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Malaysia’s public and private healthcare sectors to grow at CAGR of 8% and 7.3% respectively by 2028

The Malaysian healthcare sectors, both public and private, are anticipated to witness a five-year compound annual growth rate (CAGR) of 8% and 7.3% respectively in healthcare expenditure, driven by strong demand.

The government’s focus on modernizing healthcare facilities, addressing staffing issues, and Malaysia’s growing medical tourism industry contribute to this growth.



MALAYSIA: The public and private healthcare sectors in Malaysia are projected to experience a compound annual growth rate (CAGR) of 8% and 7.3% respectively in healthcare expenditure over the next five years.

BMI, a Fitch Solutions said the forecast growth was due to high demand from the majority of the population.

“Healthcare remains high on the government agenda with persisting issues such as overcrowding in hospitals and understaffing, which became highly apparent during the Covid-19 pandemic.

“Addressing these issues is a key target for the government, with the 2023 budget focusing on modernising and expanding healthcare facilities, procuring medicines, reagents, vaccines, and medical consumables and recruiting more medical officers, dentists and pharmacists.

“In addition, Malaysia’s ageing population and growing chronic disease burden will support expenditure growth. Private sector growth will be supported by growing healthcare demand as well as Malaysia’s efforts to boost its medical tourism industry,” it said in its Malaysia’s healthcare sector outlook on Tuesday (8 Aug).

Over the long-term, Malaysia is seeking to promote more sustainable financing for healthcare

Significant reforms to Malaysia’s healthcare system have been proposed in the Health White Paper, produced by the Ministry of Health and tabled to parliament in June 2023.

The paper is a 15-year healthcare reform plan and a key proposal of the paper is to ensure that healthcare financing is sustainable over the long term amid current and future healthcare challenges.

These include increasing life expectancy, a growing incidence of non-communicable and chronic diseases and mental health issues, all of which contribute to rising healthcare costs.

The white paper suggests the implementation of a national health insurance scheme to ensure sustainable financing.

The public healthcare is currently funded through federal government taxes and general revenue, with current healthcare coverage varied across the country.

Malaysia’s Health Minister has stated that if the white paper is approved, it would start carrying out the development of the insurance scheme and work on calculating the appropriate contribution rate.

“The paper also proposes gradually changing the role of the Ministry of Health as service provider, with the aim to shift this to autonomous healthcare facilities, while the Ministry of Health will continue to act as regulator and policymaker.

“We expect public healthcare expenditure will continue to be reassessed over the coming years, despite the significant increase in spending proposed in the 2023 budget, as the government seeks to minimise rising healthcare costs.

“As we have previously written about, pharmaceutical price controls in Malaysia are one area the government has been targeting to reduce healthcare costs,” the research house said.

Malaysia will continue to promote digital health as part of its strategy

In May 2023, the Ministry of Health announced that it is aiming for a nationwide rollout of the national electronic medical records system by 2026.

“The record system will target improvements to healthcare services provided at public healthcare facilities through a digital database, the database will enable healthcare facilities to keep records of information such as clinical laboratory results, pharmacies, and nursing.

“The Ministry of Health has stated that the goal is to improve the coordination of care and to gather population health data to improve patient outcomes and promote a more sustainable healthcare system.

“We have recently written about Malaysia’s developing digital health landscape and how the country is targeting international collaborations to improve its digital health capabilities, and this latest announcement bodes well for the continued progress of digital health technologies,” it said.


The research arm said key downside risks to the widespread implementation of digital health technologies, however, including efforts to promote more sustainable financing, could slow the progress of digital health technologies within public facilities.

“Additional risks include regulatory barriers and concerns over patient privacy and security, risks that are experienced when markets globally are implementing digital health technologies.


Key goals for Malaysia’s digital health strategy are to improve access to medical care and to promote its medical tourism industry, which, prior to the Covid-19 pandemic had been growing in terms of number of visitors per year and revenue.

“The latest data released by Malaysia’s Healthcare Travel Council show that the medical tourism industry is recovering, although number of visitors and revenues are yet to reach pre-pandemic levels,” it said.

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