KUALA LUMPUR (Oct 10): Top Glove Corp Bhd (KL:TOPGLOV) said on Thursday that a levy on exports of rubber gloves in place for over two decades is now a “significant burden” for manufacturers.
The world’s largest glove maker said the levy was manageable previously though current market conditions make it harder to bear amid volatile raw material prices and exchange rates. Chinese and Thai producers also benefit from their government subsidies and other support, the company noted.
Currently, Malaysian glove manufacturers are subjected to an export levy of 0.2% on sales. Top Glove is proposing to halve the rate to 0.1%.
Top Glove hopes that the rate will be halved at least “to ease pressure on Malaysian glove exporters", said executive chairman Tan Sri Lim Wee Chai at an earnings briefing.
The request comes at a time when the glove industry is still reeling from the post-pandemic downturn as overbuying weighed on demand and glut in supply depressed prices. The drastic decline of the US dollar against the ringgit also weighed on earnings from exports billed in the greenback.
There are, however, signs of improvement with Top Glove reporting a much smaller net loss as sales surged in the three months ended Aug 31, 2024.
The Malaysian Rubber Council (MRC) — governed by a board of trustees appointed by the Ministry of Plantation and Commodities — oversees the collection of levies from local rubber companies.
“The MRC has been collecting levies from Malaysian rubber producers, while countries like China offer financial support to their industries,” said Malaysian Rubber Glove Manufacturers Association trustee and former two-term president Denis Low. He is also director of corporate affairs, sales and marketing at Supermax Corp Bhd (KL:SUPERMX).
The levy rate has remained unchanged even as the industry has called for a reduction in the past, he said.
Top Glove managing director Lim Cheong Guan also advocated for tax allowances for automation and digitalization for the glove players in the upcoming Budget 2025.
"We are not asking for subsidies but rather for tax allowances for investment in automation, digitalization, and green initiatives,” he said. “This would encourage companies to invest and would only benefit them if they make profits.”
He also called on the government to consider reopening the intake of foreign workers as well as promoting the use of natural gas domestically instead of exporting it.
Budget 2025 is set to be tabled by the prime minister on Oct 18.