What are the goals and benefits?

 

According to Der Spiegel, the German government is working on a six-point plan, aimed at supporting economic development in EU countries facing economic difficulties, which foresees the creation of Free Trade Zones.

A Free Trade Zone refers to a designated area in which companies are taxed very lightly or not at all in order to encourage economic activity.

Currently (2012), 31 countries have one or more free trade zones. Currently (2012) only Dubai has a Free Trade Zone dedicated to healthcare.

During or after 2012, I expect to see other countries announce the establishment of Healthcare Free Zones.  And at least one country feels that if one Free Zone is good, four or more is probably better!

Turkey has four cities wanting to become Health Tourism Free Zones, as part of Turkey’s newly-announced Free Zone policy and strategy.

Free Zones replace…medical tourism cities, hubs and clusters

Forget the scores of  “medical tourism cities, in name only” and self-proclaimed “medical tourism hubs” and “medical tourism clusters”.  They are “old hat”. The future points towards the establishment of Health Tourism Free Zones.

The goals associated with any Free Zone are to:

  •     Create employment
  •     Create “shared wealth”
  •     Stimulate the economy

Experience and observation indicate that Free Zones:

  •     Stimulate national economies
  •     Create employment at all educational levels
  •     Provide value added community benefits
  •     Increase infrastructure development and utilization

The advantages of Healthcare Free Zones

The most obvious competitive advantage of Health Tourism Free Zones, as Health Tourism Destinations, is related to cost and thus pricing levels. Less or no taxation means that services can be offered at lower prices.

Let us not forget that Free Trade Zones are also actual or virtual Free Ports. This means that importing equipment to set up facilities is not subject to import duties. This makes it more cost-effective (and attractive) for providers of services to set up a business.

The other benefit of such Zones is their ability to stimulate development in complementary industries, as well, including:

  •     Travel
  •     Tourism
  •     Hospitality
  •     Mass Catering

Creating a Healthcare Free Zone

So…how much does it cost to create a Healthcare Free Zone?

Surprisingly, starting a Free Trade Zone does not necessarily require millions of dollars. There are examples of Free Trade Zone projects that did not require funding support. Free Trade Zone projects seem to be more effort intensive rather than capital intensive. Nevertheless, the issues of financing and investment usually arise.

The issue of investment
The first thing that promoters of Free Zone Development will start looking for are financial investors (an elusive species…) Surprisingly, though, we read stories in which Fund Managers actually pursue project promoters with offers to invest. They view Free Trade Zones supported by the State or Government as secure infrastructure investments.

In rare cases, wise and enlightened governments introduce the idea of creating economic free zones. In most instances, however, for those coming up with the idea, it is a matter of having to lobby the government.

In this case, the principal challenge and difficulty is to convince Government that the country has “nothing to lose” and potentially “much to gain”. The exercise involves going from Minister to Minister explaining the net benefits to the National Economy. We know that getting any Minister to agree to anything is difficult and time-consuming.  And, as one would expect, getting all the relevant Ministers, and the Government,  to approve, and vote into law, such an initiative, proves very difficult indeed.

Experience, regarding the establishment of Free Trade Zones, indicates that the initiative needs to be led from the very top (decision-making level). Guidance and input from outside “experts” is essential, but will only produce limited results without the blessing and active support of key Ministers and Ministries.

Access to logistics
The term logistics comes from the Greek word logistiki meaning financial organization, and primarily refers to the management of the movement or flow of goods, services and persons. Experts on the subject point out that Free Zones rely on “logistics”, and that it is pointless and a waste of time and effort to even consider establishing a Free Trade Zone if the logistics are wrong.

Logistics in this instance take the form of access /accessibility:

  •     Sea Port
  •     Air Port
  •     River Port
  •     Highway / Road
  •     Railway

The other “access” needs include:

  •     Adequate power and ideally, access to an alternative power source.
  •     Availability of high speed telecommunications.
  •     Access to a pool of available labour.
  •     Access to a sophisticated and transparent banking system (without over-regulation from the Central Bank)

The need to tap into complementary fields of expertise

When it comes to implementing plans for Free Trade Zones, having the knowledge is a “good thing” but what is really needed, is the ability (and proof of prior experience) to implement the business model. There is a need for expertise (or access to expertise) in such fields as banking and finance, administration, ICT, human resources development, engineering and planning (and quite a few more!).

But even Free Zone Experts will need to tap into sector-specific expertise when it comes to sector-specific Free Zones such as Healthcare Free Zones.

FURTHER CONTENT PUBLISHED BY THIS AUTHOR

Amateur to professional

Articles, 01 August, 2018

Medical tourism clusters are not in the right league

“Fragmentistan Syndrome”

Articles, 01 March, 2017

The “Fragmentistan Syndrome” in medical tourism

Industry Representative Bodies

Articles, 31 January, 2017

The raison d'être of Health Tourism Industry Representative Bodies

Health tourism improvements

Articles, 21 September, 2016

Making health tourism “truly” sustainable and resilient – for all

The rise of domestic medical tourism

Articles, 10 December, 2015

Why more and more medical tourism business is becoming “domestic”

Insurance funded treatment abroad

Articles, 15 October, 2015

The future of “Health-Plan-Funded” treatment abroad

A fortune in pyramids

Articles, 12 June, 2015

Is there a fortune at the bottom of the medical tourism pyramid?

Saying NO

Articles, 24 November, 2014

Why some countries are turning their back on medical tourism.

"Buyers" at events

Articles, 07 August, 2014

Hosted "Buyers" fail to live up to expectations

Who leads "Health Tourism Destinations"?

Articles, 22 May, 2014

Are there leaders, or does he who pays, speaks?

The Russian Patient

Articles, 22 April, 2014

Russia is the new focus for medical tourist companies.

Why "Google Health" failed

Articles, 09 January, 2014

Examining the electronic health record "Death Trap"

Greece as a destination

Articles, 29 November, 2013

Times are changing as Greece tries to become a major destination.

Luxury and Medicine

Articles, 07 October, 2013

If medical tourism is all about cost, why so many luxury destinations?

Conventional bankruptcy

Articles, 27 August, 2013

The old models have failed, but what replaces them?

State and Government

Articles, 17 June, 2013

The role of governments in developing health tourism

Haves and wants

Articles, 12 April, 2013

How have to travel is being replaced by wanting to travel

Changing motivations

Articles, 01 February, 2013

Is medical tourism experiencing a shift from 'have to' to 'want to'

Discovering medical tourism

Articles, 22 October, 2012

Despite the recession, there's still growth in medical tourism

International medical children

Articles, 18 May, 2012

How the EU directive may stimulate an increase in child care

On ice?

Articles, 23 April, 2012

Dr Constantine Constantinides talks on the EU directive on Cross Border Healthcare

Short/long term

Articles, 06 March, 2012

Which should we focus on in medical tourism

Survivor bias

Articles, 23 January, 2012

Past success is no predictor of future eminence

Healthcare standards

Articles, 21 October, 2011

Do standards need to have a regional flavour?

Is it enough?

Articles, 28 September, 2011

Can medical tourism on its own be sustainable?

Understanding the market

Articles, 03 June, 2011

Why would you want to get into the medical tourism market?

Exploring the health tourism market

Articles, 28 January, 2011

Constantine Constantinides provides advice as to understanding the health tourism market

Government incentives for health tourism

Articles, 29 November, 2010

Constantine Constantinides speaks on the role of government in medical travel

Failure?

Articles, 26 August, 2010

Constantine Constantinides talks on why medical tourism businesses fail

Should accreditation be sold

Articles, 29 July, 2010

Constantine Constantinides talks on how should handle Destination Marketing

Blowing their own trumpet

Articles, 26 February, 2010

Is there any noise from the market, or is it all in the industry?

Brightest Africa

Articles, 20 January, 2010

Is Africa always a exporter, or can it be a healthcare destination?

Cross-border opposition

Articles, 10 December, 2009

Spain and other nations blocked the draft proposal, we ask the experts why

The resentment factor

Articles, 15 October, 2009

Health tourism is often resented by countries, but can it have positive effects?

Free and open debate

Articles, 22 September, 2009

Constantine Constantinides voices concern over the expression of opinions in the industry

Medical tourism in denial

Articles, 30 July, 2009

Supply is exceeding demand in medical tourism, but the industry is in denial

Advertisement

ADD AN ARTICLE

Do you have an article that you’d like to share with the medical travel industry?

Publish for FREE on IMTJ.

ADD ARTICLE

Related Articles

Amateur to professional

01 August, 2018

Medical tourism clusters are not in the right league

Dimensions of medical tourism clusters

23 March, 2018

Five myths about medical tourism clusters

Medical tourism associations reducing?

01 September, 2016

Where have all the national and regional associations gone?

Destination: Dominican Republic

05 March, 2014

Health and wellness offerings in the Dominican Republic

A changing relationship

23 September, 2013

Shifting trends offer incentives for US Medical Centres