By Andrew Wee, Research Analyst, Medical Devices - Asia Pacific Healthcare Practice
Highly regulated market environment poses a huge barrier
Indonesia, with a population of more than 220 million, is a medical device market that has a large potential. However, foreign manufacturers of medical devices have always been faced with numerous obstacles and challenges in entering this market. This is despite the fact that Indonesia relies mainly on imported medical devices due to the lack of any established local manufacturer.
Penetrating this huge market for medical device market is difficult due to the wide and extensive geographical boundaries in the country. In addition the highly bureaucratic medical device import and trading regulations have made it more difficult for foreign manufacturers. Indonesia also imposes tariffs of up to 30% on imported medical devices depending on the type, use and cost of these devices.
Indonesia has a very centralized healthcare system, headed by the Ministry of Health (Departemen Kesehatan R.I.). The Ministry of Health purchases most of the medical disposables and hospital equipments for the 900 public hospitals around the country. Due to the highly rigid nature, there is limited budget for most of the hospitals in the country. Recent changes, however, have been encouraging in de-centralizing healthcare services in the country. This will spur the growth of the medical devices market in the country as individual regions collects and plans the healthcare budget on their own.