Glove makers group slams Gas Malaysia over ‘sudden’ price increase

Yiswaree Palansamy
Margma has taken a swipe at Gas Malaysia Bhd (GMB) for the sudden increase in natural gas price, saying Malaysia stands to lose an estimated RM47.2 million foreign revenue in the next three months. — AFP pic

KUALA LUMPUR, July 14 — The Malaysian Rubber Glove Manufacturers Association (Margma) has taken a swipe at Gas Malaysia Bhd (GMB) for the sudden increase in natural gas price, saying Malaysia stands to lose an estimated RM47.2 million foreign revenue in the next three months.

In a statement today, Margma president Denis Lau Jau Foo said that the July 12 announcement of a new price hike, would raise production costs for rubber glove producers and demanded Putrajaya’s intervention on the matter.

Lau lamented that the three-day notice released last Friday evening for gas tariff hike which is to take effect on Monday, “is as good as no notice given.”

“As mentioned repeatedly in the past, in rubber glove export business, orders are taken two to three months ahead based on prevailing production costs by the foreign buyers. The sudden new natural gas tariff has disturbed the market equilibrium forcefully and resulted in unanticipated cost increase.

“Malaysian manufacturers must absorb the cost increase in order to honour the estimated RM5 billion of orders taken before the announcement. As a result, Malaysia would stand to lose an estimated RM47.2mil foreign revenue resulting from this sudden gas tariff increase over the next three months.

“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 (RM1.23 to RM3.29) per 1000pcs of nitrile gloves and about US$0.35 to US$0.85 for latex glove,” Lau said.

He added that all manufacturers will have to manage their production costs carefully depending on their product types and its manufacturing processes as well as energy consumption, in order not to make losses.

Margma also called for government intervention in the management of a prized resource such as natural gas, instead of handing it over to a private entity.

“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,” Lau added.

He also demanded an explanation from the Energy Commission, accusing it of forcing the new Third Party Access (TPA) system onto natural gas users and GMB.

“It is absurd that while the new policy is not properly explained, industry players are expected to sign new Gas Supply Agreements without even been given a complete agreement for their review by 30 September 2019. MARGMA had engaged with GMB recently and understands that the gas price will increase tremendously when the deregulation of the gas market happens on 1 January 2020,” Lau said.

According to the Energy Commission’s website, the TPA will allow any party to have access to, and utilise the gas facilities available in Malaysia on the same terms and conditions as other parties for similar utilisation.

It said that presently, there are three types of gas facilities that fall under the scope of the TPA, namely regasification terminals, transmission pipelines and distribution pipelines.

Lau added that when cost and competitive elements are involved, the Energy Commission must note that industries needed to be informed, be engaged and be allowed to jointly deliberate on the best applicable and winning solutions.

“Policies must always be commercially viable and easy to follow through and not be too complicated. When manufacturers require to hire more personnel just to monitor the usage of natural gas, it is just being inefficient as it is an unnecessary additional cost to doing business.

“A good policy that is being implemented in a haphazard manner, will do more harm than bringing its intended benefits,” he added.

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