Private Healthcare
This chapter provides an overview of the legal and regulatory framework governing the private healthcare sector in Malaysia. It is intended to assist a broad range of stakeholders including operators and investors in understanding the principal legislative regimes applicable to private healthcare facilities, the pharmaceutical industry, and the medical devices sector. Whilst not a comprehensive operational manual, the chapter highlights key regulatory considerations that are likely to be relevant in the context of market entry, ongoing operations, and corporate transactions involving private healthcare assets.
Introduction
Malaysia’s private healthcare sector has experienced significant growth over recent decades, establishing the country as a leading destination for medical tourism in the Asia-Pacific region. The sector encompasses private hospitals, specialist medical centres, ambulatory care facilities, pharmaceutical manufacturers, and medical device establishments. The regulatory landscape is correspondingly diverse, comprising distinct frameworks for healthcare facilities, pharmaceuticals, and medical devices, each administered by specialist bodies within or under the Ministry of Health. This chapter introduces the key regulatory regimes governing the sector.
Private Healthcare Facilities and Services
Overview of the Legislative and Regulatory Framework
The principal legislation governing private healthcare facilities is the Private Healthcare Facilities and Services Act 1998 (the “PHFS Act“). The Ministry of Health (the “MOH“) is the regulatory authority responsible for matters under the PHFS Act. The Private Medical Practice Control Section (known as Cawangan Kawalan Amalan Perubatan Swasta) is the licensing department within the MOH responsible for implementing and enforcing the PHFS Act and processing licensing applications.
The term “private healthcare facility” encompasses a broad range of facilities, including private hospitals, specialist medical centres, ambulatory care centres, haemodialysis centres, maternity homes, nursing homes, and hospices.
Key Approval, Licensing and Registration Requirements
Private Healthcare Facilities and Services (other than Private Medical Clinics and Private Dental Clinics)
There are two stages of licensing requirements for private healthcare facilities and services (other than private medical clinics or private dental clinics) under the PHFS Act:
- Establishment Approval: Any person who intends to establish or maintain a private healthcare facility must first obtain approval from the Director General of Health (the “Director General”) for the establishment of the facility.
- Operating Licence: Any person who intends to operate a private healthcare facility must obtain an operating licence from the Director General. Operating licences are generally subject to periodic renewal. An application for an operating licence must be made within three years from the date of issuance of the establishment approval in respect of such facility or service.
An establishment approval or an operating licence may only be issued to persons meeting specified eligibility criteria. This is an important consideration for investors structuring their entry into the sector, as the composition of the board or partnership will need to satisfy these requirements. Eligible applicants include:
- a sole proprietor who is a registered medical practitioner;
- a partnership which consists of at least one partner who is a registered medical practitioner; or
- a body corporate whose board of directors consists of at least one person who is a registered medical practitioner.
Notwithstanding the above, the PHFS Act permits approvals or licences to be issued to: (a) a registered nurse (for private nursing homes) or a registered midwife (for private maternity homes), provided contractual arrangements are in place for regular visits by a registered medical practitioner; or (b) a society registered under the Societies Act 1966 (for private hospices or haemodialysis centres operating on a voluntary or charitable basis).
In determining whether to grant an establishment approval, the Director General will take into consideration the following matters:
- the nature of the healthcare facility or service to be provided;
- the extent to which the healthcare facilities or services are already available in an area;
- the need for the healthcare facility or service in an area;
- the future need for the healthcare facility or service in an area; or
- any other matter which in his opinion is relevant.
The Director General may refuse to issue or renew an operating licence on various grounds, including concerns as to the character and fitness of the applicant (or, in the case of a body corporate, partnership, or society, its directors, partners, or office bearers), or if the premises are considered unsafe, unclean, unsanitary, or inadequately equipped, or if staffing is inadequate or incompetent. These grounds underscore the importance of thorough due diligence on target healthcare businesses, particularly in relation to compliance history and the standing of key personnel.
Private Medical Clinics and Private Dental Clinics
Private medical clinics and private dental clinics must be registered under the PHFS Act. A certificate of registration may only be issued to a registered medical practitioner (for medical clinics) or a registered dental practitioner or eligible body corporate under the Dental Act 1971 (for dental clinics). However, a clinic forming part of a licensed private healthcare facility to which it is organisationally, administratively, and physically linked is not required to be separately registered, provided it complies with prescribed standards.
Foreign Equity Considerations
Foreign equity participation in private healthcare facilities is subject to regulatory oversight and potential restrictions. The MOH has the discretion to impose conditions on foreign ownership as part of the approval, licensing, or registration process. As at February 2026, the MOH has indicated informally that a formal policy on foreign equity will be issued in respect of the private healthcare sector (the “MOH Equity Policy”), although the target issuance date has yet to be confirmed. In the interim, where applications requiring MOH approval involve foreign equity participation, such applications may be assessed by reference to thresholds set out in applicable free trade agreements between Malaysia and the relevant foreign jurisdiction.
The evolving nature of the foreign equity framework is a key consideration for transactions structuring. Prospective investors should obtain current advice on the applicable position, build flexibility into transaction timelines to accommodate regulatory engagement, and ensure that deal structures are capable of satisfying prevailing equity conditions.
Key Ongoing Compliance and Governance Requirements
A licensee or certificate holder must ensure that the facility is maintained by a qualified Person-in-Charge, conduct inspections at prescribed intervals, employ only staff who are appropriately registered or hold qualifications recognised by the Director General, and comply with other prescribed duties. Different persons may be appointed to manage non-clinical matters, such as finance, administration, and non-clinical resources.
Any change in the Person-in-Charge must be notified to the Director General within fourteen days, together with details of the new appointee’s qualifications, training, and experience.
The PHFS Act imposes a range of operational and governance requirements on licensees and certificate holders. Key requirements include the following:
- Governance: Licensees of private hospitals, maternity homes, ambulatory care centres, hospices, psychiatric hospitals, and other specified facilities must establish a Board of Management, which must include two members from the Medical Advisory Committee (or Medical and Dental Advisory Committee, where both services are provided).
- Quality assurance: Every private healthcare facility must implement programmes and activities to ensure the quality and appropriateness of its services.
- Permitted use of premises: Licensed or registered premises may only be used for the purpose specified in the licence or certificate of registration, and purposes reasonably incidental thereto.
- Alterations: No structural or functional extension or alteration affecting the facility’s purpose, licence conditions, or service standards, may be made without the prior written approval of the Director General.
- Transfer restrictions: No approval, licence, or certificate of registration may be transferred, assigned, or disposed of without the prior written approval of the Director General. This restriction has direct implications for M&A transactions and corporate restructurings involving healthcare assets.
- Closure or disposal: Where a licensee or certificate holder intends to close, transfer, sell, or dispose of a facility, at least thirty days’ written notice must be given to the Director General. This notification requirement should be factored into transaction timelines and completion mechanics.
Healthcare professionals providing services in Malaysia, including medical practitioners, nurses, midwives, pharmacists, and opticians, must be registered with the relevant professional regulatory body and hold a valid practising certificate, which is generally subject to annual renewal. The detailed requirements for professional registration are beyond the scope of this overview.
Pharmaceutical Industry
Overview of the Legislative and Regulatory Framework
The pharmaceutical industry is an important component of Malaysia’s healthcare sector and a significant area of investment activity. This section provides an overview of the principal regulatory framework; stakeholders should seek specialist advice on detailed procedural requirements.
In Malaysia, pharmaceutical products are primarily regulated under the Sale of Drugs Act 1952, in conjunction with the Control of Drugs and Cosmetics Regulations 1984 (the “CDCR 1984”).
The Drug Control Authority (the “DCA“) is the executive body established under the CDCR 1984 that is responsible for ensuring the safety, quality, and efficacy of pharmaceutical products marketed in Malaysia. The DCA achieves this through, amongst other things, the registration of pharmaceutical products, the licensing of manufacturers, importers, and wholesalers, the monitoring of the quality of registered products in the market, and adverse drug reaction monitoring.
The National Pharmaceutical Regulatory Agency of the MOH (“NPRA“) acts as the secretariat to the DCA. The NPRA’s main roles and functions are to implement the regulatory scheme governing pharmaceutical products, including through the administration of the product registration and licensing framework, the conduct of laboratory and quality testing, post-market surveillance, and pharmacovigilance, with the objective of ensuring the safety, quality, and efficacy of pharmaceutical products in Malaysia. The NPRA is a participating authority in the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (“PIC/S“), thereby aligning Malaysia’s manufacturing standards with those of other PIC/S participating authorities globally. The PIC/S is a non-binding collaboration of regulatory authorities, each of which adheres to a similar Good Manufacturing Practice (“GMP“) inspection system, to harmonise GMP inspection procedures and standards globally.
Under the PIC/S framework, pharmaceutical manufacturers are required to comply with Good Manufacturing Practice (GMP) requirements, including the standards set out in the Pharmaceutical Quality System. Malaysia’s membership in PIC/S has supported growth in pharmaceutical exports and enhances the attractiveness of Malaysian pharmaceutical assets to international investors.
Key Approval, Licensing and Registration Requirements
Pharmaceutical products may generally be categorised as follows:
- New Drug Products;
- Biologics;
- Generic Medicines (i.e., controlled medicines or over-the-counter medicines);
- Health Supplements; and
- Natural Products (i.e., traditional medicines, finished herbal products, herbal remedies, and homeopathic medicines).
All manufacturers, importers, and wholesalers are required to be licensed by the DCA. Additionally, no person may manufacture, sell, supply, import, possess, or administer any pharmaceutical product unless the product is registered and the person holds the appropriate licence. These licensing and registration requirements are central to due diligence on pharmaceutical businesses and should be verified in any transaction involving pharmaceutical assets.
Other legislation relevant to the pharmaceutical industry in Malaysia includes:
- Sale of Drugs Act 1952, which regulates the sale of drugs;
- Registration of Pharmacists Act 1951, which governs the establishment of a Pharmacy Board and the registration of pharmacists; and
- Poisons Act 1952, which regulates the importation, possession, manufacture, compounding, storage, transport, sale, and use of poisons.
Medical Devices
Overview of the Legislative and Regulatory Framework
Malaysia operates a dedicated regulatory regime for medical devices that is wholly distinct from the pharmaceutical framework. The regime is built upon purpose-specific primary legislation, administered by a specialist statutory authority, and has undergone sustained regulatory modernisation. Given the growth of the medical devices sector and increasing investor interest, an understanding of this framework is essential for stakeholders considering entry into or expansion within the Malaysian market.
The medical devices regulatory framework in Malaysia is established by the following principal pieces of legislation:
- the Medical Device Act 2012 (the “MD Act“), which sets out the legal framework governing the regulation of medical devices;
- the Medical Device Authority Act 2012, which establishes the Medical Device Authority (the “MDA“) as the statutory body responsible for implementing the medical device laws; and
- a number of subsidiary instruments, which supplement this primary framework. Of particular relevance are:
- the Medical Device Regulations 2012 (“the MD Regulations”), which prescribe the detailed technical, classification, and procedural requirements applicable to medical devices and establishments;
- the Medical Device (Duties and Obligations of Establishments) Regulations 2019, which governs certain duties and obligations of an establishment; and
- the Medical Device (Advertising) Regulations 2019, which govern the advertisement of medical devices.
The MDA is a statutory body under the MOH. Its core regulatory functions include the licensing of establishments (manufacturers, authorised representatives, importers, and distributors), the registration of medical devices, the registration and oversight of conformity assessment bodies, post-market surveillance and vigilance, enforcement, and the regulation of medical device advertising.
Under the MD Act, a medical device is defined broadly as any instrument, apparatus, implement, machine, appliance, implant, in vitro reagent or calibrator, software, material, or other similar or related article intended by the manufacturer to be used for human beings for purposes including: the diagnosis, prevention, monitoring, treatment, or alleviation of disease; the investigation, replacement, modification, or support of the anatomy or of a physiological process; the support or sustaining of life; control of conception; or the disinfection of medical devices.
Product Classification and Registration
Pursuant to the MD Act and the MD Regulations, all medical devices must be classified into one of four risk-based classes: Class A, Class B, Class C, or Class D, depending on the level of risk posed to patients, users, and other persons.
Under the MD Act, no medical device may be imported, exported, or placed on the Malaysian market unless it is registered with the MDA. Product registration is a key asset in any medical device business, and the status of registrations should be carefully verified in due diligence.
Medical devices are exempt from registration if used for personal use, demonstration, education, clinical research, performance evaluation, export, re-export, or if they are custom-made, special access, orphaned, obsolete, or discontinued. Exemptions for demonstration, education, research, evaluation, export, re-export, custom-made, and special access devices require an application to the MDA. Exemptions for personal use, orphaned, obsolete, and discontinued devices must comply with requirements determined by the MDA.
Establishment Licensing
Separately from product registration, every establishment that imports, exports, or places a registered medical device on the Malaysian market must hold a valid establishment licence issued by the MDA under the MD Act. The term “establishment” covers manufacturers, authorised representatives, importers, and distributors, but expressly excludes retailers.
A significant regulatory development effective 1 July 2024 is the MDA’s Single Licence Policy (Dasar Satu Lesen), under which multiple roles cannot be combined under a single establishment licence. An entity that wishes to perform multiple functions must obtain separate licences for each role. This policy has important implications for market entry structuring, distribution arrangements, and the organisation of medical device businesses in Malaysia.
Overview of Post-Market Surveillance and Compliance Obligations
Registered product holders and licensed establishments carry significant ongoing post-market compliance obligations throughout the product lifecycle. The MD Act, read together with the Medical Device (Duties and Obligations of Establishments) Regulations 2019, imposes a range of obligations, the principal categories of which are summarised below:
- Distribution Records: An establishment must maintain distribution records in respect of each medical device manufactured, imported, exported, and placed in the market in a manner determined by the MDA, ensuring full product traceability throughout the supply chain. These records must be provided to the MDA upon request. An establishment shall maintain a distribution record:
- for two years after the medical device is placed in the market;
- if the medical device is for export, for two years from the date the medical device is shipped out of Malaysia; or
- if the medical device has a projected useful life, for the projected useful life of the medical device as determined by the manufacturer.
- Post-Market Surveillance and Vigilance Reporting: An establishment must monitor the safety and performance of the medical device manufactured, imported, exported, and placed in the market, and put in place a post-market surveillance system. An establishment shall ensure that any vigilance report of an adverse incident involving its medical device in the market is properly recorded and fully evaluated.
- Complaint Handling: An establishment must establish and implement documented procedures and maintain records of reported problems or complaints relating to the safety and the performance characteristics of its medical device. The records on a complaint relating to a medical device shall be kept for a period of five years, in addition to the projected useful life of the medical device as determined by the manufacturer.
- Mandatory Problem Reporting: An establishment must report to the MDA any incident occurring inside or outside Malaysia related to a medical device. Reports must be submitted within: (a) 48 hours for serious threats to public health; (b) 10 days for incidents that have led, or could lead, to death or serious deterioration in health; or (c) 30 days for device failures, deterioration in effectiveness, or labelling/instruction inadequacies. An investigation report must be submitted within 30 days of the mandatory report (or such extended period as the MDA may grant). The reporting obligation does not apply to incidents occurring outside Malaysia where the incident has been reported to the relevant foreign regulatory agency and a field corrective action has been taken.
- Field Corrective Actions: An establishment must undertake field corrective or preventive action in relation to a medical device imported and placed on the market, which may include returning, modifying, exchanging, or destroying the device, or providing specific advice on its use. Upon completion of any such action, the establishment must submit a report to the MDA in the prescribed form.
- Recall: Medical device recalls may be initiated voluntarily by an establishment or ordered by the MDA.
- Voluntary Recall: An establishment may voluntarily recall any defective medical device at any time. Prior to undertaking a recall, the establishment must notify the MDA and all affected persons within the following timeframes:
- Class I recall(high risk — serious health problems or death): not less than 48 hours before the recall;
- Class II recall(medium risk — temporary/reversible health problems or remote possibility of serious problems): not less than 3 days before the recall; and
- Class III recall(low risk — probability of health problems): not less than 5 days before the recall.
A report must be submitted to the MDA within 30 days of completing the recall. The MDA may request additional information and, if satisfied, will close the matter. If dissatisfied, the MDA may order further action, cancel the device registration, or suspend or revoke the establishment licence.
- Mandatory Recall: The MDA may, by written order, require an establishment to recall any medical device at any time on grounds of patient safety or public health. The establishment must undertake the recall and report the results within the period determined by the MDA. If dissatisfied with the recall, the MDA may order further action, cancel the device registration, or suspend or revoke the establishment licence.
The MDA may publish recall information to the public in respect of both voluntary and mandatory recalls.
Medical Device Advertising
No person may advertise a medical device unless it is registered under the MD Act and the advertisement has been approved by the MDA. Advertisements must not contain misleading or fraudulent claims and must include information that the device is registered under the MD Act, together with its registration number.
Digital Health and Medical Technologies
The MDA has in recent years signalled its intention to support artificial intelligence (AI)-driven medical technologies through innovation-focused regulatory initiatives, including the potential use of a regulatory sandbox for medical devices. Separately, digital health services – including telemedicine, mobile health applications, and digital therapeutics – are subject to a wide-ranging body of laws and regulations. The applicable regulatory requirements will depend on the nature of the service, the technology involved, and the manner in which it is delivered. Given the rapid pace of development in this space, stakeholders should seek specialist advice before launching, investing in, or acquiring digital health businesses in Malaysia.
Key Considerations for Stakeholders
The regulatory environment for private healthcare is dynamic and subject to ongoing development. The considerations set out below are intended to highlight key issues for stakeholders, including operators and investors, This is not an exhaustive checklist, and advice tailored to the specific transaction or business context should be obtained.
- Regulatory risk allocation: Transaction documentation should appropriately allocate regulatory risk between the parties. Conditions precedent, termination rights, and indemnity or warranty provisions should address the possibility of delayed or refused regulatory approvals, non-compliance with licensing conditions, and changes in the regulatory environment. For transactions involving foreign equity participation, parties should verify the current policy position with the relevant regulators and factor regulatory approval timelines into transaction planning and deal timetables.
- Due diligence: Corporate and commercial transactions involving private healthcare assets – including acquisitions, joint ventures, investments, and financing arrangements – require thorough sector-specific due diligence. Key areas include: verification of regulatory approvals, licences, and registrations (and their transferability or assignability); review of key contracts and arrangements with healthcare professionals and suppliers; assessment of staffing (including verification of professional qualifications and practising certificates); examination of compliance history and any pending or threatened regulatory action; and review of existing financing and security arrangements. Where the target business holds product registrations (for pharmaceuticals or medical devices), the status, validity, and ownership of those registrations should be carefully verified.
Conclusion
Malaysia’s private healthcare sector offers significant opportunities for operators, investors, and other stakeholders, supported by the country’s established position as a regional medical tourism hub, a growing domestic market, and the Government’s commitment to sectoral development.
Successful participation in the sector – whether through organic growth, acquisition, joint venture, or other investment – requires careful attention to the applicable regulatory requirements. Key considerations include licensing and approval processes, foreign equity restrictions, professional registration requirements, ongoing compliance obligations, and the regulatory implications of corporate transactions and restructurings. Early engagement with the relevant regulators, where appropriate, and thorough sector-specific due diligence are essential for both new market entrants and existing stakeholders.
This chapter is intended as a general regulatory overview only. The regulatory position is subject to change, and stakeholders should obtain current specialist advice tailored to their specific circumstances before making commitments or entering into transactions.
For more information, click here to read more Doing Business Guide.
Notice
The contents of this Guide are owned by CLO and subject to copyright protection under the laws of Malaysia and, through international treaties, in other countries. No part of this Guide may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose) without the prior written permission of CLO.
Please note also that whilst the information in this Guide is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice for any particular course of action as such information may not suit your specific business or operational requirements. It is to your advantage to seek legal advice for your specific situation.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
