Massive increase in orderbook for glovemakers

Local players are experiencing a shortfall of 25,000 workers, which are crucial to meet the increased global demand, says MARGMA


MALAYSIA’S glove industry is set to produce an additional 20 billion pieces of gloves for the remaining of the year, which is 17% more from the annual production due to the Covid-19 pandemic-led demand.

Malaysian Rubber Glove Manufacturers Association (MARGMA) VP Dr Supramaniam Shanmugam said the volume would contribute to the 220 billion gloves worth RM21.8 billion that will be exported to other markets.

“We expect Malaysia to supply about 67% or 220 billion gloves globally this year.

“Before the Covid-19, the local glove industry recorded a production growth between 12% and 15%, while during Covid-19, it recorded an increment of 20% growth,” he said during a panel session at Invest Malaysia 2020 in Kuala Lumpur yesterday.

In the first quarter of 2020 (1Q20), Supramaniam said Malaysia had sold about 55 billion pieces of gloves, while 99.6% of the total production is reserved for the export market.

He said the local glove manufacturers have invested around RM600 million to RM1 billion annually for expansion plans due to the heightened global demand, which is estimated to grow between 10% and 12%, a projection made before the Covid-19 pandemic.

“Doesn’t matter if there is Covid-19 or not, the global demand is estimated to increase by 10%-12% and the expansion will happen organically.

“The profit that we are generating at the moment after paying our taxes, we will plough it back to the expansion plan,” he said.

However, Supramaniam said should the government decide to impose a windfall tax on the local glovemakers following the industry’s high gains during the pandemic, it would only stunt the companies’ expansion plans.

“The government will have to realise that the 24% corporate tax of what the companies are currently earning is already a huge contribution to the government.

“If the tax rate goes beyond that, it will affect our expansion plan and our ability to produce more. Hence, other players will take up our market share if we don’t expand, we don’t want that,” he said.

Commenting on the recent recruitment freeze on foreign labour, Supramaniam said the local players are experiencing a shortfall of 25,000 workers — 10,000 local workers and 15,000 foreign workers — which are crucial to meet the increased global demand.

“We try to minimise the dependency on foreign labour and it should be done in stages and develop as a long-term plan rather than to just come out with a knee-jerk plan.

“Engage with us and give us enough time to work through the situation. For now, we have to review the goals on whether the government wants to increase or retain net export revenue or reduce foreign workers.

“We need to strike a balance between these two goals,” he said.

Supramaniam said currently the industry employs 71,800 workers, of which 28,000 are locals and 43,800 foreign workers.