KUALA LUMPUR (June 16): The 5% sales and service tax (SST) on raw materials could have adverse effects on the domestic rubber ecosystem, said the Malaysian Rubber Glove Manufacturers Association (Margma), which urged the government to defer the tax imposition.

In a statement on Monday, Margma said natural rubber latex and nitrile butadiene rubber latex raw materials are directly affected by the sales tax under the latest P.U.(A) 170/2025 order, which could lead to higher production costs.

The association noted that besides rubber manufacturers facing rapid cost hikes, upstream latex processors and chemical supplies would face higher operating costs. Meanwhile, downstream medical-device and industrial-glove manufacturers could resort to employee downsizing.

“This could slow job creation, deter future automation projects and jeopardise Malaysia’s strategic ambition to remain a global centre for high-value glove production,” said Margma.

The rubber glove industry is Malaysia’s largest export contributor, generating RM15.41 billion in export revenue in 2024, while providing over 78,000 jobs, according to the statement. 

Margma urged the government to postpone the implementation date while conducting a cost-benefit study with industry participation and reconsider targeted exemptions or zero-rating for critical raw materials.

The association reiterated that it is in full support of the government’s broader revenue-diversification strategy but believes that undermining the rubber manufacturing sector could lead to near-term and long-term downsides.

“At a time when global glove prices remain highly competitive, this added cost cannot be passed on to overseas buyers; instead, it will erode already thin margins, reduce cash flow for reinvestment and further weaken Malaysia’s share in a market now dominated by lower-cost producers,” said Margma.