Fiscal relief inadequate to attract investors
Entrepreneurs may not be interested in setting up large hospitals outside of Dhaka, Chattogram, Narayanganj, and Gazipur despite a 10-year tax break.
A shortage of qualified doctors and healthcare workers, their unwillingness to remain away from the major cities as a result of a lack of amenities, and uncertainty about the profits on return may prevent the government from making quality health services accessible to citizens.
Finance Minister AHM Mustafa Kamal offered the tax break in his budget speech on June 3 to ensure better healthcare facilities and decentralise medical services by reducing strain on the four cities.
A huge amount of investment would be necessary to create a 250-bed general hospital and a 200-bed specialised hospital to avail the tax benefit made available from the National Board of Revenue, according to entrepreneurs and analysts.
Besides, the amount of patients who may potentially visit such a doctor is insufficient to create this investment justifiable, they said, adding that a lack of amenities generally in most districts encourages doctors to are in major towns or cities.
It costs at least Tk 300 crore to set up a 200-bed specialised hospital. Creating a standard 250-bed general hospital would require Tk 200-250 crore.
"There are not enough patients, doctors, or other healthcare staff beyond your four districts. So, you cannot make any gain establishing a hospital with such high investment," said AM Shamim, managing director of Labaid Group, one of the primary private sector healthcare providers in Bangladesh.
"I don't think you will have enough interest in the tax exemption," he said.
Hospitals that will begin commercial functions from July 1 this year to June 30, 2030 will love the tax exemption. The hospitals will have to have the mentioned number of beds to qualify.
Shamim believes if the government wants to inspire the setting up of hospitals beyond your four zones, it will have to reduce the quantity of beds to 100.
Currently, Dhaka houses most big public and hostipal wards and a huge selection of clinics and diagnostic centres. The number of private hospitals and clinics in the country stands at 5,320.
Private hospitals account for 91,537 of the 146,200 beds available, because of the growing demand for healthcare aided by rising income and the expanding middle-class amid a reliable economic growth.
About $2 billion of Bangladesh's healthcare market has remained untapped. The demand for healthcare is growing by 21 % annually, according to Bangladesh Investment Development Authority.
Tapan Chowdhury, managing director of Square Group, which owns Square Hospitals, said the group had not been thinking of establishing any new hospital.
"The primary reason is that no doctor is ready to go beyond Dhaka. They say they do not get all the amenities they have to live there," he added.
However, United Hospital, another private doctor, plans to open a multispecialty 200-bed hospital in Jamalpur on October 1.
In Chattogram, it has a 500-bed hospital approaching under a public-private partnership with Bangladesh Railway. In Sylhet, the business has acquired land to construct a 150-bed hospital, said Shagufta Anwar, director for communication and business development at United Hospital.
ABM Haroon, managing director of Samorita Hospital, one of the oldest private hospitals in the united states, expressed interest to create a cancer hospital if the federal government provided loans at a low interest rate as well as the tax exemption.
"We will setup the hospital in an area where there is an effective communication system in order that people from other districts can go and receive medical services," he said.
"This will certainly reduce the strain on the hospitals in Dhaka."
Prof Maniruzzaman Bhuiyan, president of the Bangladesh Private Clinic and Diagnostic Owners' Association, said the tax holiday might inspire many entrepreneurs.
"But it is not clear yet just how many of them will be interested," he said.
Prof Rashid E Mahbub, pro-vice-chancellor of Bangabandhu Sheikh Mujib Medical University, said no sensible investor will be considering investing just as a result of the tax break offer.
"The investors must be confident about getting the money back. Otherwise, they'll not be keen," he said.
Syed Abdul Hamid, chairman of medical economics department at the University of Dhaka, said there is a crisis of qualified doctors in Bangladesh.
Labaid's Shamim continued to say that the federal government should decrease the import duty on spare parts for medical equipment and remove tariffs on the gear for diagnostic and treatment.
At present, hospitals count 35 per cent in import duties and taxes to get spare parts from the international market.
"We will be in a position to open branches if the federal government cuts the import tariffs," Shamim added.