Electricity hike to hurt glove makers, says association

Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Wednesday, 04 December 2013 13:07
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KUALA LUMPUR (Dec 4): Rubber glove makers said the 15% electricity rate
hike next year will hurt them as electricity cost accounts for 10% of their total
production costs.
As a result, they are urging the government to implement the tariff increase
gradually so that industry players will have enough time to “adjust to the new
cost structure”.
In a press statement, president of the Malaysian Rubber Glove Manufacturers
Association Lim Kwee Shyan, said: “The electricity hike would increase
production costs significantly for rubber glove manufacturers.”
Lim said the production cost for 1,000 gloves will increase by 20-60 US cents
due to the 15% hike in electricity tariff and other costs as a result of higher
electricity cost throughout the entire supply chain.
Members of the association include the world’s leading listed rubber glove
producers such as Top Glove Corporation Bhd, Supermax Corporation Bhd,
Kossan Rubber Industries Bhd and Hartalega Holdings Bhd.
On Monday, Minister of Energy, Green Technology and Water, Datuk Seri
Maximus Ongkili, announced an electricity tariff hike of 15% (4.99 sen/kWh) in
Peninsular Malaysia and 16.9% (5 sen/kWh) in Sabah.
The higher rate will take effect on 1 January 2014.
Lim said: “The association recognises that electricity tariff should be at market
rate. However, adjustment to market price must be gradual and pre-announced
to give sufficient time for adjustments.
“The increase definitely has to come but the government should give us more time to adjust to the new cost structure and to liaise
accordingly with our customers.”
The last electricity tariff hike took place in June 2011 when the subsidised gas price was raised to RM13.70 per million metric British
thermal unit (MMbtu) from RM10.70 per mmbtu previously, noted the association.