Al-`Aqar Healthcare REIT Annual Report 2019

MALAYSIA HEALTHCARE Strong momentum should continue in 2020 Budget 2020 increased medical tourism and favourable structural dynamics to remain supportive of the sector Access to quality healthcare and social welfare protection is the main theme by the new Malaysian government. In ensuring welfare and quality of life, a sum of RM29 billion (US$7 billion) was allocated for the public healthcare sector for 2019, an increase of 7.8% from 2018. This is almost 10% of the total national budget. Out of that sum, RM10.8 billion (US$2.6 billion) is set aside for development, maintenance and upgrading work of existing public healthcare facilities, the procurement of medical equipment and medicine. The strong healthcare industry momentum is expected to be continue in 2020, where the sustained strength of domestic economic activities is expected to improve healthcare affordability and help price-sensitive patients switch back from public to private healthcare. In budget 2020, the government will extend the coverage of MySalam social protection scheme to; (i) cover more illnesses for 36 to 45-year-olds, (ii) persons aged up to 65 years old, compared to 55 years old currently. The coverage of the Skim Peduli Kesihatan (PeKA) B40 has also increased from between 50 and 60 years old to 40 years old and above. This is expected to be able to strengthen the private healthcare sector and benefit the key players. Driven by growing international recognition of Malaysia’s healthcare services, coupled with the intensified marketing campaigns to promote the upcoming Malaysia Year of Healthcare Travel 2020 (MyHT 2020), the Malaysia Healthcare Travel Council (MHTC) has projected that the domestic medical tourism industry will rake RM2.8 billion in revenue by 2020, which represents 56% year over year growth during the period. The improved medical tourism contributions are expected to further boost the earnings prospects of the private healthcare players. Volume and revenue from foreign patients: Expected strong growth in 2020 On top of that, the long-term structural dynamics such as; (i) an ageing population, (ii) growing affluence and, (iii) broader insurance coverage will remain supportive of the private healthcare sector. (Extracted from Malaysia 2020 Outlook & Lookout, Maybank IB & Malaysia Market Focus – Market Strategy, AllianceDBS Research) 0 200 400 600 800 1000 1200 1400 0 500 1000 1500 2000 2500 3000 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 03 STRATEGIC PERFORMANCE 54