A brief description of Indonesia's healthcare landscape and the challenges it faces. The country has no choice, but to attract greater investments (also importantly, foreign investments) in capacity creation.

1. CAT PULT
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Prepared by Catapult! July 2014!
Indonesia Healthcare Landscape!
An Overview!

2. Strictly Confidential
2
Contents!
!
1. Current Macro-Economic Situation 03
2. Current Healthcare Landscape 06
3. Healthcare – Drivers and Key Challenges 11
4. Back Up 13

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3
Macro-Economic Situation –
current state!

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4
A Brief Overview
!
* PPP is Public Private Partnerships
Sources: ADB – Asian Development Outlook (‘14); World Bank – Economic Quarterly (Mar ‘14) & Development Policy Review (May ‘14)
Contributors to Indonesia’s Growth – Demand-side § Overall, current macro-economic
situation demands caution given the
following:
- Return to current account deficit since
2012 (currently nearly 3% of GDP)
- Recent policies such as new trade &
foreign ownership laws (and ban on
unprocessed mineral exports), which
negatively impact investment climate
§ Only adjustment in structural
factors will bring about sustainable,
long-term positive change
- Policies that encourage manufacturing
investment (& investment in
infrastructure, not just in construction)
- Allow increased private sector
investments (on capex), incl. through
mechanisms such as PPP projects
4.6
6.2
6.5
6.3
5.8
-3.0
-1.0
1.0
3.0
5.0
7.0
2009 2010 2011 2012 2013
Private consumption Government consumption
Fixed investment Change in inventories
Net exports Statistical discrepancy
% GDP
Note: Y-axis, in %
Rapid economic expansion between 2009-2012 raised expectations significantly for Indonesia;
growth expectations, at least for the next 2 years, have been tempered back

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5
Short-to-Medium Term Challenges
basis key current macro issues!
* As of revised budget estimates for 2013
Sources: World Bank – Indonesia Development Policy Review (May 2014 Report); Asian Wall Street Journal (news item 03rd July 2014)
Going forward, unfavorable economic policies is a key risk; Unless foreign investment in
capacity creation is encouraged, Indonesia health system will remain under-served
Potential Risks –
Health Sector
1. Fiscal pressure,
impacting Government
spending
Challenges
§ Slowing economy has resulted in
lower government revenues (95% of
budget*), reducing its ability to spend
– Despite this trend, deficit is set
to rise in 2014, putting further
strain on government spending
§ Inadequate spending under
universal healthcare, which
would demand (read: needs)
increased funds allocation
from the govt.
§ Fixed investment as % of GDP has
started to dip, after rising strongly
(25% to ~33%, between 2007-12)
§ FDI is at <3% of GDP, has plateaued
in 2013 (& slowing in 2014)
§ Fiscal challenges could mean
required & necessary govt.
investment in health
infrastructure takes a back
seat vis-à-vis other priorities
§ Over-reliance on investments in
mining and in construction
§ Investment in high-technology
manufacturing not materializing
(e.g. Samsung, Blackberry, Foxconn)
§ Investments, incl. in new
technology/services in health
sector has not picked up à
Indonesians continue to go
abroad for treatment
2. Investment slowdown
(incl. Foreign Direct
Investment)
3. Lack of high value-
add manufacturing &
services
Why?

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6
Healthcare Landscape –
an overview!

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7
Healthcare Landscape, 1 of 2!
an overview
!
Central /
Other
Agencies*
District /
Provincial /
Municipal
Sub-District, Commune
and Village
Set Up
~ 200 hospitals (est. 26,500
beds all together)
~380 hospital (est. 48,500
beds)
~ 30,000 facilities (of which
only about 2,500 of these
provide in-patient facilities)
Notes
§ Only approx. 3/4th of the public
health budget is spent year-after-
year
§ Absenteeism remains high &
rampant (up to ~40% for doctors
remain absent from duties)
§ Continued dependence on
pharmacies/drug-stores for diagnosis
& prescription – self treatment (for
those ill) remains high (~50% in ’06)
Briefly,
§ Over & above the public facilities – as highlighted above – there are nearly 450 hospitals in the private sector
(accounting for ~ 37%, or 44,000 beds across the country), though they are largely concentrated in the top 5 cities
of Jakarta, Surabaya, Bali (Denpasar), Medan & Yogyakarta
§ Various estimates suggest Indonesians spend nearly US $ 1 Bn. in health services in neighboring Singapore &
Malaysia (medical tourism for the two countries)
§ There is unequal distribution of health personnel across the country, with an estimated 18 of the 33 provinces
having less than 1 doctor per puskesmas (sub-district level primary care facility)
Overall, an est. 1,050 hospitals in the country
* Other Agencies include Armed Forces, or Police, or other ministry-owned or State-owned Enterprise
Sources: World Bank, USAID Report (2009); Catapult analysis

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Overall, there were only approx. 70,000 medical doctors in the country, with only about 15,000 specialists
Healthcare Landscape, 2 of 2!
an overview
!
8
Sources: Ministry of Health; Health Financing in Indonesia, World Bank (2009); Indonesian Medical Council, http://www.inamc.or.id/
Java &
Bali
% of
Population
% of
Hospitals
% No. of
Beds
% of all
Doctors
59% 51% 55% 67%
Sumatra 22% 25% 23% 19%
Rest of
Country
19% 24% 22% 14%

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The employed
(~131 Mn.)
Health Insurance Coverage
an overview
!
Current
Population
(~240 Mn.)
Police and
Military
Military Health
Services 2.2 Mn.
Civil Servants
ASKES (Civil
Servants
insurance)
17.3 Mn.
Private Sector
JAMSOSTEK
(Workers Social
Security)
5.6 Mn.
Private (self-
insured) &
Commercial
Insurance
18.3 Mn.
No Insurance /
Reimbursement
System
88.4 Mn.
Self
Employed /
Unemployed
(~108 Mn.)
JAMKESMAS
(health insurance
for the poor)
76.4 Mn.*
JAMKESDA
(regional govt.
health insurance)
31.9 Mn.
~25 Mn.
insured
under
different
govt.
schemes
~18.3 Mn.
insured in
the private
sector
~108.3 Mn.
insured by
under 2
schemes
2012
Targeted to go to
257.5 Mn. (the
entire population)
by 2019
* Expected to increase to 86.4 Mn. people by end-2013 as part of transition to universal coverage
Notes: Figures may not fully add-up due to rounding-off error; data as of 2012
9

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10
Roadmap to Universal Health Coverage
present-day to 2019!
Universal Health Coverage under BPJS I
As of Jan 2014 2015 2016 2017 2018 2019
~122 Mn. under
mgmt. of BPJS I
257.5 Mn. people
covered by UHC
Private sector
coverage (according
to company size):
- 20% large
- 20% medium
- 10% small
- 10% micro
companies
Private sector
coverage(according
to company size):
- 50% large
- 50% medium
- 30% small
- 25% micro
Companies
All JAMKESDA
members will be
covered by BPJS
Private sector target
coverage (according
to company size):
- 75% of large
- 75% medium
- 50% small
- 40% micro
companies
Private sector
coverage (according
to company size):
- 100% large
- 100% medium
- 70% small
- 60% micro
companies
Private sector
coverage
(according to
company size):
- 100% large
- 100% medium
- 100% small
- 80% micro
companies
Target 100% of
Indonesia population
~15 Mn. people still
covered by
JAMKESDA
Jamkesmas, operational since 2005, is estimated to have ~122 Mn. members (as of Jan 2014),
when UHC started under BPJS I

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11
Healthcare – drivers and
key challenges!

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12
Drivers and Key Challenges
likely developments in health landscape!
Macro-Economic
factors
Health Financing
& Sector reforms
Disease Burden
& Treatment
Challenges
Infrastructure /
Capacity creation
§ Despite challenges,
economy is likely to be
among the fastest
growing within ASEAN
(5.5%+ y-o-y), in the
medium-term
§ Indonesia is rapidly
urbanizing & would
have ~135-140 Mn.
middle-income &
affluent consumers by
2020
§ Expenditure on health is
amongst the lowest in
the region (<3 % of GDP,
of which govt. spending is
~1.2%)
§ Implementation of the
Universal Health
Coverage scheme is the
biggest health reform
undertaken. Over time,
this has the potential to
transform health services
in the country, though
funding challenges remain
§ ~2/3rd of all deaths are
caused by non-
communicable
diseases (also, >50%
of deaths are due to
chronic conditions)
§ TB & other respiratory
diseases are significant
challenges, as are CVD
and certain cancers
§ There is also
significant variation in
treatment rates in
rural areas, given
generally poor facilities
§ Indonesia’s existing
health infrastructure is
old & dilapidated. It
suffers from the problem
of poor manpower
resources, lack of
investments in
equipments & other
systemic issues
(absenteeism, corruption)
§ Unless new, capacity is
created (in both, primary
& secondary care),
chronic issues to persist
Sources: Ministry of Health; World Bank Reports (multiple); Asia’s Next Big Opportunity – BCG (2013 Report); Unleashing Indonesia’s
Potential – McKinsey (2012 Report); Catapult analysis

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13
Back Up!

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Evolution of Indonesia’s Health Insurance Programs
up to 2012
!
Year Initiative
1968 Health Insurance for civil servants
1992 Social Security for Private Sector employees – Jamsostek, JPKM (HMOs) and CBHI
1999 JPS (Social Safety Net); financial assistance for the poor via ADB loan
2000
Comprehensive review of health insurance and amendment of constitution to prescribe the
rights to health care
2004
National Social Security (SJSN) Law (No. 40/2004) mandated social health insurance for the
entire population
2004 Introduction of Asuransi Kesehatan Masyarakat Miskin (health insurance for the poor)
2008 Askeskin is renamed Jamkesmas and extended to the near poor
2010
Law No. 17: The National Development Middle Plan (RPJMN) reconfirmed Indonesia’s
commitment to provide universal health coverage by 2014
2011
Constitution No. 24/2011: Social Security Providers Bill is passed, which mandates that
the Social Security Agency (BPJS) would be operational by January 1, 2014
Sources: http://www.uhcforward.org/content/indonesia; jamsosindonesia.com/english
14

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15
Key Elements of Universal Health Coverage
funding and resource contributions
!
* Original calculations were for a subsidy of between Rp 22,000 – Rp 27,000 per person per month for those categorized as poor; premium
contributions also differ by type of hospital accessed for services
** 3% paid by employer & 2% by employee (in certain cases share of contribution is 4% employer & 1% employee); though under Jamsostek it is
mandatory to register employees, compliance (estimates suggest only about 25% of formal sector employees are currently covered)
Note: DRG is Diagnosis Related Group; INA-CBG is Indonesia Definitions; exchange rate may not up to date; $ are US$
Resource Contributions Extent of Pooling Purchasing / Provision
Govt.
Rp 15,500 (~ $ 1.5)
payout* (revised
subsidy in 2013) /
person / mth. by the
govt. as contribution
for the poor
Existing funds to be pooled by 2014:
§ Jamkesmas
§ TNI/Polri (military & police)
§ Askes PNS (civil servants)
§ JPK Jamsostek
§ Some of Jamkesda
TOTAL: 121.6 million
Hospital
§ DRG payments based on
INA-CBG. Amounts to be
negotiated with hospital
associations & to vary
according to region
Formal
Sector
5% of wages**
shared between
employer &
employee
By 2019: total population, incl.
remainder of Jamkesda schemes
TOTAL: 257.5 million
Primary
Health
Centre
§ Monthly capitation
contribution based on
registered users for public
& private clinics
Informal
Sector
Self-funded
contribution of ~5-6%
of monthly income
(+some govt.
contribution)
BPJS as single institution managing
pooled funds to be formed by
conversion of PT Askes
Benefit
Package
§ Comprehensive
§ Initially public ward for
govt. contributor & 2nd
class ward for self-
funded; shift to 2nd class
for all by 2019

16. Strictly Confidential
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Tel.: +65 6321 8930, +65 9179 1410
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