Malaysia is steadily progressing toward becoming an ageing nation, with the proportion of citizens aged 60 and above rising rapidly.
As the country moves closer to “super-aged” status, the demand for structured, safe, and high-quality elderly care services will increase significantly.
Yet, despite this demographic urgency, the infrastructure and regulatory environment supporting residential and long-term elder care remain underdeveloped.
A combination of regulatory, financial, and structural issues continues to limit the sector’s ability to scale and modernise.
Here are five key challenges that Malaysia must address to build a sustainable, world-class elder care system.
Height Restrictions Imposed By Fire And Rescue Department Limit Scalability
A major structural obstacle facing elderly care centre operators is the building height restriction imposed by the Malaysian Fire and Rescue Department.
At present, elderly care centres may operate only in buildings with a maximum of two storeys — a rule designed with resident safety and ease of evacuation in mind. While well-intentioned, this restriction severely limits scalability.
Hospitals, by comparison, are permitted to operate in buildings of up to seven storeys, allowing for greater capacity, efficient land use, and improved service consolidation.
As urban land prices continue to rise, the two-storey cap forces operators to expand horizontally instead of vertically, increasing both construction and operational costs.
A review of this regulation — possibly with allowances for enhanced fire protection systems or additional facility categories — could enable the development of modern, purpose-built centres.
Inconsistent Service Tax Policies Create An Uneven Playing Field
The inconsistent application of service tax across different types of elderly care centres further complicates the industry landscape.
Centres licensed under the Social Welfare Department (JKM) are required to charge an 8 per cent service tax on Malaysian clients, while centres licensed under the Ministry of Health (MOH) are exempt from this tax.
This inconsistency burdens residents in JKM-regulated centres with higher fees, even though many of these centres serve individuals with high dependency needs.
For operators, the tax reduces profitability and discourages private investment in the elder care sector.
With Malaysia urgently needing more private-sector involvement, such regulatory inconsistencies send mixed signals and hinder the creation of a cohesive care ecosystem.
Standardising service tax policies — or extending exemptions to all licensed elderly care centres — would help ensure fair competition and ease financial pressure on families.
Absence Of Long-Term Visa Options For Foreign Elderly Residents
Malaysia is well-positioned to become a regional destination for elderly care and retirement living, thanks to its affordable health care, multilingual workforce, and peaceful environment.
However, the lack of suitable long-term visa options for foreign elderly individuals poses a major barrier to growth.
Currently, the Malaysia My Second Home (MM2H) programme is the only viable long-stay option. Its strict financial requirements and eligibility criteria make it inaccessible for many elderly foreigners who need continuous care.
Without alternative options, these individuals are limited to short-term tourist visas, which are impractical for long-term care arrangements.
A dedicated Elderly Care Visa would fill this gap, allowing foreign seniors to reside legally in licensed care centres while requiring operators to maintain proper monitoring and reporting.
Such a measure could stimulate medical tourism, create new employment opportunities, and contribute to Malaysia’s health care and elder care economy.
Limited Insurance Coverage For Residential Elder Care
Insurance policy limitations also hamper the industry’s ability to support seniors effectively.
Most insurance plans in Malaysia do not cover long-term residential stays in elderly care centres, not even for post-operative recovery, dementia care, or situations requiring round-the-clock nursing supervision.
Paradoxically, home-based care-giving services are often claimable, even when they may be less suitable or more expensive.
This inconsistency pushes families toward home care even when institutional care would be safer, more efficient, or more cost-effective.
Middle-income families, in particular, face significant financial strain, while care centres lose potential residents who could benefit from structured support.
To create a strong elder care system, insurance providers should be encouraged — through guidelines, incentives, or policy reforms — to extend coverage to residential care, especially when medically indicated.
No Tax Incentives For Elderly Care Operators
Despite the increasing need for elder care, Malaysia currently offers no targeted tax incentives for operators in this sector.
Other industries such as manufacturing, renewable energy, and digital transformation benefit from extensive incentives to promote development, yet the elder care industry receives no comparable support.
Without fiscal incentives, operating costs remain high, discouraging private-sector investment and driving up the cost of care.
Introducing strategic tax incentives such as capital expenditure deductions, equipment tax relief, or corporate tax reductions could boost industry growth, improve service quality, and encourage innovation.
Conclusion: A Call For Coordinated Reform
Malaysia stands at a critical turning point. As the population ages, the demand for accessible, high-quality elderly care will only continue to rise.
The challenges outlined, spanning regulations, taxation, visas, insurance, and incentives, are interconnected issues that collectively impede the sector’s progress.
Addressing these challenges requires coordinated action among government ministries, regulatory bodies, and private stakeholders.
Through thoughtful, strategic reform, Malaysia can strengthen its elder care ecosystem, meet the needs of its ageing population, and position itself as a regional leader in elderly care, ensuring dignity, safety, and quality of life for all seniors.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
