Due to the outbreak of COVID-19, the demand for personal protective equipment (PPE) has surged, presenting a promising opportunity for Malaysia's rubber glove industry.
According to estimates by the World Health Organization (WHO), approximately 89 million medical masks, 76 million examination gloves, and 1.6 million medical goggles are needed each month to respond to the pandemic. This increasing demand for personal protective equipment (PPE) has created an unprecedented opportunity for Malaysia's rubber glove industry.
Before the pandemic, the global PPE market was projected to reach $77 billion USD by 2027. However, due to a threefold increase in spending on PPE, it is now revised to reach $92.86 billion USD by 2027. The global market for medical gloves is expected to reach $18.5 billion USD by 2026, with a compound annual growth rate (CAGR) of 11.64%.
Malaysia already supplies 65% of the global rubber glove market (300 billion gloves) and recorded exports worth 52.7 billion ringgit ($12.7 billion USD) in 2020. Amidst the pandemic, which saw a decline in global demand for Malaysia's resources and traditional manufacturing sectors, this product has been a crucial driving force supporting Malaysia's resilient exports. Top Glove, one of the world's leading manufacturers of medical gloves based in Malaysia, saw its after-tax profit increase by 417% (to $459 million USD) in fiscal year 2020 and is expected to grow by an additional 30% in 2021.
Malaysia's rubber glove industry has consistently received support from the government and is also one of the country's 12 National Key Economic Areas (NKEAs).
The rubber glove industry in Malaysia has benefited from continuous government support, recognizing the rubber-related industries as a critical pillar of the economy and including them as part of Malaysia's 12 National Key Economic Areas (NKEAs).
This support includes subsidies for gas prices to promote upstream rubber activities. Natural gas is said to account for 10-15% of the overall operating costs for rubber manufacturers. Additionally, the Rubber Industry Smallholders Development Authority, a federal agency overseeing the smallholder sector, has made significant investments in replanting programs. The Malaysian Investment Development Authority (MIDA) has approved 14 projects related to the manufacture of medical gloves, providing 3 billion ringgit ($723 million USD) and creating over 8,000 jobs. 70% of this investment comes from domestic investors.
Although Malaysia is one of the world's largest rubber producers, its rubber plantation area is just over 1 million hectares, which pales in comparison to Indonesia (3.6 million hectares) and Thailand (3.7 million hectares). However, the reason Malaysia's rubber glove industry remains competitive is due to innovation across all parts of the value chain. The widespread use of robotics and automation throughout the industry has enabled high-speed production while maintaining international safety standards.
Before automation, about 10 workers were needed to produce 1 million gloves per month. With innovations like artificial intelligence and big data, this number has now decreased to 1.7 workers. Similarly, in the 1980s, glove manufacturers could produce 3,000 gloves per hour, but now the latest production lines can produce over 45,000 gloves per hour.
Domestic companies are also leading in cutting-edge technological innovations, such as developing allergy-free latex gloves and thinner gloves made from natural materials. In the midstream sector, the Malaysian Rubber Board (MRB) is advancing research and development through public-private partnerships, leading to technological improvements and robust quality control systems. With this background, Malaysia's glove manufacturers have weathered the Asian financial crisis of 1997-1998 and have now grown to become one of the world's largest suppliers.
Dependence on Foreign Workers and Addressing Supply Chain Management Challenges are Key
On the other hand, challenges exist. Despite advancements in automation, the industry remains labor-intensive, heavily relying on unskilled foreign workers. The pandemic, with its associated international border closures, has made it difficult for companies to employ workers. Malaysian workers, who generally have high educational levels, show little inclination to work in labor-intensive industries.
Furthermore, the COVID-19 crisis has led to repeated operational shutdowns due to containment measures triggered by infection hotspots in factories and worker dormitories, affecting supply chains. During this process, the poor living conditions of migrant workers have been internationally highlighted, raising concerns about labor practices in the industry. Effectively addressing these issues is seen as crucial for the future development of the industry.
Thank you for reading to the end. For inquiries regarding the content of the article, information on M&A deals and potential partners in related industries, or consultations on market research, please contact the person in charge or use the inquiry form.
Comentarios