INTRODUCTION1.1   INTRODUCTIONThis chapter starts with an overview on medicaltourism in Malaysia. Nowadays, policymakers from both developed and developingcountry starts to encourage the growth of economic through medical tourismindustry. But, the real relationship between medical tourism and economicgrowth is still ambiguous. Even though medical tourism can spur the economicgrowth through increase in foreign exchange, tourist arrival and investment butstill it can also lead to negative externalities which can effect the economicgrowth either direct or indirectly.

Without a doubt, relying on medical tourismto effectively increase economic growth remains as an important researchquestion. So, a study should be conducted conducting a study on how factors in medical tourism affects theeconomic growth in Malaysia. With the result that will be generated, astrategies can be form to attract more foreign tourist around the globe formedical purpose. This chapter will thoroughly explains background ofstudy, motivation of study, problem statement, objectives of the study,significance of study and organization of study. 1.

2 BACKGROUND OF STUDY            What is the definition of medicaltourism? According to Meghan, Wong and Chan (2014) in their writing, medicaltourism can be defined as all activities that are related to travel or hostinga tourists to stay minimum one night at the destination for the purpose ofmaintaining, improving or restoring health through medical intervention. Medicaltourism is not new and has started since the Asian Financial Crisis. Duringthat time, a number of Indonesian came to Malaysia’s private hospital to seekfor reasonable yet high quality of healthcare.             According to Burkatt (2007), duringthe seventeeth century, mostly people travelled to spas and hospital in Nilecame from richer family. In other word we can say that during those time wheregetting on airplane was only for the upper class family, travelling was hardenough especially travelling for medical purpose. Nowadays, travelling acrossthe border can be done at the tip of our finger as in Malaysia, we have AirAsia which offers us the lowest price in flight ticket across the Asean.

Plus,travelling for medical purpose are mostly made because of its affordable cost,high quality in medical facilities, its good services and also type ofdestination.    According to Hazilah(2012), people from developing country tend to go to US or developed countrywhere they have better equipped medical facilities and are more advanced interm of technology.   However, there arealso trend where people from developed country such as US came to developingcountry to seek for medical purposes. Although they have a tip top facilitiesand technologies but the high cost had caused most of them to travel to theother part of the world where they have cheaper cost but still high quality offacilities. Hazilah (2012) said that in Britain, the long queue of the waitinglist of National Health Service (NHS) for surgery has causes the patients tofind any other alternative in other country.

She also said that two regionswhich is known as benefitted from medical tourism is Latin America and Asiacountry. Unlike Britain, Malaysia has almost no queues for most of its medicaltreatment (Wonderful Malaysia, 2017). According to Patients Beyond Border(2016), the healthcare has become so expensive and estimated approximately1400,000 million Americans will travel outside US for medical purpose.            According to Malaysia HealthcareTourism Council, a forecasts has made regarding Malaysia medical tourism marketwhich is expected to grow at a compounding annual growth rate (CAGR) of 30.05%over the next eight years which by the end of 2024 it can reach as much as US$3.

5 billion from US$424.96 million in 2016. Also, based on Transperancy Market Research,governmentactivities and lower cost of medical services compared to the same offered indeveloped countries of North America and Europe is the core factor of foreigncountries to choose Malaysia. Other than that, with the rising influx oftourists arrival from Middle East and North Africa (MENA) and other neighboringcountries and partly due to the economic factors such as tax exemption onrevenue generated from foreign patients and low exchange rate between RM andany other currencies.            (“Medical tourism to generate RM1.

3b revenue in 2017″, 2017) reportedthat Malaysia expected to hit RM 1.3 billion in revenues by 2017 which will becontributed from medical tourism alone. It is also reported that Malaysia hasbeen listed as the most popular places to go for medical tourism purposefollowed by Singapore and Thailand. Medical tourism first gained his name whenCuba tried to attract more foreign patients in order to gain more foreignexchange during its crisis in 1989 to 1993. Fortunately, Malaysia has tried thesame technique during the Asian Financial Crisis and has successfully rising upfrom the declining GDP.  Thelatest Budget 2018 presentation had announced that government will allocated anamount of RM 30 million in order to spur the growth of Malaysia’s healthcaretravel industry. Plus, this is in line with the National Key Economic Areas(NKEA) where it identified healthcare travel as a set to drive Malaysia as ahigh-income nation by 2020. Plus, the allocation is for the initiatives topromote Malaysia as the Asian Hub for Fertility Treatment, IVF and Cardiologyas well as the ‘Flagship Hospital Programme’.

Basedon the 2018 Budget, many initiatives has been done to promote this medicaltourism industry. First, in conjunction with the Asian Hub for Fertility, IVFand Cardiology, there will be a collaboration with the Department ofImmigration Malaysia to facilitate the entry of medical traveller throughMalaysia Healthcare Traveller Programme (MHTP) by introducing the eVisa(Medical) through online application services. Second, through the ‘FlagshipHospital Programme’ private hospital will be given initiative to increase thequality care and service, patient safety, quality management and serviceexperience to accelerate the growth. It will also help the private hospital tobe internationalized for the tourism purpose. Thirdly is the double taxdeduction for accreditation expenses to be extended for ambulatory care centreand dental clinics and lastly the exemption of income on value of increasedexport for healthcare services rate to be increased from 50% to 100% forprivate healthcare from YA 2018 to YA 2020. 

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