Despite political instability, Thailand’s healthcare sector has great prospects for growth due to its expanding middle class, public health service, supply of affordable medicine, and forthcoming membership of the ASEAN Economic Community (AEC).
Thailand has faced severe tests in recent years but is today emerging from them stronger. As well as meager growth and floods which devastated the country in 2011, the country suffered a military coup in 2014. Today, though, Thailand is showing its mettle. The economy is rebounding and the middle class expanding. The country’s health is improving too. A new public system has been providing basic healthcare to a rising proportion of the Thai population since 2002, and the state-run drug manufacturer GPO has maintained the supply of drugs and kept prices affordable – a key contributor to rising standards of living in Thailand. These years have seen Thailand master the art of resilience.
The coup, in May 2014, was the thirteenth since 1932 —lead by General Prayuth Chan-o-cha, the country’s current prime minister. Needless to say, the political turmoil affected mainland Southeast Asia’s largest economy. Growth in 2014 hit a meager 0.7 percent and while GDP is estimated to grow at a healthier 3.5 percent in 2015, it still is way below its potential, and below some of Asia’s fastest-growing economies such as Vietnam, Myanmar, Laos and Cambodia.
Although political stability will be key to determining Thailand’s prospects and progress in future years, the Kingdom offers reason for optimism. World Bank’s Doing Business 2015 report still ranks the country among the top 30 economies worldwide in which to do business. “Thailand always manages to maintain an economically safe environment for international companies to do business in,” explains Judy Benn, executive director of the American Chamber of Commerce in Thailand. “Companies that have continuously done business here and dealt with the political instability continue to reinvest because they are very optimistic about the future and view Thailand as more of an opportunity than an obstacle.”
The forecasts confirm her view. After the post-coup slump, in 2015-19 the country’s economy is expected to rebound to a healthier 3.9 percent growth rate. Foreign direct investment is expected to keep coming. Thailand is the only upper-middle-income country in mainland Southeast Asia with a growing middle class, which fuels demand for goods. Also, thanks to its strategic position and developed infrastructure, Thailand continues to be the main gateway to Indochina. As a member of the Association of Southeast Asian Nations (ASEAN), Thailand is also set to join the ASEAN Economic Community (AEC), due to be implemented at the end of 2015, a market of more than 600 million people with a combined GDP of some estimated USD 2.4 trillion.
“Thailand always manages to maintain an economically safe environment for international companies to do business in.”
Judy Benn – Executive Director, American Chamber of Commerce in Thailand
“The bridging of the AEC in December 2015 will create many positive changes for the region, although it will take some time to develop uniform policies,” points out Dr. Boonchai Somboonsook, secretary general of the Thai Food & Drug Administration. “I believe that trade amongst the Southeast Asian region will be improved in various sectors, such as technology and pharmaceuticals. It is my personal belief that Thailand will play a larger role in the coming years because of its geographic location and production capacity. “John Clare, vice president of the healthcare business unit at DKSH Thailand Limited, the leading market expansion services provider in Asia, agrees on this. “Definitely, the AEC will strengthen Thailand’s position […]. The country is already well positioned geographically. The establishment of the AEC and harmonization of regulations may simplify how business is conducted in the region, thereby facilitating growth.” He adds: “The Thai government already instituted a set of policies to incentivize multinational companies to set up their head offices in Thailand. […] Dropping the barriers and opening up Southeast Asia’s market may drive more companies to do so.”
Thailand is also a regional innovator when it comes to public healthcare. Since 2002 a new public system aims to provide at least basic care to all Thai citizens. Today, about three quarters of Thai healthcare expenditure is public. But as Busakorn Lerswatanasivalee, CEO of the Thai Pharmaceutical Research & Manufacturers Association (PReMA) explains, “financing … universal coverage is becoming more expensive … In order to make it sustainable they need to find more funding. [Otherwise] this may lead the country to financial challenges.”
Meanwhile, debate rages about the state-run drug manufacturer Government Pharmaceutical Organization (GPO). Multinationals see a monopoly, but others see it as improving access and reducing drug prices. Dr. Nopporn Cheanklin, managing director of GPO makes the case that “we are contributing to Thai society by providing better standards of living through production and the supply of quality medicines at affordable prices.” He says the GPO saves the public finances “THB 4 billion (USD 111 million) per year, as the government would have spent more on imported pharmaceutical products.”