KUALA LUMPUR: The Malaysian Rubber Gloves Manufacturers Association (MARGMA) hopes the government will provide better tax exemptions for them in Budget 2025 to enhance the sector's environment, social, and governance (ESG) ratings.

Its president Oon Kim Hung believes that improving the sector's ESG ratings will boost export volumes and drive economic activity, helping Malaysia achieve its carbon neutrality goals by 2050. He noted that the association's members are investing in multiple ESG initiatives to enhance both performance and ratings.

"We urge the government to consider offering better tax exemptions for the exceptional costs our members incur while implementing initiatives that improve their environmental or social aspects of ESG, aligning with national goals.

"While the government's Green Technology Tax Incentives are welcomed, we propose increasing the tax incentive percentage for energy efficiency, waste and water recycling in the rubber glove manufacturing industry to more than 60 per cent," he told Bernama.

Oon also suggested that the government consider increasing the fiscal incentives to reduce the financial burden on small and medium enterprises.

"We believe this would encourage greater ESG adoption and facilitate emission tracking, ensuring compliance and readiness with the European Union's (EU) Carbon Border Adjustment Mechanism (CBAM). Exporters aiming to reduce emissions and comply with the EU CBAM are incurring additional costs for green energy usage," he said.

The MARGMA president also highlighted the need for competitive gas pricing. "This would help local manufacturers to compete more effectively, particularly against Chinese manufacturers who use coal, which is cheaper but emits significantly more carbon dioxide," said Oon.

He pointed out that the revised Green Energy Tariff is higher than the current Imbalance Cost Passthrough (ICPT) surcharge of 17 sen per kilowatt-hour, making the cost of adopting green energy more expensive.

"Despite Malaysia being a major natural gas producer, Malaysian manufacturers are paying higher gas costs compared to those in neighbouring countries like Thailand and Indonesia," Oon noted.

Meanwhile, Oon expressed MARGMA's support for the government's recent decision to streamline foreign worker management under the Ministry of Home Affairs. "We emphasise the critical role of foreign workers in our industry, as they contribute to our production efficiency and enable us to deliver quality products to 195 countries worldwide.Foreign workers are a key reason that our industry thrives, and they form an integral part of our workforce," he said.

He also noted that the sector has heavily invested in automating its manufacturing processes and now employs less than two per cent of the total foreign labour workforce, while still producing close to 50 per cent of the world's glove consumption.

"Our industry players have also been among the first to strictly adhere to labour standards under the International Labour Organisation (ILO) guidelines, completing remediation and implementing zero debt recruitment fees.

"We therefore urge the ministry to provide flexibility in managing our existing workforce and allow us to continue our operations with minimal disruption. We hope the government will make informed decisions on this matter," he added.