KUALA LUMPUR (Dec 23): Rubber glove manufacturers are crying foul over the decision by Gas Malaysia Bhd to increase natural gas tariffs by 17.2% come Jan 1, saying the hike is "too soon" and "too sudden".

In a statement today, Malaysian Rubber Glove Manufacturers Association (MARGMA) president Denis Low Jau Foo said the quantum of price increase is also too high.

"The 10 days’ notice is too short and makes it difficult for manufacturers to manage the sudden increase in production costs as the selling price for orders were already fixed months ahead,” he said.

"MARGMA will advise its members to inform their customers immediately as the selling price has to be fixed in advance and the 10-day notice given in this price hike is too short," Low added.

He noted that Gas Malaysia had increased the tariff by 10.27% six months ago, on July 1.

“The gas price hike does not benefit the industry. It does not benefit the nation and for the next two months ahead, it is the buyers that are gaining what could have been extra revenue for the nation,” said Low.

MARGMA estimates that the cost of the latest round of increase will mean an additional cost of 40 US cent to 70 US cent per 1,000 pieces of nitrile glove and about 30 US cent to 50 US cent for latex glove.

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

"While the rubber gloves business is still robust with companies reporting good profits recently, the buyers are actually getting lower and lower price offers. The buyers are requesting lower prices every time there is an upward movement in the US dollar and a downward movement on commodity prices," Low explained.

"This is resulting in profits margin being squeezed and may eventually hurt the rubber glove industry and the Malaysian economy in general," he added.

Yesterday, Gas Malaysia announced that the government has revised the natural gas tariff for non-power sector in Peninsular Malaysia effective Jan 1.

On average, the gas tariff has been increased by 17% to RM25.53 per one million British Thermal Units (mmbtu) from RM21.80 per mmbtu. The tariff for residential consumers, however, has been kept unchanged at RM19.52 per mmbtu.

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