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This article first appeared in The Edge Financial Daily on August 24, 2018

KUALA LUMPUR: Malaysia will further solidify its position as the world’s leading rubber glove manufacturer by raising its market share to 68% over the next two years amid continued robust demand globally, said the Malaysian Rubber Glove Manufacturers Association (Margma).

The country currently commands a market share of 60% to 65%, followed by Thailand (21%), China (5%) and Indonesia (3%).

Margma vice-president Dr S Supramaniam said Malaysia is expected, by the end of this year, to supply about 63% or 168.8 billion units of the world’s rubber glove purchases.

The annual growth rate in the next few years is expected to be about 15%, he added at a media conference on the rubber glove industry.

The association’s president Denis Low Jau Foo agreed, saying the industry has grown tremendously over the past two decades and continues to display resilient growth.

“Global demand for rubber gloves has continued to rise and is expected to increase from 232.2 billion gloves in 2017 to 268 billion gloves in 2018. Malaysia is expected to supply 63% or 168.8 billion gloves. This will translate into a projected revenue of RM18.8 billion for Malaysia in 2018,” Low said.

Malaysia exports rubber gloves to over 195 countries, he said, adding that the product makes up 73.2% of all rubber goods exported by the country.

“From January to June 2018, the export value of the local rubber glove industry was at RM8.47 billion, up 6.57% from RM7.95 billion in the same period last year,” Low said.

He cited the ageing population in Northern America and Europe, high birth rates and regulations in Brazil, and population growth in Russia as among major drivers of growth. In Asia, both China and India are seeing population growth and growing affluence.

The US is currently the main importer of Malaysian rubber gloves, with a 36% market share, followed by Europe (28% to 30%), Latin America (10% to 15%) and Asia (8%.)

 

Potential short-term gain from US-China trade war

On the escalating US-China trade tensions, Low said a trade war between the two countries will not benefit anyone, but acknowledged that a temporary jump in demand could be possible if consumers look for other markets aside from China for rubber gloves following the tariffs imposed by US President Donald Trump.

Supramaniam agreed, saying that if customers look for alternative supplies and opt for the Malaysian market, it will be a positive development, but the spike in demand will be short-lived.

As for the rise in minimum wages and other potential increases in costs with the shift from the goods and services tax to the sales and services tax (SST), Low said the industry usually passes on increases in costs to consumers.

Datuk Lee K M, the immediate past president of Margma as well as the managing director of Top Glove Corp Bhd, said the SST and the increase in minimum wages will not have a significant impact on glove manufacturers’ earnings.

“Labour cost constitutes less than 10% of the total cost of production, so if you increase, say, 10%, that is only a 1% increase in the total cost of production. It is manageable. Do not forget that over time, there will be an increase in productivity, so that will offset any increase in minimum wages,” Lee said.

Earlier, Supramaniam shared that the headcount in the industry had fallen from 2.7 workers for producing one million gloves in 2016 to two workers for the same, and this is expected to reduce further to 1.7 workers with more automation and enhancement of production.

Margma yesterday also announced that it will organise the 9th International Rubber Glove Conference and Exhibition in the Kuala Lumpur Convention Centre from Sept 4 to 6.

On the event, Low said the number of booths, showcasing the latest product developments and innovations, will increase to 514 this time from 272 in 2016.

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