Monica Topliss pauses while eating breakfast in her Bangkok hotel to explain why she flew 7,300 kilometers from her home in Australia to go under a Thai plastic surgeon’s knife.
“The whole thing, airfares and hotel included, cost me 15,000 Australian dollars ($13,050), when back home, it would have been twice as much,” Topliss, a 48-year-old executive chef and author of cookbooks, says of the breast enhancement procedures and cosmetic dentistry she has just undergone. “And the surgeon did such a good job. It’s like the clock has been turned back 20 years. What’s more, I’m having a wonderful two- week holiday as well. Even the hospitals are like five-star hotels.”
Come for the gold-spired temples and sun-kissed beaches; stay for the low-cost, U.S.-accredited medical services. Or vice versa. That’s the Land of Smiles today, Bloomberg Markets magazine will report in its December issue. Foreigners seeking treatment for everything from open-heart surgery to gender reassignment have made Thailand the world’s No. 1 destination for so-called medical tourism, luring as many as 1.8 million overseas visitors in 2013, according to Patients Beyond Borders, a consulting firm based in Chapel Hill, North Carolina.
That ranks Thailand, a developing nation with a per capita gross domestic product of just $5,700, ahead of the U.S. — and also Thailand’s more prosperous Southeast Asian neighbors, Singapore and Malaysia — as the preferred destination for international patients. Last year, medical tourists pumped as much as $4.7 billion into the Thai economy, according to government statistics. “While the U.S. is still first choice for the ultrarich, Thailand is unquestionably No. 1 among everyone seeking affordable care,” Patients Beyond Borders founder Josef Woodman says.
Medical tourism is far from the only industry in which Thailand punches above its weight. The country is also among the world’s biggest exporters of products as diverse as computer disk drives, canned tuna, rice and rubber. It’s the region’s leading auto manufacturer and last year ranked as one of the top 10 global tourist destinations.
These strengths have earned Thailand considerable goodwill among investors, who have proved willing to stick with it even through months of political and social trauma. In the past year, the country has been shaken by deadly street protests, a military coup, three months of negative growth and a slump in tourism, which accounts for 10 percent of GDP. Even so, the benchmark SET Index jumped 22 percent this year through Nov. 18, compared with a 1.7 percent fall in the MSCI Emerging Markets Index.
‘So Far, So Good’
All while a junta steers the economy. “It’s so far, so good,” says Mark Mobius, executive chairman of San Mateo, California–based Templeton Emerging Markets Group. Mobius, who oversees about $45 billion from his offices in Hong Kong and Singapore, is so bullish on Thailand that he has made the nation of 68 million the largest geographical component of his $13.2 billion Templeton Asian Growth Fund, ahead of China and India.
Apart from strengths in manufacturing, agriculture and tourism, Mobius is also impressed by Thailand’s resilience in the face of previous political and economic shocks. “I think they will pull through, like they have in the past,” he says.
Medical tourism is doing its part. A gauge of 15 Thai hospital stocks, boosted by medical tourism, leapt 54 percent in 2014 as of Nov. 18. Among the prime beneficiaries of these soaring valuations are three of Thailand’s billionaire dynasties.
They include the family of the late Chaleo Yoovidhya, who in 1987 co-founded Red Bull GmbH, the world’s biggest energy- drink company, with Austrian billionaire Dietrich Mateschitz. The media-shy Yoovidhyas, whose 51 percent stake in Red Bull is worth about $10 billion, according to the Bloomberg Billionaires Index, own Bangkok’s Piyavate Hospital, where Topliss underwent her breast surgery.
Prasert Prasarttong-Osoth, 80, a physician-turned- entrepreneur who founded Bangkok Airways Co., Thailand’s oldest private carrier, owns 20 percent of Bangkok Dusit Medical Services Pcl, Thailand’s largest hospital operator. Bangkok Dusit stock rose 55 percent through Nov. 18. And the Sophonpanich family, whose patriarch, Chin Sophonpanich, founded Bangkok Bank Pcl, Thailand’s biggest lender by assets, owns 45 percent of Bumrungrad Hospital Pcl. Shares in Bumrungrad, which markets itself as Southeast Asia’s largest private health-care facility, have also jumped 55 percent this year.
“Hospital operators are among our top picks,” says Peerapong Jirasevijinda, who helps manage $15 billion at Bangkok-based BBL Asset Management Co. “We are still really upbeat even though they have rallied so much recently.”
The Thai military, which has staged 12 coups since 1932, hasn’t always inspired such confidence in investors. After the previous putsch, in 2006, the junta briefly imposed capital controls, prompting fund managers to dump stocks. This time, investors have been betting that the current crop of generals, led by army chief–turned–Prime Minister Prayuth Chan-Ocha, will get it right. In September, foreigners were net buyers of Thai stocks for a third straight month. The $657.1 million inflow was the highest since December 2012, although that was followed by an outflow of nearly $500 million in October.
Prayuth, 60, seized power on May 22, following six months of street protests against the elected government of Yingluck Shinawatra. He has thus far kept a lid on Thailand’s seemingly unbridgeable divisions between the urban elite and rural poor.
Since 2006, the country has repeatedly been thrown into turmoil by demonstrators representing color-coded rival factions — the so-called Yellow Shirts largely backed by the Bangkok middle classes and royalist establishment and the Red Shirt supporters of the populist former prime ministers Yingluck and her brother Thaksin, both of whom won elections only to have their governments deposed by coups. In the worst incidents, 92 people died when Red Shirts occupying Bangkok’s city center were driven out by the military in 2010, and Yellow Shirts shut down airports for a week in 2008, stranding 400,000 travelers. Prayuth has declared martial law and has succeeded in keeping protesters off the streets.
The general has also placed himself on the front line in the battle to revive an economy that shrank 2.2 percent in the first quarter of 2014. Appointing himself head of the Board of Investment, he promptly signed off on $4 billion of foreign investment that had been awaiting approval from the government he deposed. He also pledged to press ahead with his own, modified version of a $60 billion, 10-year program to upgrade railways, roads and ports.
Under Prayuth, Thailand has avoided a technical recession in 2014, growing 1.1 percent in the three months ended on June 30 and another 1.1 percent in the quarter ended Sept. 30. In October, Sommai Phasee, Prayuth’s finance minister, predicted that the economy would end up growing 2 percent in 2014.
Investors are betting the government’s infrastructure spending will provide a bonanza for the nation’s construction companies. As of Nov. 18, the SET’s Thai Construction Services Index had joined health-care stocks in jumping more than 50 percent for the year. The largest company in the index, Ch. Karnchang Pcl, had soared 82 percent, and the second biggest, Sino-Thai Engineering & Construction Pcl, had doubled in value.
Such investor euphoria may be premature, according to former Thai Finance Minister Korn Chatikavanij. Korn, a former Thailand chairman of JPMorgan Chase & Co., says the junta’s policies are too conservative to stimulate the economy; he predicts the stock market’s run will end soon because there is no assurance when the country will return to more-growth-focused civilian rule.
Prayuth has said elections won’t be held until at least late 2015 and then only after his junta approves a new constitution and enacts unspecified measures to “reform” Thai politics and society. “The market will do well over the long term but disappoint before that,” Korn says.
The country’s rulers are facing major economic challenges, according to Siam Commercial Bank Pcl, Thailand’s biggest lender by market value. While the government has predicted the economy will grow 4.5 percent in 2015, Sutapa Amornvivat, SCB’s chief economist, said at a conference in October that she believed growth will average only 3.5 percent in the medium term. Sutapa said Thailand would struggle to overcome high levels of household debt, an aging workforce, a slowing Chinese economy and increased competition from faster-growing Southeast Asian neighbors. The World Bank is also downbeat, predicting Thailand will grow 1.5 percent this year and 3.5 percent in 2015 — slower than any other major Asian economy.
On Oct. 6, Thais were reminded of another risk — an inevitable royal succession — when King Bhumibol Adulyadej, the world’s longest-reigning monarch, underwent surgery to remove his gall bladder. Since ascending to the throne in 1946, the revered Bhumibol, 86, has been an enduring presence through coups and revolving-door civilian regimes. His heir is Crown Prince Maha Vajiralongkorn, 62. Though palace officials pronounced the king’s surgery a success, Thai stocks fell 1.7 percent that day.
Amid such challenges, medical tourism is one industry in which Thailand can compete — on services, prices and style. Patients flying into Bangkok’s Suvarnabhumi Airport are greeted at special arrival desks before being whisked to hospitals where, in grand hotel-type lobbies, English-speaking concierges, as well as interpreters skilled in some 30 other languages, shepherd them to private rooms.
Once discharged, patients can recuperate in five-star hotels that charge as little as $100 a night. Medi Makeovers, a Sydney-based medical travel agency, is now the biggest corporate customer of Bangkok’s 500-room Grande Centre Point Hotel Terminal 21, according to Somchai Meesri, the hotel’s general manager.
“They take 10 percent of our rooms, ahead of Japanese clients such as Toyota and Honda,” says Somchai, whose hotel is owned by Land & Houses Pcl, Thailand’s biggest residential property developer. Medical tourists also stay longer, resting up after their procedures. “The average stay for other guests is three nights,” Somchai says. “For medical tourists, it is 10.”
Though Thailand has long aspired to medical excellence — the present king’s father graduated as an M.D. from Harvard University in 1927 — it wasn’t until 1997 that it began to tap a global market. That year, Bumrungrad opened the 500-bed Bumrungrad International Hospital with money borrowed in U.S. dollars. Six months later, Thailand was at the epicenter of the Asian financial crisis. The Thai baht collapsed along with the domestic market for premium private hospital care. “Our U.S.- dollar debt doubled on a local-currency basis,” says Chai Sophonpanich, Bumrungrad’s chairman.
In desperation, the hospital began to woo wealthy foreigners and expatriates living in nearby Asian countries, where medical services were less developed. Then, after the Sept. 11, 2001, attacks in the U.S., a new market in the Middle East opened up. “Patient flow increased as a result of more- stringent immigration policies by the USA and European countries for Middle East travelers,” Chai says. Within a decade, the number of Bumrungrad’s Middle Eastern patients leapt to 130,000 a year from 20,000. In 2002, Bumrungrad became the first hospital in Asia to win accreditation from the Joint Commission International, the global arm of the main standards-setting body for U.S. hospitals. Since then, 29 more Thai hospitals have also received that accreditation, including Bumrungrad’s main rival, Bangkok Hospital, the flagship of Bangkok Dusit.
Last year, Bumrungrad attracted 250,000 medical tourists, including 20,000 Americans and 8,000 Australians. Three weeks after paying $7,500 to have her nose reshaped and breasts enhanced in Bangkok, Australian Calli Graham sips coffee beside Sydney’s Bondi Beach and declares herself content. “It’s the best money I ever spent,” Graham, 30, says. “I got fantastic treatment and the satisfaction of knowing I am helping the economy of a developing country. It’s a win-win.”
With assistance from Anuchit Nguyen in Bangkok and Robert LaFranco in London.
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