INTRODUCTION1.1   INTRODUCTIONThis chapter starts with an overview on medicaltourism in Malaysia. Nowadays, policymakers from both developed and developing countrystarts to encourage the growth of economic through medical tourism industry.But, the real relationship between medical tourism and economic growth is stillambiguous. Even though medical tourism can spur the economic growth throughincrease in foreign exchange, tourist arrival and investment but still it canalso lead to negative externalities which can effect the economic growth eitherdirect or indirectly. Without a doubt, relying on medical tourism toeffectively increase economic growth remains as an important research question.

So, a study should be conducted conducting a study on how factors in medical tourism affects theeconomic growth in Malaysia. With the result that will be generated, astrategies can be form to attract more foreign tourist around the globe formedical purpose. This chapter will thoroughly explains background ofstudy, motivation of study, problem statement, objectives of the study,significance of study and organization of study. 1.2 BACKGROUND OF STUDY            What is the definition of medicaltourism? According to Meghan, Wong and Chan (2014) in their writing, medicaltourism can be defined as all activities that are related to travel or hostinga tourists to stay minimum one night at the destination for the purpose ofmaintaining, improving or restoring health through medical intervention. Medicaltourism is not new and has started since the Asian Financial Crisis. During thattime, a number of Indonesian came to Malaysia’s private hospital to seek for reasonableyet high quality of healthcare.

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            According to Burkatt (2007), duringthe seventeeth century, mostly people travelled to spas and hospital in Nile camefrom richer family. In other word we can say that during those time wheregetting on airplane was only for the upper class family, travelling was hardenough especially travelling for medical purpose. Nowadays, travelling acrossthe border can be done at the tip of our finger as in Malaysia, we have AirAsia which offers us the lowest price in flight ticket across the Asean. Plus,travelling for medical purpose are mostly made because of its affordable cost,high quality in medical facilities, its good services and also type ofdestination. According to Hazilah (2012), people from developing country tendto go to US or developed country where they have better equipped medicalfacilities and are more advanced in term of technology.

   However, there are also trend where people from developed countrysuch as US came to developing country to seek for medical purposes. Althoughthey have a tip top facilities and technologies but the high cost had causedmost of them to travel to the other part of the world where they have cheapercost but still high quality of facilities. Hazilah (2012) said that in Britain,the long queue of the waiting list of National Health Service (NHS) for surgeryhas causes the patients to find any other alternative in other country. Shealso said that two regions which is known as benefitted from medical tourism isLatin America and Asia country. Unlike Britain, Malaysia has almost no queuesfor most of its medical treatment (Wonderful Malaysia, 2017). According toPatients Beyond Border (2016), the healthcare has become so expensive andestimated approximately 1400,000 million Americans will travel outside US formedical purpose.            According to Malaysia HealthcareTourism Council, a forecasts has made regarding Malaysia medical tourism marketwhich is expected to grow at a compounding annual growth rate (CAGR) of 30.05%over the next eight years which by the end of 2024 it can reach as much as US$3.

5 billion from US$424.96 million in 2016. Also, based on Transperancy Market Research,governmentactivities and lower cost of medical services compared to the same offered indeveloped countries of North America and Europe is the core factor of foreigncountries to choose Malaysia. Other than that, with the rising influx oftourists arrival from Middle East and North Africa (MENA) and other neighboringcountries and partly due to the economic factors such as tax exemption onrevenue generated from foreign patients and low exchange rate between RM andany other currencies.            (“Medical tourism to generate RM1.3b revenue in 2017”, 2017) reportedthat Malaysia expected to hit RM 1.3 billion in revenues by 2017 which will becontributed from medical tourism alone. It is also reported that Malaysia has beenlisted as the most popular places to go for medical tourism purpose followed bySingapore and Thailand.

Medical tourism first gained his name when Cuba triedto attract more foreign patients in order to gain more foreign exchange duringits crisis in 1989 to 1993. Fortunately, Malaysia has tried the same techniqueduring the Asian Financial Crisis and has successfully rising up from thedeclining GDP.  Thelatest Budget 2018 presentation had announced that government will allocated anamount of RM 30 million in order to spur the growth of Malaysia’s healthcaretravel industry. Plus, this is in line with the National Key Economic Areas(NKEA) where it identified healthcare travel as a set to drive Malaysia as ahigh-income nation by 2020.

Plus, the allocation is for the initiatives topromote Malaysia as the Asian Hub for Fertility Treatment, IVF and Cardiologyas well as the ‘Flagship Hospital Programme’.Basedon the 2018 Budget, many initiatives has been done to promote this medicaltourism industry. First, in conjunction with the Asian Hub for Fertility, IVFand Cardiology, there will be a collaboration with the Department ofImmigration Malaysia to facilitate the entry of medical traveller throughMalaysia Healthcare Traveller Programme (MHTP) by introducing the eVisa(Medical) through online application services. Second, through the ‘FlagshipHospital Programme’ private hospital will be given initiative to increase thequality care and service, patient safety, quality management and serviceexperience to accelerate the growth. It will also help the private hospital tobe internationalized for the tourism purpose.

Thirdly is the double taxdeduction for accreditation expenses to be extended for ambulatory care centreand dental clinics and lastly the exemption of income on value of increasedexport for healthcare services rate to be increased from 50% to 100% forprivate healthcare from YA 2018 to YA 2020.