This article first appeared in The Edge Financial Daily on October 25, 2018

KUALA LUMPUR: The Malaysian Rubber Glove Manufacturers Association (Margma) is hoping for an extension and expansion of the reinvestment allowance for glove manufacturers in the upcoming Budget 2019.

In a statement yesterday, Margma said it was cognisant of the difficult financial situation that the Pakatan Harapan government was now facing.

“It is really a predicament for which every citizen must come forward to assist. As far as the glove industry is concerned, we are only looking at the extension and expansion of the Reinvestment Allowance.

“This is particularly important for Malaysian glove manufacturers to continue to reinvest huge capital to expand and build modern and automated factories. We want to work hand in glove with the government to expand business world-wide, and to bring in more revenue to the country,” the association said.

The reinvestment allowance, according to the Inland Revenue Board, is a special tax incentive available to a resident company that has been in operation for not less than 36 months in Malaysia, and which had in its year of assessment, incurred capital expenditure on a factory, plant or machinery used in Malaysia for a qualifying project under Schedule 7A of the Income Tax Act 1967.

Margma said the reinvestment allowance is no longer granted to the rubber glove industry as it is deemed a mature industry.

“The Malaysian rubber glove industry has completed its first phase of rapid growth in production capacity and has helped position Malaysia as the world's leader in rubber gloves manufacturing.

“The industry is now in the second phase of growth where companies compete in terms of product innovation and production technology. Heavy investments are required for this phase of growth to maintain our competitive advantage.

“As our foreign competitors in neighbouring countries are catching up fast, reinvestment allowance is crucial for Malaysia to maintain [its] leading position in the next five years,” it said.

Margma said the intended impact of the reinvestment allowance is to ensure Malaysia maintains its global leadership in gloves exports, and to promote and encourage more investments in factory expansions, modernisation, diversification and automation to improve and increase manufacturing activities.