23 June 2024

Being healthy is economically sound for the nation

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By: Dr Mohd Zaidi Md Zabri

In Malaysia, the intersection of health and economics forms a crucial aspect of the country’s dynamic socio-economic landscape. Personal well-being is more than a matter of physical health; it is a significant economic driver. This connection becomes increasingly pertinent in the context of escalating healthcare costs.

In today’s economic climate, embracing a healthy lifestyle is not merely a personal choice, but an essential economic strategy. The 2022 “Direct Healthcare Cost of Noncommunicable Diseases in Malaysia Report” by the Ministry of Health Malaysia (MOH) sheds light on this relationship.

The report outlines how cardiovascular diseases, diabetes, and cancer—leading causes of morbidity and mortality in Malaysia—incurred direct healthcare costs of RM9.65 billion in 2017. This figure represented a significant portion, nearly 40% (38.91%), of MOH’s annual budget of RM24.8 billion in 2017. To put it in perspective, for every RM100 in the MOH budget, RM40 was allocated to managing these critical health issues.

On a macroeconomic level, the implications are profound. Healthcare expenditure in Malaysia accounts for about 4% of its GDP, as per the World Bank. This expenditure reflects the financial burden of managing chronic diseases. In addition, the Malaysian workforce is significantly affected by health issues. According to the Malaysian Employers Federation (MEF), businesses incur RM20.71 billion in annual costs (or RM56.74 million per day) due to absenteeism and presenteeism related to health problems.

By promoting healthier lifestyles, there is potential to reduce these costs, freeing up valuable resources for other vital sectors, such as education and infrastructure development. Effective health management, therefore, is not just a matter of personal well-being but is integral to enhancing workforce productivity and reducing economic losses attributed to health issues.

The state of public health also directly impacts Malaysia’s insurance and pension systems. Healthier individuals are less likely to make substantial claims on health insurance or takaful.

They are also more likely to maintain an active lifestyle post-retirement, reducing the financial strain on pension funds. The Employees Provident Fund (EPF) highlights that healthier retirees contribute to a more sustainable pension system, drawing on their savings more gradually over time.

Malaysia’s healthcare sector is not only a cornerstone of public health but also a significant contributor to the nation’s GDP and employment. The sector is bolstered by advancements in medical technology, preventive care, and wellness programs. These developments not only enhance healthcare delivery but also open up new economic avenues, creating jobs and business opportunities.

The link between education and health is particularly crucial. The National Health and Morbidity Survey 2022 also indicated the percentage of overweight (15.2% to 16.2%) and obese (13.3% to 14.3%) adolescents steadily increased from 2012 to 2022, a concerning trend that underscores the need for addressing health issues within the education system.

Healthier students are demonstrably better learners. The Journal of Physical Activity and Health’s article “Impact of the Active Healthy Kids Canada Report Card: A 10-Year Analysis” demonstrates that healthier students show improved learning outcomes. The report card’s influence on policy, awareness, and education highlights that better physical activity and health positively impact students’ academic performance, attendance, and behavior, supporting the link between health and learning.

The recent COVID-19 pandemic underscored the critical role of health in economic resilience. Countries with robust health infrastructures and healthier populations were able to manage the crisis more effectively, thereby minimizing economic disruptions. Malaysia’s proactive health measures during the pandemic played a crucial role in mitigating the economic impact of the crisis.

Investing in health yields substantial long-term economic benefits. A study by The Brookings Institute indicates that for developing countries, the return on investment in health ranges from USD2 to 4 for every USD1 invested. For example, a USD1 million investment in health could result in economic returns between USD2 million and USD4 million, demonstrating a 100% to 300% return on investment.

In addition, prioritizing health can be a catalyst for a broader virtuous cycle of growth, as healthier individuals are more productive, contributing to economic development and prosperity. This creates a positive feedback loop where health and economic growth reinforce each other, promoting sustained development and improved quality of life.

This aspect is increasingly important considering Malaysia’s aging population, where the proportion of people aged 65 and above is projected to reach 14.5% by 2040. Therefore, maintaining the health of the workforce is crucial for sustained economic growth and stability.

Malaysia faces environmental challenges such as urbanization, lifestyle changes, and pollution. These present both challenges and opportunities for the healthcare system. Addressing these issues through sustainable development policies and health education can further strengthen the nation’s economic resilience.

The integration of technology in healthcare, through telemedicine, digital health records, and AI-driven diagnostic tools, is transforming the healthcare landscape. These innovations not only make healthcare more accessible and efficient but also create new economic and employment opportunities.

The increasing awareness of health and wellness has spurred growth in related industries such as fitness, nutrition, and mental health services. This not only contributes to a healthier population but also diversifies the economy, creating new jobs and fostering new business sectors.

The Malaysian government’s investment in health infrastructure—hospitals, clinics, research facilities—is a vital aspect of this economic dynamic. Such investments not only improve healthcare delivery but also stimulate construction, medical equipment, and pharmaceutical industries, contributing significantly to the economy.

Community health initiatives, including public health campaigns and free health screenings, play a critical role in preventive care. These initiatives help reduce the burden on healthcare facilities and educate the population, leading to healthier lifestyle choices and reducing the incidence of chronic diseases.

Lastly, Malaysia’s position as a medical tourism hub also contributes significantly to its economy. Offering high-quality medical services at competitive prices, Malaysia attracts patients from around the world, generating revenue and bolstering its international standing in healthcare.

In conclusion, the multifaceted economic benefits of good health in Malaysia are significant and wide-ranging. From individual savings to impacts on the national budget, health is an invaluable asset. As Malaysia continues its path of development, prioritizing health will pave the way for a more economically robust and healthier nation. Investing in health is not just a moral imperative but a smart economic strategy.


The author is a Senior Lecturer at the Department of Finance, Faculty of Business and Economics, Universiti Malaya.