This article first appeared in Forum, The Edge Malaysia Weekly on April 8, 2019 - April 14, 2019

Ageing is a reality of life. While seniorhood, if well planned, can be joyful, as with everything else, this phase of life is not without its challenges. With ageing comes a whole lot of different needs with regard to health, housing, technology, finance, travel, work, food, medication, clothing and leisure.

The good thing about ageing is that increased longevity has triggered unprecedented economic growth and new opportunities for personal fulfilment, thus driving the longevity or silver economy.

The silver economy essentially represents the aggregation of all economic and industrial developments that serve the needs of those 60 years and above, who are fast becoming a new and powerful consumer class. This new economy offers several industries many opportunities to address the emerging demands of silver consumers.

Exactly how sizeable is this consumer base?

A quick look at the UN World Population Ageing Report shows that the number of people in the world aged 60 or over is projected to leap 56% from 901 million in 2015 to 1.4 billion by 2030. Additionally, the global population of seniors is anticipated to more than double from 2015 to reach nearly 2.1 billion by 2050. If we assume the population to be eight billion by then, silver consumers will comprise 25% of it — one in four persons will be a senior.

Furthermore, financial institutions project that the global spending power of silver consumers will reach RM60 trillion a year by 2020. In 2015, this new consumer base accounted for RM19 trillion of goods and services in the EU alone, contributing over RM22 trillion to its gross domestic product and more than 78 million jobs. Asia-Pacific’s ageing market is projected to reach more than RM13 trillion by 2020.

If numbers do not lie, then these facts point to the silver economy’s huge potential. Several reports have been commissioned to assess the current situation and the probable future, including the EU’s “The Silver Economy”. Last year, the first edition of the European Silver Economy Awards was initiated, attracting a commendable 95 applications from 22 countries. This July, Finland will be convening the first-ever high-level Global Silver Economy Forum on the opportunities of growing the silver market.

Closer to home, the World Bank co-authored a report with RTI International entitled “Options for Aged Care in China: Building an Efficient and Sustainable Aged Care System” to develop a policy framework to address the country’s silver population. Japan, Hong Kong and Singapore, the Asian countries that have growing ageing populations, are also acting fast on implementing proactive policies and coming up with innovative products, services and delivery. The buzz of the silver economy is clearly getting louder and nearer.

The Malaysian scenario

The “allure of silver” makes a sound social and economic case for Malaysia to consider as it seamlessly combines meeting real societal needs with promising economic advantages. Malaysia’s population is ageing with projections indicating that 1 in 15 persons will be a senior by 2040.

The immediate impact of the rise in the silver population will be felt in three key areas, namely the labour market, as there may not be enough young talent to replace the seniors; the healthcare system, as an increase in age-related concerns such as memory loss, depression, physical falls and disability related to non-communicable diseases (NCDs) will strain the public health system; and finance, as longer life expectancy and the rising cost of living will demand further government intervention to address current gaps in healthcare funding and place families, especially women, under great stress as the primary source of support for the elderly.

However, each of these challenges provides opportunities for healthcare advancement and revenue generation for the country. For example, seniors who are willing to work longer will create a more robust labour market and make less use of government benefits, creating added demand for new products, services and experiences.

In Malaysia, private-sector demand plays a key role in advancing the aged care ecosystem with its ability to influence all stakeholders, including policymakers, regulators, investors, industry leaders, academia and entrepreneurs. The growing interest of investors and retirees from the US, Australia and Japan, to name but a few, has placed Malaysia consistently among the top 10 countries for retiring on the Annual Global Retirement Index for several years. This market trend is pushing the government to ensure that the infrastructure, investment policies and regulations on facilities and services for the aged are sufficiently robust and supportive.

In 2010, the Healthcare National Key Economic Area (NKEA) under Malaysia’s Government Transformation Programme identified aged care as one of two longer-term business opportunities that were expected to deliver 11,400 new jobs and RM1 billion in incremental gross national income by 2020. Several initiatives were identified to improve the aged care ecosystem, such as the development of a new Act, the establishment of regulations and physical planning guidelines for private aged care facilities, the transformation of old folks or nursing homes, the development of caregivers’ skills and curriculum and the development of financial products such as reverse mortgages and insurance for long-term care.

In 2012, this business opportunity was converted into three entry-point projects (EPPs), namely retirement village, homecare/mobile healthcare services and institutional care with the long-term goal to create a number of centres and services for people who need help with daily living but allowing them to live as independently as possible for as long as possible.

As a result, the government has come up with the National Policy and Plan of Action for Older Persons, the Private Aged Healthcare Facilities and Services Act and Physical Planning Guidelines for the Elderly with plans for Private Aged Healthcare Facilities and Services Regulations, which set the minimum standard for professional elderly care.

At the same time, the Ministry of Women, Family and Community Development is developing a new Welfare Act to protect the elderly with programmes based on productive welfare rather than focusing on aid. While this is commendable, a more integrated and strategic approach is needed in an increasingly competitive market to attract investors, services, retirees and professionals to choose Malaysia as their preferred “silver” destination.

As is the case with all nascent industries, with strategic and targeted policies in place, the compelling lure of the silver economy will bring in investors and entrepreneurs to set up business in Malaysia. This will have a compounding effect on other businesses in the value chain and soon a vibrant ecosystem that addresses not just the local but possibly also global demands will develop and flourish. Academia can explore and research creative approaches to meet the evolving needs of the silver consumer and collaborate with industry to bring their scientific innovations to the world for global good.

In China, for example, RTI International recently completed a study on caring for the ageing population, which could assist the government in establishing national regulations and guidelines for the various needs of the market, including enforcing regulations and monitoring industry standards, strengthening financing channels for long-term care, enhancing the implementation of local policies to encourage public-private partnerships as well as incentivising the private sector to innovate in new areas.

The China experience is relevant to Malaysia as there are many similarities in terms of the current trends in fertility, longevity and family formation, culture and practices of caregiving and support for the elderly.

Over the next couple of decades, the silver economy, as a source of demand, is expected to boom owing to the anticipated ageing population. It is a ready market that is here to stay, grow and thrive. The question is, does Malaysia wait and see or do we as a nation actively pursue, create and capitalise on this growing economic potential? The answer is clear.

Heng Pey Pey is healthcare practice lead at RTI International (Malaysia). RTI International is a global, independent research and advisory institute with more than 60 years of global experience dedicated to improving the human condition and turning knowledge into practice.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.