MARGMA foresees export revenue to rebound in 2020


MALAYSIAN Rubber Glove Manufacturers Association (MARGMA) is expecting a slight decrease in export revenue this year but foresees a rebound next, driven by tapping into new potential markets in Asia and Africa.

MARGMA president Denis Low (picture) said the growth in exports of rubber gloves from the country is expected to continue in 2020, projecting an export revenue of RM20.68 billion versus the RM18.2 billion expected this year.

He said China and India’s combined population of about 2.5 billion people offer an opportunity to grow glove exports.

“If you look at the US market, each person uses up to 150 pieces of gloves, while in China the number is about eight pieces and India, six pieces. If China and India were to increase by five pieces per capita, multiply it by 2.5 billion people how many pieces more? Hence, those are the growth areas,” Low told reporters at the association’s outlook briefing in Petaling Jaya (PJ), Selangor, yesterday.

Low also said the local industry is poised to supply to all the citizens of the world once it meets the social compliance standards demanded in certain heavily regulated markets.

Top Glove Corp Bhd MD Datuk Lee Kim Meow, who was also present, said the industry is progressing and expanding despite the challenges it has to face.

“There is still a lot of potential, especially in the emerging markets. The industry is in a healthy and sweet spot for many years ahead,” he said.

“Africa’s population is about 1.3 billion people but the usage there is two pieces per person. The continent is no longer poor. Cities like Addis Ababa in Ethiopia are so modern and the future markets for our glove makers,” Low added.

Low noted that the industry recorded total exports of RM11.3 billion for the period of January to August this year, a decrease of 2.4% from the RM11.58 billion recorded for the same period in 2018.

“Extrapolated for the full year, the industry expects to export RM16.95 billion or 4.45% lower than the export value in 2018 of RM17.74 billion. MARGMA has projected export revenue at RM19.88 billion for 2019,” he said.

The industry is expected to export more and at higher prices in the months of November and December due to the spike in year-end demand and low inventory among the buyers as the monsoon season and year-end holiday season arrive.

On the industry performance this year, the combined effect of low rubber prices and government policy on foreign worker intake since February 2016 has led to poorer results.

“The policy of freezing the intake of foreign workers has left many manufacturers with little choice but to reduce production and decline orders as not all processes can be automated,” Low said.

“Many workers who had completed their three-year employment contracts returned home this year and manufacturers have had difficulty filling the vacancies. As a long-term solution, manufacturers have invested heavily in automation in the past three years and expect to see the result in higher productivity next year.

“The most productive factories are expected to realise the target of 1.5 workers to produce one million gloves earlier than targeted in 2020,” he said.

Low said MARGMA members expect the cost of doing business to rise further next year as the cost of raw materials and the cost of implementing new measures to meet the stringent social compliance standards increase.