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It will renovate two hospitals and build five new ones in next 5-10 years

PROPERTY company Lippo Karawaci will be pouring US$500 million into its Siloam Hospitals Group in the next five to 10 years to spruce up two of its four hospitals and build five new ones.

The expansion targets middle to upper-class Indonesian patients, about 200,000 of whom have been flying to Singapore each year spending at least US$600 million on medical treatment.

The group hopes to reverse this outflow and capture some of the money spent on health.

With the completion of the exercise, Lippo Karawaci’s president-director, Viven G Sitiabudi, expects to more than triple patient numbers, from 600,000 now to two million.

In the process, 4,000 new jobs will be created, she said.

Phase one of the expansion involves renovating two Siloam hospitals in West Jakarta and Surabaya. Both are assets under the portfolio of First Reit, a Singapore-listed real estate investment trust that Lippo launched in December.

Each hospital now has 175-205 beds, but will be expanded to have 250 beds. Built between 1977 and 1991, these hospitals will now get ‘cutting-edge technologies’ to bring clinical procedures up to date. Further details on the makeover will be forthcoming in the next couple of months, the group promised.

Of the five new hospitals, four will be in Jakarta and the fifth in Bandung. Each hospital will have 250 beds.

The group said its hospitals will each develop an area of speciality, in keeping with trends at other international medical centres.

The new hospital at Semanggi in downtown Jakarta, for instance, will house a cancer centre. Scheduled for opening by December next year, it will be one of Lippo’s first new hospitals to be completed.

Ms Sitiabudi said: ‘Nearly 800,00 people are afflicted with various forms of cancer every year in Indonesia. So it makes sense that our first new project will be the Siloam Hospitals Semanggi and Mochtar Riady Comprehensive Cancer Center.’

She said the renovation of the two hospitals and construction of the new Semanggi facilities will cost about US$50 million.

The developments will be financed in part by the S$100 million raised last year from the listing of First Reit in Singapore, Ms Sitiabudi said.

In a separate announcement earlier, Lippo Karawaci said it was studying the possibility of issuing a second Reit.

But no details were given as to which properties would be included in the portfolio or where the Reit will be listed.

‘Management is convinced that Reit management is an effective way of bringing in foreign capital and promoting the Indonesian property market to the international investment community,’ the firm said in an announcement on its website.

Source : Business Times - 11 May 2007