Kuala Lumpur, 10 October 2025 — The health allocation under the Federal Budget 2026 tabled in Parliament by the Finance Minister today sets an encouraging direction in key areas, particularly modernising of physical infrastructure and improving human resources. However, it falls short in several areas, namely aged care, sugar subsidies, primary care, tobacco, and healthcare financing reforms.

It would be a mistake to consider that there has been overspending in health. In 2018, the Auditor General’s report of the health sector clearly stated that the public health system is over congested, understaffed and suffering from underinvestment. It is 2025 but the situation remains serious and in crisis,” said Azrul Mohd Khalib, Chief Executive of the Galen Centre for Health & Social Policy, when commenting on the tabling of the federal budget bill this evening.

“Unfortunately, the 2026 allocation at RM 46.52 billion is only an anaemic 2.8 percent higher than 2025 or an increase of around RM1.3 billion, which is similar to increases made by pre-Madani governments. Health is 9.9 percent of the total Federal Budget 2026 of RM 470 billion. However, it is important to see how it is being spent.”

“Almost all of that increase will go towards operating expenditure. MOH will have RM39.776 billion for its operating expenditure and RM6.74 billion for development expenditure. The latter has remained static which does not bode well for future-proofing and increasing investments in health, especially when Malaysia is facing multiple health crises including non-communicable diseases and an aging population. ”

“The announcement regarding the GP consultation fee which has gone unrevised for decades is certainly welcomed. Raising the fee to a maximum of RM 80 is certainly a positive move. GP clinics play a crucial role in primary care by providing accessible, quality care while reducing congestion at government hospitals. GP clinics are often small businesses which must conform to strict healthcare regulations, realistic costs of doing business, as well as ensure fair and adequate compensation for its workers. GP clinics are not subsidised,” Azrul pointed out.

“We are glad to hear of the Elaun Tugas Atas Panggilan (ETAP) increase of 40 percent across the board. This will ensure that the government’s promise to its medical officers, specialists and dental officers are kept. Together with the announcement of additional permanent positions for nurses and doctors, these will go a long way towards increasing the morale, spirit, appreciation and retention of our healthcare professionals. It is clear that the Government is making a serious effort to recruit, retain and invest in its skilled healthcare workers.”

“Unfortunately, the budget falls short in aged care. The number of elderly people, aged 60 years old and above, will increase to 15.3% in 2030 to approximately 5.8 million. It is currently at 11%. The needs of the aged population will increase significantly over the years, especially aged care. Aged care should not be confused with aged welfare, which is covered in the budget. Malaysia has been deemed as insufficiently prepared in infrastructure and services related to aged care such as treatment and care which is four times more costly. Older people are likely to suffer and be left behind, if aged care is not addressed.

“It is a mystery as to why the Government is retaining its sugar subsidies despite its ongoing War on Sugar. Despite the sugar-sweetened beverages (SSB) tax which collects an estimated RM400 million annually, these sugar subsidies or incentive payments being paid to sugar manufacturers are costing the Malaysian taxpayer up to RM 500 million to RM 600 million yearly. These subsidies are not even wanted by the manufacturers themselves who have asked for the price of sugar to be floated. This money could have been used to fund aged care.”

“A look at the Budget document indicates that the allocation for Skim Perubatan MADANI has been reduced by 50% to RM 50 million, which is very surprising. This was considered one of the more successful programmes focusing on primary care. It aimed to reduce overcrowding at government hospitals and to assist the B40 group in obtaining acute primary care services or outpatient treatment at nearby private general practitioner (GP) clinics.”

“The Skim Perubatan Madani introduced by Prime Minister Anwar Ibrahim during the tabling of the 2023 Budget was expected to benefit 700,000 households, utilising the proven and successful public-private partnership models from Selangor and ProtectHealth Corporation. We previously described this scheme as a potential game changer. What happened and why is a successful programme suffering a reduction in allocation?” asked Azrul.

“It is disappointing that after 10 years of no excise duty increases on cigarettes and other tobacco products, the best that the Government could manage was a meagre increase of 2 sen per stick. If this was 77 sen per stick, equivalent to 61 percent excise tax of the retail price, it would generate an additional tax revenue of RM771.8 million,” said Azrul. “How much would a 2 sen increase bring in?”

“Malaysia spends an estimated RM16 billion annually treating smoking-related illnesses such as cardiovascular disease and lung cancer. For every RM 1 collected from tobacco excise duties, RM4 is spent on treating smoking related diseases.”

“We continue to recommend to the Government that the best way forward is to introduce national health and social insurance. The pooling of funds will go towards investing in both health and aged care. Such a scheme could potentially raise an additional RM 6 billion which will complement the existing annual budgetary allocation,” Azrul highlighted.

“In order to ensure that Malaysia’s healthcare system is able to be sustainable and continue to provide quality, affordable and accessible universal health services for decades to come and tackle the NCD crisis, and support an aging population, the government must be bold to invest in a  resilient approach to funding health. Unfortunately, we did not hear that commitment today and have kicked the can down the road once again.”

“We need to invest in future-proofing and increasing the resilience and sustainability of the public healthcare system. We cannot expect someone else to do it for us,” Azrul emphasised.