July-August. 2025 | The HEALTH
COVER STORY
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In response to widespread concerns, the Finance and Health Ministries have formed a joint ministerial committee, co-chaired by Finance Minister II Amir Hamzah Azizan and Health Minister Dr Dzulkefly Ahmad, along with Bank Negara Malaysia and key stakeholder representatives to monitor private healthcare costs, coordinate tax policy, billing transparency, and medical inflation mitigation.
GRACE PERIODS
While no formal delay was announced for the Jul 1 SST rollout, the government has granted a compliance grace period until Dec 31, 2025, during which eligible businesses- including clinics and hospitals- can implement new systems without facing penalties.
Additionally, the Finance Ministry is actively engaging with the Association of Private Hospitals Malaysia( APHM) to clarify definitions- particularly on professional fees and treatment of foreign residents- and to ensure administrative readiness.
Representatives from doctors, pharmacy, and physiotherapy associations have urged the government to reconsider the eight per cent SST on commercial rental.
The government has raised the SST registration threshold to RM1 million for leasing and rental, and Businessto-Business( B2B) exemptions have been introduced to reduce cascading taxes,
Summary:
Medicines and medical devices: Still zero-rated- no price impact. Private healthcare for Malaysians remains exempt, with no changes for citizens. Private healthcare for foreign patients: Will incur a six per cent service tax from Jul 1, raising concerns over access, admin burden, and patient costs. Overall revenue boost: The SST expansion is expected to add RM10 billion in annual revenue overall. https:// www. thestar. com. my / business / business-news / 2025 / 06 / 11 / manageable-impact? utm _ source = chatgpt. com Policy pressure: Industry groups are advocating for delays or realtime support while systems and funding mechanisms are adjusted.
US TARIFFS
The Trump administration announced tariffs of 25 – 40 per cent, effective Aug 1, 2025, on several Southeast Asian countries, including Malaysia, to counteract companies
Summary of Impact of US Tariffs:
AREA
Medical Devices
GP Clinics & Pharma
Public System
Industry Response
rerouting exports from China. Key targets include medical devices and inputs that rely on global value chains.
Private hospital operators have warned of increased costs for importing high-tech medical equipment.
Globally, stocks of medical-device giants cratered after the tariff announcement, signalling expected margin pressures. Tariffs on gloves,
Effect on Malaysian Healthcare
Costlier imports could delay equipment upgrades; local sourcing efforts gain urgency.
Rising drug & supply costs strain margins; could reflect in higher consultation and medicine prices.
Government tapering some cost hikes via subsidies, but rising procurement could eventually affect patient charges.
MOH fast-tracking alternate approvals; MAPS seeks contract flexibility to manage volatility.
catheters, infusion pumps, and other items that Malaysia currently exports could rebound through reimportation, potentially pushing up procurement costs for hospitals and clinics.
FPMPAM reported that even before tariffs, clinics were already being squeezed by cost surges in pharma and supplies. A US tariff threat aggravates these pressures. The higher costs of APIs and device components resulting from US tariffs will likely be passed through to public and private systems.
Dr Dzulkefly announced efforts to secure alternative sourcing, including fast-tracking approvals for generics from China and India, and reviewing expiring contracts to ensure stable access.
Public hospitals may have a buffer due to subsidies, but experts have warned that if procurement costs rise, some charges might eventually be passed on to patients. Pharmaceutical suppliers have flagged that a stronger dollar and general trade uncertainty will likely raise the costs of imported drugs. They’ ve urged MOH to allow contract repricing flexibility.
Outlook & Resilience: The manufacturing and export sectors, such as medical devices, Nonetheless, healthcare providers remain vulnerable to global supply chain and currency shifts tied to US tariffs.
WHAT ' S NEXT
The implementation of the tariff on Aug 1 will be a critical moment to assess the real-world price effects. Stakeholders are pushing for procurement safeguards( e. g., repricing, local content mandates). If tariffs are extended to pharmaceuticals, broader impacts on drug costs may follow.- The HEALTH