KUALA LUMPUR: High dependency on foreign workers, low-skilled labour and lack of automation are stumbling blocks for Malaysian glove manufacturers to fully resume operations during the lockdown, economists said.
They said it was vital to ensure glove producers in Malaysia, the world's biggest glove exporter, resume operation at 100 per cent capacity as soon as possible to avoid relocation of export orders to competing countries such as China and Vietnam.
Glove manufactures might have been allowed to operate fully during the lockdown if they automated their process throughout assembly lines, with a minimum number of manual workforce, they added.
Economist Dr Nungsari Ahmad Radhi said Malaysia was a net important of rubber and its competitive advantage was only on cheap production cost especially labour.
"Such advantage will easilly be lost to competitors which invest more in technology. Compliance to standards, quality control and production certainty are better with a more technology-based production," he told the New Straits Times (NST) recently.
Nungsari said Malaysian producers of latex products had had success but they should invest in technology if they were to remain competitive, not just against China but any competitors.
"Commodity producers do not necessarily have a competitive advantage in downstream industries. Firms have to continuously innovate and invest in technology to remain competitive," he added.
Sunway University economics professor Dr Yeah Kim Leng said the Covid-19 pandemic had proven that glove manufacturers would need to upgrade their manufacturing processes to reduce dependency on the foreign and manual workforce.
"The enormous profit due to higher sales should be ploughed back to automation and upgrading processes," he told NST when contacted recently.
Yeah said the current situation was concerning given that glove was part of the essential personal protective equipment (PPE) items as Malaysia was a major export and supplier globally.
He said it was vital to ensure Malaysia's glove production fully resume operation to meet the burgeoning export orders and avoid disruption in the global supply chain.
"It will also avoid the relocation of export orders to other countries. This could result in production and trade diversion to competing countries such as China, Thailand and Vietnam," he said.
According to the Malaysian Rubber Gloves Manufacturers Association (Margma), Malaysian glove manufacturers accounted for 67 per cent of the global supply or 320 billion pieces annually out of 480 billion pieces.
Its president Dr Supramaniam Shanmugam said its members had been allowed to resume operations at 60 per cent workforce capacity since last week.
"We are now talking to the government to allow us to be at 100 per cent workforce given that gloves are an essential item for the world, its demand is still very robust and Malaysian gloves are the global preferred choice."
It added that its members could not meet the orders, buyers would move to China, Thailand and Vietnam.
"We may lose market share and revenue for the country. We are telling the government that if we are allowed to bring in sufficient labour and run at 100 per cent workforce, we can easily exceed RM65 billion export revenue for 2021. For 2020 export revenue was RM36 billion," he said, in response to the NST query.
Yeah said glove manufacturers should be given the priority to vaccinate their workers, including allowing them (employers) to make the purchase for vaccination for workers.
"This allows them to restart operations with standard operating procedures (SOPs) compliance. Manufacturers need to satisfy the authority with full SOPs compliance while enabling them to have quick access to vaccination including procuring the vaccines," he said.
Yeah said this decision should not be further delayed as it would reduce the economic losses for manufacturers and the government.
"Glove sector is one of the largest sectors that contribute to the government tax revenue collection at the time of crisis. It contributes to the government's coffer that has been reduced due to losses incurred by other sectors."
Yeah said the glove sector's contribution was important as other sectors were unable to generate profit that can be taxed.
"Further uncertainty in resuming operations will result in erosion in investor confidence and create negative perception by foreign buyers (importing countries)," he cautioned.
Nungsari said glove manufacturers should carry out mass-testing of their workers regularly while waiting to fully vaccinate them.
He expressed concern over large numbers of workers living in closed cramped quarters.
"These workers should be mandated to vaccinate as a precondition for operation. And even after vaccination, they should still test regularly," he said, adding that there was a significant spread among workers in the factories and their living quarters.