In October 2024, Malaysia’s Prime Minister and Minister of Finance, Anwar Ibrahim, announced the 2025 government budget, allocating RM45.3bn to the healthcare sector. This allocation marks a 10% increase from RM41.2bn allocated in 2024 and means the sector will receive the second largest budgetary allocation, following education. Of the total healthcare budget, RM1.3bn will fund upgrades and repairs to public hospitals, while RM300mn has been allocated to upgrade dilapidated clinics, particularly in rural areas, to enable more comprehensive and efficient care.

Giving its commentary on the healthcare budget, BMI a Fitch Solutions agency, said Malaysia has prioritised healthcare infrastructure enhancements in recent years to address challenges such as an ageing population, the growing burden of chronic diseases and urban-rural disparities. The 2025 budget continues this trend, reflecting sustained commitments to strengthening the public health system. Malaysia’s increasing healthcare budget allocations, coupled with rising demand for private healthcare both domestically and from medical tourists, has prompted us to revise our five- year growth forecast for health expenditure.

BMI said it now expects health expenditure to increase at a compound annual growth rate of 8.7% over the 2023-2028 period, up from previous forecast of 8.3%. Private hospitals are anticipated to experience increased demand for services through stronger collaborations with the public sector and the rollback of healthcare subsidies for high-income individuals. In its 2025 budget, the Ministry of Health stated it will enhance collaborations with 91 private hospitals to outsource public health patients for services such as cardiology, radiology, and nephrology. Additionally, the ministry has reiterated it will continue outsourcing heart patients among government pensioners aged 65 and above through the National Heart Institute. These initiatives will drive increased demand in private hospitals that are well-equipped to handle specialised treatments and complex procedures and aims to alleviate the burden on public healthcare facilities.

The government also announced the gradual rollback of education and healthcare subsidies for the top 15% income group. This policy shift is likely to further boost demand for private healthcare, with higher-income individuals turning to private healthcare services. The government aims to reallocate resources to upgrade medical equipment and services for lower-income groups.

Collaboration between Malaysia’s public and private healthcare sectors will become increasingly important as demand for care rises and staff shortages persist. BMI noted, despite increased public health spending in recent years, Malaysia’s public healthcare system faces significant challenges, including a shortage of doctors, surgeons and nurses, which exacerbates the issue of long waiting times. For instance, Penang General Hospital recently reported that its waiting list for heart surgeries has surged to 850 people, while the Sultan Idris Shah Hospital in Selangor estimated that 1,000 patients were waiting for urgent heart surgery as of July 2024.

The public health system will increasingly come under pressure as Malaysia’s population ages and the issue of staff shortages remains. This will necessitate continued collaboration between the public and private sectors to improve efficiency and leverage the advanced capabilities and infrastructure of private hospitals, which can help to improve healthcare outcomes and reduce waiting times.

Malaysia will continue to boost its self-sufficiency in medical products by adopting policies that support domestic production. A key announcement from the budget is the government’s implementation of an offtake policy to procure pharmaceutical products and critical medical devices. This policy will support the local medical device industry by prioritising purchases from companies that invest in manufacturing these products within the country. Malaysia will steadily increase its domestic production of medical products through supportive policies such as the New Industrial Master Plan 2030, which will enhance the country’s industrial sector, including the medical device industry.

The plan will continue to focus on producing more technologically advanced products, with the goal of developing a more sustainable and globally competitive medical device industry. This includes diagnostic products such as MRI machines and in-vitro diagnostics, as well as orthopaedic and dental implants.