On February 4th 2016, TPP Agreement was officially signed, which is considered as one of the most important milestones for Vietnam and many countries in the world. What TPP is, what are opportunities and challenges for Vietnamese private healthcare providers in TPP integration?
TPP (The Trans-Pacific Partnership) known as The Trans-Pacific Partnership Agreement was established in 2005 on the basis of The Trans-Pacific Economic Partnership Agreement among the four countries: Brunei, Chile, New Zealand and Singapore. In 2014, there were twelve countries of Asia-Pacific region, namely Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, the United States, Malaysia and Vietnam, participating in negotiation of joining the TTP.
TPP is considered as a Trade Agreement showing top quality and high competition. It deals with all traditional trade problems as well as new trade issues among its members. TPP is estimated to contribute approximately 40% of global GDP and more than 30% of global trade.
The private healthcare system, especially private hospitals in Vietnam, has expericenced nearly 15 years of establishment and development. While few hospitals and clinics are quite successful, some private medical centers have entered into joint ventures, implemented corporate mergers and acquisitions, and a variety of private medical centers are at risk of bankruptcy unless they get ready for the changes in the period of international integration.
Once Vietnam and other countries participate in TTP integration, there are fundamental changes affecting not only Vietnamese private healthcare sector but also other sectors within 12 member countries.
Opportunities for private healthcare system in Vietnam in the period of TPP integration:
TPP will create an equal competition between private medical enterprises and public healthcare centers. As these public healthcare centers will no longer be protected by the Government, they themselves need to actively improve the competition, as a result, there will be more chances for equal competition for the private healthcare system.
There will be more and more opportunities to attract investment and cooperation with developed coutries with the aim of modernizing and improving the quality of medical services. These member countries have chances to discuss, gain knowledge, implement trade and exchange goods to each other. Moreover, some member countries of TPP could be potential markets for investors from countries outside TPP, namely India, France, South Korea and North Korea,… Therefore, Vietnamese medical enterprises will have more opportunities to gain access to high quality medical equipments and transparent international bidding mechanism.
Most of pharmaceutical and medical equipment enterprises would have the chance to gain access to high-quality material from developed member countries.
Some Vietnamese items, medical services can be exported to other member countries such as a small number of medical professional techniques of in vitro fertilization (IVF) or endoscopic thyroid surgery.
Moreover, Vietnam’s pharmaceutical sector will also get more opportunities thanks to TPP integration policies. According to a study, pharmaceutical and medical equipment enterprises with a large distribution channel will have more chances for cooperations or mergers and acquisitions with international pharmaceutical enterprises. Thus, the items namely dietary supplements, herbs with low cost raw materials could be exported to other member countries.
Challenges for private healthcare system in Vietnam when joining TPP:
- The legal systems and international regulations: Vietnamese suppliers of medical equipments and products are not ready for the game, they could face many difficulties from the legal systems and rules of international competitive bidding.
- Languages: while English is a native and official language of almost TPP countries, English is not commonly used in Vietnam. Without the timely and proper preparation for this international language, Vietnam will face a variety of challenges in the future.
- Private healthcare system in Vietnam: joining TPP, investors in Vietnam having advantages in textiles, footwear, agricultural products will have the opportunity to access and export goods to potential markets such as the United States, Japan… However, in terms of some sectors which are not the strength of Vietnam including health sector. The private medical system in Vietnam is considered as the lower group, this brings more chanllenges to Vietnam’s health sector.
- Changes in competition models in private medical market: recently, private healthcare enterprises in Vietnam compete with each other or with public health centers. However, apart from these above competitition models, when joining TPP, Vietnam’s private healthcare enterprises will have other competitors, these are private enterprises from TPP members that are considered to be high group because they have trongly implemented international trade.
- In the early stages, TPP integration only has impact on premium segments of the market among member countries, and then it wil has effect on mid-segment and lower segment. Unless private healthcare system in Vietnam is given suitable and timely solution, these 3 segments (premium-mid-low) will be dominated by global corporations and enterprises. Similarly, there will be changes in terms of medical staffs. The high-qualified health care providers with scrupulous preparation for integration will be highly appreciated and have more oppotunites to work in medical centers of international standards while the low-qualified ones will be taken out of the game.
Joining TPP, in a simple way, is a step foward from individual activity to group activities. Once entering the Agreement, all members accept to reduce individuality in order to adapt to common regualtions and rules of the group. In other words, the private healthcare enterprises will have a new milestone, they are to obey common rules and regulations, as well as gain more opportunities or encounter more challeges. Besides TTP, ASEAN Economic Community (AEC) which was established on December 31st 2015 also gives priority to healthcare sector in term of liberalization. In order to obtain significant development and reduce the risk of failure in the period of international integration, private medical enterprises and corporations in Vietnam need good preparation and timely, proper solution.