Estimated reading time: 17 minutes
In 2023, Malaysia’s fertility rate dropped to an average of just 1.7 babies per woman which is a worrying sign that our younger population is shrinking rapidly. If you didn’t know, this figure falls well below the 2.1 babies per woman needed to maintain a stable population. In fact, this declining birth rate trend could have serious consequences for our future.
In this blog, we’ll dive into this alarming trend, explore how it could impact Malaysia’s demographics, and discuss the potential effects of having fewer people in the years to come. Most importantly, we’ll talk about why we need to start paying attention to this issue now before the consequences catch up with us.
TABLE OF CONTENTS
Overpopulation in History
Back in the 1960s (after World War II), there was a major problem of overpopulation with fertility rates reaching an all-time high.
During that time, the fertility rate in China was more than 6 babies per woman. To address this issue, the government introduced the One-Child Policy in 1979 by enforcing it through fines and strong social pressure. However, this policy eventually became a major factor behind the continuous decline in China’s birth rate which is a trend that has persisted until today, and is even more pronounced when compared to the global population trend.
Because of this, China changed its policy to allow 2 children per family in 2016 and later 3 children in 2021. This all happened within just 10 years. However, the changes did not improve the birth rate much as people’s mindset had already shifted. This is because once the culture of having fewer children becomes normal, it is very hard to change it back to how it was in the past.
The sad news is that this serious problem is not only happening in China, but also in almost every country around the world, including us. This will definitely cause a long term impact on the global economy as well as our own economy.
Why is Malaysia’s Population Declining?
Now, if you are wondering why the birth rate is declining, the main reason is actually urbanization.
This trend is very clear, as you can see many people migrating from suburbs and kampungs to larger cities like Kuala Lumpur, Penang, and Johor Bahru in search of better education and career opportunities.
This is also supported by data from the Department of Statistics Malaysia (DOSM), which shows that states like Terengganu, Kelantan, and Pahang have higher average birth rates of more than 2.5 babies per woman, while urban areas like Kuala Lumpur and Penang have much lower rates, at around 1.3 babies per woman.
The Reason: Cost of Parenthood
The real reason urbanization plays such a big role is not just about people moving to a new place to live. It also changes how people live, work, and decide whether to start a family. This is because starting a family today involves much greater responsibility, commitment, and financial burden.
Back in our parent’s or grandparent’s time, having more children was seen as a natural advantage, especially in rural areas. In the past, children were considered assets to the family since they can helping with the family business or taking on labor-intensive tasks like farming. Not only that, but having more children also meant receiving financial support from them once they started working.
However, this idea no longer works in today’s world. Nowadays, children are no longer expected to shoulder the family’s financial burden due to the enforcement of child labor laws and the rise of modern urban lifestyles in areas like Klang Valley.
In fact, many people today see children more as a financial liability, given the high costs of raising them. It is easy to understand why as the expenses of childcare, tuition, and education are already heavy, not to mention the additional financial support needed for things like buying a car or a house when the child enters society and the workforce.
Economics of a Baby
According to an estimate by the Credit Counselling and Debt Management Agency (AKPK) in 2023, the cost of raising a child from infancy to university can range from RM393,000 to RM1.4 million. However, this amount can vary depending on each family’s situation.
Let’s take working adults in Kuala Lumpur as an example. Here’s a rough breakdown of the major costs:
- Pregnancy, delivery, and postpartum period: The total cost can range from RM5,500 to RM69,300.
- From birth to 6 years old: Expenses over the first six years can range from RM100,000 to RM300,000.
- Primary and secondary school: Costs can range from RM125,000 to over RM1 million, depending on whether the child attends government or private schools.
- College or university: Tertiary education costs can range from RM98,000 to RM580,000.
Therefore, the total cost of raising a child from pregnancy until they start working is at least RM333,000 and this only covers the major expenses. If you divide this amount across 21 years and 12 months, you would need to save around RM1,324 every month for just one child.
Now here is the challenge. According to statistics, the average salary in Malaysia is about RM2,700. Even in cities like Kuala Lumpur the average salary is only around RM4,000. If a husband and wife both earn this amount, raising just one child would already use up about 16% of their household income. If they want more than one child, then the financial burden would be even heavier.
Hence, this means many people would have to compromise their lifestyle if their income growth does not catch up with inflation. For example, they might travel less, spend less on hobbies, or focus more on improving their career to earn higher pay. This helps explain why many young people today choose to prioritise their careers, personal interests, and even survival over dating, marriage, and starting a family.
However, this does not mean people no longer want children. Instead, many only reach financial stability when they are 30 years old or older. By that time, it becomes harder to find a partner who is suitable for them. Also, it is riskier for women to give birth at an older age.
As for the costs mentioned earlier, these are only rough estimates from different sources, since I have not had a child yet. In reality, the actual costs will be different for every family because each of us has different needs, goals, and expectations for our child.
Non-Monetary Reason
Of course, it is not just about money and numbers. Some people simply do not want children based on their lifestyle preferences. Nowadays, people are more aware that being a parent is a full-time job, and it requires a willingness to sacrifice time and energy to fulfill the commitment of raising a child.
For example, many people prefer their current lifestyle with their beloved pets. In addition, some are afraid that they will not have enough support. Some women also worry that men may not actively participate in raising the children. Even worse, some women have experienced difficult or traumatic childhoods themselves. All these factors make them think twice about whether they can overcome these risks and whether they want to repeat the same cycle.
Long-Term Effects
Now, if you think having fewer babies will not affect us much, you might want to read on. Based on the population pyramid, you can see that the largest population group in Malaysia was between 10 to 14 years old about 20 years ago. By 2015, this shifted to the 20 to 30 age group. Fast forward to now in 2025, it has moved to 30 to 34 years old.
This clearly shows that our population is aging over time. In fact, even our government has acknowledged this. By 2040, the proportion of older people is expected to grow from 5% in 2020 to 14.5%.
But for now, Malaysia’s situation is still not as serious compared to countries like Japan and Korea. Based on estimates, the largest population group in those countries will mostly be people aged between 60 to 80 by 2055. For Malaysia, our largest group will be in the 40 to 50 age range, which is still considered better compared to others.
Problem 1: Slower Economic Growth
However, this does not mean we can ignore the growth of this issue as it will affect us in serious ways. Firstly, the economy will grow slower because there will be less energy from fewer young people. When the workforce decreases, innovation and productivity will also drop, and making it harder to sustain economic growth.
This also means companies will find it harder to hire workers. Even if migration can help to fill the gap, companies will still need to offer higher salaries to attract talent. In this point, when companies face higher costs, they will likely pass this pressure onto consumers, which means all of us will feel the impact.
According to a report, more than 52% of EPF members under 55 years old still have savings of less than RM10,000. This amount is barely enough to cover 3 months of living expenses without a job. Imagine if they reach retirement age with no strong pension and no children to support them because of fewer births, they will have to depend on government aid. When we say government support, it actually means taxpayer’s money, which comes from us.
Moreover, when the population becomes older, the demand for housing might decrease. This is because most older people already bought their houses when they were younger. If the majority of the population is older, there will be fewer people buying houses. As a result, property prices might fall, which could also affect the overall economy.
For example, in Japan, the shrinking population has led to a sharp rise in the number of empty houses. In 2023, the number of vacant houses was 80% higher compared to 2003. This means if you buy an extra house as an investment hoping to rent it out or sell it later, you might end up disappointed when demand is no longer strong.
Problem 2: Healthcare Overload
Besides the economic slowdown, another serious problem is the risk of healthcare overload. Even now, Malaysia is still facing a shortage of doctors in public hospitals.
When we compare ourselves with Singapore, Malaysia has only 2.4 doctors for every 1,000 people, while Singapore has 2.7 doctors. Looking at our current public healthcare system, long waiting times are already common because of limited resources. It is hard to imagine what will happen if we have an even larger group of elderly patients in the future.
This situation will be even worse for lower-income households that cannot afford the extremely high cost of private hospitals. If they are forced to rely on public hospitals during emergencies where every minute counts, it could lead to very bad outcomes for their loved ones.
This will also create another ripple effect, where insurance premiums are likely to rise as the demand for healthcare among the elderly increases over time. If you did not know, health insurance premiums in Malaysia have been growing by 10.4% every year as of 2023, reaching the highest rate in the past 10 years. Even the latest EPF dividend rate also cannot keep up with this rise.
Just as a quick aside, even the cost of afterlife services is getting more expensive. The price of a burial plot, which is the land where your body is laid to rest, has also been rising. Recently, it can cost between RM20,000 and over RM1 million depending on the package. Even the cheaper “afterlife condo” options now cost around RM10,000 to RM30,000. Therefore, as the population continues to age and deaths become more common, prices in these areas are expected to rise even further.
Government’s Action
Fortunately, our government has taken some incentive measures to help improve the low birth rate situation in Malaysia.
One of the efforts is allowing parents with children to claim a tax relief of up to RM8,000 annually.
In addition, the government is subsidising fertility treatments for mothers, with an allocation of RM5.2 million in 2025.
They have also extended the minimum maternity leave from 60 days to 98 days under the Employment Act 1955.
It is good to see that the government is making efforts to support population growth. However, the support is still limited, especially when compared to countries like Singapore. If you have not heard, the Singapore government offers cash gifts of up to SGD11,000 (about RM36,000) for the first and second child. For the third child and beyond, parents can receive up to SGD13,000 (around RM43,000).
On top of that, parents in Singapore are also entitled to 6 days of childcare leave each year. In comparison, parents in Malaysia still have to use their annual leave for childcare needs.
Is Malaysia’s Future Generation Over?
But as of today, Malaysia’s population is still growing. Based on estimates, the birth rate is expected to peak around 2071, and then start to decline from 2072 onwards. This means we still have time to take action and improve the situation, rather than waiting until the peak and doing nothing.
Before we move into the conclusion, here is a fun fact. Even with many incentives and benefits provided to Singaporeans, their birth rate has still not seen much improvement, not even during the highly anticipated Year of the Dragon.
Conclusion
Anyways, looking at all the data and estimates, it is clear that this is a serious issue we cannot afford to ignore. Over the next few decades, it will bring real and direct impacts on our lives, especially as we grow older.
Although Malaysia still appears to be doing better than some other countries, it does not mean we are completely safe. The mindset and lifestyle of the younger generation are already shifting toward supporting and embracing a childfree life. While this choice offers greater personal freedom and flexibility, it also brings long-term consequences that are often overlooked.
Therefore, with greater awareness they can make clear and informed decisions by understanding what they are choosing to sacrifice for their future. More importantly, they can start planning early and build strong backup plans to protect themselves from the challenges that may come later.
Checkout the YouTube video for a visual guide to this blog!
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