Indonesian Patients Drive Malaysia’s Medical Tourism Boom

KUALA LUMPUR, AUGUST 2026 — Malaysia’s healthcare sector is benefiting from a sustained rise in medical tourism, with Indonesian patients emerging as the biggest contributor to the country’s growing international healthcare market.

According to Phillip Capital Research, Malaysia’s medical tourism industry recorded a compound annual growth rate of 33% between 2020 and 2025, reaching RM3.4 billion. Indonesian patients accounted for around 70% of medical tourist arrivals in 2025.

More than 970,000 Indonesians travelled to Malaysia for healthcare services in 2025, representing a 23% increase from the previous year. Demand has remained resilient despite Malaysia introducing sales and service tax on foreign patients from July 2025.

Indonesia continues to face healthcare capacity challenges, including relatively low hospital-bed availability and shortages of medical specialists. Malaysia, meanwhile, remains attractive because of its more competitive treatment costs, wider specialist network, cultural similarities and improving air connectivity between the two countries.

Phillip Capital maintained an “overweight” outlook on Malaysia’s healthcare sector, citing resilient demand and continued hospital capacity expansion. IHH Healthcare remains its top sector pick with a target price of RM11.03, followed by KPJ Healthcare, Optimax Holdings and UMediC Group.

Major hospital groups are already benefiting from the trend. KPJ Healthcare’s medical tourism revenue grew about 24% year-on-year in the first quarter of 2026, while IHH’s Malaysian operations recorded double-digit growth. At Island Hospital, foreign patients now contribute about 15% of revenue.

The continued influx of Indonesian patients is expected to remain an important growth driver for Malaysia’s private healthcare sector, strengthening the country’s position as a leading medical tourism destination in the region.