Malaysia’s 6% Service Tax Unlikely to Dent Medical Tourism Growth, Says Health Minister
KUALA LUMPUR: Malaysia’s booming medical tourism sector is expected to maintain its strong growth trajectory despite the recent expansion of the Sales and Service Tax (SST), according to Health Minister Dzulkefly Ahmad.
In a written parliamentary reply, Dzulkefly assured that the new 6% service tax imposed on foreign patients, effective July 1, would not significantly impact Malaysia’s competitiveness as a regional hub for medical travel.
“Malaysia’s medical costs remain 30% to 40% lower than those of neighbouring countries such as Indonesia, Thailand, and Singapore, particularly for key treatments in gastroenterology, cardiology, orthopaedics, and oncology,” Dzulkefly stated.
He was responding to a question from Dr. Ahmad Yunus Hairi (PN-Kuala Langat), who raised concerns about the potential negative implications of the expanded SST on Malaysia’s global standing as a top medical tourism destination.
In 2023, Malaysia’s medical tourism sector generated over RM2 billion in revenue and attracted approximately 1.3 million international patients, according to government data.
Dzulkefly said the upward trend has continued in 2024, with the sector recording RM2.72 billion in revenue, marking a 21% increase year-on-year. The number of health tourist arrivals also rose by 14% to 1.59 million, driven by strong regional demand and Malaysia’s reputation for quality care.
The Finance Ministry’s June announcement clarified that the 6% service tax applies to private healthcare providers, including those offering traditional and complementary medicine (TCM) and allied health services only if their total taxable revenue exceeds RM1.5 million over the past 12 months.
This threshold ensures that small clinics and practitioners are exempt, thereby limiting the tax’s impact to larger service providers catering primarily to foreign patients.
Dzulkefly reiterated that Malaysia’s appeal in the medical tourism market extends beyond cost competitiveness.
“Our health tourism sector is internationally recognised for its quality of care, clinical outcomes, and the hallmark Malaysian hospitality,” he said.
He added that the country’s integrated approach—combining affordable care, modern medical infrastructure, and government support has made it a top choice for patients seeking advanced treatments abroad.
With continued investments in healthcare facilities, digital health platforms, and training for medical professionals, Malaysia aims to further consolidate its position as a premier health tourism destination in Southeast Asia.
Despite the new service tax, analysts expect minimal disruption to patient inflow, especially given rising medical costs elsewhere in the region and increasing demand for cross-border healthcare.
The Malaysia Healthcare Travel Council (MHTC) is also intensifying its global outreach campaigns to promote Malaysia’s value-driven offerings to international patients, particularly in the Middle East, Asia-Pacific, and North America.