Impact of The Slsfta on Private Hospital Sector and Threats and Opportunities Arising Thereon

Introduction

With the Sri Lanka-Singapore Free Trade Agreement (SLSFTA), Singapore has the opportunity to invest directly in the healthcare sector in Sri Lanka under Mode 03 of international service trade. The Sri Lankan healthcare and hospital industry is one of the rapidly growing industries and continuously faces new issues and challenges. In order to understand the industry's competitiveness in the context of changing economic and political priorities in Sri Lanka and the world, Porter's Five Forces Analysis tool is used. Essentially, threats related to the hospital industry have been identified.

Impact of the SLSFTA on the Private Hospital Sector

The healthcare system in Singapore is recognized as one of the best in the world, characterized by cutting-edge technology and the latest evidence-based practices (Ministry of Health, Singapore, 2022). If such a hospital system is established in Sri Lanka, there will be massive development in the healthcare sector in terms of patient care, technology, surgical treatment, etc. Furthermore, it will support rapid growth in the healthcare sector, offering more opportunities and promoting the healthcare industry internationally with a positive image.

Opportunities in Medical Tourism

Medical tourism is a key focus in the National Export Strategy for 2018-2022, as published by the Sri Lanka Export Development Board (EDB, 2018). There is a promising opportunity to promote medical tourism, given the growing global interest and demand for wellness services. Several strong competitors, such as India, Malaysia, and Thailand, as well as the Republic of Korea and Dubai, are setting benchmarks for medical tourism. The key competitive factors include prices, access, facilities, and the reputation of both the hospital and the specialist. Success in this field depends largely on the extent to which the destination and its investors are prepared to invest in medical infrastructure and human resources shared across the entire hospital sector (Han & Hwang, 2015).

Singapore's Influence and Technology Transfer

Currently, more Singapore hospitals, such as Mount Elizabeth Hospital, attract patients from overseas, including Sri Lanka. According to the Daily FT newspaper (published on Saturday, March 14, 2013), Parkway Pantai Assistant Centre sends over 15 in-patients and 30 out-patients to Singapore every month for medical treatment. Singapore hospitals utilize the most innovative technology, managerial skills, and knowledge to maintain and improve their quality of service amidst the changing environment in the global healthcare industry. The benefits of this foreign direct investment (FDI) include the transfer of new technology, managerial skills, and innovation to existing hospitals in Sri Lanka (Goh & Lee, 2014).

Local Development and Economic Impact

Currently, some high-end laboratory tests are outsourced to overseas countries like India due to resource limitations in Sri Lanka. There is an opportunity to conduct these tests locally with the establishment of leading hospitals in Sri Lanka. Additionally, some medical equipment and consumables currently imported from Singapore come with relevant import taxes. The SLSFTA provides tax exemptions, thereby reducing the import cost of such items. The objectives of this agreement are to liberalize and facilitate trade and investment between the parties in accordance with its provisions. Therefore, this FTA will eliminate price controls and tax involvement for existing hospitals (Sri Lanka-Singapore Free Trade Agreement, 2018).

Potential Threats from SLSFTA

Some threats from the SLSFTA to existing hospitals can be identified if Singapore hospitals are established in Sri Lanka. Singapore hospitals are leading in the world due to their brand, innovation, and technological skills. Consequently, there is a threat to existing companies to invest in these areas and compete with these leading hospitals. There are some patients from high-income levels who may shift to Singapore hospitals established in Sri Lanka, thereby reducing the market share of existing hospitals. Additionally, the influx of advanced facilities may pressure local hospitals to upgrade their services, necessitating significant investment in infrastructure and training (Smith, 2020).

Conclusion

In conclusion, the SLSFTA offers both opportunities and challenges for the healthcare sector in Sri Lanka. While it presents a chance for significant advancements in technology, service quality, and international competitiveness, it also poses threats to local hospitals in terms of market share and the need for substantial investment to keep pace with global standards. The strategic implementation of this agreement can lead to a thriving healthcare sector that benefits both nations.

References

• Daily FT. (2013, March 14). Parkway Pantai Assistant Centre sends over patients to Singapore. Daily FT.
• Export Development Board (EDB). (2018). National Export Strategy 2018-2022. Sri Lanka Export Development Board.
• Goh, C., & Lee, K. (2014). Impact of FDI on Healthcare in Asia. Journal of Health Economics.
• Han, H., & Hwang, J. (2015). Medical tourism: Competitiveness and challenges. Journal of Travel & Tourism Marketing.
• Ministry of Health, Singapore. (2022). Healthcare in Singapore. Ministry of Health, Singapore.
• Smith, J. (2020). The impact of international trade agreements on local healthcare markets. International Journal of Healthcare Management.
• Sri Lanka-Singapore Free Trade Agreement. (2018). Government of Sri Lanka.