by SHAHEERA AZNAM SHAH / pic by BERNAMA
THE RM400 million Covid-19 donation from four largest rubber glovemakers in Malaysia is a one-off contribution and does not serve as an exchange for the windfall tax the industry was spared from in the recent Budget 2021, a glove association said.
Malaysian Rubber Glove Manufacturers Association president Dr Supramaniam Shanmugam said the glove producers have presented a valid argument to the government on the financial repercussions to the local glove industry should a profit tax be introduced.
“Certainly, it is not a trade-off. The industry players have already presented reasons as to why the windfall tax will basically ‘shoot us on our feet’.”
“Do not forget, while the companies are making far bigger revenues about RM30 billion, it is also going to translate into the higher corporate taxes to be paid,” he told The Malaysian Reserve (TMR).
Supramaniam added that the local glove making industry has to be ready for expansion to meet the heightened demand of glove products and an additional tax will only curb the business growth.
“At the end of the day, the players want to bring in more revenue for the country and I think this is the best time to do that as demand for gloves will be very vibrant post-pandemic.
“Introducing the windfall tax will stifle the companies’ growth because they need to expand their capacities, and capacity expansion requires reinvestment into the companies in terms of new machines, workforce and factories.
“That is where all the profit will be committed to. A windfall tax is going to defeat the expansion programmes which will result in loss of revenue for the country, as well as loss in job opportunities,” he said.
Supramaniam recently told TMR the local glovemakers are expected to pay about RM2.4 billion in corporate taxes for 2020, a fourfold increase from the estimated RM600 million paid in 2019.
Following the shifting in the lifestyle due to the Covid-19 pandemic, the demand of healthcare-related products is expected to skyrocket and the glove companies are estimated to rake in about RM30 billion in revenue this year, which is about 50% higher or RM10 billion more than what was recorded the previous year.
The jump is anticipated from the exceptional gains in demand and the higher average selling prices of glove products.
In the Budget 2021 announced last Friday, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture) said Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd are expected to contribute a combined RM400 million to assist the country in combating the Covid-19 outbreak.
Tengku Zafrul added that the contribution will be utilised to partially cover the cost of Covid-19 vaccine procurement and expenses for health equipment.
Top Glove told TMR the group will be contributing RM185 million out of the RM400 million, while its distribution timeframe is still being determined and finalised.
Hartalgea confirmed to contributing RM90 million to the fund, while Kossan and Supermax will provide RM50 million and RM75 million respectively.
Supramaniam said the local glove industry will continue engaging the government on other pressing issues such as the access to foreign workers and increasing the production of locally produced latex.
“Malaysia glove industry supplies about 67% of the global demand and we want to achieve about 69% to 70% by the first or second quarter next year to give us dominance in downstream manufacturing.
“We have also been talking to the government about the conversion of smallholders’ style of production from cup lump to latex.
“Now, we are importing 95% of the latex across the borders and it is a huge spending for the country. We might as well pay that kind of money to smallholders,” he said.