KUALA LUMPUR, 9 October 2026 — The Galen Centre for Health & Social Policy welcomes several measures announced under Budget 2027, particularly the commitment to permanently resolve the contract doctor issue, increase allowances for healthcare workers, improve public health facilities, and expanding assistance for older persons and people with disabilities.

However, despite these positive announcements, Budget 2027 represents another missed opportunity to undertake the structural reforms urgently needed to secure Malaysia’s healthcare future.

“The government has once again chosen to spend more without sufficiently addressing why the healthcare system continues to struggle. The budget provides relief in several important areas. However, it avoids the difficult decisions necessary to make healthcare sustainable, affordable and accessible over the next decade,” said Azrul Mohd Khalib, Chief Executive of the Galen Centre for Health & Social Policy.

“Despite having five chances for meaningful reform, particularly on sustainable healthcare financing, the government has kicked the can down the road once again.“

“The healthcare system is clearly struggling. Malaysia cannot continue to manage a worsening non-communicable disease crisis, an ageing population, workforce shortages and escalating medical costs through incremental annual allocations. We need to invest in fundamental reforms now.”

An increase of RM1.2 billion is insufficient to meet growing demands

The Ministry of Health’s allocation increases from RM46.52 billion in 2026 to RM47.70 billion in 2027, representing an increase of approximately RM1.18 billion or 2.5 per cent. The smallest increase in 5 years.

More concerning is that development expenditure remains practically unchanged at RM6.75 billion, increasing by just RM5 million from 2026.

“The government cannot expect to modernise the healthcare system, expand capacity and address decades of underinvestment while keeping development expenditure effectively stagnant.

This is not the investment trajectory of a country preparing for a rapidly ageing population and increasing chronic disease burden.

Investment in physical infrastructure must also be accompanied by sufficient allocations for staffing, operations, medicines and maintenance. New buildings and sophisticated equipment are of little use when there are insufficient trained personnel to operate them. A number of recently opened hospitals such as Pasir Gudang Hospital rare still unable to properly operate due to insufficient staff.

Permanent appointments are welcome, but where is the workforce reform?

The commitment to offer permanent positions to more than 9,000 contract doctors in 2027 is a significant and welcome development.

It addresses an injustice which has undermined morale, career development and confidence among young doctors for years.

However, regularising existing doctors is not equivalent to increasing the overall actual number of healthcare professionals delivering services. How many people will actually be filling in these positions? Only around 500 medical graduates applied for the 5000 trainee doctor positions earlier in the year.

“The increase in post-basic incentives for 47,000 nurses and paramedics from RM100 to RM200 monthly is also welcome. However, this will not resolve shortages of nurses, specialists, pharmacists, medical assistants and allied health professionals. Currently, there are more than 50,000 health worker vacancies in the public health sector. How will we fill these positions?”

“What is missing is a credible, funded, multi-year recruitment and retention programme. Malaysia needs to recruit aggressively, retain experienced personnel, improve working conditions and compete for skilled healthcare talent from both domestic and regional sources,” Azrul said.

Most disappointing is the absence of a commitment to establish an independent Health Services Commission.

“The government has acknowledged the workforce crisis but continues to avoid reforming the very system responsible for managing healthcare personnel. A Health Services Commission is not an optional administrative improvement. It is essential to modernising recruitment, deployment, remuneration, occupational safety, welfare and career progression.”

MediAsas risks creating another healthcare financing problem

The introduction of MediAsas in January 2027, together with greater transparency in private hospital billing and diagnosis-based payments, signals recognition of Malaysia’s escalating private healthcare costs.

However, the Galen Centre strongly opposes allowing Malaysians below 55 years of age to use their Employees Provident Fund (EPF) Account Sejahtera savings to pay MediAsas premiums.

Using retirement savings to pay for medical insurance is fundamentally the wrong policy direction.

We should not be asking Malaysians to sacrifice their financial security in old age to obtain healthcare protection today.”

The proposed RM200 first-year premium subsidy for eligible SME employees may encourage initial take-up, but it does not resolve affordability after the subsidy expires. Neither does it guarantee adequate protection against exclusions, escalating premiums, co-payments and high out-of-pocket expenditure.

Postnatal care tax relief is welcome

The Galen Centre welcomes the expansion of income tax relief to include postnatal care services. However, this measure primarily benefits tax-paying households and does little for lower-income mothers who cannot afford such services to begin with. Tax relief is not a substitute for accessible, adequately funded public healthcare.

Postnatal care is essential healthcare, not a luxury.

The government must ensure that all mothers, regardless of income, have access to quality postnatal services, including maternal mental health support, breastfeeding assistance and follow-up care,” said Azrul.

Aged care: Welcome recognition, but inadequate preparation for an ageing society

The reduction in service tax on aged-care services from eight to six per cent, with full exemption for annual care fees up to RM96,000, may provide some relief to families accessing formal care. “But it does beg a question, why are these services taxed to begin with?” asked Azrul.

These measures remain fragmented and disproportionately focused on financial assistance and formal care facilities.

“Malaysia is approaching an aged-care crisis for which we are financially, institutionally and socially unprepared. Most older Malaysians depend on family members, particularly women, who often sacrifice employment, income, savings and career opportunities to provide unpaid care. Tax relief primarily benefits those who pay income tax. It does little for low-income households that cannot afford to pay for care in the first place,” emphasised Azrul.

The government should establish a National Aged and Long-Term Care Framework covering home-based care, community nursing, rehabilitation, respite services, residential care, palliative care and protection against catastrophic care expenses.

A dedicated and sustainable financing mechanism such as a National Health and Social Insurance is needed to pay for this.

No meaningful tobacco-tax reform is a serious public health failure

One of the most disappointing omissions from the Budget speech is the absence of a further increase in cigarette excise duties.

“At a time when Malaysia faces a major burden from tobacco-related diseases, failing to substantially increase cigarette excise duties is economically and medically indefensible”

The Galen Centre has recommended an increase from RM0.42 to RM0.65 per stick in 2027, followed by scheduled annual increases reaching RM0.95 by 2031. The proposed increases would potentially generate more than RM 2 billion in additional revenue on top of the existing collection by 2031.

The government has missed an opportunity to discourage smoking, prevent initiation among young people, reduce long-term healthcare expenditure and strengthen public revenue.