Medical driver of growth
Pakistan should focus on health services and set up a Medical City. The well-to-do Pakistani diasporas in the US and Canada should be invited to become partners.
By Shahid Javed Burki
Tuesday, 01 Sep, 2009
ONE of the themes explored in these columns has been how to develop the Pakistani economy by using a new driver of growth.
I have maintained that the economy has missed the opportunity when first the East Asian economies and then China used their productive sectors to create space for themselves in the markets of the industrial world.
The industries they developed first focused on the simple low-priced consumer goods and later on more sophisticated goods. South Korea, for instance, is now competing with Japan in the export of luxury automobiles, Taiwan exports laptop computers and has become a major contributor to the development of nanotechnology. China has begun to manufacture aircraft parts and is becoming a large developer of solar technology.
The Indian growth model took a different line, using the large supply of skilled engineers and the contacts the non-resi dent Indians — the NRIs — had in America’s corporate world to build a vibrant IT industry that is now the envy of the world. In a general sense, I have been suggesting that Pakistan should search for a niche it could develop to ex ploit its skill base and its own diasporas to gain access to the global market.
Given the way the global economy is growing and changing its structure, the opportunities lie in the service sector. Within the service sector Pakistan should perhaps focus on health services. To develop this point I will today make a specific suggestion in the hope that it will attract the attention of policymakers in Islamabad as well as operators in the private sector who have the requisite skills, experience and competence. But the government will need to take the initiative. In this context what could it do? It is in answering this question that I will get into some specifics.
The government may set up a public–private-sector company to develop a site and call it the Medical City. Some pleasant location should be found — something like the Kalar Kahar area on the Islamabad-Lahore Motorway. The area has a relatively pleasant climate, has a great deal of history and very good road connections with Lahore and Islamabad, two of the largest urban clusters in Pakistan.
While initially capital for developing the site could come from the government, the extremely well-to-do Pakistani diasporas in the US and Canada should also be invited to become partners. These diasporas have a large number of medical personnel who are well-to-do and looking for business opportunities in Pakistan. Some of them have already invested in setting up hospitals and clinics in the country but these initiatives were taken on an ad hoc basis.
Pakistani expatriates have set up hospitals in Lahore, Islamabad and Karachi but they are operating as separate institutions. The idea behind the establishment of the Medical City is to make these efforts fit into a well-developed programme.
To begin with this programme should concentrate on three things. It should establish a hospital that concentrates on catering to the needs of the Pakistani population in areas that are not well covered at this time. In focusing on these, the needs of the Middle East and Central Asia should also be kept in mind. These would then become the catchment areas for the City. A teaching hospital and nursing institute should be developed alongside the hospital with a view to meeting the need for skilled personnel.
The second part of the plan should include locating, alongside the hospital, specialised institutions dealing with some areas of concentrations. These institutions should provide not only healthcare in these areas but also research facilities. The aim should be to establish world-class institutions in specific areas that will attract students and researchers from neighbouring countries.
The third element of the programme should be the development of a financing plan for the building of the City and developing it over time. The plan should have a combination of public resources and private money. Initially the City should be presented as an investment opportunity for venture capital firms that specialise in healthcare. Once the facilities have been created, private-equity firms could be attracted to take positions in the enterprise with a view to taking it to the capital markets. This would provide continuous access to fresh capital.
What I am proposing is an establishment that would work for profit. That said, there should be adequate provision for making it possible for the poor to access the facilities located in the City. This could be done by creating a fund that should have contributions from the government as well charitable organisations.
Is something like this possible in a country in Pakistan’s situation? Would it be able to attract the clientele essential for making such an enterprise a success? Initially the City would cater to Pakistan’s large population but once it develops a reputation the geographic area from which the users come would expand. When Pakistan no lon ger has the reputation of being a place unsafe for foreigners it could become the destination for what has come to be called medical tourism. India has become a beneficiary of this type of market. There is no reason why the Indian experience cannot be replicated in Pakistan.
My view is that it will work for the reason that there are a variety of people and groups who are interested in some aspects of the programme outlined here but are looking for the support of an institution that will bring together these interests. The government is best able to do this.
A task force that includes both the public- and private-sector people could be assigned the job of developing these ideas. The people included in it should represent the various disciplines that will need to be tapped to give shape to this type of initiative. The task force could be located in the Planning Commission.