KUALA LUMPUR (July 14): The Malaysian Rubber Glove Manufacturers Association has slammed the sudden gas price hike announced by Gas Malaysia last Friday, saying the three-day notice given in the price increase that will take place tomorrow (Monday, July 15) was “as good as no notice given”.

The abrupt price hike, the association’s president Dennis Low Jau Foo said in a statement today, is detrimental not only to the industry, but also the nation, which it said stands to lose an estimated RM47.2 million in foreign revenue resulting over the next three months due to this price hike, as orders are taken two to three months ahead, based on prevailing production costs, in the rubber glove export business.

This is based on an estimated RM5 billion worth of orders that Malaysian manufacturers have taken, for which they now have to absorb additional costs, with the sudden natural gas tariff increase, it said.

“This action by Gas Malaysia is too abrupt and destructive and is adding cost to doing business, when such cost could have been passed on to buyers. It does not benefit the nation and for the next two to three months ahead, it is the buyers that are gaining on what could have been extra revenue for the nation,” he said.

“If given sufficient time and notice, such increased cost could have been passed on to international buyers. It is not smart and wise at all, especially when MARGMA has time and again requested Gas Malaysia to give us early notice. Gas Malaysia has done a disservice not just to the rubber glove industry, but also to Malaysia when the government is busy reviving our economy,” Low added.

Margma estimates that the natural gas price hike this round will lead to an increase in production cost of US$0.30 to US$0.80 per 1,000 pieces of nitrile glove and about US$0.35 to US$0.85 for latex glove. 

“Due to slim profit margin, all manufacturers will have to manage their production costs carefully depending on the product type and their manufacturing process and energy consumption profile in order not to make losses,” Low said.

The natural gas price hike to RM34.12 per MMBtu from RM32.38 per MMBtu is equivalent to a 5.37% increase for Tariff Category F -- users with average annual consumption of between 200,001 and 750,000 MMBtu -- according to Margma.

“The increase is too sudden and the quantum is too high with just three days’ notice for the manufacturers over a weekend and to be effective on July 15,  2019. This tariff is higher than the base tariff at RM32.74 per MMBtu as announced in the road map on Dec 28, 2016,” he said.

Low went on to urge the government to look into and capitalise on the country’s natural gas to spur industrial growth, and not just sell off the gas as commodities and benefit others.

“When natural gas is used to benefit Malaysian industries, tens of thousands of jobs can be created locally and eventually the country would benefit the most through the multiple levels of taxes, job opportunities and a better use of our natural resources. We should seize the gift from heaven and multiply its inherent worth,” he added.