Malaysia’s elderly care industry: Ready or not?

ON April 20, 2026, Health Minister Datuk Seri Dr Dzulkefly Ahmad shared findings from the 2025 National Health and Morbidity Survey (NHMS). He highlighted that only 14.7% of elderly Malaysians are ageing healthily. This is worrying considering that by 2048 Malaysia will have become an aged nation with more than 14% of the population aged 65 and above.

Among the strategies proposed during the survey’s launch was the introduction of long-term care insurance. But even with reform in how we finance long-term care, is Malaysia’s care industry prepared to meet the demand for such insurance?

Long-term care insurance (LTCI) is different from medical insurance. Instead of covering healthcare needs, it helps to cover the high costs of long-term care needs such as paying for a nursing home or care facility.

In Japan, for example, everyone above 40 is required to contribute to a national LTCI, which is also supported by tax funding. The LTCI ensures that those aged 65 and above can have subsidised aged care. Singapore also imposes a mandatory premium payment on its citizens between the ages of 30 and 67 for its national LTCI, complemented by government subsidies. Its LTCI provides citizens with lifetime basic monthly cash payouts that increase over time if they become severely disabled, especially during old age.

These LTCI models do not come without flaws. Japan’s LTCI, while providing almost universal coverage, faces escalating costs, and its mandatory contributions requirement continues even after retirement. While Singapore’s broader age group allows for larger-scale pooling of funds, it also translates into more people having to be covered, and little is done to facilitate access to service providers.

Malaysia currently does not provide LTCI on its own, although it may sometimes be bundled with traditional life or critical illness insurance policies. The lack of LTCI here may be due to factors such as low awareness, high rates and underwriting standards, high cost, and cultural norms that rely on care by family members.

Previous Khazanah Research Institute (KRI) research has revealed uneven care provisions across the nation and a gap between demand and supply within the care sector. “Care in Malaysia: Emerging trends, challenges, and opportunities” (2024) illustrates that the live-in or residential elderly care centre landscape is highly privatised and small in number, introducing issues of affordability. Previous reports of costs ranging from RM1,500 to RM3,000 a month for basic care – that’s not including medical care – would be burdensome for most Malaysian families. A small number of government-run residential centres are concentrated in Peninsular Malaysia and only available for extremely poor elderly with no family.

The high costs may not be entirely a matter of the private sector seeking profits. Care providers, especially those who seek to be legally registered under the Welfare Department (Jabatan Kebajikan Masyarakat, JKM), struggle with the high costs of operations and registration processes.

Starting in 2025, JKM-registered elderly care centres now have to include an 8% service tax despite providing a welfare service. This is an example of governance that may deter centres from obtaining registration, leaving them to operate without regulatory oversight. In 2022, it was estimated that between 700 and 1,000 residential care facilities were unregistered.

Costs for seniors could potentially be lowered through enrolment in day-care centres during working hours. These are more numerous and mainly provided by the government. Specifically, these refer to Senior Citizen Activity Centres (Pusat Aktiviti Warga Emas, PAWE) run by the Women, Family and Community Development Ministry, and the Senior Citizens Clubs run by the Health Ministry.

There are over 190 registered PAWEs nationwide currently, possibly favoured due to the cost-effectiveness of running these compared with residential facilities. However, PAWEs still face issues of availability – a ratio of 13,530 elderly to one PAWE compared with Singapore’s 6,323 elderly to one similar facility – and accessibility.

Malaysia also faces a lack of aged care workers. Limited career pathways, low salaries, and labour-intensive work mean not many would choose this career. According to another KRI paper, low- and semi-skilled workers in the social care and residential care sector can only earn up to 50% of what high-skilled workers do.

The obvious split between private-driven residential care centres and government-driven daycare facilities signal Malaysia’s policy shift towards more community-based care and encouragement of ageing in place. The Malaysia Ageing and Retirement Survey in 2019 also found that most Malaysian elderly want to grow old in their own homes. More than 70% of their survey respondents indicated that they were not prepared to live in a care centre.

However, there is still a lot of demand for help from the elderly. In 2022, the Welfare Department reported that its Home Help Services (HHS) programme – which delivers at-home care through volunteers – catered to close to 7,000 elderly people. HHS volunteers can help to do chores, provide companionship, and even take their charges to the hospital or clinic.

Day-care centres and HHS are insufficient for those with complex care needs or who require constant supervision. Based on NHMS 2025, more than 80% of elderly lack social support, are cognitively impaired, depressed, unable to perform daily activities independently, or have chronic diseases. Thus, there is still an urgent requirement to develop residential care infrastructure alongside strengthening community care.

We should also consider the “sandwich generation”, ie, working adults who have to care for both young children and ailing parents.

In the absence of affordable and accessible options, oftentimes Malaysians must choose between financial strain and dropping out of the workforce to provide care themselves. Based on a 2025 KRI survey, 52.7% of women who had previously worked became homemakers due to caregiving responsibilities.

Malaysia needs to reform its aged care service delivery landscape to meet future needs. Streamlined governance and reduced fragmentation is needed to encourage providers to expand service delivery and spur the growth of the care market. An all-of-government effort and destigmatisation of care as a welfare issue is also important.

Through effective planning of resources as well as synergistic collaboration among government, NGOs, and the private sector, the availability and quality of care services can meet the needs of the population more effectively. We must choose to act now to provide an inclusive and sustainable ecosystem in which Malaysians can age with comfort and dignity.

ILYANA MUKHRIZ

Research associate

Khazanah Research Institute