What are the key demands from the rubber glove industry for Budget 2024?

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Key Demands from the Rubber Glove Industry for Budget 2024

The Malaysian rubber glove industry is seeking several key revisions and incentives for Budget 2024, primarily focused on reducing operational costs and enhancing global competitiveness. These demands include a simplified gas supply agreement, a reduction in natural gas costs, and the removal of the export cess, alongside suggestions for tax policy adjustments and reinvestment incentives. The overarching goal is to enable local manufacturers to better compete with international rivals, particularly those utilising cheaper energy sources like coal, and to foster further growth and foreign income generation within the sector.
Revision of Gas Supply Agreement and Natural Gas Costs

The Malaysian Rubber Glove Manufacturers Association (Margma) is advocating for a revision of the current Gas Supply Agreement (GSA) to implement a more equitable pay-as-per-usage pricing mechanism. They argue that the existing GSA is complex, carries significant penalties, and includes stringent take-or-pay clauses that disadvantage local manufacturers and limit their flexibility in the global market. Furthermore, the industry urges Petroliam Nasional Bhd (Petronas) to supply natural gas at a reduced cost to Gas Malaysia Bhd and its subsidiary, Gas Malaysia Energy and Services Sdn Bhd. This cost reduction is seen as crucial for enabling Malaysian manufacturers to compete with overseas counterparts who benefit from lower energy prices derived from coal, thereby making Malaysian rubber glove products more competitive internationally.
Removal of the 0.2 Per Cent Export Cess

A significant request from the rubber glove sector is the immediate removal of the 0.2 per cent export cess, a levy that has been in place for over two decades. Margma highlights that this cess has historically accounted for up to two per cent of gross profit margins during favourable years. However, with current average selling prices falling below production costs, the industry continues to incur this export cess even when experiencing losses on every exported container. The removal of this cess is viewed as essential to alleviate financial pressure, prevent further suppression of profits, and bolster the industry's global competitiveness.
Tax Policy and Reinvestment Incentives

Top Glove Corporation Bhd has proposed several fiscal measures to support the industry. These include the reintroduction of the Goods and Services Tax (GST) at a reasonable rate, which they believe offers a more effective, efficient, and transparent tax system compared to the current one. In addition to GST, Top Glove is calling for a gradual reduction in the corporate tax rate. The company also seeks an extension of the special reinvestment allowance, which is scheduled to expire in 2024, requesting advance notice to allow for proper corporate planning and investment strategies.
Enhancing Competitiveness and Economic Contribution

Collectively, these demands aim to address the challenging operating environment faced by the Malaysian rubber glove industry, which is experiencing intense competition from countries with access to cheaper energy. By securing more competitive energy prices and reducing tax burdens, the industry hopes to encourage downstream activities, create more employment opportunities, and stimulate business growth in supporting industries. Ultimately, these measures are intended to enhance the sector's export value, increase foreign income inflow, and ensure its continued substantial contribution to the Malaysian economy.

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What are the key demands from the rubber glove industry for Budget 2024?

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