1. The onset of COVID-19 has increased the demand for personal protective equipment (PPE). This will continue to rise, and the World Health Organization (WHO) estimated that some 89 million medical masks, along with 76 million examination gloves and 1.6 million medical goggles are needed each month to respond to the pandemic.
2. This upsurge in demand for PPE presents many scalable opportunities in Malaysia’s rubber glove industry, especially as the government has introduced new incentives for businesses. The country already supplies 65 percent of the world market for rubber gloves (300 billion pieces) and recording 52.7 billion ringgit (US$12.7 billion) worth of glove exports in 2020. This makes the products a key driver behind Malaysia’s resilient exports during a year in which global demand for the country’s resource-based and traditional manufacturing was adversely affected by the pandemic.
3. Before the pandemic, the global PPE market was predicted to be valued at US$77 billion by 2027, this has now been revised to reach US$92.86 billion by 2027 with spending on PPE set to be tripled. The global medical glove market itself is expected to reach US$18.5 billion by 2026, growing at a compound annual growth rate (CAGR) of 11.64 percent.
4. The world’s leading manufacturer of medical gloves, Top Glove (also headquartered in Malaysia) expects an additional 30 percent growth for 2021, after reporting a 417 percent increase in fiscal 2020 post-tax profits (US$459 million).
EXPECTATIONS REMAIN HIGH
1. The booming demand for rubber gloves will likely continue due to the pandemic, particularly as countries roll their massive vaccination programs. Beyond the pandemic, the rising need for quality medical services in not only advanced economies but also developing ones will sustain global demand for gloves in the long term.
2. Many individuals will also remain cautious even after the pandemic and wary of another global health crisis, thus maintaining demand for PPE such as medical gloves. Businesses will also remain cautious, especially in the airline industry, and many staff will continue to wear gloves.
GOVERNMENT SUPPORT
1. Malaysia’s rubber glove industry enjoys consistent support from the government, as the industry, as well as the rubber sector, are seen as key pillars of the economy and are part of Malaysia’s 12 National Key Economic Areas (NKEAs).
2. Such support includes providing subsidized gas prices to promote upstream rubber activities. On average, natural gas makes up some 10 to 15 percent of the total operating costs of rubber manufacturers. In addition, the Rubber Industry Smallholders Development Authority — a federal government agency that oversees the smallholder sector — also invests heavily in replanting programs.
3. Malaysia is the world’s third-largest producer of rubber, annually producing 0.9 million metric tons, behind Indonesia (3 million tons) and Thailand (4.3 million tons).
4. The Malaysian Investment Development Authority (MIDA) — the government’s main agency to drive investment into the manufacturing and services sectors in Malaysia —approved 14 projects for medical glove manufacturing, also valued at 3 billion ringgit (US$723 million) and providing over 8,000 jobs. 70 percent of this investment was contributed by domestic investors.
5. Moreover, MIDA approved 46 manufacturing PPE projects (not including gloves) valued at over 3 billion ringgit (US$723 million). From this, 70 percent, or 2.5 billion ringgit (US$603 million) came from domestic investors with the remaining from foreign investors.
INNOVATION AND MOVING UP THE VALUE CHAIN
1. Innovation in every part of the value chain is why Malaysia’s rubber glove industry is expected to remain competitive. As such, robotics and automation are prevalent throughout the industry, and gloves are now produced at an accelerated rate, while still maintaining international safety standards.
2. The upstream and midstream segments of Malaysia’s rubber industry dates back to the colonial period, while the downstream segment began developing in the 1980s catalyzed by rising demand for latex gloves following the HIV/AIDS epidemic.
3. Before automation, it took some 10 workers to produce one million pieces of glove per month but now it reduced to 1.7 as a result of the use of artificial intelligence, big data, and other innovations. Similarly, during the 1980s, glove manufacturers could produce 3,000 gloves per hour, whereas, through modern production lines, over 45,000 pieces can be produced every hour.
4. Homegrown firms lead-cutting edge innovations such as the development of allergy-free latex gloves as well as even thinner natural gloves. In the midstream segment, the Malaysia Rubber Board (MRB) has taken initiatives to foster public-private research and development partnerships, which has led to technological upgrading and robust quality management lines.
5. Against these backdrops, Malaysian glove makers were able to survive the 1997-1998 Asian financial crisis and have since thrived to become one of the world’s largest suppliers today.
Source:
https://www.aseanbriefing.com/news/opportunities-in-malaysias-rubber-glove-industry/
