Promoting Services Trade in ASEAN PAPER 1
SECOND PHASE (SOCIAL SERVICES)

Trade in Health Related and Social Services

FEBRUARY

2020

For inquiries, contact ASEAN-Japan Centre(ASEAN Promotion Centre on Trade, Investment and Tourism)
1F, Shin Onarimon Bldg., 6-17-19, Shimbashi,
Minato-ku, Tokyo 105-0004 Japan
Phone/Fax: +81-3-5402-8002/8003 (Office of the Secretary General)+81-3-5402-8004/8005 (Research and Policy Analysis (RPA) Cluster)+81-3-5402-8116/8005 (Capacity Building (CB) Cluster)+81-3-5402-8006/8007 (Trade and Investment (TI) Cluster)+81-3-5402-8008/8009 (Tourism and Exchange (TE) Cluster)+81-3-5402-8118/8003 (PR)e-mail address: info_rpa@asean.or.jp
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All Rights Reserved.
Second Phase (Social Services)
Paper 1 / February 2020 / Trade in Health Related and Social Services

Promoting Services Trade in ASEAN PAPER 1
SECOND PHASE (SOCIAL SERVICES)

Trade in Health Related and Social Services

FEBRUARY

2020

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

NOTES
The terms country and/or economy as used in this study also refer, as appropriate, to territories orareas; the designations employed and the presentation of the material do not imply the expressionof any opinion whatsoever on the part of the ASEAN-Japan Centre concerning the legal status of any
country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers orboundaries.
The following symbols have been used in the tables:• Two dots (..) indicate that data are not available or are not separately reported.
• A dash (-) indicates that the item is equal to zero or its value is negligible.
• Use of a dash (-) between dates representing years, e.g., 2015–2016, signifies the full period
involved, including the beginning and end years.
Reference to “dollars” ($) means United States dollars, unless otherwise indicated.

List of papers under the project on promoting services trade in ASEAN by the ASEAN-Japan
Centre
The current paper is the first of a 3-paper series of social services under the second phase of
the project on promoting services trade. The other papers under this project are listed below:
First Phase
Paper 1. Trade in Professional Services (February 2017)
Paper 2. Trade in Research & Development Services (February 2017)
Paper 3. Trade in Telecommunication Services (March 2017)
Paper 4. Trade in Computer and Related Services (March 2017)
Paper 5. Trade in Courier Services (January 2018)
Paper 6. Trade in Maritime, Air, Rail and Road Transport Services (February 2018)
Paper 7. Trade in Tourism Services (March 2018)
Second Phase: Social Services
Paper 1. Trade in Health Related and Social Services
Paper 2. Trade in Education Services (forthcoming)
Paper 3. Trade in Environmental Services (forthcoming)

Prepared by Upalat Korwatanasakul (ASEAN-Japan Centre - AJC), Kaliappa Kalirajan (Australian
National University - ANU), Hikari Ishido (Chiba University), and Martha Primanthi (ANU) under
the direction of Masataka Fujita (AJC). The authors wish to thank the staff members of the AJC
and our research assistant, Teah Heng Shue (University of Tokyo), for their great contribution.
The authors would also like to express their sincere appreciation to all ASEAN delegates of theASEAN Services Trade Forum – Health and Social Services for their valuable input and comments.
The manuscript was edited by Adam Majoe and typeset by Laurence Duchemin. Errors andomissions are only those of the authors and should not be attributed to their organizations.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E SABBREVIATIONSACIAASEAN Comprehensive Investment Agreement

AEC

ASEAN Economic Community

AFAS

ASEAN Framework Agreement on Services

AMS

ASEAN Member States

ASEAN

Association of Southeast Asian Nations

ATISA

ASEAN Trade in Services Agreement

CSAP

Consolidated strategic action plan

CPC

Customs Procedure Code

CPTPP

Comprehensive and Progressive Trans Pacific Partnership

EBOPS

Extended balance of payments services

FDI

Foreign direct investment

GATS

General Agreement on Trade and Services

GDP

Gross domestic product

GNI

Gross national income

HDI

Human Development Index

IO

Input-Output

ISIC

International Standard Industrial Classification

MRA

Mutual Recognition Agreement

MSWRR

Ministry of Social Welfare, Relief and ResettlementNGO

Non-governmental organization

OECD

Organisation for Economic Co-operation and Development

Lao PDR

Lao People’s Democratic Republic

PPP

Public–private partnership

R&D

Research and development

TISMOS

Trade in Services data by mode of supply

UHC

Universal health coverage

UNCTAD

United Nations Conference on Trade and Development

UNDP

United Nations Development Programme

UNESCO

United Nations Educational, Scientific and Cultural Organization

WHO

World Health Organization

WTO

World Trade Organization

iii

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CONTENTS
Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Overview of the health related and social services sector. . . . . . . . . . . . . . . . . . . . . 3
III. The ascendancy of trade in health related and social services. . . . . . . . . . . . .  14
1. Mode 1: Supply through cross-border trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

2. Mode 2: Supply through consumption abroad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
3. Mode 3: Supply through commercial presence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4. Mode 4: Supply through movements of natural persons. . . . . . . . . . . . . . . . . . . . . 26
IV. T
 rade agreements and regulations among and in

the ASEAN Member States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

V. Impacts of further liberalization of health related andsocial services on the economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31

VI. P
 olicy recommendations and promotion measures for

trade in health related and social services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1. Challenges in the health related and social services industry in ASEAN . . . . . 33

2. Policy recommendations to promote trade liberalization . . . . . . . . . . . . . . . . . 35
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Annexes
Annex A. Specific commitment tables for health related
and social services under the ASEAN Framework Agreement
on Services 10th Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Annex B. Negative list commitments under the Comprehensive
and Progressive Agreement for Trans-PacificPartnership for health related and social services. . . . . . . . . . . . . . . . . . . . . . 53
Annex C. Theoretical model and statistical analysis on
measuring the impact of further liberalizationon the Human Development Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57v

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1I. INTRODUCTION
Different levels of economic development have led, to some extent, to different levels of humandevelopment across the Association of Southeast Asian Nations (ASEAN) Member States. As oneof the objectives of the ASEAN Economic Community (AEC) Blueprint 2025 is to build “a highly
integrated and cohesive economy”, it can be inferred that there is room for a regional growth strategy
for strengthening cooperation to help the lagging countries to catch up with the leading ones. In
other words, there is a need to focus on strategies at the national and regional levels to facilitate theconvergence of human development across the region.
Human development depends on and determines economic and social development. The productivityof the labour force, which depends on its health status, plays a crucial role in determining overall
productivity. The key ingredients to human development are the provision of easy access to quality
health for all residents in a country. Therefore, policy measures aimed at the smooth functioningof health and social services are of paramount importance for improving and sustaining humandevelopment and, thereby, the performance of the economy.
The importance of sustaining the availability and provision of easy access to quality healthcare
infrastructure for the residents of ASEAN should be emphasized. However, it may not be possible
to implement such strategies satisfactorily in all ASEAN Member States given the shortage of bothhuman and physical capital faced by most of the countries. Furthermore, given the characteristics ofhealth and social services, policymakers might find it difficult to strike a balance between promoting
equitable and affordable access to a set of basic health and social services, and modernizing thehealth and social services sector with recent technologies. Trade liberalization in health and social
services may help to ease such constraints.
While country-specific national policy measures can address many of the technical, financing,and knowledge-capacity constraints through liberalization, policymakers around the world areincreasingly acknowledging that regional cooperation is crucial to complement and augment
national action plans towards achieving regional objectives, such as the AEC Blueprint 2025. Hence,
it is necessary to implement more liberalization measures in healthcare systems at the national
level and, thereby, at the regional level to eliminate the rigidities that restrict those systems fromunleashing their potential contribution towards improving human development.
The General Agreement on Trade and Services (GATS), administered by the World Trade Organization(WTO), lists the following four categories under “health related and social services” (WTO, 1991):
8A Hospital services
8B Other human health services
8C Social services
8D Other
Nevertheless, services that are not listed under 8.A-D but related to health and social services, suchas medical and dental services (under professional services), residential care services for the elderly
and disabled (not listed under GATS but the Extended Balance of Payments Services (EBOPS)),
among others, are also included in this study. Figure 1 gives a comprehensive overview of the healthrelated and social services covered in this study.

EBOPS

Social services without

Non-health related and social services aread
Other personal services include other components as follows:- Services of membership organizations (95)
- Washing, cleaning and dyeing services (971)- Beauty and physical well-being services (972)- Funeral, cremation and undertaking services (973)- Other miscellaneous services (979)- Domestic services (98)

Source: AJC
Notes: GATS: General Agreement on Trade and Services; EBOPS: Extended Balance of Payments Services; and n.e.c.: not elsewhere classified. The numbers in parentheses represent the corresponding
Customs Procedure Codes (CPCs).
a
Health related and social services under the GATSb
Professional services under the GATS
c
Other health related and social services that are not listed under the GATS but the EBOPSd
Non-health related and social services that may be contained in the data for the analysis.

Guidance and counselling services
n.e.c. related to children (9352)
Welfare services without accommodation (9353)
Other social services without accommodation,
n.e.c. (9359)

accommodation for the elderly
Nursing services (93192)
and disabled (934)c
Physiotherapeutic services (93193)
Ambulance services (93194)
Vocational
rehabilitation
Medical laboratory services (93195)
services (9341)
Diagnostic-imaging services (93196)
Blood, sperm and organ bank
Other social services without
services (93197)
accommodation for the elderly
Other human health services
and disabled (9349)
Other social services
n.e.c. (93199 )without accommodation (935)c
Other social services
with accommodation
Child day-care services (9351)(933)

Inpatient services (9311)

GATS 8.A-Da

Medical anddental services (9312)
Childbirth and related services(93191)GATS 1.A.h-j.b

Residential careservices for the elderly
and disabled (932)c
Residential health-care services otherthan by hospitals (9321)
Residential care services for the elderly
and persons with disabilities (9322)

HEALTH RELATED AND SOCIAL SERVICES SPHERE

Figure 1. Overview of health related and social services covered in this study

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3II. OVERVIEW OF THE HEALTH RELATEDAND SOCIAL SERVICES SECTOR
With a combined gross domestic product (GDP) of $3 trillion, ASEAN is the third-largest economy
in Asia and the seventh-largest economic power in the world (table 1). In 2018, ASEAN’s population
reached 650 million people (table 1), making ASEAN the world’s third-largest market. In addition toits economic progress, ASEAN has shown positive trends for social and human development, suchas poverty reduction, a rise in the middle-class population, sharp reductions in the infant mortality
rate, longer life expectancy, an increasing schooling completion rate, and improvements in youth
and adult literacy rates. Moreover, the governments have made strong commitments to universal
healthcare while improving the healthcare investment environment. These factors have driven
greater demand for quality health-related and social services in the region. Despite these favourable
factors, health related and social services in most of the ASEAN Member States (AMS) are still
underdeveloped and inadequate. Therefore, the industry is facing challenges to meet current andfuture demand, from both within and outside the region. Table 1 summarizes the key indicators ofhealth related and social services in ASEAN.
Under national schemes, all AMS aim to have full universal healthcare coverage by 2030. Nonetheless,half of the Member States have achieved less than 70% coverage and need greater efforts toaccomplish the goal (table 1). In terms of regional cooperation, ASEAN promotes both trade andinvestment in health related and social services under the AEC Blueprint 2025. In 2019, the ASEAN
Trade in Services Agreement (ATISA) was concluded to further promote and facilitate intraregional
trade in services, including health related and social services.1 A Consolidated Strategic Action Plan
(CSAP) was formulated to promote regional investment. The plan identifies the key strategies andcorresponding measures, such as the harmonization and standardization of healthcare products andservices, the promotion of investment opportunities, public–private partnerships (PPPs), medical
tourism, and start-ups in healthcare technology (ASEAN Secretariat and United Nations Conference
on Trade and Development (UNCTAD), 2019) (table 2).

1

For more discussion, see Section IV.

16.2

267.7

7

32.4

53.7

106.6

5.6

69.4

95.5

Cambodia

Indonesia

Lao PDR

Malaysia

MyanmarPhilippines

Singapore

Thailand

Viet Nam

2018

7.3

11.9

13.7

5.1

6.7

6.5

4.1

9.27

5.9

4.9

Ageing population(% of population aged
65 and above against
total population)

129

62

362

55

112

76

631

123

222

2 619

2017a

Current healthexpenditure
per capita (USD)

73

75

>=80

58

60

70

48

49

55

>=80

2015

Universal
Health Coverage(UHC) index

8

8

24

13

9

18

5

5.2

2

18

2018a

Physicians(per 10,000 people)

Source: AJC, based on World Bank, World Development Indicator database and World Health Organization, Global Health Observatory Data Repository.
aLatest available year.

0.43

2018

Brunei Darussalam

Year

Country

Population(millions)

Table 1. Key indicators of health related and social services in ASEAN

2018a

14

30

75

2

10

32

10

21

10

66

Nursesand midwives(per 10,000 people)
2015a

26

21

24

10

9

19

15

12

8

27

Hospital beds
(per 10,000 people)

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

1995

2006

2009

2009

ASEAN Framework
Agreement
on Services andSubsequent
Protocols

MRA on Nursing
Services

ASEAN
Comprehensive
Investment
Agreement (ACIA)

MRAs on Medical
and Dental
Practitioners

Relation to healthcare development and investment• Healthcare services (e.g. specialized medical services, dental services,
specialized nursing services, private hospital services, and other human healthservices, including pharmacy services and welfare services for the elderly andhandicapped) are covered under the AFAS and its subsequent protocols.
• As Member States liberalize their commitments under the AFAS (e.g. relaxationof foreign equity ownership restrictions and the elimination of investment
barriers), the investment environment of the region and that of the Member
States is expected to further improve. Mutual Recognition Agreements (MRAs)
also contribute to the improvement of the regulatory environment for healthcare
business and investment in the region (see MRAs at the end of the table).

Subject to investment and regulatory requirements, cooperation in this area helps
healthcare providers, such as hospitals, medical centres, and clinics, invest in (setup a presence, expand, or form a joint venture) or source nursing services.

• The agreement covers manufacturing activities (including pharmaceuticaland medical devices manufacturing). It also involves services incidental to
manufacturing.
• Work under the ACIA relates to liberalization, promotion, facilitation, andcooperation on investment. Work on the elimination of investment barriers is tobe undertaken.

The improved mobility of medical and dental practitioners in ASEAN could more
efficiently facilitate technology transfer, sharing of knowledge and best practices,and exchange of information and training. It would help healthcare providers
move medical and dental specialists or personnel within the region to increase
the efficiency of services.

Objectives and history• Facilitates free ¬flow of intra-ASEAN trade in services
and substantially eliminates restrictions on trade inservices.
• Since 1995, the ASEAN Framework Agreement
on Services (AFAS) has covered 10 packages ofcommitments for further market liberalization and theelimination of barriers to trade in services.
• Under the AFAS, market limitations (e.g. market
access and national treatment) to the three modes ofsupply (cross-border supply, consumption abroad, andcommercial presence) are gradually eliminated.

The objectives of the MRA include the following• Facilitate the mobility of nursing services professionals
within ASEAN• Enhance the exchange of information and expertise on
standards and qualifications• Promote the adoption of best practices for professional
nursing services• Provide opportunities for the capacity-building andtraining of nurses

The ACIA is one of the main economic instruments forrealizing a free and open investment regime. It aims tocreate a liberal, transparent, and competitive investment
environment in ASEAN. It replaces the predecessor
ASEAN Investment Agreement.

The objectives of the MRAs include the following:• Facilitate the mobility of health services professionals
within ASEAN• Enhance the exchange of information and expertise on
standards and qualifications• Promote the adoption of best practices for professional
health services• Provide opportunities for the capacity-building andtraining of health practitioners

Source: AJC, based on ASEAN Secretariat and UNCTAD, ASEAN Investment Report 2019.

Year
signedMajor economic
agreement

Table 2. ASEAN economic agreements and their implications for health related and social services

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Brunei Darussalam: Public healthcare services are either free or heavily subsidized by theGovernment. Brunei Darussalam achieved more than an 80% universal health coverage index (UHC
index) in 2015 (table 1). As of 2017, the total number of health facilities in Brunei Darussalam was
56 facilities, of which seven facilities were hospitals, including five public and two private hospitals(table 3). More than 80% of human resources in the health related and social services sector are
from the public sector. The total number of doctors in the same year was 664, while the total
number of nurses and midwives was 2,907. The density of doctors was approximately 18 doctors per
10,000 population (table 1), which was above the world average (15 doctors per 10,000 population).
Although the ageing population share is still low at 4.9% (table 1), the trend is on the rise. The
12th ASEAN and Japan High Level Officials Meeting on Caring Societies reported that as of 2014,
there was no formal long-term institutional home for the elderly in Brunei Darussalam (Ministryof Health, Labour and Welfare (Japan), 2014). Nevertheless, there have been some government
initiatives regarding the care of the elderly, e.g. the establishment of senior citizen activity centres,
the approval of an action plan emphasizing the rights and protection of the elderly (Borneo Bulletin,
2018a), and the launch of a national study on elderly persons by Universiti Brunei Darussalam(Borneo Bulletin, 2018b).
According to the Master Plan for the Health System and Infrastructure set out by the Ministry of Health,
Brunei Darussalam, the Government of Brunei Darussalam has seven key strategies to implement acomprehensive health system and infrastructure program, namely 1) promoting excellent healthcare
services; 2) supporting health management and healthy lifestyles; 3) ensuring a sustainable healthsystem as well as maintaining universal access; 4) enhancing policies, regulations, and operations
to improve the quality of healthcare; 5) supporting the programme of proactive and transparent
governance; 6) strengthening the mission and capacity as well as upgrading all the government
hospitals and healthcare facilities; and 7) strengthening the network of health centres throughout
the country
Cambodia: The health system is managed by the Ministry of Health under Sub-Decree 67 ANKr.
BK (1997) under four laws: (i) the 1996 Law on the Management of Pharmaceuticals; (ii) the 1997
Law on Abortion; (iii) the 2000 Law on Management of Private Medical, Paramedical, and Medical
Aid Services; and (iv) the 2002 Law on the Prevention and Control of HIV/AIDS (Annear et al., 2015).
Health related and social services are still underdeveloped and inadequate. The UHC index in2015 was low and covered only half of the total population (table 1). There were 1,548 hospitals
in Cambodia in 2016, of which 99% were public (table 3). In 2014, the total number of doctors per
10,000 population was two. The density of doctors is far below that of the world average; therefore,
there is an urgent need to increase the supply of doctors in the country either by increasing thenumber of domestic doctors or importing health related and social services from abroad.
Similar to Brunei Darussalam, the ageing population trend is still low, at 5.9%, but rising (table 1),
and there are no formal long-term care institutions for the elderly. Such services are expected fromindividuals’ extended family networks or local nongovernment organizations (NGOs) (Annear et al.,2015). In 2017, the Government approved the National Ageing Policy 2017-2030 with the long-term
perspective to prepare for the domestic ageing society by 2030. As a result, the first training institutefor elderly care nurses was opened in 2018. After completing the training programme, the nurses
will be sent to work in Japan in the short run but are expected to eventually return home to serve
the domestic market.
The most recent reforms in the health services sector in Cambodia, described in the Third HealthStrategic Plan 2016-2020, are in line with the Second Health Strategic Plan 2008-2015. This thirdplan emphasized addressing critical health system issues, including: 1) improving reproductive
health; 2) reducing maternal, new-born, and child mortality and malnutrition among women andyoung children; 3) reducing morbidity and mortality caused by communicable diseases; 4) reducing

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7morbidity and mortality caused by non-communicable diseases and other public health problems;and 5) making the health system more accountable and responsive to the population’s health needs.
Indonesia: In total, there were 2,898 hospitals in Indonesia in 2019, of which 1,586 hospitals were
public and 1,330 hospitals were private (table 3). In terms of healthcare personnel, there were about
47,289 active doctors in 2018. Nevertheless, due to the country’s large population and its geography
with several islands, there were 5.2 physicians per 10,000 population in 2018 (table 1) and, currently,
the Social Health Insurance index is measured at 96% of the total population. Hence, similar to
Cambodia, there is an urgent need to increase the supply of doctors to ensure quality health-related
and social services for Indonesia’s citizens.
The ageing population comprised 9.27% of the total population, or approximately 24.5 million people in2018 (table 1). Indonesia has a series of national policies to ensure the welfare of the elderly and prepare
for the future increasing ageing population (Sunusi, 2014). In 2016, the Ministry of Health of the Republicof Indonesia established the Ministry of Health Decree No. 25 Yr 2016 on the National Action Plan for
the Elderly 2016-2019. The National Action Plan aims to improve the degree of health of the elderly
to achieve a healthy, independent, active, productive, and efficient elderly population for families andcommunities. As of 2019, 4,835 out of 10,032 health centres provided services to the elderly.
The Government has established three types of policy reform related to healthcare systems.
These reforms focus on three main areas: 1) strengthening promotive and preventative systems;2) strengthening the healthcare system both in primary healthcare and the referral system; and3) strengthening the national social health insurance. The recent reforms regarding financing areconcerned with expanding the healthcare services coverage. In 2014, the National Social Security
Agency targeted 121.6 million people, or half of the total population, under the management of
national healthcare, so-called Badan Penyelenggara Jaminan Sosial. In 2019, the coverage is
expected to reach all residents of Indonesia, approximately 257.5 million people, as members of thehealthcare system.
Lao People’s Democratic Republic (PDR): The health sector in Lao PDR is governed under threeadministrative levels, namely the central level (Ministry of Health), the provincial level (provincial
health offices), and the district level (district health offices). In addition, health services are also
provided at the community level (health centres) to expand the service coverage and help mitigate
the burdens imposed on larger health facilities. Recently, the private health sector has emerged
to provide better healthcare services (Akkhavong et al., 2014). The UHC index is 48%, which is thelowest among the AMS (table 1).
According to the World Health Organization (WHO) (2018), the number of health facilities in 2017 was
2,281 facilities, equipped with 11,070 beds in total (table 3). Compared with the statistics on publichealth facilities and beds by facility in 2010, the improvement in health related and social services
has been very subtle. The number of public health facilities increased by less than 20%, while thenumber of beds rose approximately 33%. With regard to the health workforce, it was reported that
there were 17,666 medical staff employed under the Ministry of Health. Among them, formallytrained medical workers, including village health workers, nurses, midwives, medical assistants,
medical doctors, and specialists, accounted for 12,904 persons. However, the ratio of physicians per
10,000 people was 5, which is less than the world average and similar to other AMS, except Brunei
Darussalam, Malaysia, and Singapore. The situation would have been worse if the private healthsector had not entered the market for health related and social services.
In response to the gradually ageing society in Lao PDR (table 1), the National Committee for the
Elderly was established in 2005. The Government adopted the following legislation for elderly healthand welfare (Vangkonevilay et al., 2011; Khomphonh, 2017): 1) Law on Health Treatment; 2) Law on
Hygiene Education; 3) Law on Social Security; 4) Social Welfare Strategy 2011-2020; 5) Decree on

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Social Welfare; 6) Community Bad Health Insurance; 7) Decree (No 156/PM) on the Approval and
Declaration of Application of the National Policy towards the Elderly in the Lao PDR; and 8) Decree
on Promotion of Establishment on Social Organization.
There are two major reforms related to the healthcare system concerning health regulation andthe healthcare system (WHO, 2018). First, reforms in health regulations concerning the servicerelated requirements are based on the principle of “Five Good, One Satisfaction”, which is expected
to increase patients’ satisfaction and also the development of an essential service package providing
guidance about the provision of a minimum set of priority services in public health and clinicalcentres. Second, reforms in the healthcare system are undertaken with the following objectives:
the implementation of a health management information system; transformation toward improved
population-based data; utilization of data for planning and reporting in decision-making policy
activities; and the development of patient-centred delivery models emphasizing the importance of
responding to the specific needs of individuals. By 2025, the Government aims to achieve universal
health coverage.
Malaysia: In 2018, there were 364 hospitals in Malaysia, of which 154 hospitals, or 42%, belonged
to the public sector (table 3). The public hospitals are equipped with 46,611 beds, whereas there
are 15,957 beds in the private hospitals. Although the number of public hospitals is less than thatof private hospitals, public hospitals can accommodate three times more inpatients. Apart from
hospitals, the high number of health/medical clinics can help mitigate the burden on large hospitals
in accommodating patients with minor diseases or symptoms. Regarding health personnel, thetotal number of doctors and nurses is 61,158 persons and 106,373 persons, respectively, of whichapproximately 76% and 67%, respectively, belong to the public sector. The density of doctors isapproximately 18 doctors per 10,000 population, which is above the world average.
In terms of elderly care, the Government has been placing its efforts in promoting the welfare of
the elderly by passing the Private Aged Healthcare Facilities Act and the National Health Policy for
Older Persons. Throughout Malaysia, there are 10 public nursing homes and 21 private ones. While
the private nursing homes are established under the Private Health Facilities and Services Act 1998,
there are a total of 1,853 residential and daycare centres operated under the Care Centres Act 1993.
Healthcare was incorporated in the National Key Economic Areas (2010-2020). The government
has established two types of policy reforms related to healthcare systems (Sebastian et al, 2016),
namely reforms in the healthcare system and reforms in healthcare financing under the “One Care”
concept. Four strategies have been implemented to ensure access to high-quality healthcare.
These strategies include the promotion of a healthy lifestyle by establishing a complete healthcare
system and recreational infrastructure; promoting health awareness and healthy lifestyle activities;
empowering the community to plan or conduct individual wellness programmes by taking
responsibility for health; and the improvement of the efficiency and effectiveness of the overall
delivery system in healthcare. On the other hand, the One Care concept is a “restructured national
health system that is responsive and provides the choice of quality healthcare, ensuring universal
coverage for healthcare needs of the population based on solidarity and equity”.
Myanmar: Myanmar aims to achieve UHC by 2030, which is outlined in the National Health Policy
1993 and the National Health Plans (2011-2016) with specific action plans (Myint, 2015). The
situation of UHC in Myanmar is, on average, better than many of the AMS. The UHC index showed
60% coverage in 2015 (table 1). There were 1,115 hospitals equipped with 56,748 beds and 2,199
health centres in 2016 (table 3). In terms of healthcare personnel, 31,542 doctors and 50,967 nurses
are in service. The density of doctors in Myanmar (9 physicians per 10,000 population) is lower thanthat of the world average (15 physicians per 1,000 population). The liberalization of health related
and social services trade would help Myanmar increase its supply of health facilities as well as
healthcare personnel and, in turn, achieve the targeted UHC by 2030.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

9Compared with other AMS, especially those with a similar stage of economic development, thepercentage of the population aged 65 and above to the total population is moderately higher. In 2018,
6.7% of the population was considered as the ageing population. To accommodate future demand in
this area, elderly care services are jointly managed and supported by the Ministry of Health, Ministryof Social Welfare, Relief and Resettlement (MSWRR), and NGOs, such as the Myanmar Maternaland Child Welfare Association. The Ministry of Social Welfare, Relief and Resettlement has been
implementing an elderly care scheme since 1992 while enacting the Older People Law from 2016. By
2013, 161 townships provided specific care for the elderly in station hospitals or rural health centres(Ministry of Health (Myanmar), 2014). Furthermore, the Government provided financial and technicalassistance to the “Homes for the Aged” recognized by the MSWRR. Other important elderly careinitiatives include homes for the aged, the Republic of Korea-ASEAN Home Care Program, Older
People Self-help Groups, and daycare centres (Ministry of Health, Labour and Welfare (Japan), 2013;
Aung, 2012). According to Frontier Myanmar (2017), there are currently 85 homes for the aged run
by voluntary organizations that can accommodate more than 3,000 people. However, it seems the
supply of services in this area has not met the domestic demand.
Under the Myanmar National Health Plan (2017-2021), the Government aims to achieve UHC by
2030 and provide a sufficient supply of essential packages of healthcare to their citizens by 2020.
The areas of health sector reforms in Myanmar include: 1) health policy and law, 2) health as wellas traditional medicine promotion, 3) health service provision, 4) development of human resources
for health, 5) development of research in health areas, 6) development of international collaboration,7) improvement in the roles of cooperatives, joint ventures, the private sector, and NGOs in healthareas, and 8) development of partnerships for health systems (European Chamber of Commerce in
Myanmar, 2017).
The Philippines: The Philippines’ health sector had 1,224 hospitals, 2,587 city/rural health centres
and 20,216 village health stations in 2017 (table 3): 64% of these hospitals, on average, were
equipped with 41 beds, while only 10% were equipped with an average capacity of 318 beds (Dayrit
et al., 2018). The health facilities are distributed unevenly across regions/islands. In terms of humanresources for health, there are 40,775 doctors and 90,308 nurses throughout the country. Among
AMS, the Philippines performs well in terms of the density of doctors, only next to Singapore andBrunei Darussalam. The density of doctors is approximately 13 doctors per 10,000 population, which
is close to the world average (15 doctors) (table 1). Nevertheless, the UHC index is 58% (table 1).
In other words, doctors are concentrated in certain parts of the country, while almost half of the
population does not have access to basic health related and social services.
The Philippines still also lags in terms of elderly care and long-term care in general. In 2018,the ageing population accounted for 5.1% of the population, which is still moderate (table 1). The
situation of long-term care is, however, serious since there are no public facilities for long-termcare to accommodate the current and future demand (Dayrit et al., 2018). As a result, families are
expected to take care of their own elderly, disabled, and chronically sick persons.
The analysis of recent health reform strategies (2010–2016) focuses on three goals of Kalusugan
Pangkalahatan or UHC and along three areas of reform, namely service delivery, health financing,and governance. The reform in service delivery deals with a wide range of activities, e.g. remodelling
Government facilities through the Health Facilities Enhancement Program by upgrading the capacityof public health facilities; and establishing PPPs to support the immediate repair, rehabilitation,and construction of selected priority health facilities. In terms of health financing, the reform isaimed at improving the delivery ratios by expanding the enrolment of the poor in the National Health
Insurance Program; promoting quality outpatient and inpatient services; increasing the support
value of social health insurance by upgrading the information technology to facilitate faster claims;
and using the evidence to guide PhilHealth’s benefit development processes for targeted services

10

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

to a prioritized population. Some strategies in terms of governance reforms are mobilizing morefiscal and health insurance resources for health service; improving allocative efficiency in thehealthcare system; transferring the authority for strategic purchasing and provider payment system
improvements towards Philhealth; and improving the quality of management and governance inhealthcare facilities. In 2019, the new UHC bill enrolled all citizens in the National Health Insurance
Programme and encouraged more reforms in the health system.
Singapore: There are 28 hospitals in Singapore, of which about half belong to the public sector (table 3).
Despite the small number of hospitals, there are more than 2,000 clinics and health services centres
offering primary care. Regarding health personnel, in 2018, there were about 13,800 registereddoctors and 42,100 registered nurses/midwives, of which more than 60% each belonged to the
public sector. In 2018, the density of doctors per 10,000 population was 24 doctors, far above theworld average (15 doctors).
Like other developed economies, Singapore is facing the issue of an ageing society where 13.7%(2018) of its population is aged over 64 years old (table 1). There are 72 nursing homes and 123 centrebased care facilities. The government has also launched initiatives such as the Pioneer Generation
Package, Enhancement for Active Seniors, the Silver Support Scheme, among others, to support theelderly, especially in terms of financial support or subsidies (Government of Singapore, 2016).
Under its Beyond Healthcare 2020 plan, Singapore has launched several initiatives to enhance thedelivery of healthcare services in Singapore. These include the reorganization of six regional healthsystems into three integrated healthcare clusters to better optimize resources and capabilities, andprovide more comprehensive and patient-centred care to meet Singaporeans’ evolving healthcare
needs.2 The integrated clusters will offer a comprehensive suite of healthcare services, including
acute and community hospitals, primary care, and community care.
In addition, Singapore has also implemented reforms in its health insurance scheme. MediShield
Life replaced MediShield from 1 November 2015. MediShield Life is a basic health insurance planthat protects all Singaporeans and permanent residents against large hospital bills as well as
selected costly outpatient treatments, such as dialysis and chemotherapy for cancer. The plan isbasic because it is sized for subsidized treatment in public hospitals. All Singaporeans are coveredby the MediShield Life for life, regardless of age or health condition.
Thailand: In 2007, the National Health Act established the National Health Commission Officewith specific missions to improve the national health system of Thailand. In total, there were
988 hospitals around Thailand in 2017, of which 641 hospitals were public and 347 hospitals
were private (table 3). However, the large number of public and private primary care facilities(13,703 public facilities and 24,809 private facilities) can help deliver health related and social
services to meet the domestic demand. In terms of healthcare personnel, there are approximately
36,938 doctors and 165,541 nurses in Thailand. The density of doctors is approximately 8 doctors
per 10,000 population, which is below the world average (15 doctors). This suggests that Thailand
is facing a scarcity of doctors. Despite the scarcity, the government has been promoting Thailand to
become a regional hub of medical services in Asia. The challenge for the government, therefore, isto balance the gains from trade in health related and social services with the health benefits of its
citizens. This is to prevent problems of access and equity of the services, especially for poor people.
However, Thailand performs well in terms of UHC. In 2015, the UHC index is 75% coverage, behind
only Brunei Darussalam and Singapore (table 1).

2

https://www.moh.gov.sg/news-highlights/details/reorganisation-of-healthcare-system-into-three-integratedclusters-to-better-meet-future-healthcare-needs

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

11Regarding the ageing population, Thailand had reached the status of an aged society in 2005
(Foundation of Thai Gerontology Research and Development Institute, 2017). Currently, 11.9% of
the population is aged above 64 years old, which is the highest among the AMS (table 1). Under its
chairmanship of the ASEAN Summit and its related summits in 2019, Thailand took the initiative toestablish the ASEAN Centre for Active Ageing and Innovation in Bangkok to serve as a knowledge
centre to provide capacity building and to conduct research on active ageing. The ministry primarily
in charge of elderly welfare is the Ministry of Social Development and Human Security. As of 2015,
there are 12 Social Welfare Development Centers for Older Persons that provide subsidized housing,and education and training for the elderly. Due to the increasing number of elderly, goods andservices, such as planned communities for senior citizens, home-based care services, geriatricclinics, among others, have recently been offered in the market. Regardless of all the efforts fromboth the public and private sectors, the challenges remain. The supply of health related and social
services for the elderly is still insufficient, while the existing goods and services are at high prices.
Liberalization of services helps increase the competition in the market and, in turn, leads to lower
prices and higher volume and a variety of services.
Some recent reforms, such as the National Strategic Plan for Public Health (2017-2036) and e-healthstrategy (2017-2026) (Thailand Board of Investment, 2018) cover 1) supplying medicine and medical
devices; 2) creating a high standard quality of healthcare; and 3) the development of tomorrow’s
world-class medical hub system. Thailand’s hospitals have worked to meet healthcare accreditation
standards to ensure that residents and visitors continue to get access to premium medical care.
These reforms aim to provide unprecedented business opportunities to healthcare visionaries.
Viet Nam: Healthcare facilities are primarily governed by both the Ministry of Health and provincial
departments of health (General Statistics Office (Viet Nam), 2016). In total, there were 1,085 hospitals
across Viet Nam in 2017, of which 86 were from the public sector (table 3). Almost 12,000 public andprivate facilities offer primary care services. Regarding healthcare personnel, 74,400 doctors and107,600 nurses are in service. The density of doctors in Viet Nam (8 doctors per 10,000 population)is lower than that of the world average (1.5 doctors per 1,000 population) (table 1). The UHC index
is as high as 73% coverage. Similar to other AMS, to increase the supply of health facilities as wellas healthcare personnel, further liberalization of health related and social services trade would be
required.
Viet Nam has a high proportion of its population aged 65 and above. The proportion accounted for
7.3% of the population in 2018, which is only lower than that of Thailand (11.9%) and Singapore (11.5%)(table 1). However, the number of nursing homes and facilities for elderly care or “social protection
establishments” is quite low. In 2015, there were 153 social protection establishments, of which
36% were public, 36% were non-profit organizations, and 27% were private enterprises (Ministry of
Health (Viet Nam), 2016). The public social establishments can accommodate approximately 2,000
persons (Viet Nam News, 2017), whereas the other forms of establishments can help absorb thedemand to a much lesser extent. With the rising number of elderly, Viet Nam is gradually facing the
new challenge of a nursing home supply shortage. However, the demand is still growing subtly as
the idea of nursing homes is new to Vietnamese people, who tend to grow up in extended families.
A recent reform implemented in healthcare services was specified in Viet Nam’s Five-Year SocioEconomic Development Plan (2016-2020). This reform involves reforming the contribution of healthinsurance and the coverage rate of health insurance (Mary Brown Legal, 2015). The Government aims
to increase the coverage to be above 80% of the population. Furthermore, the density of doctors, thetotal number per 10,000 population, is to be raised to 9–10 doctors, while the number of patient bedsof 26.5 per 10,000 people is to be achieved by 2020 (ASEAN Secretariat and UNCTAD, 2019).

12

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Table 3. Number of health facilities and healthcare personnel in ASEAN Member States
Country

Health facilities

Brunei Darussalam(2017)a

PublicPrivateTotal

Hospitals

4

2

6

Medical clinics and health services centres

16

34

50

Dental services facilities

75

5

80

1 537

11

1 548

Medical clinics and health services centres

..

3 683

3 683

Dental services facilities

..

41

41

Hospitals

1 586

1 330

2 898

Medical clinics and health services centres

9 993

8 841

18 834

0

2 104

2 104

1 253

1 028

2 281

Medical clinics and health services centres

..

..

..

Dental services facilities

..

..

..

Hospitals

154

210

364

Medical clinics and health services centres

3 239

8 364

11 603

Dental services facilities

Hospitals
Cambodia (2016)bIndonesia (2019)c

Dental services facilities
Hospitals
Lao PDR (2017)d

Malaysia (2018)eMyanmar (2016)f

2 324

2 311

4 635

Hospitals

..

..

1 115

Medical clinics and health services centres

..

..

2 199

Dental services facilities

..

..

..

434

790

1224

22 803..

22 803

Dental services facilities

..

..

..

Hospitals

15

13

28

Medical clinics and health services centres(Primary care facilities)

20

2 222

2 242

Dental services facilities

245

876

1 121

Hospitals

641

347

988

13 70324 80938 512..

..

..

Hospitals
Philippines (2017)g

Singapore (2018)hThailand (2017)i

Medical clinics and health services centres

Medical clinics and health services centres
Dental services facilities
Hospitals

Viet Nam (2017)j

Medical clinics and health services centres
Dental services facilities

936*

149*

1 085*

11 120710

11 830..

..

..

Source: AJC, based on a) Ministry of Health (Brunei Darussalam); b) Ministry of Health (Cambodia); c) Ministry of Health (Indonesia);d) WHO (2018); e) Ministry of Health (Malaysia) and Department of Social Welfare (Malaysia); f) Ministry of Health (Myanmar);g) Dayrit et al. (2018); h) Ministry of Health (Singapore); i) Ministry of Health (Thailand); j) General Statistics Office (Viet Nam).
* indicates AJC's estimation; years indicated in parentheses are the latest available years.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E SCountry

Healthcare personnel

Brunei Darussalam(2017)a

Cambodia (2016)bIndonesia (2019)c

Lao PDR (2017)d

Malaysia (2018)eMyanmar (2016)f

Philippines (2017)

Singapore (2018)hThailand (2017)iViet Nam (2017)j

PublicPrivate

Total

Doctors

566

98

664

Nurses/Midwives

2 488

419

2 907

Dentists

93

12

105

Doctors

..

..

264*

Nurses/Midwives..

..

14 511*

Dentists

..

..

..

Doctors

33 10214 18747 289Nurses/Midwives

455 270

80 109535 459

Dentists

9 942

3 088

13 030Doctors..

..

3 320*

Nurses/Midwives..

..

6 507*

Dentists

..

..

..

Doctors

46 50914 64961 158Nurses/Midwives

71 49934 874106 373

Dentists

6 455

3 244

9 699

Doctors

13 09918 44331 542..

..

50 967

Dentists

782

2 437

3 219

Doctors

20 21420 56140 775

Nurses/Midwives

54 94335 36590 308Dentists

..

..

..

Doctors

8 819

4 225

13 044

Nurses/Midwives

25 636

10 71136 347

Dentists

525

1 768

2 293

Doctors

29 809*7 129*

36 938*Nurses/Midwives

142 034*

23 507*165 541*

Dentists

7 226*

494*

7 720*

Doctors..

..

74 400

Nurses/Midwives..

..

136 900

Dentists

..

..

..

Nurses/Midwives

g

13

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

III. THE ASCENDANCY OF TRADE IN HEALTHRELATED AND SOCIAL SERVICES
In 2017, the total services supply to foreign markets from ASEAN (exports) was $581 billion, while
the total receipts of services from abroad (imports) were $637 billion (table 4). For both imports
and exports, health related and social services accounted for approximately 0.2%–0.3% of thetotals. Health related and social services are provided through four modes of trade in services,namely cross-border trade (Mode 1), consumption abroad (Mode 2), commercial presence(Mode 3), and the movement of natural persons (Mode 4). Table 5 provides typical health related
services by mode of supply.
In terms of the health related and social services exports, the largest services provision is throughMode 2, accounting for $1,196 million or 71% (table 4), whereas the supply of services is thesmallest in Mode 3, which occupies only $26 million, or 2%. On the other hand, the imports givea contrasting picture. The receipts of health related and social services are the most substantial
in Mode 3 at approximately $515 million (43%), while Mode 4 demonstrates a very limited share($64 million or 5%).

Table 4. Estimated value and share of health and social services supply in ASEAN, by mode of supply, 2017
(Millions of dollars and per cent)Receipts from the world (imports)
Health and social
services
Mode of Supply

Supply to the world (exports)

Total
services

Health and social
services

Total
services

Value

Share

Value

Share

Value

Share

Value

Share

Mode 1

222

18

260 689

41

360

21

232 353

40

Mode 2399

33

98 711

15

1 196

71

126 920

22

Mode 3515

43

253 28540

262

199 466

34

Mode 464

5

24 685496

622 307

4

Total

1 200

100

637 370

100

1 678

100

581 046

100

Source: AJC, based on data from World Trade Organization (Trade in Services data by mode of supply (TISMOS)) and UNCTADStat.

Tele-medicine, including diagnostics, radiology• “Medical tourism”, i.e. voluntary trip toreceive medical treatment abroad• Medically-assisted residence for retirees• Expatriates seeking care in country ofresidence• Emergency cases (e.g., accident whenabroad)Foreign participation or ownership of hospital/
clinic or medical facilities (e.g., capital
investments, technology tie-ups, collaborative
ventures)

Movement of doctors and health personnel forthe purpose of commercial medical practiceMode 1:
Cross-border supply

Mode 2:
Consumption abroad

Mode 3:
Commercial presence

Mode 4:Presence of natural persons

Source: Chanda, 2017.

Trade in health services

Mode

Table 5. Trade in health related services by mode of supply

Movement of doctors and health personnel forother purposes (e.g., education or training)• Foreign-sponsored education or training
centres• Foreign-sponsored medical researchfacilities• All activities associated with health
tourism (e.g., transport, hotel, restaurant,
paramedical, local purchases, etc.)• Local medical education and training of
foreign nationals• Distance medical education and training• Medical transcription, back office• Medical research tools and databases• Medical insurance

Trade in ancillary services• Healthcare equipment• Drugs• Medical waste• Prosthesis

Trade in goods associated with healthservices

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S
15

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

1. Mode 1: Supply through cross-border trade
Trade in Mode 1 of health related and social services seems underused in most of the AMS possibly
due to underinvestment in technology and research and development (R&D) and low degree ofliberalization of such services in the region. However, there have been efforts from AMS to boost thetrade volume during the past decade (see box 1).

(a) Exports
Exports of health related and social services in Mode 1 have been growing over time (table 6). The
recent exports value amounts to $360 million, double that of 2011. Singapore and the Philippines
have been the largest contributors to ASEAN exports, which, in 2017, accounted for $288 million(80% of total exports) and $46 million (13%), respectively. The amount of exports from Brunei
Darussalam, Cambodia, and Lao PDR has been negligible, while other member states’ exports havebeen moderate.

(b) Imports
Although the volume of imported health related and social services is smaller than that of theexports, and some fluctuations can be observed, the AMS have been gradually increasing theirimports of such services in the past decade (table 6), except Lao PDR and Myanmar. Similar toexports, Singapore and the Philippines have been the largest importers among AMS. In 2017, theirimports comprised 52% ($116 million) and 41% ($92 million), respectively.

Table 6. Trade in Mode 1 of health related and social services, 2005-2018(Millions of dollars)
Annualaverage2005-2010

Country

2011

2012

2013

2014

2015

2016

2017

2018

0.001

..

Exports
Brunei
Darussalam

0

0

0

0

0

0

0

Cambodia

0.19

0.21

0.48

0.20

0.47

0.04

0.07

0.1

..

Indonesia

2.7

5.7

7.6

6.8

5.4

4.0

3.2

4.8

..

Lao PDR

0

0

0

0

0

0

0

0

..

Malaysia

9.7

1.9

2.0

2.4

3.4

4.6

4.4

5.6

..

Myanmar000.000001

0

3.9

12

11

3.7

..

Philippines

2.8

9.4

11

14

33

36

36

46

..

Singapore

36

147

178

157

205

254

262

288

304

11

9.4

8.8

7.0

6.6

6.9

7.8

..

Thailand

10

Viet Nam

2.2

1.8

3.3

3.4

7.8

5.9

3.8

4.3

..

ASEAN total

64

177

212

193

266

323

327

360

..
…/

Table 6. Trade in Mode 1 of health related and social services, 2005-2018(Millions of dollars) (Concluded)
AnnualPhilippines

2.8

9.4

11

14

33

36

36

46

..

Singapore

36

147

178

157

205

254

262

288

304

Thailand

10

11

9.4

8.8

7.0

6.6

6.9

7.8

..

Viet Nam

2.2

1.8

3.3

3.4

7.8

5.9

3.8

4.3

..

ASEAN total
64
177
212
193
266
323
PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

327

360

..

17

…/

Table 6. Trade in Mode 1 of health related and social services, 2005-2018(Millions of dollars) (Concluded)
Annualaverage2005-20102011

Brunei
Darussalam

0.003

0.035

Cambodia

0.9

Indonesia

3.1

Country

2012

2013

2014

2015

2016

2017

2018

0.056

0.047

0.064

0.002

0.087

0.196

..

1.6

1.1

0.7

0.9

0.3

0.4

0.5

..

5.0

6.6

6.3

5.7

1.6

1.2

1.3

..

Imports

Lao PDR

0

0

0

0

0

0

0

0

..

Malaysia

1.8

0.03

1.1

0.01

1.1

2.2

1.4

2.3

..

Myanmar

0

0

0

0

0

0

0

0

..

Philippines

7.7

15

10

16

28

121

57

92

..

Singapore

14

54

66

82

98

129

122

116

122

Thailand

2.0

1.5

1.7

1.5

1.4

2.1

2.2

2.3

..

Viet Nam

5.5

5.6

4.2

10

14

11

8.1

7.2

..

ASEAN total

35

83

91

116

149

267

193

222

..

Source: AJC, based on data from World Trade Organization (Trade in Services data by Mode of Supply (TISMOS)) and UNCTADStat.
Note: The numbers in italic represent the data from a country’s balance of payments complied by UNCTADStat.

Box 1. Growing tele-health and telemedicine in ASEAN
In terms of the number of start-ups, tele-health and telemedicine (Mode 1) account for the highest
number among the top 50 most-funded medical technology start-ups in ASEAN (figure B1.1).
This, therefore, shows the growing trend of Mode 1 in the region. These start-ups accumulated
approximately $1 billion in venture capital funding during 2017–2019. However, most of the startups and the funds are concentrated in Singapore, 39 out of 50 firms with 88% of all funds.

Box figure B1.1. Top 50 most-funded medical technology start-ups in ASEAN,
by specialization, 2019 (Number of companies)

Tele-health/telemedicine

20

Medicals devices/hardware

11

Heatlh software/solutions

9

Biotechnology
Consumer health portal

82

Source: AJC, based on ASEAN Secretariat and UNCTAD, ASEAN Investment Report 2019

18

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

2. Mode 2: Supply through consumption abroad
Mode 2 has a large presence in ASEAN both in terms of exports and imports as health services, suchas medical tourism, play a significant role in inducing the growth in such services trade. The great
ambition of ASEAN to become an Asian medical hub helps promote inter and intra-regional trade in
Mode 2 of health related and social services (see box 2).

(a) Exports
Overall, the AMS have been increasing their exports of health related and social services in Mode
2 (table 7). The export volume in 2017 ($958 million) was more than double that of the past decade($376 million). This has been largely due to the governments’ continuous efforts to promote a
regional medical hub. Thailand, Malaysia, and Singapore are the leading exporting countries in thisarea. Their exports account for $589 million, $295 million, and $133 million, respectively, which
occupy more than two-thirds of the total export market. Under the regional medical hub scheme,

Table 7. Trade in Mode 2 of health related and social services, 2005–2018 (Millions of dollars)Country

Annualaverage2005-2010

2011

2012

2013

2014

2015

2016

2017

2018

0.60

0.58

0.59

0.41

0.21

0.37

0.44

0.67

..

0
6.1
0
34
1.1
8.7
67
232
27
376

0
8.4
0
167
4.2
23
81
289
43
617

0
8.7
0
181
7.2
23
134
389
55
798

0
9.4
0
219
13
25
143
389
57
857

0
11
0
228
21
28
131
397
71
887

0
11
0
235
31
36
110
467
67
958

0
12
0
271
29
44
125
533
66
1 081

0
14
0
295
24
69
133
589
72
1 196

..
..
..
..
..
196
..
..
..
..

2.2

3.3

4.8

5.1

3.5

3.9

2.8

3.0

..

0
0.6
0
21
13
9
29
8.8
34
117

0
0.7
0
40
23
8
135
9.6
64
284

0
0.8
0
27
16
21
113
9.9
73
266

0
0.9
0
19
11
19
123
21
80
279

0
0.9
0
22
13
37
209
17
68
372

0
0.8
0
19
12
38
214
9.7
85
382

0.001
0.9
0
17
11
54
174
7.1
76
342

0.001
1.0
0
24
17
66
178
13
97
399

..
..
..
..
..
71
..
..
..
..

Exports
Brunei
Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
MyanmarPhilippines
Singapore
Thailand
Viet Nam
ASEAN total

Imports
Brunei
Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
MyanmarPhilippines
Singapore
Thailand
Viet Nam
ASEAN total

Source: AJC, based on data from World Trade Organization (Trade in Services data by Mode of Supply (TISMOS)) and UNCTADStat.
Note: The numbers in italic represents the data from a country’s balance of payments complied by UNCTADStat.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

19

medical tourism and medically assisted residence for retirees brought about considerable growthfor exports under Mode 2.

(b) Imports
Under Mode 2, ASEAN imported health related and social services with a value of $399 million in 2017.
The volume of imports was particularly high for Singapore, Viet Nam, and the Philippines. Among theAMS, Singapore is the largest importer, and its imports accounted for $178 million or 45% of ASEAN’s
total imports under this category. As domestic health related and social services impose high costs
on customers in Singapore, it is less expensive to travel to receive medical services in neighbouring
countries, such as Malaysia and Thailand, where customers can get a similar quality of service withcheaper prices. In contrast, customers from countries such as the Philippines and Viet Nam havedifferent motivations to import the services under Mode 2. One of the motivations is to gain access tothe services that are not available in those countries. These services are services that require higher
technology and advanced knowledge. Moreover, the available services are relatively less developed
compared to those of Malaysia or Thailand. Therefore, customers, especially from the expanding
upper-middle-income class, are seeking services with better quality but affordable prices. The same
situation can also be observed for other neighbouring countries, e.g., Cambodia and Lao PDR, where
customers travel to receive medical treatment in countries with better service quality. However, thesetrends are not reflected in the data (low volume of imports) as the customers from those countries areconcentrated in the high-income class, which constitutes a small proportion of society.

Box 2. Medical tourism in ASEAN
ASEAN is one of the most attractive destinations for medical tourism owing to its affordable
and high-quality private healthcare facilities. Malaysia, Singapore, and Thailand have been
competing to become a hub of medical tourism in the region. Even though the number of
medical tourists to Singapore was stagnant or even declined during 2011–2017, the annual
growth rates of medical tourism in Malaysia and Thailand are 9% and 30%, respectively(table B2.1). In 2017, Malaysia attracted approximately 1,050,000 medical tourists, while thenumber of medical tourists to Thailand doubled that of Malaysia (2,400,000 medical tourists).
The downturn of Singapore’s medical tourism mainly came from the rising costs of theservices coupled with the quality improvement in health and social services in other ASEAN
countries. Currently, the Philippines and Viet Nam are also making efforts to promote their
medical tourism and attract tourists from their neighbouring countries.

Box table B2.1. Medical tourists in ASEAN Member States, 2011 and 2017 (Number)Country

2014

2015

Malaysia

643 000

1 050 000

Philippines..

80 000 - 250 000

Singapore

540 000

370 000 - 550 000*

Thailand

500 000

2 400 000

Viet Nam..

80 000Source: AJC, based on Department of Health (Philippines) and ASEAN Secretariat and UNCTAD, ASEAN Investment
Report 2019.
*
Based on 2016 estimate.

20

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

3. Mode 3: Supply through commercial presence
Different from other modes, the AMS all record deficits in health related and social services trade,with receipts being greater than the volume supplied to the world. In other words, the presence of
foreign companies in ASEAN is significantly larger than ASEAN’s commercial presence abroad (seebox 3 and box 4). Policies supporting domestic investors’ capacities to penetrate foreign markets
and policies liberalizing domestic markets are required if ASEAN countries aim to raise the volume
of both exports and imports of health related and social services in Mode 3.3(a) Exports (ASEAN presence abroad)
Generally, the scale and coverage of health related and social services provided by ASEAN investors
in foreign markets are fairly small. Nearly 100% of ASEAN’s total exports or services supplied inMode 3 comes solely from Singapore ($26 million) (table 8). The increase in the export volume has
been very small or negligible during the past decade. ASEAN’s presence abroad seems not to be
the priority investment area for AMS, especially Thailand and Malaysia. Both countries have beenplacing their efforts in promoting a regional medical hub in their own countries, rather than investing
abroad, whereas the rest of the AMS are still struggling to develop their own domestic health related
and social services.

(b) Imports (Foreign presence in ASEAN)
Singapore, Viet Nam, and the Philippines host a large number of foreign affiliates that supply healthrelated and social services, and the import volume has been increasing over time (table 8). In Mode3, Singapore accounts for almost half of ASEAN’s total imports, or $229 million, while the import
volumes of Viet Nam and the Philippines were $145 million and $119 million in 2017, respectively.
Although Singapore’s domestic market of health related and social services is very competitive,
high technology and R&D networks, domestic demand (especially of expats), and the locational
advantage enticing foreign customers have made the market highly attractive to both domestic andforeign investors, such as hospitals and medical laboratories. On the other hand, Viet Nam and thePhilippines offer different market potentials. As quality health related and social services are notoffered by domestic health facilities, there is a high demand for quality services, provided by foreigncompanies, from the expanding upper middle-income class and the large population.
In contrast, foreign investors are facing difficulties in investing in countries such as Malaysia andThailand, where the markets already face high competition among domestic investors. They also findthat the markets in the rest of the countries are not attractive due to the small domestic demand.
Therefore, the small volume of imports in Mode 3 or the low foreign presence can be observed inmost of the AMS. These countries may consider liberalization of the services in this area to enhancecompetition and expand the domestic markets. Foreign competition and technology from abroad
help the domestic markets to achieve a higher quality of services and, in turn, benefit the citizens
in the countries.

3

See ASEAN Investment Report 2019 (ASEAN Secretariat and UNCTAD, 2019).

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

21Table 8. Trade in Mode 3 of health related and social services, 2005–2017 (Millions of dollars)Country

Annualaverage2005-2010

2011

2012

2013

2014

2015

2016

2017

0

0

0

0

0

0

0

Exports
Brunei Darussalam0Cambodia

0

0

0

0

0

0

0

0

Indonesia

0

0

0.002

0.004

0.004

0.004

0.007

0.01

Lao PDR

0

0

0

0

0

0

0

0

Malaysia

0.0003

0.004

0.007

0.015

0.024

0.021

0.029

0.026

Myanmar

0

0

0

0

0

0

0

0

Philippines

0.001

0.005

0.007

0.011

0.019

0.026

0.038

0.045

Singapore

1.1

5.6

8.1

12

16

18

24

26

Thailand

0.00060.0063

0.010

0.015

0.018

0.024

0.033

0.039

Viet Nam

0

0

0

0

0

0

0

0.001

ASEAN total

1.05

5.61

8.13

12

16

18

24

26

Brunei
Darussalam

0.1

1.4

1.2

0.8

1.9

2.0

1.5

2.1

Cambodia

0.1

0.3

0.2

0.2

0.5

0.6

0.7

1.0

Indonesia

0.4

2.2

1.9

1.4

2.9

3.8

3.9

5.8

Imports

Lao PDR

0

0

0

0

0

0

0

0

Malaysia

0.1

0.9

0.8

0.5

1.3

1.6

1.5

2.1

Myanmar

0.5

2.1

1.9

1.5

3.4

4.0

3.6

5.3

Philippines

7.0

25

24

20

50

87

86

118

Singapore

20

78

68

52

117

171

160

229

Thailand

0.7

2.6

2.3

1.8

3.7

5.1

4.9

7.2

Viet Nam

36

54

64

90

92

106

109

145

ASEAN total

66

166

164

168

272

381

371

515

Source: AJC, based on data from World Trade Organization (Trade in Services data by Mode of Supply (TISMOS)).

22

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Box 3. Hospitals and healthcare providers in ASEAN
Tables B3.1 and B3.2 show that intraregional investment from member countries withrelatively more advanced medical and health services (i.e., Indonesia, Malaysia, Singapore,
and Thailand) is predominant in the region. However, the recipients of the services cover
all Member States since each investment serves different kinds of demand within theregion. On one hand, hospitals and healthcare providers invest in countries with a similar
quality of services to offer high-quality services at affordable prices. For example, IHH
Healthcare (Malaysia) and Bangkok Dusit Medical Services (Thailand) have their presencein Singapore to enjoy their cost advantages over local services providers. On the other hand,foreign hospitals and healthcare providers established their branches in countries withless advanced medical and health services to serve the unmet need due to underdeveloped
medical and health services in those countries, especially in Cambodia, Lao PDR, Myanmar,
and Viet Nam (table B3.2).

Box table B3.1. Top 15 major hospitals and healthcare providers in ASEAN,
by assets, 2018
Total assets(Millionsof dollars)Company

Headquarters

Presence in other ASEAN countries

IHH Healthcare

Malaysia

9 584

Brunei Darussalam, Indonesia, Myanmar(under development), Singapore, Viet Nam

Bangkok Dusit Medical
Services

Thailand3 765

Cambodia, Lao PDR, Myanmar, Singapore

KPJ Healthcare

Malaysia

1 042

Indonesia, Thailand

Raffles Medical Group

Singapore753

Cambodia, Indonesia, Viet Nam

Bumrungrad HospitalThailand

721

Myanmar

Siloam International
Hospitals

Indonesia

559

MyanmarThonburi Healthcare

Thailand

550

MyanmarBangkok Chain HospitalThailand389

Lao PDR

Thomson Medical Group

Singapore180

Indonesia, Malaysia, Viet Nam

Q&M Dental Group

Singapore165

Malaysia

Cordlife Group

Singapore

144

Indonesia, Malaysia, Philippines, Thailand

Singapore Medical Group

Singapore

125

Indonesia

Health Management
International

Singapore

97

Indonesia, Malaysia

ISEC Healthcare

Singapore54

Malaysia, Myanmar

Clearbridge HealthSingapore

51

Indonesia, Malaysia, Philippines

Source: ASEAN Secretariat and UNCTAD, ASEAN Investment Report 2019.

Singapore

Singapore

Singapore

ThailandThailandSingapore

Malaysia

SingaporeOUELHThomson Medical Group

Singapore Medical Group

Wattana Medical Group

Bangkok Chain Hospital

Singapore National Eye
Center and Singapore
National University Hospital

Navis Capital

AJT Holdings

Vientiane, Lao PDR

Kasemrad International
Hospital VientianeSingapore Medical Center

Cambodia

Viet Nam

Vientiane, Lao PDR

Alliance International
Medical Center (AIMC)

Hanoi French Hospital(L’hopital Francais de Hanoi)

Ho Chi Minh City

Care Plus Clinic Vietnam(CCVN)

Viet Nam

Viet Nam

Hanh Phuc International
Hospital

FV Hospital (in Hanoi and
Saigon Clinic)

Myanmar

Myanmar

Yoma Siloam Hospital Pun
Hlaing Limited

Pun Hlaing International
Hospital Limited

Host country

Hospital

Source: ASEAN Secretariat and UNCTAD, ASEAN Investment Report 2019.

Headquarters

Investor

Box table B3.2. ASEAN healthcare services providers in CLMV countries

Box 3. Hospitals and healthcare providers in ASEAN (Conluded)

2017

47
(in CityClinic Asia
Investment (CCAI))

2016
2018

Partnership: AJT
manages the centre

..

2017

Investment

..

76

2011

2011

Medicalcollaboration

..

2019

2019

Year

35

40

Equityownership (%)..

Investor owns the hospital.

Collaboration between the hospitals.

Joint venture with a Lao PDR investor to establish
the hospital.

AIMC is a joint venture between New Chip XengGroup of Lao PDR and Wattana Medical Group.

Investor provides training to hospital in marketing.
CCAI has a 100% foreign investor license forhealthcare operations in Viet Nam.

Investor helps co-develop operational proceduresand policies for nurses and non-medical
departments of the hospital.

Investor is part of the Indonesian Lippo
conglomerate.

Remarks

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24

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Box 4. Japan’s investment and involvement in health related and social services in ASEAN
Investment in health related and social services from Japan in ASEAN is still limited but has
high potential. In 2016, the Japanese Government created a new initiative called “the Asia
Health and Human Well-Being Initiative” to improve the situation of Asian ageing societies
by providing Japanese knowledge and expertise on nursing care and social welfare systems.
Making use of various programmes and initiatives to improve health related and social
services, such as Japan’s Asia Health and Human Well-Being Initiative, provides incentives
and business opportunities for ASEAN countries to develop and improve the quality of theirhealthcare systems and standards. Japanese companies are involved in the health related
and social services industry in ASEAN through multiple channels, layers, and segments.
Tables B4.1 and B4.2 give a comprehensive, but not exhaustive, list of Japanese institutions
and companies in this industry and summarize their involvement.

Box table B4.1. Japan’s investment and involvement in hospital operations in ASEAN
Japanese partner

Hospital partners
in ASEAN

Headquarters

Type ofconnection

MitsuiIHH Healthcare

Malaysia

Equity stake
investment

Remarks
Strategic investment by Mitsui

Singapore

Knowledge
sharing

Partnership with Japan’s leading
elderly care provider (Gakken
Cocofump) on training and bestpractices on community careand home caregiver segments in
Singapore and the region

Sano Hospital

Bangkok Dusit
Medical Services
Group

Thailand

Knowledge
sharing, patientreferrals

Joint cooperation to study
and develop projects on
gastrointestinal tract disease andpatient referrals

Universal Strategy
InstituteBangkok Dusit
Medical Services
Group

ThailandCollaboration

Collaboration on a radiation
centre, which will use heavy ion
therapy technology

Nagoya University

Bangkok Dusit
Medical Services
Group

Thailand

Medical training
and patientreferrals

Training medical personnel andenabling patient referrals

Sanno Hospitaland International
University of Healthand Welfare

VinMec Healthcare
SystemViet Nam

Technology
cooperation

Technology transfer and capacitybuilding with VinMec hospital

Gakken Cocofump
Holdings

HealthManagement
International

Source: AJC, based on ASEAN Secretariat and UNCTAD, ASEAN Investment Report 2019.
Note: All Japanese partners have their headquarters in Japan.

Mitsui & Co
(in Malaysia)

Mediva Inc(in Viet Nam)

Mitsubishi
Corporation(in Myanmar)

Sanshikai(in Myanmar)

Itochu Corporation(in Indonesia)

Sakura Cross Clinic(in Thailand)Long Life Holding(in Indonesia)

Medical Care
Services(in Malaysia)

Oubaitouri(in Viet Nam)

Tetsuyu(in Singapore)

Shimadzu (in Malaysia)

Source: AJC, based on ASEAN Secretariat and UNCTAD, ASEAN Investment Report 2019.
Note: All Japanese partners have their headquarters in Japan.

Marubeni(in Philippines)

Omron Healthcare (in Indonesia,
Singapore, Thailand)

Kaikoukai Group(in Indonesia)

Riei (in Thailand)

Corporate
examplesNipro (in Indonesia, Malaysia,
Singapore)

Sakurajyuji Group(in Thailand)Star Partners(in Thailand)

Objective

Distribute, sell, and market
pharmaceutical products anddevices in the host country
and in the region

Invest and provide
preventive
and curative careservices

Provide nursing
and care homes forpatients and theelderly

Distribution and retailing ofpharmaceuticals and devices

Hospitals andmedical services

Nursing and care
homes

Value chain

Box table B4.2. Japanese companies in ASEAN’s healthcare value chain

Box 4. Hospitals and healthcare providers in ASEAN (Conluded)

Mani (in Myanmar, Viet Nam)

Shimadzu (in Philippines, Viet
Nam)

Sysmex (in Singapore)

Omron Healthcare (in Viet Nam)

Nipro (in Indonesia, Thailand)

Manufacture pharmaceuticalproducts and devices

Manufacturing ofpharmaceuticals and devices

Olympus (in Indonesia, Thailand)

TakedaPharmaceutical (inSingapore)

Olympus (inSingapore)

Shimadzu (inSingapore)

Kyowa Hakko Kirin(in Singapore)

Mediva (in Myanmar)

Hoya (in Singapore) Fujifilm (in Viet Nam)

Collaborate on sharing of
knowledge and establish
facilities for training

Knowledge collaborationand training

Undertake medical
related R&D
activities

R&D

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25

26

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

4. Mode 4: Supply through the movement of natural persons
Mode 4 is the least active among all modes of services. In part, the presence of natural persons forthe supply and the receipt of cross-border health related and social services is not well documented.
Moreover, barriers such as the laws and regulations of health-related occupations (e.g., doctors andnurses, among others) as well as language and communication largely prevent natural persons frommoving across borders. Liberalization in terms of intraregional ASEAN agreements on common laws
and regulations on health-related occupations, including those in Mutual Recognition Agreements(MRAs), may partly help promote greater volumes of exports and imports of the services in Mode 4.

(a) Exports
The size of exports of health related and social services from Singapore and the Philippines has
been limited but higher than that of other AMS. Singaporean doctors and other health-related
professionals move across borders to provide their services, whereas the Philippines mainly exports
their nurses and caregivers to countries, such as Japan and the United States. In 2017, Singapore’s
exports accounted for $72 million or 75% of ASEAN’s total exports of health related and social
services in Mode 4, while the Philippines is the second-largest exporter in ASEAN and occupies
almost the rest of the export share ($15 million or 15% in 2017) (table 9).

(b) Imports
Among AMS, the Philippines and Singapore are the top importers of health related and social
services in Mode 4. The volume of imports to the Philippines and Singapore in 2017 was $31 million
and $29 million, respectively (table 9). The import volume of both countries accounts more than 90%
of ASEAN’s total imports. Other AMS demonstrate a very limited import volume of the services.

Table 9. Trade in Mode 4 of health related and social services, 2005–2017(Millions of dollars)Country

Annualaverage2005-2010

2011

2012

2013

2014

2015

2016

2017

Exports
Brunei Darussalam

0

0

0

0

0

0

0

0.0003

Cambodia

0.063

0.071

0.160

0.067

0.160

0.014

0.023

0.037

Indonesia

0.9

1.9

2.5

2.3

1.8

1.3

1.1

1.6

Lao PDR

0

0

0

0

0

0

0

0

Malaysia

3.24

0.63

0.67

0.80

1.10

1.50

1.50

1.90

Myanmar000.0000002

0

1.3

4.0

3.6

1.2

Philippines

0.9

3.1

3.6

4.6

11

12

12

15

Singapore

12

37

44

39

51

63

66

72

Thailand

3.4

3.5

3.1

2.9

2.3

2.2

2.3

2.6

Viet Nam

0.7

0.6

1.1

1.1

2.6

2.0

1.3

1.4

47

55

51

71

86

88

96

ASEAN total

21…/

Table 9. Trade in Mode 4 of health related and social services, 2005–2017

Philippines

0.9

3.1

3.6

4.6

11

12

12

15

Singapore

12

37

44

39

51

63

66

72

Thailand

3.4

3.5

3.1

2.9

2.3

2.2

2.3

2.6

Viet Nam

0.7

0.6

1.1

1.1

2.6

2.0

1.3

1.4

ASEAN total
21
47
55
51
71
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86

88

96

27

…/

Table 9. Trade in Mode 4 of health related and social services, 2005–2017(Millions of dollars) (Concluded)
Annualaverage2005-20102011

Brunei
Darussalam

0.001

0.012

Cambodia

0.3

Indonesia

1.0Country

2012

2013

2014

2015

2016

2017

0.019

0.016

0.021

0.001

0.029

0.065

0.5

0.4

0.2

0.3

0.1

0.1

0.2

1.7

2.2

2.1

1.9

0.5

0.4

0.4

Imports

Lao PDR

0

0

0

0

0

0

0

0

Malaysia

0.616

0.009

0.372

0.004

0.352

0.722

0.483

0.754

Myanmar

0

0

0

0

0

0

0

0

Philippines

2.6

4.8

3.5

5.4

9.3

40

19

31

Singapore

4.7

14

16

20

24

32

30

29

Thailand

0.7

0.5

0.6

0.5

0.5

0.7

0.7

0.8

Viet Nam

1.8

1.9

1.4

3.2

4.6

3.6

2.7

2.4

ASEAN total

12

23

25

32

41

78

54

64

Source: AJC, based on data from World Trade Organization (Trade in Services data by Mode of Supply (TISMOS)).

IV. TRADE AGREEMENTS AND REGULATIONSAMONG AND IN THE ASEAN MEMBER STATESThe AFAS is the main trade agreement concerning the liberalization of trade in health related
and social services. It is a progressive agreement with subsequent “packages” offering deeper
commitments for trade liberalization. Annex A provides the specific commitments and remaining
restrictions for every ASEAN country for trade in health related and social services under the AFAS
10th Package, the latest and final one under this framework. Further liberalization will be continued
within ATISA. In order to assess the degree of liberalization under the AFAS, the Hoekman Index
can be applied.4 The higher the figure, the more liberal the country’s service trade commitments
are to the ASEAN members. Using the database constructed for this study, the “Hoekman Index” isderived for each of the 155 sub-sectors of the health related and social services of ASEAN countries.
Then simple averages are calculated at the level of each sub-sector for each country and, finally,an average index is constructed for the entire health related and social services sector. It has to be4

Hoekman (1995) proposed an indexation method for measuring the GATS-style degree of commitments in theservices sector by four modes of cross-border services delivery. Using this method, values are assigned to eachof eight cells (for four delivery modes and two aspects of liberalization, concerning market access and national
treatment, thereby making 4 times 2 = 8 cell entries) of a single table concerning one country and one type ofservice (e.g., 8A. Hospital Services). Values are assigned as follows: “1” means that the sector is “fully liberalized”;“0.5” that liberalization is limited, but bound (which means that, even if liberalization is partial, a country took
a commitment not to withdraw it); “0” indicates that the Government has not committed to liberalize. For theaggregation of the values of the degree of liberalization (from 1=full liberalization to 0=no liberalization), simple
averages are calculated for subsectors, sectors, and countries. As shown, it is a simple but objective indexation
method, applying the numerical estimates (i.e., discrete points of 0, 1, or 0.5) to sometimes ambiguous legal texts.
Based on the “law of large numbers”, aggregation of these values is expected to reflect the degree of service tradeliberalization by sector, sub-sector, and country.

28

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

noted that Mode 4 was left out of the calculations, as it is not covered by AFAS and is subject to a
separate agreement on the movement of natural persons. Using the database constructed for thisstudy, the “Hoekman Index” is derived, based on the specific commitment tables (reproduced in
Annex A).
Table 10 shows the results of the calculation. Overall, there is a divergence observed concerning theliberalization of health related and social services. Also, the sectoral classifications applied and theircoverage for liberalization are rather domestically oriented (sometimes rearranging the sequenceof subsectors, and commitments without corresponding Customs Procedure Codes (CPCs)). This
makes it hard to calculate the Hoekman Index value and may result in an overestimated degreeof trade liberalization. In fact, the health related and social services sector is one of the leastcommitted sectors, in which less than 50 WTO members committed in one of the four health services
sub-sectors.5 With this in mind, a preliminary assessment has been attempted.
The average index value for all countries, modes, and the entire health related and social services
sector is 0.83, which is rather high, considering that 1 means full liberalization. Mode 2 has thehighest value of 0.95, followed by mode 1 (0.81) and Mode 3 (0.74). This implies that Mode 3 remains
relatively restricted in the trade in health related and social services of ASEAN countries.
The following is a summary of the liberalization commitments and remaining restrictions by country:
Brunei Darussalam: The health related and social services sector is open, with a total index scoreof 0.92;
Cambodia: The health related and social services sector is open (the index value is 0.83), although
domestically defined subsectors are mentioned for liberalization;
Indonesia: While hospital services are rather open (the index value is 0.83), other health related
and social services are not liberalized; Mode 3 regulations include “joint venture with foreign equity
participation limitation” for market access, and “subject to qualification and licensing requirement
and procedure including registration”;
Lao PDR: The health related and social services sector is rather open (with an index value of 0.71),
while “other services” are not committed;
Malaysia: The health related and social services sector on the whole is highly open (with an index
value of 0.94);
Myanmar: The health related and social services sector on the whole is highly open (with an index
value of 0.96);
Philippines: Mode 1 is unbound because of a lack of technical feasibility; foreign equity participation
is limited for some sectors in Mode 3; otherwise, this sector is open (and the total average index
value is 0.56, yet this is because of the perceived lack of technical feasibility of supplying services inmode 1).
Singapore: Human health services as well as social services are not fully open; otherwise, the healthand social services sector is liberalized (with an average index value of 0.75);
Thailand: The health related and social services sector on the whole is highly open (with an index
value of 0.92);
Viet Nam: Foreign equity participation has upper limits for some sub-sectors; otherwise, the healthand social services sector is open (the index value is 0.92).

5https://www.wto.org/english/tratop_e/serv_e/health_social_e/health_social_e.htm

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

29Potential of the ASEAN Trade in Services Agreement (ATISA)ASEAN is transitioning from the positive-list based AFAS to the negative-list oriented ATISA. In orderto achieve the above workable policy recommendations, the ASEAN Trade in Services Agreement(ATISA) has a large potential. Drastically liberalized trade in health related and social services under
ATISA can be predicted by considering existing negative-list oriented trade frameworks. Some
ASEAN members are signatory to the Comprehensive and Progressive Trans-Pacific Partnership(CPTPP), as in Annex B. This annex lists the reserved sub-sectors for health related and social
services under this agreement. As shown, not so many areas are reserved, i.e., the market openingof the health related and social services is high. This implies that under the proposed ATISA, thedegree of market opening would also be high, while avoiding commitments using domesticallyoriented sub-sector classifications, to facilitate the harmonized realization of innovative healthrelated and social services.

9319(other than
93191)

933

08.B.
Other Human
HealthServices

08.C.
SocialServices
0.63
1.00

0.88
0.75

0.88

1.00

0.88

0.92

Mode 1Mode 2Mode 3All modes

0.83

0.88

0.83

0.75

0.92

Mode 3

Average

0.50

0.94

1.00

Average

Mode 1

0.50

0.50

0.50

1.00

1.00

1.00

1.00

1.00

1.00

1.00

0.75

Mode 3

1.00
1.00

1.00

1.00

Mode 2Mode 2

1.00

1.00

Average

Mode 11.00

Mode 31.00

Mode 1

1.00

0.83

Average

Mode 2

1.00

Mode 30.50

1.00

Mode 1Mode 2

Cambodia

Source: AJC, based on the specific commitment tables under AFAS 10th package.
Note: See Annex A for the specific commitments of each country.

Simpleaverage

08.D.
Other

9311/93110

08.A.
Hospital
Services

Brunei
Darussalam

0.83

0.50

1.00

1.00

0.83

0.50

1.00

1.00

0.83

0.50

1.00

1.00

0.83

0.50

1.00

1.00

0.83

0.50

1.00

1.00

Indonesia

0.71

0.63

0.75

0.75

0.00

0.00

0.00

0.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

1.00

1.00

1.00

1.00

Lao PDR

0.94

0.81

1.00

1.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

1.00

1.00

1.00

1.00

Malaysia

0.96

0.88

1.00

1.00

1.00

1.00

1.00

1.00

0.98

1.00

1.00

1.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

Myanmar

0.56

0.69

1.00

0.00

0.58

0.75

1.00

0.00

0.56

0.75

1.00

0.00

0.50

0.50

1.00

0.00

0.58

0.75

1.00

0.00

Philippines

0.75

0.75

0.88

0.63

1.00

1.00

1.00

1.00

0.33

0.00

0.50

0.00

0.83

1.00

1.00

0.50

1.00

1.00

1.00

1.00

Singapore

Table 10. Hoekman Index by ASEAN Member State for health related and social services (under AFAS 10th package)

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

0.92

0.75

1.00

1.00

Thailand

0.92

0.75

1.00

1.00

1.00

1.00

1.00

1.00

0.83

0.50

1.00

1.00

0.83

0.50

1.00

1.00

1.00

1.00

1.00

1.00

Viet Nam

0.83

0.74

0.95

0.81

0.80

0.70

0.90

0.80

0.79

0.63

0.90

0.75

0.87

0.75

1.00

0.85

0.91

0.88

1.00

0.85

Simpleaverage

30

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

31V. IMPACTS OF FURTHER LIBERALIZATION OF
HEALTH RELATED AND SOCIAL SERVICES ON
THE ECONOMY6As discussed in Section I, human development depends on and determines economic and social
development. This section examines the impact of further liberalization in health and social serviceson the economy by measuring the impact of the liberalization policies on the Human Development
Index (HDI) of AMS. To understand the impact of further liberalization policies on HDI, it is necessary
to examine whether the existing liberalization policies have yielded the maximum possible potential
HDI. If the existing liberalization policies have not been working effectively, there will be a gap between
the potential HDI and the achieved HDI. If there is a significant gap between the potential HDI andthe achieved HDI, then it is imperative to close that gap before embarking on further liberalization
measures.
The concepts of potential HDI and actually achieved HDI can be explained using the following
diagram (figure 2):

Figure 2. The concepts of potential HDI and actually achieved HDIPY(Output)

Non-oriented
inefficiency

N

Q
M

Outputinefficiency
M

O

Input inefficiency
L

X (Input)

Source: AJC.

In the above diagram, the inputs, such as agriculture value added, are plotted on the X-axis and theoutputs, such as HDI, are on the Y-axis. M, Q, N, and P are potential HDI for different levels of inputs,
such as agriculture value added. On the other hand, for the given level of input L, the achieved
HDI is “O”, while the potential HDI is N. With the given level of input L, it produces “OL” units of
output (HDI) and it could increase by “ON” units to be on the potential frontier.7 The gap between
the achieved values and an estimated potential frontier value is attributed to “behind the borderconstraints” emanating from existing socioeconomic institutional rigidities. The vertical gap (ON)67

See Annex C for a data description, a theoretical model, and its empirical analysis.
There are three ways to improve the performance of “O”. One is to reduce its input to reach “M” or “Q” on thefrontier, and the other is to increase its output to reach “N” on the frontier. As a result, DEA models thus, from thepolicy perspective, there are three orientations: input-oriented, output-oriented, and non-oriented.

32

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

from the potential frontier is called “output inefficiency”, which shows to what extent output could
be expanded while keeping inputs constant. The horizontal gap (OM) from the potential frontier ismeasured as “input inefficiency”, meaning the extent to which inputs could be reduced without
affecting output. Similarly, the distance of “OQ”, which is measured as “non-oriented inefficiency”,
means the extent to which output could be expanded (RQ) and input could be reduced (OR). As
the objective is to improve the HDI, from the policy perspective, the suggested path is to close thevertical gap (ON), which depends on using the inputs most effectively. The empirical analysis in thisstudy concerns measuring the vertical gap that exists in the ASEAN countries.
The empirical analysis utilized data from the Organisation for Economic Cooperation andDevelopment (OECD)’s Input-Output (IO) table to acquire uniform data between trade in educationand health services. The OECD data is highly consistent with the data presented in Section III. Other
trade and economic indicator data were obtained from the WTO, the World Bank, and the United
Nations Educational, Scientific and Cultural Organization (UNESCO) for 2005–2015. HDI data wereobtained from the United Nations Development Programme (UNDP).
With a panel data framework, the empirical model used to measure the impact of further liberalization
on education and healthcare services on the HDI of ASEAN is as follows:
Log HDIit = α0 + α1 Trade in education it + α2 Trade in healthcare it +α3 Policy impact on trade in educationit +α4 Policy impact on trade in healthcareit +α5 Log agriculture value addedit + α6 Log manufacturing value addedit +α7 t + vith - uit
The HDI is a statistic composite index of health, education, and per capita income indicators (UNDP,
2018). Hence, the factors influencing HDI should reflect the status of the above three dimensions of
HDI that exist within a country.
Hence, the variables for the empirical modelling have been selected based on the “human capitaltheory”, initially formulated by Becker (1962), and other empirical studies. The human capital theory
argues that individual workers have a set of skills or abilities which they can improve or accumulate
through training and education. It should be noted here that “trade in education” is incorporated
in the above empirical model. This formulation reflects the indispensable role of education, which
can create opportunities for better health, as noted in the previous sections.8 Health is both humancapital itself and an input to producing other forms of human capital. Being unhealthy weakens
the ability and willingness to work productively and reduces incentives to invest in human capitaldevelopment. In this context, providing easy access and affordable healthcare services to residents
of a country plays a crucial role in improving human development. For example, a healthcare
programme of treating malaria in Nigeria increased workers’ earnings by 10% in a few weeks(Dillon et al., 2014).
Given the financial constraints and lack of healthcare professionals in many developing countries,“trade in healthcare” is an important factor contributing to HDI. Acknowledging the fact that income
is an important means to human development, the core sources of income generation at the national
level—agriculture value added and the manufacturing value added are used as two important factors

8

For the important linkage between education and health, see, e.g., “Why Education Matters to Health: Exploring
the Causes” (https://societyhealth.vcu.edu/work/the-projects/why-education-matters-to-health-exploring-thecauses.html).

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

33contributing to HDI. The liberalization of education and healthcare policies is gradual. Hence, thepolicy impacts on education and healthcare are modelled by multiplying the time trend (1 for 2005
and 11 for 2015) with the trade in education and trade in healthcare. Detailed discussion about theempirical modelling and estimation method is given in Appendix C.
The empirical result shows that the further liberalization of education and healthcare services has
the potential to contribute to a significant improvement in HDI and, thereby, to the economy. The result
reveals that the liberalization measures could have been more effective, as the member countries
on average have realized only 82% of their potential HDI. In other words, member countries could
improve their HDI by 18% without increasing their resources, but through effectively using them withthe appropriate reform measures. Therefore, it is imperative first to raise the mean HDI from its
current level by identifying and eliminating the existing socio-political and institutional rigidities at
the individual country level. The result also implies the need for further liberalization in trade in healthrelated and social services, which is reinforced by the positive and highly significant coefficients ofthe variable, “impact of liberalization of healthcare”. In order to discuss what is needed for further
liberalization, it is necessary to understand the existing constraints and challenges in trade in healthrelated and social services in ASEAN that have implications for improving HDI (see Section VI).

VI. POLICY RECOMMENDATIONS AND PROMOTION
MEASURES FOR TRADE IN HEALTH RELATEDAND SOCIAL SERVICES
1. Challenges in the health related and social services industry
in ASEAN(a) Barriers to the further liberalization of health related and social
services (ex-ante liberalization)
Depending on the appropriate regulatory conditions, the liberalization of trade in certain selected
health services may improve quality and efficiency in healthcare nationally and regionally andcontribute to increasing foreign exchange earnings. This, in turn, leads to higher human, economic,
and social development, which is supported by the empirical results in Section V. Hence, it is obviousthat there is an urgent need for further liberalization in health related and social services if ASEAN
wants to achieve the objective of the AEC Blueprint 2025. At the same time, it is noted that further
liberalization of ASEAN services trade is in the context of AFAS 10 and ATISA as the degree ofliberalization is already considerably high in the GATS framework. The challenges deterring further
liberalization of health related and social services are as follows.
Low attention paid to trade liberalization in health related and social services: As suggested in
Section II, overall, the health related and social services sector has been subject to more reforms
than liberalization by the ASEAN member countries. There are a very limited number of policies
concerning trade liberalization and regional cooperation in this area.
Insufficient supply to catch up with the rising domestic and foreign demand: Given the size of thebudget constraints in the majority of AMS, providing sustained basic health related and social services
to the residents by government departments alone has been a challenging issue for policymakers.
Moreover, there is always the dilemma for policymakers about how to divide resources between

34

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

providing basic health related and social services and promoting state-of-the-art technologies insuch services. The AMS generally still have low UHC, while suffering from shortages of doctors,
nurses, and facilities (especially for the ageing population), which constrains the efficient delivery of
hospital services. The exceptions to the shortage of medical professionals are Brunei Darussalam,
the Philippines, and Singapore (table 3). The issue of insufficient supply can be attributed to thefollowing.

Underused Mode 1 (supply through cross-border trade): Despite the increasing trend for artificial
intelligence solutions, tele-health and telemedicine, trade in Mode 1 seems underused in most of
the AMS possibly due to underinvestment in technology and R&D and the low degree of liberalizationof such services in the region. Insufficient levels of PPPs and foreign direct investment (FDI) also
further contribute to the underuse of Mode 1.
Problems of attracting FDI (Mode 3): Though there are fewer restrictions on foreign ownership in
the health related and social services sector in Cambodia, Lao PDR, Malaysia, Singapore, Thailand,
and Viet Nam than in the rest of ASEAN, still the majority of the AMS have not opened up theireconomies significantly for the free movement of capital across countries. There are “behind theborder” constraints emanating from socio-political institutional rigidities at different levels in all
member countries (Basu Das et al., 2013). Those remaining constraints include limited domestic
demand and purchasing power (in certain countries); harmonization of healthcare standards andmutual recognition among AMS; a lack of skills, technological capacity, and human resources; andlimited government supports in terms of budget and administrative challenges (e.g. uncertainties in
the implementation of laws and regulations and a lack of transparency, clarity and streamlining ofinvestment procedures).
Limited free movement of labour (Mode 4): In this context, particular interest concerns the MRA
on medical practitioners that was signed in 2009 and is being coordinated by the ASEAN Joint
Coordinating Committee on Medical Practitioners. The objective of the MRA is to facilitate themobility of medical services professionals within ASEAN to promote the adoption of best practices
for professional medical services and provide opportunities for the capacity building and training of
medical practitioners. The fuller implementation of the medical and nursing MRA is slow due to theresistance by the domestic health professionals to the inflow of foreign professionals. For example,
the national regulations imposed due to the pressure from the Indonesian Medical Association have
prevented foreign nurses (except specialist nurses) from providing services in Indonesia (Fukunaga,2015). Another example concerns the Philippines’ constitution, which appears to restrict foreign
doctors from filling professional posts, though there are no reciprocal constraints to medical
outmigration (McCall, 2014). In Thailand, a foreign medical practitioner wishing to work in the
country needs to pass the National Medical Licence Examination of Thailand in which the final stageof “Objective Structured Clinical Examination” is conducted only in the Thai language (Wangchukand Supanatsetakul, 2015). Thus, it is imperative to remove those restrictions to achieve the AEC
Blueprint 2025 vision successfully within the prescribed timeframe.

(b) Potential risks from the liberalization and deregulation of healthrelated and social services (ex-post liberalization)
Only a small group of people may benefit from the gains of the trade liberalization. Trade in healthrelated and social services, in some cases, may exacerbate the existing problems of access and equity
financing, especially for poor people. This section discusses the potential risks of the liberalizationand deregulation of health related and social services (ex-post liberalization) as follows:
Trade-offs between higher quality and inequality in health related and social services: Promoting
and sustaining the supply of quality health related and social services to all the citizens in a countryPA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

35

are core ingredients to human development and, thereby, to the economy. These services are
considered differently from other services in the sense that they are treated as public goods withrespect to the provision of basic health related and social services. Therefore, the most importantargument levelled against the liberalization of trade in healthcare services concerns the entry of
foreign healthcare services, which would encourage intra-country health professionals’ movementfrom public hospitals to private hospitals and the concentration of health personnel only in theurban areas serving the middle-income and high-income earners at the cost of low-income earners.
In other words, there are possibilities that the benefits of opening markets will be concentrated
among the wealthy. Thus, it is argued by some that trade liberalization in healthcare services would
aggravate intra-country healthcare inequities (Minh et al., 2014). The shortage can also occur due
to the movement of health professionals from low-income countries to high-income economies(brain drain) (Mode 4), which may be construed by some as a disadvantage of liberalizing tradein healthcare services. In addition, it has been argued that medical tourism (Mode 2) through theliberalization of trade in health services may lead to an increase in the migration of doctors andpatients from other countries, which may exert a negative influence on the health system of the hostcountry (Gunawan, 2016).

2. Policy recommendations to promote trade liberalization
To address some of the challenges, the following policy options on liberalization and regional
cooperation, and the promotion of PPPs and a better investment environment for domestic andforeign investors could be considered. Table 11 summarizes the challenges and corresponding
policy recommendations.

(a) Policy recommendations to promote further trade liberalizationof health related and social services (ex-ante liberalization)
Reforms with the implication of liberalization and regional cooperation: Acknowledging domestic
constraints and challenges, the individual ASEAN member countries must undertake reforms with
the implication of liberalization either directly or indirectly. In addition, trade in health related andsocial services through regional cooperation also plays a crucial role in providing sustained qualityof such services in AMS. For example, the technically and financially advanced AMS could “share”
clinical services intended for rare diseases. It is worth noting here, for example, Singapore maintains
a sophisticated burns unit, which de facto serves the region (Minh et al., 2014).
If ASEAN is to sustain its philosophy of open regionalism as a model of development, then one
would expect more foreign players in the construction and management of health and social
services infrastructure, including build-operate-transfer schemes (Zen, 2012). Such schemes
would particularly require a careful scrutiny of the financing issues concerning national basic
healthcare systems and healthcare maintenance institutions. In this context, it is worth mentioning
the flexibility that is built in the “ASEAN–X” formula, which gives freedom to member countries toliberalize according to their current situation.
Promotion of PPPs and a better investment environment for domestic and foreign investors: Theprovision of health related and social services at the advanced level along with improving the quality
at the basic level, given government budget constraints, warrants the support of the private sector
and FDI. This can mainly be done through further trade liberalization under ATISA and AEC Blueprintcommitments in all four modes, especially Modes 1, 3, and 4.

36

PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Mode 1 – Increasing domestic capacity in medical technology: First, the government may increase
the budget on R&D to develop medical technology, such as artificial intelligence solutions,tele-health, and telemedicine, in partnership with the private sector. Through PPPs, financing
domestic start-ups in this industry could be one of the strategic policy options. Moreover, thegovernment could improve a domestic investment environment that is conducive for MNEs andstart-ups to establish operations in this industry. FDI could, in turn, further develop domestic
medical technology.
Mode 3 – Strengthening investment promotion policies: To attract higher FDI, a mix of investment
promotion policies is required. The main policy options would be as follows:• Removal of the remaining entry and operational restrictions on international branches of healthrelated and social services businesses after putting in place quality assurance frameworks;• Establishment of a clear and transparent policy and regulatory framework; and• Promotion of training programmes and general education to increase the necessary skills ofdomestic labour in health related and social services

Mode 4 – Implementation of the full MRA: The weakness in implementing the full MRA concerns
the lack of institutional capacity in the regulatory bodies in the majority of the AMS. Mendoza andSugiyarto (2017) have highlighted the need for providing sufficient funding with adequate legislative
frameworks to maintain coordination among the professional bodies and relevant government
agencies. It is imperative to encourage PPPs both at the national and regional levels to build effective
healthcare services infrastructure through eliminating country-specific non-tariff barriers to tradeand investment.

(b) Policy recommendations to counterbalance the negative impactsof the liberalization and deregulation of health related and social
services (ex-post liberalization)
Quality control and consistent accreditation and certification: With further liberalization of healthcare
services, human development is stimulated according to the empirical work undertaken for this study(Section V). As the main objectives of trade in health related and social services are to assure equityof access and to provide quality healthcare services to improve and sustain HDI at higher levels,
priority should be given to those investors or institutions that have been accredited in their country oforigin. Hospitals and other medical facilities within any ASEAN country should feel proud of their highstandards in providing patient care, and in order to achieve those high standards, they need to subject
their premises and medical systems to the most rigorous inspections by applying for accreditation andcertification. This accreditation and certification should be carried out by an internationally qualified
standards organization, such as the American Board of Medical Specialties or the Medical Board ofAustralia, that is different from the domestic healthcare organization under review.
Continuing Professional Development is a method through which members of the medical profession
maintain, or improve their knowledge, skills, and professional performance. It is important that
effective registration and certification systems are needed at the national and regional levels withrespect to trade in medical education and healthcare services. Such a regulation will prevent
unapproved institutions from partnering for making profit at the cost of quality. In this context, theharmonization of standards concerning health related services is important across AMS. As argued
by Sugiyarto and Agunias (2014), some national professional associations may look at the ASEAN
Qualification Framework, which is established to harmonize regulatory arrangements between
the Member States by aligning the national frameworks according to a common reference, asa threat. Regional agreements do have a crucial role to play concerning regulatory cooperation.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

37The drawback of the weak alignment of national regulatory framework with the regional framework
can be eliminated by effectively implementing Articles 1 (b) and (c) of the ASEAN Framework
Agreement on Services, which are as follows: “(b) to eliminate substantially restrictions to trade inservices amongst Member States; and (c) to liberalise trade in services by expanding the depth andscope of liberalisation beyond those undertaken by Member States under the GATS with the aim torealising a free trade area in services.”

Promotion of equal access to quality health related and social services through UHC: To
counterbalance the possible negative impacts of trade liberalization in health related and social
services, the government must push forward the commitment toward UHC, including public insurance
and large-scale primary care. Another major challenge for governments is to determine how muchthe private sector should be allowed to provide public services. On one hand, the privatization ofhealth related and social services may aggravate the problem of inequality of access to the services.
On the other hand, without privatization, government have difficulties in securing universal quality
services for their citizens. Accounting for these possible negative impacts in policy formation would,
therefore, help promote equity in health related and social services.
In conclusion, trade liberalization in health related and social services has become a crucial issue.
Liberalization is expected to open up the markets for health related and social services in theeconomies, which will facilitate investment from the domestic private sector and global investors.
Trade in health related and social services will expand the quality supply, which is in shortage in many
AMS, and eventually reduce the cost of these services by improving competition. Thus, liberalizationin trade in health related and social services is instrumental in preparing a highly productive humancapital, which is a key ingredient to economic growth.
It is important from the policy perspective to strengthen health related and social services to improveand sustain HDI nationally and regionally. In light of the existing technical and financial constraints
in the majority of the AMS, improvement in health related and social services necessitates theliberalization of trade in this area to eliminate barriers to the mobility of healthcare professionals
and services across countries. Moreover, national trade policy in healthcare may not be considered
in isolation from regional healthcare policy, such as the full implementation of the health-related
MRAs. This requires support from broader trade and immigration policies and a stronger politicalcommitment to avoid the brain-drain scenario leading to shortages of healthcare professionals insome countries. The responsibility of the policy makers in the AMS is to strike an optimal balance
between competing national interests and support for the effective implementation of MRAs.
Drawing on the suggestions made in the AEC Blueprint 2025, member countries can make useof the opportunities to deliberate facilitating the cross-border movement of health personnel andinvestment depending on the host countries’ demand and supply conditions towards sustaining thewell-being of their residents.

Source: AJ.

Ex-post liberalization

Ex-ante liberalization

Trade-offs between higher quality and inequality in health related andsocial services- Brain drain and shortage of human resources in health related andsocial services due to the migration and concentration of healthcare
personnel in certain areas (Mode 2 and Mode 4)• Promotion of equal access to quality health related and social
services through universal health coverage (UHC)• Quality control and consistent accreditation and certification• Implementation of the full Mutual Recognition Agreements (MRAs)• Strengthening investment promotion policies:- Removal of the remaining entry and operational restrictions on
international branches of health related and social services businessafter putting in place quality assurance frameworks- Establishment of a clear and transparent policy and regulatory
framework- Promotion of training programmes and general education to increase
necessary skills of domestic labour in health related and social
services• Increasing domestic capacity in medical technology• Promotion of public-private partnerships (PPPs) and a better
investment environment for domestic and foreign investors• Reforms with the implication of liberalization and regional cooperation

Low attention paid on trade liberalization in health related and social
services

Insufficient supply to catch up with the rising domestic and foreign
demand:- Underused Mode 1 (supply through cross-border trade)- Problems of attracting foreign direct investment (FDI) (Mode 3)- Limited free movement of labour (Mode 4)

Policy options/Recommendations

Issues/Challenges

Table 11. Summary of challenges and policy recommendations

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and East Asia.

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ANNEX A.
SPECIFIC COMMITMENT TABLES FOR HEALTHRELATED AND SOCIAL SERVICES UNDER THE
AFAS 10TH PACKAGE
Brunei Darussalam
Subsector

Limitation on market access

Limitation on national treatment

Medical and dental services (CPC 9312)(1) None(2) None(3) None(1) None(2) None(3) None

Services provided by midwives, nurses, physiotherapists
and para-medical personnel (CPC 93191)(1) None(2) None(3) None(1) None(2) None(3) None

Hospital services (excluding laboratory and x-ray
services) (CPC 9311/93110)(1) Unbound*(2) None(3) None(1) Unbound*(2) None(3) None

Laboratory services (CPC 9311X)(1) None(2) None(3) None(1) None(2) None(3) None

X-ray services (CPC 9311X)(1) None(2) None(3) None(1) None(2) None(3) None

Pharmaceutical services (CPC 9319)(1) None(2) None(3) None(1) None(2) None(3) None

Social services (other than 93191)(1) None(2) None(3) Foreign equity participation
should not exceed 70% subject
to the approval of the relevant
agencies.

(1) None(2) None(3) NoneChild day-care services including day-care for thehandicapped (CPC 93321)(1) None(2) None(3) Foreign equity participation
should not exceed 70% subject
to the approval of the relevant
agencies.

(1) None(2) None(3) None(1) None(2) None(3) Foreign equity participation
should not exceed 70%.

(1) None(2) None(3) None

Other health related and social services:
Ambulance services (CPC 93194)

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

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43Cambodia
Subsector

Limitation on market access

Limitation on national treatment

Specialized medical services (CPC 93122)
Specialized dental services (CPC 93123)(1) None(2) None(3) None(1) None(2) None(3) None

Hospital services (CPC 93110)(1) None(2) None(3) None(1) None(2) None(3) None

Ambulance services (CPC 93192)(1) None(2) None(3) None(1) None(2) None(3) None

Nursing services (CPC 93191)(1) None(2) None(3) None(1) None(2) None(3) None

Veterinary services for pet animals(CPC 93201)(1) None(2) None(3) None, foreign equity
participation is limited tomaximum of 70%(1) None(2) None(3) None

Vocational rehabilitation services(CPC 93324)(1) None(2) None(3) None(1) None(2) None(3) None

Source: AFAS 10th package.
Notes: * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

Indonesia
Subsector

Limitation on market access

Limitation on national treatment

Clinic of specialized medical services (only for registeredhealth institution, with three sub-specialistic/super
specialistic medical care/more specific than specialistic
medical care) (CPC 93122)(1) None(2) None(3) Unbound(1) None(2) None(3) Unbound(1) None(2) None(3) Joint venture with foreign equity
participation up to 51%(1) None(2) None(3) As indicated in the Horizontal
Section andGeneral Conditions the healthprofessionals shall be Indonesian(1) None(2) None(3) Joint venture with foreign equity
participation up to 70%(1) None(2) None(3) As indicated in the Horizontal
Section and General Conditions
the healthprofessionals shall be Indonesian

Clinic of specialized dental services, only for registeredhealth institution, with specialistic dental care, provided byhospital of more than 50 dental
units and chairs) (CPC 93123)
Clinic of specialized medical services (only for registeredhealth institution, with three sub-specialistic/super
specialistic medical care/more specific than specialistic
medical care) in Makassar and Manado (CPC 93122)
Clinic of specialized dental services, only for registeredhealth institution, with specialistic dental care, provided
by hospital of more than 50 dental units and chairs) in
Makassar and Manado (CPC 93123)
Clinic of specialized medical services (only for registeredhealth institution, with three sub-specialistic/super
specialistic medical care/more specific than specialistic
medical care) in capital province of East Indonesia Region(except in Makassar and Manado) (CPC 93122)
Clinic of specialized dental services, only for registeredhealth institution, with specialistic dental care, provided byhospital of more than 50 dental units and chairs) in capitalprovince of East Indonesia region (except in Makassar andManado) (CPC 93123)

…/

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Other veterinary services (CPC 93209)
Exclusively covers only poultry farm consultant services(1) None(2) None(3) Joint venture company withforeign equity participation up to70%(1) None(2) None(3) Subject to qualification andlicensing requirement andprocedure including registration

Nursing services (only for specialistic care) (CPC 93191)(1) None(2) None(3) Unbound(1) None(2) None(3) UnboundNursing services (only for specialistic care) in Medan and
Surabaya (CPC 93191)(1) None(2) None(3) Joint venture company withforeign equity participation up to51%(1) None(2) None(3) As indicated in the Horizontal
Section and General Condition thehealth professionals shall be
Indonesian

Nursing services(only for specialistic care) in capital province of East
Indonesia region (except in Makassar and Manado) (CPC
93191)(1) None(2) None(3) Joint venture company withforeign equity participation up to70%(1) None(2) None(3) As indicated in the Horizontal
Section andGeneral Condition the healthprofessionals shallbe Indonesian

Hospital services(only for specialist and super specialist medical care/more
specific than specialist medical care, provided by hospitalof more than 200 beds)(CPC 9311)(1) None(2) None(3) Unbound(1) None(2) None(3) UnboundHospital services(only for specialist and super specialist medical care/more
specific than specialist medical care, provided by hospitalof more than 200 beds) in Medan and Surabaya(CPC 9311)(1) None(2) None(3) Joint venture with foreign equity
participation up to 51 %(1) None(2) None(3)As indicated in the Horizontal
Section and General Condition
the health professionals shall be
Indonesian

Hospital services(only for specialist and super specialist medical care/more specific than specialist medical care, provided byhospital of more than 200 beds) in capital province of East
Indonesia region (except in Makassar and Manado)(CPC 9311)(1) None(2) None(3) Joint venture with foreign equity
participation up to 70 %(1) None(2) None(3)As indicated in the Horizontal
Section and General Condition
the health professionals shall be
Indonesian

Other human health services(CPC 9319 other than 93191)
Limited to residential health facilities services thanhospital services only (CPC 93193)(1) None(2) None(3) Joint venture foreign equity
participation up to 70 %(1) None(2) None(3) Subject to qualification andlicensing requirement andprocedure including registration

Social services(Social welfare services for the elderly)(Social welfare services for persons with disabilities)
Social welfare training and education Social workers andcare workers(1) None(2) None(3) Joint venture foreign equity
participation up to 70%(1) None(2) None(3) Services shall be delivered
indiscriminately

D. OtherSpecialistic centre in government / public hospital incapital city of East Indonesia region e.g. cancer specialisticcare centre, cardiac centre, haemodialysis centre(1) None(2) None(3) Aggregate foreign equity
participation is permitted up to
70% provided that: up to 49%
through foreign direct investment,
and the remaining percentage
through other mechanism(1) None(2) None(3) The health professionals shallbe Indonesian

Source: AFAS 10th package.
Notes: * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

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45Lao PDR
Subsector

Limitation on market access

Limitation on national treatment

Medical and dental services (CPC 9312)- General medical services (CPC 93121)- Specialized medical services (CPC 93122)(1) None(2) None(3) None (only for private hospital)(1) None(2) None(3) None

Private hospital services(Part of CPC 93110)(1) None(2) None(3) None(1) None(2) None(3) None

Services provided by midwives, nurses, physiotherapists,and para- medical personnel (CPC 93191)(1) None(2) None(3) None (only for private hospital)(1) None(2) None(3) NoneB. Other human health services(CPC 9319 (Other than 93191)(1) None(2) None(3) None (only for private hospital)(1) None(2) None(3) None

C. Social services (CPC 933)

(1) None(2) None(3) None (only for private hospital)(1) None(2) None(3) None

Source: AFAS 10th package.
Notes: * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

Malaysia
Subsector

Limitation on Market Access

Limitation on National Treatment

Specialized medical services (CPC 93122)
Covering forensic medicine, nuclear medicine, geriatrics,
micro vascular surgery, neurosurgery, cardiothoracic
surgery, plastic surgery, clinical immunology and oncology,
traumatology, anaesthesiology, intensive care specialist,
child psychiatry and physical medicine(1) None(2) None(3) Specialized medical services
may be supplied only by a natural
person(1) None(2) None(3) None

Dental services (CPC 93123)
Covering orthognathic surgery, cranio-facial surgery, oral
oncology, forensic odontology and special needs dentistry(1) None(2) None(3) Foreign equity shall not exceed70%(1) None(2) None(3) As in market access limitations

Veterinary services (CPC 932)

(1) None(2) None(3) Only through a locallyincorporated joint-venturewith Malaysian individuals or
Malaysian-control corporation
or both and aggregate share offoreign interest shall not exceed70%(1) None(2) None(3) NoneSpecialized nursing services (CPC 93191)- Intensive care nursing- Coronary care nursing- Peri-operative nursing- Neonatal nursing- Pediatric nursing- Emergency and trauma care
- Oncology nursing- Gerontology- Renal nursing- Orthopaedic nursing- Ophthalmology nursing(1) None(2) None(3) Services may be supplied by anatural person. The setting up ofindividual or joint group practices
is not permitted.

(1) None(2) None(3) Unbound

…/

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Private hospital services (CPC 93110*)(1) None(2) None(3) Only through a locallyincorporated joint venturecorporation with Malaysian
individuals or Malaysiancontrolled corporations or both andaggregate foreign shareholding in
the joint-venture corporations shallnot exceed 70%(1) None(2) None(3) Establishment of feeder
outpatient clinics is not permitted

Private hospital services (CPC 93110*)
Excluding the establishment of feeder outpatient clinics(1) None(2) None(3) Only through a locallyincorporated joint-venturecorporation with Malaysian
individuals or Malaysiancontrolled corporations or both andaggregate foreign
shareholding in the joint-venturecorporations shall not exceed 70%(1) None(2) None(3) None

Other human health services (CPC 93199)
covering pharmacy services in the manufacturing sector
only(1) None(2) None(3) Foreign equity shall not exceed70%(1) None(2) None(3) None

Welfare services delivered through residential institutions
to old person and the handicapped(CPC 93311)
Vocational rehabilitation services for the handicapped(CPC 93324)(1) None(2) None(3) Foreign equity shall not exceed70%(1) None(2) None(3) None

Other health related and social services n.e.c.
Private centre for special needs persons(1) None(2) None(3) Only through a locallyincorporated joint-venturecorporation with Malaysian
individuals or Malaysiancontrolled corporations or both andaggregate foreign
shareholding in the joint-venturecorporations shall not
exceed 70%(1) None(2) None(3) None

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

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47MyanmarSubsector

Limitation on market access

Limitation on national treatment

Human health services
A. Medical and dental services
General medical services (CPC 93121)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted
and to be accordance with the Law
relating to Private Health Care
Services, 2007

(1) None(2) None(3) NoneSpecialized medical services(CPC 93122)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted
and to be accordance with the Law
relating to Private
Health Care Services, 2007

(1) None(2) None(3) None

Dental services (CPC 93123)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted
and to be accordance with the Law
relating to Private
Health Care Services, 2007

(1) None(2) None(3) None

Veterinary services(CPC 932/9320)(1) None(2) None(3) None(1) None(2) None(3) None

Deliveries and related services, nursing services,
physiotherapist and paramedical personnel(CPC 93191)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted and to beaccordance with the Law relating
to Private Health Care Services,
2007(1) None(2) None(3) None

Hospital services (CPC 9311)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted and to beaccordance with the Law relating
to Private Health Care Services,
2007(1) None(2) None(3) None

Ambulance services (CPC 93192)(1) None(2) None(1) None(2) None(3) None(3) Up to 70% foreign equity
participation is permitted and to beaccordance with the Law relating
to Private Health Care Services,
2007
Laboratory services(1) None(2) None(3) Up to 70% foreign equity
participation is permitted
and to be accordance with the Law
relating to Private Health Care
Services, 2007

(1) None(2) None(3) None

Residential health facilities services other than hospital
services(CPC 93193)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted
and to be accordance with the Law
relating to Private Health Care
Services, 2007

(1) None(2) None(3) None…/

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Other human health services(CPC 93199)(1) None(2) None(3) Up to 70% foreign equity
participation is permitted
and to be accordance with the Law
relating to Private Health Care
Services 2007

(1) None(2) None(3) None

Social services without accommodation
Early childhood care & development programme forchildren(CPC - 9332)(1) None(2) None(3) None(1) None(2) None(3) None

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

Philippines
Subsector

Limitation on market access

Limitation on national treatment

A. Hospital services (CPC 9311)
B. Other human health services n.e.c.
Laboratory services(1) Unbound*(2) None(3) The limitations on foreign equity
in the horizontal section do not
apply(1) Unbound*(2) None(3) Nonei. Veterinary services
Other veterinary services – specialized Hospital services
for pets(CPC 93201**)(1) None(2) None(3) Up to 70% foreign equity
participation is allowed(1) None(2) None(3) Nonei. Veterinary medicine (CPC 932)

(1) None(2) None(3) Corporate practice is notallowed.

(1) None(2) None(3) None

Services relating to ergotherapy, speech therapy,
homeopathy, and acupuncture provided by para-medical
personnel(CPC 93191**)(1) None(2) None(3) Up to 70% foreign equity
participation is allowed(1) None(2) None(3) None

C. Social services
Welfare services delivered through residential institutions
to old persons and the adult handicapped/differently-abled
persons excluding social work practice (CPC 93311**)(1) Unbound*(2) None(3) None, except that foreign
equity participation is limited to a
maximum of 70%(1) Unbound*(2) None(3) NoneD. Other
Ambulance services ancillary to private hospitals (i.e.,
operated and owned by private hospitals for the benefit of
their patients and not for hire) (CPC 93192**)(1) Unbound*(2) None(3) Up to 70% foreign equity
participation is allowed(1) Unbound*(2) None(3) None

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

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49Singapore
Subsector

Limitation on market access

Limitation on national treatment

Medical services, specifically general medical services(CPC 93121)
Specialized medical services(CPC 93122)(1) Unbound*(2) None(3) None(1) None(2) None(3) None

Dental services(1) None(2) None(3) None(1) None(2) None(3) None

Veterinary services(1) None(2) None(3) None(1) None(2) None(3) None

Deliveries and related services, nursing services,
physiotherapists, and para-medical personnel(CPC 93191**)(1) Unbound*(2) None(3) None(1) None(2) None(3) None

Hospital services, except:(i) supply of health services by government-owned orcontrolled health institutions, and(ii) investments in governmentowned or controlled health institutions (CPC 93110 **)(1) None(2) None(3) None(1) None(2) None(3) None

Ambulance services (CPC 93192)(1) Unbound*(2) None(3) None(1) Unbound*(2) None(3) None

Acute care hospitals, nursing homes and convalescenthospitals as defined by the Private Hospitals and Medical
Clinics Act, run on a commercial basis(CPC 93193**)(1) Unbound*(2) None(3) None(1) Unbound*(2) None(3) None

Laboratories licensed under the Private Hospitals andMedical Clinics Act (CPC 931991**)(1) None(2) None(3) None(1) None(2) None(3) None

Social services delivered through residential institutions to
old persons and the handicapped(CPC 93311)(1) Unbound*(2) None(3) Unbound for facilities/service
operations run by non-profit
service suppliers that are partiallyor totally state-funded(1) Unbound*(2) Singapore retains the discretion
to determine whether
a non-resident service supplier
may solicit business or conduct
active marketing in Singapore(3) None

Social services delivered through residential institutions tochildren and other clients(CPC 93312 **)(1) Unbound(2) Singapore retains the discretion
todetermine whether a nonresident service supplier may
solicit business or conduct active
marketing in Singapore.
(3) Unbound for facilities/service
operations run by non-profit
service suppliers that are partiallyor totally state-funded(1) Unbound(2) Singapore retains the discretion
to determine whether
a non-resident service supplier
may solicit business or conduct
active marketing in Singapore(3) Unbound for facilities/service
operations run by
non-profit service suppliers thatare partially or totally state-funded…/

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Child day-care services including day-care services for thehandicapped(CPC 93321)
Vocational rehabilitation services(CPC 93324)(1) Unbound(2) Singapore retains the discretion
todetermine whether a nonresident service supplier may
solicit business or conduct active
marketing in Singapore.
(3) Unbound for facilities/service
operations run by non-profit
service suppliers that are partiallyor totally state-funded(1) Unbound(2) Singapore retains the discretion
to determine
whether a non-resident service
supplier may solicit businessor conduct active marketing in
Singapore(4) Unbound for facilities/service
operations run by non-profit
service suppliers that are partiallyor totally state-funded

Guidance and counselling services not elsewhere classified (1) Unboundrelated to children(2) Unbound for a non-resident(CPC 93322)
servicesupplier soliciting business orconducting active marketing in
Singapore(3) Unbound for facilities/ service
operations run by non-profit
service suppliers that are partiallyor totally state-funded(1) Unbound(2) Unbound for a non-resident
service suppliersoliciting business or conducting
active marketing in Singapore(3)Unbound for facilities/service
operations run by nonprofit service suppliers that are
partially or totally state-fundedWelfare services not delivered through residential
institutions (CPC 93323)(1) None(2) Unbound for a non-resident
servicesupplier soliciting business orconducting active marketing in
Singapore(3) Unbound for facilities/ service
operations
run by non-profit service suppliers
that are partially or totally statefunded(1) None(2) Unbound for a non-resident
service supplier soliciting
business or conducting active
marketing in Singapore(3) Unbound for facilities/service
operations run by nonprofit service suppliers that are
partially or totally state-funded

Other social services without accommodation(CPC 93329 **)(1) Unbound(2) Singapore retains the discretion
to determine
whether a non-resident service
supplier may solicit businessor conduct active marketing in
Singapore.
(3) Unbound for facilities/service
operations run
by non-profit service suppliers thatare partially or totally state-funded(1) Unbound(2) Singapore retains the discretion
to determine whether
a non-resident service supplier
may solicit business or conduct
active marketing in Singapore.
(4) Unbound for facilities/service
operations run by nonprofit service suppliers that are
partially or totally state-funded

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

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51Thailand
Subsector

Limitation on market access

Limitation on national treatment

Medical and dental services:- General medical services (CPC 93121)- Specialized medical services(CPC 93122)(1) None(2) None(3) As indicated in 3.3 of thehorizontal section andmust only be OP clinic in a
hospital. A person is allowed
to operate not more than one
sanatorium.

(1) None(2) None(3) The person who applies for the
license to operate must have a
domicile in Thailand- Specialized medical services provided in private hospital(CPC Version 1.1: part of 93122)
This subclass includes:- consultation services in paediatrics, gynaecology,
obstetrics, neurology and psychiatry- surgical consultation services- analysis and interpretation of medical images(x-ray,electrocardiograms, endoscopies and the like)
This subclass does not include:- services of medical laboratories, cf.93199(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) None- Dental services (CPC 93123)(1) None(2) None(3) As indicated in 3.3 of thehorizontal section
and must only be dental
department in a hospital, notdental clinic nor dental hospital.
A person is allowed to operate notmore than one sanatorium.

(1) None(2) None(3) The person who applies for the
license to operate must have a
domicile in Thailand

Veterinary services:
Veterinary services for pet animals(CPC 93201)(1) None(2) None(3) As indicated in 3.3 of thehorizontal section and aperson is allowed to operate notmore than one veterinary hospital(1) None(2) None(3) The person who applies for the
license to operate must have a
domicile in Thailand

Veterinary services:
Veterinary services for livestock(CPC Version 1.1: 93220)(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) None

Services provided by nurses(part of CPC 93191)(1) None(2) None(3) As indicated in 3.3 of thehorizontal section
and must only be nursing
department in a hospital.
A person is allowed to operate notmore than one sanatorium.

(1)None(2)None(3)The person who applies for the
license to operate must have a
domicile in Thailandj) Nursing department of physiotherapeutic andparamedical services provided in a hospital.
(CPC Version 1.1: 93191)(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) NoneA. Hospital services (CPC 9311)(1) None(2) None(3) As indicated in 3.3 of thehorizontal section
Thailand may prescribe, in any
area, numbers of
hospital, or types of medical
services to be provided in
the hospital. A person is allowed tooperate not more than one
hospital.

(1) None(2) None(3) The person who applies for the
license to operate must have a
domicile in Thailand

…/

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

A.
Private Hospital services(CPC Version 1.1: 93110)
This subclass does not include:-services delivered by hospital out-patient clinics, cf. 9312
- dental services, cf. 93123- ambulance services, cf. 93192- military hospital services- prison hospital services- nursing services- chronic case services(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) NoneB. Other human health services(CPC Version 1.1: part of 93199)- Residential health facilities services other than hospital
services, excluding non- overnight stay (CPC 93193)(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) None

C. Social services:
Day-care services for children with disabilities(CPC Version 1.1: part of 93321)(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) NoneD. Other:Diagnostic imaging services without analysis orinterpretation,e.g., x-ray, ultrasound, and magnetic resonance imaging(MRI)(1) None(2) None(3) As indicated in 3.1 of thehorizontal section(1) None(2) None(3) None

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

Viet Nam
Subsector

Limitation on market access

Limitation on national treatment

Medical and dental services (CPC 9312) covering:- General medical services (CPC 93121)- Specialized medical services (CPC 93122)- Dental services (CPC 93123)
Nursing services, physiotherapists, and para-medical
personnel (CPC 93191)
Hospital services (CPC 9311)(1) None(2) None(3) None(1)None(2)None(3)NoneVeterinary services (CPC 932/9320) 22(1) None(2) None(3) Access is granted to natural
persons exclusively for the conductof private professional practiceand under the authorisation by theveterinary authorities(1)None(2)None(3)NoneOther human health services(1) None(2) None(3) None, except joint venture withthe foreign capital contribution notexceeding 70% shall be permitted(1) None(2) None(3) None, except as indicated in themarket access column

Health related and social services social services(CPC 933)- Social services with accommodation (CPC 9331)- Social services without accommodation (CPC 9332)(1) None(2) None(3) Unbound, except for foreign
equity ownership permitted up
to 70%(1) None(2) None(3) None, except as indicated in themarket access column

Source: AFAS 10th package.
Notes: 	 * after a CPC code means the sector is part of the wider service sector elsewhere indicated. ** after a CPC code mean
the sector is part of the wider service sector indicated by the CPC code. Unbound* means unbound due to lack oftechnical feasibility.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

53

ANNEX B.
NEGATIVE LIST COMMITMENTS UNDER THE
COMPREHENSIVE AND PROGRESSIVE AGREEMENTFOR TRANS-PACIFIC PARTNERSHIP (CPTPP) FOR
HEALTH RELATED AND SOCIAL SERVICES
Note: The list is repeat verbatim.

Brunei Darussalam
Annex I
Not listed.
Annex II
Sector: Private Health Services
Sub-Sector:
Pharmacists, nurses, midwives and allied
health services
Private laboratory services
Private radiology services
Obligations Concerned:
National Treatment (Article 9.4 and Article 10.3)
Performance Requirements (Article 9.10)
Senior Management and Boards of Directors(Article 9.11)
Market Access (Article 10.5)
Local Presence (Article 10.6)
Description:
Investment and Cross-Border Trade in Services
1. Brunei Darussalam reserves the right toadopt or maintain any measure relating to
the private practice of pharmacists, nurses,
midwives and allied health services.
2. Brunei Darussalam reserves the right toadopt or maintain any measure relating to theestablishment of private laboratory services
and private radiology services.

Sector: Private Health Services
Sub-Sector:
Private health centres or clinics
Obligations Concerned:
Performance Requirements (Article 9.10)
Senior Management and Boards of Directors(Article 9.11)
Market Access (Article 10.5)
Description:
Investment and Cross-Border Trade in Services
Brunei Darussalam reserves the right toadopt or maintain any measure relating to
the establishment of private health centres orclinics, including but not limited to:(a) requiring that such private health centres
or clinics be established in the form of a joint
venture with a Brunei Darussalam national;(b) limiting the number of private health centres
or clinics that can be established in Brunei
Darussalam;(c) requiring such private health centre or clinic
to carry out research and development within
the territory of Brunei Darussalam, or transfer
of technology; and(d) equiring a majority of the senior managers
in the private health centres or clinics to be ofBruneian nationality.

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Malaysia
Annex I
Sector:Private Healthcare Facilities and Services
Allied Health Services
Obligations Concerned:
National Treatment (Article 9.4 and Article 10.3)
Local Presence (Article 10.6)
Level of Government: Central
Measures:
Medical Regulations 1974
Private Healthcare Facilities and Services Act
1998 [Act 586]
Private Healthcare Facilities and Services
Regulations 2006
Registration of Pharmacists Act 1951 [Act 371]
Administrative Guidelines
Description:
Investment and Cross-Border Trade in Services
Private healthcare facilities and services canonly be supplied by service suppliers that areregistered and established in Malaysia and withauthorization.
Foreigners are not allowed to establish bloodbanks, maternity homes, psychiatric hospitals,
pathology laboratories or to practice as
general dental practitioners, general medical
practitioners, and general nurses including
midwifery.
Specialized Dental Services
Foreigners are not allowed to provide
specialized dental services or operate a
specialized medical facility except in oral andmaxillo-facial reconstructive surgery.
Pharmacists
Foreign pharmacists are not allowed to prepare,dispense, assemble, or sell medicinal products.
Allied health services

Foreigners are not allowed to supply allied
health services which cover services suchas clinical scientist, microbiologist, clinicalbiochemist, medical geneticist, biomedical
scientist, embryologist, medical physicist,
entomologist, forensic scientist, nutritionist,speech language pathologist/speech language
therapist, audiologist, physiotherapist,
counsellors, diagnostic radiographer,radiotherapist, food technologist, dietician,medical social officer, optometrist, healtheducation officer, environmental health officer,
medical laboratory technologist, healthcare
food service assistant officer, assistant medical
officer and assistant food technologist.
Annex II
Sector: Social Services
Obligations Concerned: National Treatment(Article 9.4 and Article 10.3)
Most-Favoured-Nation Treatment (Article 9.5
and Article 10.4)
Performance Requirements (Article 9.10)
Senior Management and Boards of Directors(Article 9.11)
Local Presence (Article 10.6)
Description:
Investment and Cross-Border Trade in Services
Malaysia reserves the right to adopt or maintainany measure with respect to the supply of law
enforcement and correctional services,and the following services to the extent they aresocial services established or maintained for a
public purpose: income security or insurance,social security or insurance, social welfare,public education, public training, health andchild care.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

55Singapore
Annex I
Health services

Annex II
Sector: Health related and social services

Sector:
Health related and social services

Sub-Sector:
Medical services
Pharmacy services
Deliveries and related services, nursing
services, physiotherapeutic and para-medical
services, and allied health services
Optometrists and opticians

Sub-Sector:
Medical services
Pharmacy services
Deliveries and related services, nursing
services, physiotherapeutic and para-medical
services and allied health services
Optometrists and opticians
Industry Classification:
Obligations Concerned:
Local Presence (Article 10.6)
Level of Government: Central
Measures:
Medical Registration Act, Cap. 174
Pharmacists Registration Act, Cap. 230
Medicines Act, Cap. 176,
Medicines (Registration of Pharmacies)
Regulations, Cap. 176, Regulation 4
Nurses and Midwives Act, Cap. 209
Allied Health Professions Act, Act 1 of 2011
Optometrists and Opticians Act, Cap. 213A
Description:
Cross-Border Trade in Services
Only persons who are resident in Singapore
are allowed to provide the following services:
medical services, pharmacy services, deliveries
and related services, nursing services,
physiotherapeutic and para-medical services
and allied health services and optometry andopticianry services.

Industry Classification:
Obligations Concerned:
National Treatment (Article 10.3)
Market Access (Article 10.5)
Description: Cross-Border Trade in Services
Singapore reserves the right to adopt ormaintain any limit on the number of service
suppliers providing, including but not limited
to, the following services: medical services,
pharmacy services, deliveries and related
services, nursing services, physiotherapeuticand para-medical services, allied healthservices, and optometry and opticianry services.
Singapore reserves the right to adopt ormaintain any measure with respect to theregulation of service suppliers providing,including but not limited to, the following
services: medical services, pharmacy services,deliveries and related services, nursing
services, physiotherapeutic and para-medical
services, allied health services, and optometry
and opticianry services.
Existing Measures: Allied Health Professions
Act 2011

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Viet Nam
Annex I
Not listed
Annex II
Health services
Sector: Health related and social services
Sub-Sector:
Residential health facilities services other thanhospital services (CPC 93193)
Other human health services (CPC 93199)
Social services (CPC 933)
Obligations Concerned:
National Treatment (Article 9.4 and Article 10.3)
Most-Favoured-Nation Treatment (Article 9.5
and Article 10.4)
Performance Requirements (Article 9.10)
Senior Management and Boards of Directors(Article 9.11)
Local Presence (Article 10.6)

Description:
Investment and Cross-Border Trade in Services
Viet Nam reserves the right to adopt ormaintain any measure with respect to the listed
sub-sectors.
Existing Measures:
Health services(medical as compared with GATS)
Services provided by midwives, nurses,
physiotherapists and para-medical personnel(CPC 93191)
Insert new commitments as follows:
Mode 1: None.
Mode 2: None.
Mode 3: None.

PA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

57

ANNEX C.
THEORETICAL MODEL AND EMPIRICAL ANALYSISON MEASURING THE IMPACT OF FURTHER
LIBERALIZATION ON THE HUMAN DEVELOPMENTINDEX
Theoretical framework
Drawing on the development economics literature, a country’s HDI is defined by UNDP (2018)as a statistic composite index of health, education, and per capita income indicators. Hence, thefactors determining HDI can logically be proxied by many factors, including the country’s two basic
production sectors, namely agricultural value added and manufacturing value added, two social
services affecting human development, namely education and health services trade, and the impact
of existing liberalization policy measures on these two social services trade. Drawing from thestochastic production frontier literature (Kalirajan and Shand, 1994), let the theoretical model be
specified as follows:
ln Xit = ln f(Zi;β) exp(vi - ui)(1)

where the term Xij represents the actually achieved HDI of country i in period t. The term f (Zi;β)is a function of the determinants of potential HDI and β is a vector of unknown parameters. The
double-sided error term vi, which is usually assumed to be N(0, σ2v), captures the influence on HDI
on the other left out variables, including measurement errors that are randomly distributed acrossobservations in the sample. The single-sided error term, ui is the combined effect of the “behindthe border constraints”, on which the researcher does not have full information. Those constraints
emanate from the socio-political institutional rigidities of the concerned country i, and are understoodto create the difference between the actual and potential HDI of country i. It is assumed that u takes
values between 0 and 1 and it is usually assumed to follow a truncated (at 0) normal distribution,
N (μ, σ2u) with mean μ and variance σ2u. When u takes the value 0, this means that the influence of
the “behind the border constraints” is not important and the actual HDI and the potential HDI are
the same, assuming there are no statistical errors [ln Xij = ln f(Zi;β)]. When u takes the value otherthan 0 (but less than or equal to 1), this means that the influence of the “behind the border constraints”
is important and it constrains the actual HDI from reaching its potential. Thus, the term ui, which iscountry-specific, represents the influence of the “behind the border constraints” and is a functionof the socio-political institutional rigidities that are within the concerned country i. Thus, unlike theconventional approach, the suggested method of estimating the determinants of the HDI model
does not exclude the country-specific influence of the existing “behind the border constraints”.
Further it is assumed that the effects of country-specific constraints “u” are time-varying and follow
an exponential specification:{}uit = ηit ui = exp ⎡⎣−η (t-T)⎤⎦ ui ,t ∈ ℑ(i);i = 1,2,...Ν

(2)

Here, ɳ is an unknown parameter and determines whether the country-specific constraints uit,
which are the “behind the border constraints”, decrease (ɳ>0), remain constant (ɳ=0) or increase
with time (ɳ<0). Maximum likelihood methods can be applied on the panel data to estimate theabove discussed HDI model and to verify how important the socio-political institutional rigidities arein constraining the HDI reaching its potential level in ASEAN.

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Empirically, the potential HDI is determined by the upper limit of the current data set. That is, by
those economies that have effectively liberalized the healthcare services by reducing the “behindthe border constraints” the most. Thus, potential HDI can be defined as the maximum level of HDI
given the current level of the determinants of HDI and (given) the least level of the “behind theborder constraints” within the data set. Finally, the suggested method bears strong theoretical andhealthcare policy implications towards finding ways to eliminate the influence of the socio-politicalinstitutional rigidities to achieve the objectives of the AEC Blueprint 2025.

Data
The empirical analysis in this chapter has utilized the data from the OECD’s IO table, trade datafrom the WTO, economic indicators data from the World Bank, and expenditure data on educationfrom UNESCO for 2005–2015. In the empirical analyses for estimating the impact of liberalization on
health, the data from the IO table was used, which provided trade data in education and the healthsector specifically and in a long time series. Unlike in the case of other trade data sources, the datafrom the IO table arguably presents the best country-specific uniform trade data in education andhealth sectors. All the monetary variables were deflated by the GDP deflator at 2010 as the base year.
Using the IO table also has limitations, such as the lack of uniform data for some countries, such
as Lao PDR and Myanmar, and there are no updated data for the countries beyond 2015. The HDI istaken from the UNDP reports over the sample periods. The scores for the three HDI dimensions ofhealth, education, and per capita income indicators are aggregated into a composite index using thegeometric mean.
Agriculture, forestry, and fishing, value added (constant 2010 US$) (from OECD): Agriculture
corresponds to the International Standard Industrial Classification (ISIC) divisions 1–5 and includes
forestry, hunting, and fishing, as well as the cultivation of crops and livestock production. Value
added is the net output of a sector after adding up all outputs and subtracting intermediate inputs.
It is calculated without making deductions for depreciation of fabricated assets or depletion anddegradation of natural resources. The origin of value added is determined by ISIC, revision 3 or 4.
Data are in constant 2010 US dollars.
Manufacturing, value added (constant 2010 US$) (from OECD): Manufacturing refers to industries
belonging to ISIC divisions 15–37. Value added is the net output of a sector after adding up all outputs
and subtracting intermediate inputs. It is calculated without making deductions for depreciation of
fabricated assets or depletion and degradation of natural resources. The origin of value added isdetermined by the ISIC, revision 3. Data are expressed in constant 2010 US dollars.
The empirical models used to measure the impact of further liberalization on education andhealthcare services on HDI of ASEAN are as follows:
Log HDIit = α0 + α1 Trade in education it + α2 Trade in healthcare it +α3 policy impact on trade in educationit +α4 policy impact on trade in healthcareit +α5 Log agriculture value addedit + α6 Log manufacturing value addedit +α7 t + vith - uit

{

(4)

}

uit = ηit ui = exp ⎡⎣−η (t-T)⎤⎦ ui ,t ∈ ℑ(i);i = 1,2,...Ν

(5)

The variables are self-explanatory except for the variables “policy impact on trade in education”,
and “policy impact on trade in healthcare”. The liberalization of education and healthcare policies
is gradual. Hence, the policy impacts on education and healthcare are modelled by multiplying thePA P E R 1 T R A D E I N H E A LT H R E L AT E D A N D S O C I A L S E R V I C E S

59time trend (1 for 2005 and 11 for 2015) with the trade in education and trade in healthcare. The
computer software, FRONTIER 4.1 was used to estimate the equations (4) and (5) in a panel data
framework (Coelli, 1996).

Discussion of the empirical results
The results of the estimation of equations (4) and (5) are presented in table 1. At the outset, it isimportant to examine whether the modelling of equations (4) and (5) in the stochastic production
frontier framework is valid for the current data set used in the empirical analysis. Such an examination
can be done by examining the statistical significance of the parameter estimate of gamma (γ).
The parameter γ, is the ratio of country-specific variation ( ) to total variation (), whichindicates whether the “behind the border constraints” are one of the determinants of HDI. When γ
is significant, it implies that the “behind the border constraints” are important determinants of HDI.
The results of table 1 concerning the estimates of γ indicate that the stochastic frontier modelling
framework for the current data set is correct. The results mean that the influence of the “behind theborder constraints” in determining the HDI cannot be ignored. The mean of the potential HDI is 0.82.
The implication of the results is that the impact of the liberalization of healthcare services on theeconomy is not as expected and could be improved by 18% by eliminating the country-specific sociopolitical institutional rigidities. The constraints emanating from country-specific socio-politicalinstitutional rigidities on the economy may change over time due to both bilateral and multilateralnegotiations and regional cooperation agreements, such as the AEC Blueprint 2025. Whether suchchanges happened during the study period of 2005–2015 can be examined by statistically testing
the coefficient of eta (η). The eta coefficient indicates whether the constraining impact of countryspecific socio-political institutional rigidities on reaching the potential HDI have been increasingfrom one time period to another. If the eta coefficient were positive, then the constraining impact ofcountry-specific effects on achieving the potential HDI would be decreasing over time. If, however
eta were zero or not significant, then the impact could be considered to be constant over time. The
results in table 1 show that the eta coefficient is positive and significant. These imply that the impactof the liberalization policies of healthcare services on HDI and thereby on the ASEAN economy has
positively improved between 2005 and 2015.9
The estimates of interest are the coefficients of the variables – “policy impact on trade in education”
and “policy impact on trade in health” in table 1, which are significant at the 1% level. These results
imply that the further liberalization of education and healthcare services has the potential tocontribute to a significant improvement to HDI and thereby to the economy. Identification of suchsocio-political institutional rigidities at the individual country level is crucial and is difficult too withthe existing data set. Further research in this direction is important from the liberalization policy
perspective.

9

This process is still continuing. As of 2019, the negotiations under the ASEAN Framework Agreement on Services(AFAS) have led to the ratification of the tenth packages of services commitments, and ASEAN has shifted tonegotiations under ATISA.

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PROMOTING SERVICES TRADE IN ASEAN: SECOND PHASE (SOCIAL SERVICES) – FEBRUARY 2020

Table 1. The impact of liberalization policies of health services on HDI
Y= log HDI
log_trade in_education

0.02**(0.01)

log_trade in_health services

0.02**(0.01)

Time

0.002**(0.0009)

Log agriculture value added

0.04***(0.007)

Log manufacturing value added

0.05***(0.01)

policy impact on trade in education

0.02***(0.007)

policy impact on trade in health0.03***(0.005)_constant-0.27(0.24)/mu (μ)-0.25(1.18)/eta (η)

0.03***(0.0045)

Gamma (γ)

0.83***(0.232)

Number of countries

8

Number of time11

Total Observations

88

Source: AJC.
Note: ** and *** refer to statistical significance levels of 5% and 1%, respectively.

ASEAN Promotion Centre on Trade, Investment and Tourism
www.asean.or.jp/en