Introduction
Malaysia is predicted to become an “aged nation” by the year 2048, once the proportion of the rakyat aged 65 and above reaches 14% of the population (Hadina, 2025). This situation is alarming, as Malaysia’s birth rate has reached its lowest record. Only 93,500 babies were born in the first quarter of 2025, a 11.5% drop from the same period in 2024 (Mail, 2025). A declining birth rate will exacerbate the ageing population issue in Malaysia.
Ideally, this issue is driven by a range of interconnected factors, including health concerns such as infertility, domestic burdens such as the high cost of childcare and work-life imbalance, as well as broader socio-economic pressures, including rising living costs, housing affordability, job insecurity, and financial instability, all of which contribute to the declining birth rate.
However, the most pressing concern is the government’s lack of comprehensive, supportive policies to address declining birth rates and the challenges faced by young families.
Additionally, Malaysia’s labour market would face “severe challenges” over the next 20 years (Seraj, 2025) if this projection comes to pass. There will be more people aged 60 and above than those aged 18 to 59. Eventually, the contraction of the working-age population would intensify the need for workers in crucial sectors such as healthcare, eldercare, and manufacturing, leading to reliance on foreign labour. Therefore, reversing this trend would require multidimensional approaches and, most importantly, strong political will from the government.
It is important to highlight the underlying issues surrounding the declining fertility rate, the growing reluctance of young people to marry and the urgent need for better childcare support. Without meaningful reform, marriage and parenthood will be increasingly perceived as financially challenging choices.
Fertility Rate
Demographic change has long been a source of worry, but the concern has transitioned profoundly. In the 1960s and 1970s, fears centred on overpopulation, with the expansion outpacing the growth of food supplies and natural resources (Coelli and Garcia Guzman, 2026). The global birth rate in the 1960s was 5 births per woman, but it fell to 2.23 births per woman as of 2026. This is only marginally above the “replacement rate” (2.1 births per woman).
However, in Malaysia, the total fertility rate (TPR) was 1.67 births per woman (aged 15 to 49) in 2025 (DOSM, 2025), which is expected to decline to 1.66 in 2030 and 1.6 in 2035 (BERNAMA, 2025). This appears to be an alarming number, parallel to the decrease in the total number of marriages per 1000 people from 6.6 in 2022 to 5.7 in 2023 (DOSM, 2025).
While declining fertility rates are often viewed through a social lens, it must also be understood within the context of a country’s economic development. This demographic shift risks weakening inter-generational support structures, placing increasing pressure on a shrinking working-age population.
Previously, experts have concluded birth rates and economic factors have a “strong relationship” as “premature.” It would be misguided to dismiss it as “premature”, while rising living costs, increased female workforce participation, a weakening ringgit, and fluctuations in inflation are still central to understanding this trend. Nevertheless, social and biological factors, including delayed marriage, contraceptive use and infertility issues, do not outweigh the structural economic realities today.
As a starting point, the government must prioritise family-centred financial incentives to support childbearing and reverse the current demographic trend. By easing cost of living pressures, the young Malaysians will have greater breathing space and confidence to consider marriage earlier than they might otherwise intend.
A Glance at the Government’s Current Initiatives
Despite sustained economic development, government initiatives to advance women’s rights remain limited across all administrations in Malaysia. Budget allocations for women-focused programmes lack depth in addressing the barriers. At the same time, women are expected to be actively involved in the labour force, highlighting a disconnect between policy and economic expectations for women.
Through Budget 2026, the Madani government has enhanced existing monetary measures to encourage young couples to marry and ease the burden on the “sandwich generation,” with the broader goal of improving fertility rates.
Among these initiatives, the existing RM3,000 income tax relief for childcare and kindergarten fees has been expanded to include daycare and after-school transit centres for children up to 12 years old. In addition, childcare fee subsidies for TASKA are maintained at a maximum of RM180 per month per child. However, for households in the B40 income group earning below RM3,000, the tax relief measures do not change their day-to-day reality, as they do not meet the taxable income threshold and therefore do not benefit from such incentives.
Unveiling the Hidden Realities
Cost of Living
Raising a child was far more financially manageable in 1980, despite a higher inflation rate of 6.7%, than it is today, when inflation is around 1.7% as of March 2026. This is because the overall cost of living is significantly higher due to decades of accumulated price increases. During that period, the cost of basic necessities was significantly lower; for instance, RM10 could purchase several types of vegetables. In contrast, the same amount today may only be sufficient to buy one or two types of vegetables. With car loan tenures rising from 5 years to 9 years, and credit cards easily accessible, reflecting higher household indebtedness and increased financial strain.
Moreover, household costs of living are much higher in urban areas than in rural areas. For instance, families in Petaling need to spend RM6,870 compared to those in Kuala Lumpur (RM5,639) to achieve a decent standard of living (Ikram, 2025). Meanwhile, a family of 4 in Perlis would only need to spend 39.1% less than the same family size in Kuala Lumpur (Pfordten, 2025).
These disparities illustrate the heightened financial pressure faced by urban households. The struggle to make ends meet, difficulty in finding affordable childcare and lack of extended family help, have pushed many families to limit the number of children they have. In some cases, couples even choose to forgo having children altogether.
Quality of Childcare
The current economic situation leaves many parents with little choice but to work, making them increasingly reliant on childcare centres to care for their young children. But the reality is that quality childcare (safety and hygiene) comes at a high cost. A reputable childcare centre can charge approximately RM1,800 per month, while half-day kindergarten fees may cost around RM600.
In contrast, many parents can afford only between RM400 and RM700 per month, which is significantly below the actual cost of quality care. As a result, lower-cost childcare options, particularly those charging below RM1,000, often come with substantial risks, including being unregistered with the Social Welfare Department (JKM), overcrowded conditions and poor hygiene standards.
Moreover, parents are confronted with a difficult dilemma whether to prioritise affordability or accessibility, particularly when childcare centers near their workplace which offer greater convenience and flexibility, are limited, much pricier or unavailable. This often forces them to rely on centers located farther from their workplace or home, increasing commuting time, logistical challenges and overall stress. In some cases, parents may even compromise on quality and safety standards simply to secure a place that fits their budget and daily routines.
This raises serious concerns, as many cases of negligence have been reported in unregistered childcare centers, which are often more affordable, and therefore more accessible to low-middle-income families.
Proposed Initiatives
While these measures appear positive from a macro-level perspective, they remain insufficient in addressing challenges with childbearing and family formation. For many young families, financial burden can deter them from having more than one child.
Monetary and service-based interventions are needed to reduce the cost of parenthood and encourage family growth. Without stronger and more targeted support, the long-term fertility rate is likely to continue declining.
Direct Financial Support for Families
A lump-sum childbirth allowance followed by a monthly allowance should be introduced to support parents at the critical early stage of parenthood and to encourage family formation amid Malaysia’s declining birth rate. The most significant expenses for newborns occur in the first year, particularly in the first few months, which cover delivery costs, healthcare needs, baby equipment, and early nutrition.
At the same time, proper nutrition in the first 2 years of a child’s life is essential, as it promotes healthier development, decreases the risk of chronic diseases, and helps lower both morbidity and mortality.
Hence, a lump sum allowance of RM3,000 would substantially ease the financial burden during the crucial postpartum period, followed by RM300 for the next 11 months, RM200 for the subsequent 12 months, and RM150 for the final 12 months. This amounts to a total of RM8500 per child up to 3 years old, for the first 3 children in each family. Targeting the scheme to the B40 and M40 households, who are most in need of financial assistance.
Although no amount of financial aid can fully solve the problem, it is hoped that the assistance will help ease the burden faced by families. The amount allocated should also be subject to the government’s annual budget.
Malaysia may draw lessons from regional models such as Singapore’s Baby Bonus Scheme. In Singapore, it is known as Child Development Co-Savings (Baby Bonus) Scheme, which is a cash gift that is given out every six [6] months until the child turns 6.5 years old. For the first child, the cash gift totals $11,000 and can be used to pay for the newborn’s expenses.
Well-Being of Childcare
Apart from financial concerns, parents are also worried about the well-being of their children in childcare centres. Lower cost centres may raise questions about the quality of care and systems, while higher cost options are often beyond the reach of many families.
Childcare is among the most pressing financial burdens for Malaysian parents, especially in urban areas. Private childcare centres typically cost around RM400-RM800 per child monthly, excluding registration fees and other charges, making them unaffordable for many B40 and M40 families. This leaves mothers, particularly single mothers without support systems, torn between staying home to care for their children and returning to the workforce to increase household income.
Having more children leads to higher costs, which in turn increase the need for both parents to work; however, it also creates greater demand for affordable, high-quality childcare. Currently, the nation currently has only 4,016 registered childcare centres serving nearly 4 million children under the age of four nationwide, a figure that remains grossly insufficient to meet the growing demand for accessible and affordable childcare services. At the same time, Malaysia has around 1,080 unregistered childcare centres due to excessive bureaucracy, inconsistent local regulations, and the absence of a clear legal framework governing early childhood care.
To address this, the government should expand the network of government-run childcare centres, particularly in high-cost urban areas such as the Klang Valley and Johor Bahru, where childcare expenses place significant pressure on working families. Additionally, childcare fee subsidies should be expanded beyond TASKA to also include TABIKA and preschool education, ensuring that support extends to children throughout their early developmental years rather than being limited only to daycare services.
On the other hand, the government should provide grants, especially to small- and medium-sized private childcare centre operators. Such grants and initiatives can help reduce childcare fees while improving the quality of the centres, enabling parents to send their children with ease and confidence.
Apart from that, through these grants, the government should also encourage employer-linked childcare partnerships through tax incentives, whereby companies collaborate with private childcare providers to offer childcare centres located near parents’ workplaces for greater convenience.
Accessible, affordable childcare will not only boost the fertility rate but also enable more mothers to return to work, reducing financial stress on families while boosting the birth rate and Malaysia’s female labour force participation rate.
Other than that, the government and the private sector should implement workplace policies that support work-life balance, including flexible working arrangements and adequate parental leave, which should be strengthened. For example, employees could be granted at least 2 days per month of flexible work-from-home entitlement, which may be utilised when their children are sick, allowing parents to provide care without compromising their job responsibilities.
Easy access to childcare can:
- Boost the Birth Rate
Affordable childcare is a critical factor in family decisions about having children, particularly for working mothers. Many women delay or avoid childbirth due to concerns about who will care for their children, alongside the high cost of private childcare.
In addition, accessible childcare will boost greater workforce participation, especially among mothers, by contracting the necessity to choose between career development and family responsibilities. When accessibility and affordability options are there, parents will more likely to have a greater sense of financial security when planning for children.
- Increase Malaysia’s Labour Force Participation Rate
Currently, Malaysia’s labour participation pattern is described as having a single peak, with women entering the workforce after graduation but dropping out following childbirth. Unlike countries such as Japan and South Korea, Malaysia lacks a “second peak” where mothers return to work once their children are older. Expanding subsidised childcare can create this second peak, ensuring women re-enter the workforce and contribute to the economy.
Conclusion
What makes this crisis “silent” is not the absence of data, but the absence of urgency. Malaysia’s declining fertility rate is not merely a demographic shift but also a growing economic challenge for the younger generation. If left unaddressed, the nation risks facing a shrinking workforce, accelerated ageing, and mounting pressure on public resources in the decades ahead.
Ultimately, if Malaysia is serious about reversing its declining birth rate, it must invest in meaningful family-oriented economic policies. By making parenthood more financially sustainable through well-designed incentives and more accessible childcare, the government can restore confidence among young people or young couples and ensure that starting a family is not seen as an economic risk, but a realistic and supported choice.
References
BERNAMA. (2025). Malaysia to become aged nation by 2048 – Amir Hamzah. BERNAMA. https://www.bernama.com/en/general/news.php?id=2460694
Coelli, F., & Garcia Guzman, P. (2026, February 6). How could falling birth rates reshape the global economy? Economic Observatory. https://www.economicsobservatory.com/how-could-falling-birth-rates-reshape-the-global-economy
Department of Statistics Malaysia (DOSM). (2025). Vital statistics Malaysia 2025. https://www.dosm.gov.my/portal-main/release-content/vital-statistics-malaysia-2025
Hadina, A. (2025, August 26). Malaysia to become aged nation by 2048 – Amir Hamzah. Kementerian Kewangan. https://mof.gov.my/portal/en/news/press-citations/malaysia-to-become-aged-nation-by-2048-amir-hamzah
Ikram, I. (2025, December 24). Living in Shah Alam is more expensive for families than in Kuala Lumpur, official data shows. The Edge Malaysia. https://theedgemalaysia.com/node/787120
Malay Mail. (2025, May 15). Malaysia’s birth rate hits record low in Q1 2025, but Terengganu, Kelantan and Pahang buck baby bust. Malay Mail. https://www.malaymail.com/news/malaysia/2025/05/15/malaysias-birth-rate-hits-record-low-in-q1-2025-but-terengganu-kelantan-and-pahang-buck-baby-bust/176836
Pfordten, D. (2025, December 24). The most expensive states. The Star. https://www.thestar.com.my/news/nation/2025/12/25/the-most-expensive-states
Seraj, Z. (2025, August 15). Alarming birth rate decline threatens Malaysia’s economic future [Video]. New Straits Times. https://www.nst.com.my/news/nation/2025/08/1260784/alarming-birth-rate-decline-threatens-malaysias-economic-future-watch
Author
Farah Nisa Sa'adon
Author
Kabileshwaran Kalaiselvan
