Indonesia is the fourth most populous nation in the world, with over 184 million people. Its land mass comprises 13,667 islands — of which only 7% are inhabited — and stretches 5,120 kilometers from east to west, about the same distance as from London to Moscow. Indonesia today has over 300 ethnically distinct groups. Bahasa Indonesian is the national language and English is the second most widely-used language.
Despite a health and welfare situation characteristic of many developing countries, Indonesia is well on its way to improving the quality of life for its citizens. Increased prosperity from export earnings (a large share being from trade in crude oil and gas) has enabled the government to turn its attention towards enhancing living standards. This includes the eradication of contagious diseases, programs to prevent epidemics and the provision of clean water and modern sewage systems to a greater number of Indonesians.
Hospitals in large cities such as Jakarta, Bandung, Surabaya and Balikpapan are of a relatively high technological standard and are stocked with sophisticated medical equipment. Government measures, combined with a general desire to improve healthcare, have resulted in the number of public health centers growing at an average rate of 4% per year.
The number of trained medical practitioners has also been growing dramatically. In 1992, the government introduced a pilot self-financing system in four large city hospitals. Partly funded by the US Agency of International Development (USAID), this program is designed to promote more effective management and fiscal self-sufficiency.
Despite these medical advances, however, only about 10-12% of Indonesia’s population is covered by medical insurance — mostly civil servants and military personnel.
… medical equipment market
Indonesia’s 1993 medical equipment market is estimated to be worth over US$105 million. The market for basic medical equipment such as electromedical and diagnostic equipment, mechanotherapy and respiratory appliances, orthopaedic appliances, prostheses, hearing aids and X-ray equipment is estimated at almost $62 million for 1992. Imports account for more than 90% of the country’s overall medical equipment market.
Indonesia principally imports medical equipment from the US, Japan and Germany. However, the Netherlands, the UK, Singapore, France, Belgium and Luxembourg are also significant suppliers. Indonesia buyers maintain that US goods, although of excellent quality, tend to have higher prices than similar products from other countries. In addition, it is believed that US exporters do not offer credit terms as generous as some of their competitors. With the recent rise of the yen against the dollar, however, US goods have become more attractive to Indonesian purchasers than Japanese products.
… how the system works
The government is the largest purchaser of medical equipment in Indonesia. The Ministry of Health is responsible for building new public health centers, providing subsidies to regional authorities to purchase medicine and equipment, and supervising the national Family Planning Program. In addition, the Ministry of Education, armed forces and other government departments spend significant sums on healthcare. Over 15% of all government development expenditure is devoted to the procurement of medical equipment.
The major purchasers of medical equipment in Indonesia are: general hospitals (the majority of which are owned by the government), specialist hospitals, health centers, clinical laboratories and the Family Planning Program. There are three channels of distribution for imported medical equipment:
1) Through public tender – a method used by the Department of Health, state enterprises, state hospitals and large private companies and clinics.
2) Direct retail – usually reserved for small hospital or government purchases; and
3) In connection with grant aid – in which suppliers are usually designated by the grant donor country’s government.
All healthcare supplies and equipment must be registered with the Department of Health, a process which may be carried out by the manufacturer, packaging companies or importer. Registration is not required if the equipment is intended for personal use, for research, shipped in small quantities as samples, and/or is a donation from a foreign government or social organization.
Import duties of up to 30% apply to medical equipment. In general, electromedical and other technical equipment is accorded a lower tariff rate (5%), while medical supplies and plastics have a higher rate (20-30%). All imported medical equipment is subject to a 10% value added tax. There are no technical standard requirements specific to Indonesia.
A foreign manufacturer which chooses to sell equipment from outside Indonesia should appoint a local company as its distributor or agent. In order to participate in a tender offer, distributors and agents must first obtain a license as a wholesaler of medical equipment from the Department of Health. In addition to export opportunities, the government of Indonesia encourages foreign investment and has a favorable attitude to the granting of local production licenses.
… best prospects
Based on import trends and distributor opinion, the following medical equipment categories offer good opportunities for foreign suppliers: electro-medical apparatus, surgical instruments and appliances, X-ray equipment and film and laboratory equipment.
As Indonesia’s population grows and its standard of living improves, and as the government focuses on increasing the availability and quality of healthcare, significant opportunities for foreign suppliers of medical equipment will open up over the next 10-15 years.