Economists warn RM5.4 billion cuts to health and higher education threaten Malaysia’s future

SHAH ALAM - Economists are sounding the alarm over the proposed RM5.4 billion budget cuts for the Health and Higher Education Ministries, warning that treating these "investment ministries" as discretionary expenses risks long-term national decline in exchange for short-term savings.

Economics expert from the Malaysia University of Science and Technology Professor Emeritus Dr Barjoyai Bardai said while the RM5.4 billion reduction may serve as a temporary “fiscal signal,” the strategy was economically unsustainable.

He said underfunding healthcare could increase long-term fiscal burdens through higher disease prevalence and productivity losses, while higher education cuts could weaken innovation and graduate outcomes.

"Health and higher education are investment ministries, not discretionary spending items," he said when contacted.

Barjoyai also cautioned that operational cuts in the health sector could have direct service implications.

He noted that reductions in operational expenditure may lead to longer waiting times, workforce strain, reduced preventive care and disproportionate impacts on rural and low-income communities.

"Even if essential services are protected, international experience shows that operational cuts often result in quality erosion rather than outright service preservation," he added.

Echoing these concerns, economist Dr Geoffrey Williams warned that the drive to save money could ultimately be measured in human lives.

"In cutting health, they are likely to cut development spending on maintenance and new hospitals and clinics. These will be postponed to save money. This protects patients who should be treated normally, although elective and non-essential treatments might also be postponed," he said when contacted.

Williams said reducing health spending could effectively mean "people will die in order to have cheap petrol," or at the very least, "vulnerable patients will be put at risk."

He stressed that such a move ultimately places money ahead of people’s health.

He added that while reductions in higher education might be manageable in the short term, they reflect a specific perception of the sector.

"Cutting the higher education budget is sustainable because public universities are seen as having their own funds and resources to absorb the impact.

"Higher education is often among the first areas considered for budget reductions due to perceptions that it is less essential," he said.

Previously, online news portal Free Malaysia Today reported that the Finance Ministry proposed the RM5.4 billion operational expenditure cut for the two ministries as part of broader austerity measures amid the economic impact of the Iran war.

It was reported that a Treasury directive indicated a potential total saving of RM10 billion, specifically targeting RM3.06 billion from the Health Ministry and RM2.39 billion from the Higher Education Ministry.