Greater latex production needed to meet demand

MARGMA will work towards 30% to 40% latex share of natural rubber production within 3 to 5 years


The Malaysian Rubber Glove Manufacturers Association (MARGMA) is working with the relevant ministries and stakeholders to increase Malaysia’s latex rubber production to meet demand.

Its president Denis Low Jau Foo said the local production is skewed towards dry or solid rubber, despite the higher consumption demand and price recognition for latex or liquid rubber.

He said MARGMA has discussed the issue with the new Primary Industries Minister Teresa Kok, emphasising the need for local producers to meet the industry’s demand in its official paper.

“We want to get the industry to produce as much latex as it can because there is a ready market for smallholders and you can fetch better prices as well,” Low told members of the press at a briefing session in Petaling Jaya yesterday.

“Together with the Malaysian Rubber Board, the Malaysian Rubber Export Promotion Council and the ministry, we want to ensure that adequate supply of latex rubber will be forthcoming in the years ahead,” he said.

Low said MARGMA, alongside other stakeholders, will work towards achieving 30% to 40% latex share of natural rubber production within the next three to five years, if not earlier.

“We want to be self-reliant on our own rubber latex as well as buying from overseas — it is always better to be self-sustaining.”

Malaysia produced a total of 740,278 tonnes of natural rubber in 2017, of which only 6.1% or 45,359 tonnes were latex, while the remainder came from dry rubber.

This is despite the fact that the country had consumed about 424,135 tonnes of latex rubber against 64,504 tonnes of dry rubber that same year.

Consequently, in 2017, despite being the world’s No 1 rubber glove producer, Malaysia had to import 305,721 tonnes of latex in order to meet demand.

MARGMA VP Dr Supramaniam Shanmugan said the issue is partly attributable to the fact that 90% to 95% of the total hectarage in Malaysia is managed by smallholders who prefer to produce dry over latex rubber.

“Therein lies our problems because almost all smallholders would prefer to produce dry rubber, which is comparatively easier to do,” he said.

Supramaniam added that liquid or latex rubber production requires more time and work to process.

“We are talking constantly with the government on how to produce more liquid latex, which the market can immediately consume, while uplifting estate holders’ standard of living because liquid latex fetches better prices.”

As an export-driven industry, glove manufacturers are expected to benefit from Bank Negara Malaysia’s decision of allowing Malaysian exporters to bank in their proceeds with onshore accounts for six months without having to first convert it into ringgit.

According to Low, the details of the initiative is still being fine-tuned and at the moment, there is not much clarification made available to the industry. He noted, however, that any initiative to ease trading conditions is a boon to glove players.

“It is a good thing for all and especially glove manufacturers, where almost 100% of their exports are US dollar denominated.”

He said the current government’s plans to spread out the increase in minimum wage over a period of five years is a far more manageable situation, but noted that the glove industry has already been paying its employees above the minimum wage.

On the trade war front, Washington signalled its intention to impose a 10% tariff on about 5,000 new Chinese goods including gloves worth US$200 billion (RM821.79 billion).

The US, the world’s largest glove consumer, could increase its take-up of Malaysian-made gloves as opposed to buying from China.

According to Supramaniam, whatever benefits resulting from the planned tariff will be “shortlived” as prolonged trade war conditions are negative to the global economy and could bring down demand.

MARGMA projects Malaysia to supply 63% of the total 268 billion gloves anticipated for 2018, translating into a revenue of almost RM18.8 billion for the year. Last year, the total demand was at 232.2 billion gloves.

The increase is expected to be fuelled by the US as the main consumption market, while China and India are identified as key growth markets due to its rising affluence and large population bases, resulting in higher glove demand.