Fit for the future: A bright outlook for business growth in ASEAN healthcare

These shifts will create many opportunities for businesses, but the dynamics differ widely across regional markets like Indonesia, Malaysia, Philippines, Singapore, Thailand or Vietnam. In Southeast Asia, local market knowledge and presence can help open doors to future business growth in the region’s fast-evolving healthcare sector.

Longer lives

First, the demographic shift to longer lives and greying populations is playing out on a massive scale in ASEAN, the 10-member Southeast Asian economic bloc that’s home to a population of 685.4 million². According to data from the UN Economic and Social Commission for Asia and the Pacific, the proportion of people aged 60 or above in ASEAN is forecast to rise to 22.2% by 2050, from 11.2% in 2020.³ There will be an even more precipitous decline in the region’s old-age support ratio, or the average number of people aged 15-64 for every person that’s 65 and over, which is forecast to fall from 9.5 in 2020 to 3.9 in 2050, based on the UN data.

This will put huge strains on the healthcare system, adding to the demand for basic medical infrastructure as well as treatments for specific conditions like dementia or addressing mental health or mobility challenges.⁴ Singapore and Malaysia are relatively well served today by 2.4 and 2.2 physicians per 1,000 people, respectively, compared with a global average ratio of 1.7, or 2.0 for East Asia and the Pacific. But across Indonesia, the Philippines, Thailand and Vietnam, the number of physicians ranges from 0.7 to 0.9 per 1,000 people, according to World Bank data.⁵

Advancements in tech, automation, and AI, such as machine learning for data analysis, natural language processing in telemedicine or medical robots, will be part of the solution as they become increasingly common.⁶ But technology alone cannot close the coverage gap, putting pressure on countries to increase the flow of capital to the sector and creating opportunities for investment and business growth.

Rising wealth

The second supertrend is rising wealth across Southeast Asia. GDP per capita on a purchasing-power-parity basis rose by a third from 2019 to an estimated USD17,440 in 2024 and is forecast by the IMF to rise by a third again to USD23,260 by 2029 as affluence spreads.⁷

Rising levels of wealth are driving an increase in spending on healthcare across the region – both from public and private sources. In Malaysia, for example, the 2024 budget increased the allocation to healthcare by 13.5% to RM41.2 billion (USD8.7 billion).⁸ Singapore’s budgeted spending on healthcare rose 4.6% in the 2024 fiscal year to SGD18.8 billion (USD13.8 billion), and health recently overtook education as the biggest component of social spending.⁹

Total current health expenditure across all ASEAN countries rose to USD156.3 billion as of 2021, according to the most recent data available from the WHO, an increase of 42% from five years earlier.¹⁰

Where this money is going is also changing. Across ASEAN, rising obesity rates and increased risks of non-communicable diseases, like cardiovascular disease or cancer, are adding to health-related challenges. In Indonesia for example, the number of people living with diabetes more than tripled to 19.5 million in the two decades up to 2021, and is forecast to rise another 47% by 2045.¹¹

Opportunities for business growth:

• Medical infrastructure: Southeast Asia is accelerating its build-out of public and private hospitals, clinics, senior care facilities and other medical infrastructure, adding doctors and medical staff, attracting more investment into medical device manufacturing, and broadly increasing support for the sector. Medical tourism to Southeast Asia is also rising, and could double to more than USD100 billion a year by 2029.¹² Popular destinations including Malaysia, Thailand and Singapore¹³ —with demand rising from the rest of Asia, notably from China¹⁴ as a source market.
• Tech innovation: The Covid-19 era brought rapid advancements in telemedicine and digital health industries that have improved accessibility, helping to deliver healthcare solutions and consultation services in more rural or hard-to-reach locations, and online consultations for check-ups and diagnosis are gaining broader acceptance around the region.¹⁵ This translates to robust business growth: digital healthcare in ASEAN is forecast to grow at an annual rate of 8.6% from 2024 to 2028.¹⁶ AI and big data are enhancing disease surveillance, for example by leveraging statistical analysis gathered from wearable devices to provide real-time health screening and early diagnoses.¹⁷ Pioneering biopharma and medtech companies are leveraging precision medicine to develop new treatments, such as using biomarker testing to deliver more personalised and customised cancer treatments.¹⁸
• Financial investment: The private sector is well placed to shape the future of healthcare in Southeast Asia. Around the region, both overall spending on healthcare as a percentage of GDP¹⁹ and out-of-pocket healthcare expenditures²⁰ tend to lag peers in other regions. This spells abundant opportunities for private equity and venture capital investment²¹, as well as business growth in health insurance²² and the expansion of innovative consumer financing and wholesale payment solutions, for example.²³
• Wellness products: The market for vitamins and dietary supplements is booming as consumers in Southeast Asia take a more proactive approach to managing their health.²⁴ This creates opportunities for leading global brands to explore international expansion, and opens up a new channel for business growth for homegrown manufacturers and service providers.

How HSBC can help:

• Connecting clients: HSBC has operated for more than 135 years in ASEAN²⁵ and has a track record of connecting clients with opportunities in the healthcare sector. For example, HSBC worked closely with Beijing- and Hong Kong-based Sino Biopharm to support its international expansion, including introducing Sino Biopharm to a Thailand-based pharma company for a potential business growth opportunity.²⁶
• Supporting international expansion: As multinational companies seek to diversify their supply chains and look to manufacturing hubs in Southeast Asia, HSBC provides businesses across the region with seamless access to trade finance and digital banking solutions. That includes HSBC TradePay, a 100% digital trade finance solution that simplifies and streamlines loan/financing drawdowns and allows faster, direct payment of suppliers. In ASEAN, HSBC TradePay is available in Singapore and Indonesia and expected to be made available in the Philippines in Q3 2024 and Malaysia in Q4 2024.
• New economies: Advancing new and sustainable economies and business models is an important goal for the healthcare sector in ASEAN, and HSBC is well-placed to leverage its global expertise to support business growth in the sector. For example, in June 2024 HSBC extended a new social loan to Vietnam- headquartered Gene Solutions to help it expand healthcare services in Vietnam and around the ASEAN region. The revolving credit facility, HSBC’s first in Vietnam, is supported by HSBC Singapore’s groundbreaking USD200 million New Economy Fund*, which is designed to empower new business growth and innovation across Southeast Asia²⁷.