The International Finance Corporation (IFC) will invest up to US$15 million in rupiah equivalent in Tawada Healthcare of Indonesia to support the company’s medical device and consumables distribution business while also enabling it to expand its manufacturing operations. The investment is likewise expected to improve access to more affordable healthcare for Indonesians by providing a significant boost to the country’s healthcare and medical device industry.
The investment, announced on September 18, marks the first deal under a memorandum of understanding (MoU) between the IFC and the Indonesian Ministry of Health that included an undertaking to identify investment opportunities to support the pharmaceutical, vaccine and medical technology industries, and strengthen resilience in the Indonesian healthcare sector.
The partnership between the IFC and Tawada Healthcare is also expected to contribute to job creation and economic growth by fostering the development of local industries, attracting investment and promoting technological advancements. The investment from the IFC, in the form of equity, will enable Tawada Healthcare to grow its distribution business and will provide capital for the construction of a new manufacturing facility in Central Java.
The MoU between the IFC and the Indonesian Ministry of Health, signed in May, included the launch of the Indonesian Health Sector Growth Programme under which the IFC committed to support Indonesian companies in the healthcare sector through advisory services and financing. In addition, the IFC agreed to facilitate foreign direct investment in the healthcare sector.
Tawada Healthcare chief executive Satrija Sumarkho notes that Indonesia lags most countries in terms of access to quality healthcare. “The Covid-19 pandemic changed the public’s mindset with the nation recognizing that it needs to secure access to healthcare for its people in order to fulfil its dream of becoming a developed nation by 2045,” he points out. “The government has since poured investment into building more hospitals and clinics, purchasing quality medical devices, building a workforce of qualified healthcare practitioners, and handing out incentives to the private sector to build a local medical industry. The private sector has also relentlessly built more and more hospitals.”
Indonesia has achieved significant gains in health outcomes over the past two decades but still faces some key challenges. The lack of affordable and high-quality manufacturing capacity is a barrier to producing medical equipment and devices locally, while insufficiently developed distribution channels limit the ability to reach the underserved segments in remote areas. By scaling up local production and improving the distribution of medical devices, the investment from the IFC is expected to contribute to increased accessibility and affordability, especially in remote and underserved areas, and boost healthcare infrastructure by ensuring a steady and reliable supply of medical devices.
The IFC country manager for Indonesia and Timor Leste Eun Marshall says the IFC investment will be directly contributing to overcoming some of the challenges faced by Indonesia’s healthcare sector, particularly in relation to manufacturing and distribution, that were highlighted by the Covid-19 pandemic, and which placed enormous pressure on the country’s healthcare system.
The investment, which is aligned with local policies enacted in 2021 by the National Public Procurement Agency of Indonesia, is also expected to improve resilience during health emergencies by making available a local supply of medical goods and thus reducing vulnerabilities associated with disruptions in global supply chains.
As well, the investment is in keeping with the IFC’s own strategy for Indonesia, including the need to address persistent access gaps in remote areas, and is aligned with the World Bank’s approach to overcoming the adverse effects of the pandemic on human capital, building resilience to better handle a variety of shocks including those related to health, and promoting inclusive growth.
Founded in 1999, Tawada Healthcare supplies and maintains healthcare and medical devices, as well as markets and distributes medical consumables to more than 6,000 customers nationwide, including leading hospitals, medical centres and laboratories across Indonesia. Headquartered in Jakarta, the company is currently owned by Triputra Berjaya and Capsquare Asia Partners.