KUALA LUMPUR (June 29): Malaysian Rubber Glove Manufacturers Association (MARGMA) announced that glove manufacturers will have to adjust their selling prices due to the gas price hike of nearly 6% effective July 15.

The association warns its members to be cautious of their expansion plans, in order to ensure selling prices continue to be stable.

Expansion should be done “cautiously and not whimsically”, said MARGMA in a statement today.

MARGMA estimated that the latest hike on gas prices will mean an additional cost of 20 US cents to 30 US cents per 1,000 pieces of nitrile gloves, and about 20 US cents to 50 US cents for latex gloves.

Each manufacturer will have to adjust their pricing depending on the product type and their manufacturing costs, the association said.

"Basically, glove prices need to be adjusted with both the natural gas and minimum wage factors in mind, and it may cost more by about 40 US cents to 60 US cents per 1,000 pieces," it added.

The rubber glove industry is expecting the increase of minimum wage from RM900 to RM1,000 on July 1, 2016, together with the gas price hike on July 15, to bring on a ripple effect on production costs.

In the statement, MARGMA president Denis Low Jau Foo said the natural gas price hike at an average increase of 6% is “still reasonable”, though it was not what the industry expected.

“The quantum of gas price hike this round is tempered, and we hope that the price of natural gas will remain stable for the next one year in order to allow time for the industry to deal with other cost increase such as the minimum wage order 2016, which will take effect on July 1, 2016,” he said.

Just six months ago, the natural gas tariff was increased by 17.2% on Jan 1, 2016.

The association said it understands the need for subsidy rationalisation by the government, but at the same time, cautioned the need to be mindful of current global economic conditions.

Despite a longer notice period of 16 days this round, the association commented that a notice period of two months would be needed, as orders were placed months ahead.

“The quantum of the increase cannot be costed in until we are notified by Gas Malaysia Bhd, thus the industry will still have to absorb this increase when it could easily be passed on to the buyers,” MARGMA said.

MARGMA said it will advise its members to inform their customers immediately, as the selling price has to be fixed in advance and also since the 16-day notice given in this price hike is too short a timeframe.