by MIDF RESEARCH
HEALTH services is one of the key contributors to Malaysia’s economy, contributing 2.1% to GDP in 2023. Real growth in private health services showed a more robust growth of 9.3% on average in 2022- 2024, higher than average growth of 5.8% in 2016-2019.
This reflects stronger demand for private healthcare services.
Healthcare sector is also a key contributor to job employment, driven by increased numbers of facilities, both in the government and private sectors.
One of the issues relating to the healthcare sector is that medical insurance premiums are rising by 40% to 70%. Rising medical insurance premiums are largely a consequence of cost pressures fuelled by medical inflation.
Medical inflation, defined as the increasing cost of healthcare products and services over time, directly contributes to higher premiums. These increased healthcare costs are eventually borne by patients. The challenge of medical inflation, with healthcare expenses growing faster than both wages and general inflation, is a global issue affecting countries beyond Malaysia.
Khazanah Nasional Bhd reported Malaysia’s estimated medical inflation rate for 2024 at 11.9%, significantly higher than the global average of 7.2% and exceed- ing rates in Indonesia (10.1%), Singapore (9.5%) and Thailand (7.1%).
Several key factors contribute to this higher inflation, including Malaysia’s ageing population (expected to become an aged society by 2045) and advancements in medical technology (such as new drugs, devices and services). Additionally, the ringgit’s performance impacts the cost of imported medical devices, predominantly sourced from the US.
In response to medical claims inflation, Malaysian insurers and takaful operators (ITOs) have implemented measures to moderate premium increases. These include a commitment to spread premium adjustments until 2026 and to limit annual premium hikes to under 10% for around 80% of policyholders. Furthermore, ITOs will temporarily freeze premium adjustments for policyholders aged 60 years and older for a period of one year from their policy’s anniversary, alongside other initiatives.
Malaysia had built a dual-tier healthcare system — the public sector, which is highly subsidised with a focus on accessibility and
the private sector, which is largely technologically-driven to cater to the urban middle-class and medical tourists. Malaysia is a leading hub for value-driven medical tourism, given its well-developed, moderate-to-high technological adoption and affordable quality treatments. Malaysia ranked fifth globally for the best care for medical tourists.
As of writing, Malaysia boasted over 150 government hospitals, 210 licensed private hospitals, nearly 10,000 private clinics and 1,100 public clinics. Additionally, there are six national healthcare insti- tutes under the National Institutes of Health, five globally recognised teaching hospitals and 11 specialised medical institutions.
Malaysia has yet to fully adopt the Diagnosis Related Group (DRG) system nationwide, yet DRG is believed to be a good step to standardise efficiency and cost containment, as well as encouraging data-driven care, which are crucial to support medical tourism while lessening the overburden on local patients.
Healthcare sector in Malaysia saw increasing hospital trans- actions in the region and a major healthcare IPO in the pipeline. The upcoming listing of Sunway
Bhd’s Sunway Healthcare Group may serve as a key catalyst to the healthcare sector as the IPO valua- tion of IPO may re-rate the industry valuation and set a new benchmark for peers.
We remain ‘Positive’ on the healthcare sector as Malaysia healthcare sector’s overall revenue is expected to grow at a five-year CAGR of 6%-8% to 2030.
- Abridged from MIDF Research’s report entitled Malaysia Healthcare-Bedrock of Malaysia dated May 5, 2025.
- This article first appeared in The Malaysian Reserve weekly print edition
The post Healthcare sector revenue poised for growth appeared first on The Malaysian Reserve.
