitals andstate-of-the-art equipment by multinationals. These are mostly for the superspecialtycorporate hospitals, and most are set up through collaboration withIndian firms. A $40 million cardiac center at Faridabad, the Sir EdwardDunlop Hospital, is set up by a consortium of three sets of companies fromAustralia, Canada, and India. 83 A German company has been allowed 90percent equity ownership for setting up a 200-bed facility in New Delhi. 84In Mumbai, GMBH of Germany has been given permission for setting upan orthopedic clinic with 100 percent ownership. 85 Apollo Hospitals Enterprisereceived funding from Citigroup, Goldman Sachs Group, Schroders PLC, as