A couple of years ago, foreign investors expected a surge in healthcare demand in Vietnam. This was because Vietnam has a growing population and rising incomes. However, this surge didn’t really materialize. Part of the problem was that the Vietnamese weren’t willing to spend a lot of money on healthcare, there was a lack of awareness about available medical services and a severe shortage in qualified healthcare workers.
But Vietnam is a rapidly developing country and conditions have changed. Starting in 2012, Vietnam’s GDP growth steadily climbed as a recovery from economic slowdown, between 6 and 6.5% a year. As the economy grew so did demand for health services. Spending on private healthcare grew 241% over the past decade. And healthcare spending now accounts for 7.2% of Vietnam’s GDP – the highest in the region.
Source: World Bank
But the Vietnamese healthcare system cannot keep up with the demand for medical services. According to the World Health Organization, there are only an average of 7 to 8 healthcare workers and 25 hospital beds for every 10,000 Vietnamese citizens. This is much lower than the global average of 15 healthcare workers and 30 beds per 10,000 people.
The demand for health services will only grow, however. Vietnam has a growing population with rising incomes. It is estimated that the middle class (defined as people making US$10 – $100 per day) and affluent class (those making over US$100 per day) in Vietnam will double in size from 14 million in 2014 to 30 million in 2020. And per capita disposable income will rise from $1400 to $3400 per year over the same time period.
Life expectancy in Vietnam also reached a record high of 75 years in 2015. Vietnam currently has a very young population, with 75% of the population being born after 1975. But as this large demographic, with higher incomes, ages and enjoys longer lifespans the demand for healthcare services will only increase.
The government is making it easier for foreign investors to participate in the growing healthcare industry. In 2014 and 2015, the government issued decrees to help develop the health care industry and to expedite the cooperation between public and private providers.
Another favorable condition for foreign investment is the establishment of the ASEAN Economic Community (AEC) in 2015. This lowers business boundaries between ASEAN members and makes it easier for certain professionals to work in other ASEAN countries. Doctors and dentists are among the 7 professions that are granted labor movement within ASEAN. This will help with Vietnam’s problem of finding qualified healthcare workers to staff needed medical centers.