Since the introduction of the Movement Control Order (MCO) on 18 March, the bulk of business activity in Malaysia has been critically limited.
Throughout the MCO, people have been ordered to remain at home unless they are going out to buying necessary provisions or get medical help. Also, both interstate and international travel has been prohibited whereas schools and non-essential businesses have been shut down.
The Malaysian government has extended the MCO three times as the country strives to contain the spread of COVID-19 and the current end date of the MCO is on 12 May. As of 29 April, the local number of infected cases was 5945 cases with 100 deaths.
The government initially mandated a 50 per cent capacity for manufacturers of medical supplies and other products considered vital to the country’s interest during the MCO. However, the Ministry of International Trade and Industry later allowed for special dispensation to allow medical glove producers to operate beyond the limited capacity.
Beginning from 29 April, all manufacturers have been allowed to function at full capacity as long as they obey the health control guidelines and physical distancing rules.
Malaysia supplies around 65 per cent of rubber medical gloves globally. This greenlight for full-capacity operation is welcomed by countries across the world as they are still struggling to obtain produce personal protection equipment (PPE) for their frontline and healthcare workers combating the virus.
Roughly 187 billion units were produced last year by about 200 factories who are members of the association, according to the Malaysian Rubber Glove Manufacturers Association (MARGMA).
MARGMA estimates that, compared to 298 billion units last year, international demand could be 345 billion units in 2020, depending on the development of the global pandemic.
Orders have more than doubled since the start of the outbreak, as reported by the world’s current largest supplier of nitrile and latex medical gloves, the Malaysian firm Top Glove.
Before, industrialised economies form most of the orders from overseas, but as of now, high-volume orders from Europe and the US are being received by Top Glove. Thus, the company foresees that is global market share will reach 30-35 per cent this year.
Top Glove and other medical glove manufacturers have opted to boost productivity to keep up with demand, seeing that there are difficulties in sourcing enough workers during the MCO period. In fact, some firms had already invested in digitalisation and automation before the pandemic hit, and now they can partially offset the shortage of workers.
However, the amalgation of supply chain disruption, labour shorategs and increased orders has caused lead times to become substantially longer.
The long-term view suggests that Malaysian medical glove manufactures can benefit from investment in digitalisation and automation, allowing them to secure their place at the forefront of the global industry. Due to the heightened awareness and government stockpiling in emphasis of personal hygiene, the industry is poised to experience elevated long-term growth.
Malaysia, with its 1.7 million hectare of rubber plantations produces as much as 20 per cent of the world’s natural rubber supply. Thus, the fate of the industry in Malaysia is highly determined by the hectares available.
Furthermore, the country is also the world’s number one exporter of condoms, which has seen a rise in demand during this pandemic period.
Malaysian policymakers are now focusing on further measures to boost the economy, as key producers resume to full capacity.
So far, three stimulus packages have been introduced by the Malaysian government to cushion the negative impacts of MCO and COVID-19. Oxford Business Group (OGB) detailed the first two packages here. On 6 April, the third package was introduced, bringing the sum total to MYR260 billion (S$85.5 billion).
Like the previous packages, the third stimulus package emphasises assistance primarily towards small and medium-sized enterprises (SMEs) as they form 98 per cent of the Malaysian economy.
Measures include (1) a special grant of MYR3000 (S$982.43) for SMEs with less than five workers or an annual turnover less than MYR300,000 (S$98243) as well as (2) the expansion of wage subsidies for employers according to their workforce size.
During the announcement of the third extension of MCO, Prime Minister Muhyiddin Yassin told the Economic Planning Unit and the Finance Ministry to draft short-term, medium-term and long-term economic recovery plans.
The plans will likely include measures to improve investment environment, boost industrial resilience, promote domestic consumption and raise skill levels.
On 2 March, the prime minister assumed office amidst the pressing need to manage the COVID-19 crisis, and thus he has not yet had the opportunity to share a long-term vision for Malaysia’s economic development.