The International Finance Corporation (IFC) said on Monday that it will invest up to $15 million in IDR equivalent in PT. Tawada Healthcare (Tawada Healthcare) to support the company’s medical device and consumables distribution business while also enabling it to expand its manufacturing operations.

The investment is also expected to improve access to more affordable healthcare for Indonesians by providing a significant boost to Indonesia’s healthcare and medical device industry, IFC said in a statement.

The agreement, announced on Monday, marks the first deal under a Memorandum of Understanding (MoU) between 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 IFC, the largest global development institution focused on the private sector in emerging markets 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 IFC, in the form of equity, will enable Tawada to grow its distribution business and will provide capital for the construction of a new manufacturing facility in Central Java.

“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,” said Satrija Sumarkho, Chief Executive of Tawada Healthcare.

“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. With IFC’s investment, and Tawada’s network and infrastructure, we are confident of playing a significant and important role in Indonesia’s healthcare transformation,” he said.

According to the statement, 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 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.

“It was only a few months ago that IFC signed an MoU with the Indonesian Ministry of Health to support the healthcare sector in Indonesia and I am proud to say that this investment shows that we are already delivering on our commitment, which at the end of the day will result in better health outcomes for the people of Indonesia,” said Euan Marshall, IFC Country Manager for Indonesia and Timor-Leste.

“With this investment, we will be directly contributing to overcoming some of the challenges faced by the healthcare sector, particularly in relation to manufacturing and distribution, that were highlighted by the COVID-19 pandemic, and which placed enormous pressure on Indonesia’s healthcare system,” he added.

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.

It’s also in keeping with 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.

The MoU between IFC and the Indonesian Ministry of Health, signed in May, included the launch of the Indonesian Health Sector Growth Program under which IFC committed to support Indonesian companies in the healthcare sector through advisory services and financing.

In addition, IFC agreed to facilitate foreign direct investment in the healthcare sector.

Tawada Healthcare is a firm 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 centers and laboratories across Indonesia.

Founded in 1999 and headquartered in Jakarta, Tawada Healthcare represents more than 45 globally renowned brands including Abbott, Leica, Olympus, and Baxter.

Tawada Healthcare is currently owned by PT Triputra Berjaya and Capsquare Asia Partners, and has IFC as a shareholder.

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