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KUALA LUMPUR (Oct 15): While Top Glove Corp Bhd has yet to resolve its labor issue with the US Customs and Border Protection (CBP), the US Department of Labor (DOL) has included rubber gloves made in Malaysia in the list of products that use child or forced labor.
This raises the question of whether Malaysian glove manufacturers are losing the sizeable US export market as a result.
Investment analysts, however, ignore such concern, pointing to continued strong demand for gloves with the ongoing pandemic, despite the United States being a sizeable market for glove manufacturers.
The DOL recently released its Updated List of Goods Produced by Child Labor or Forced Labor for 2020 late last month. In addition to three other categories already on the list, namely electronics, apparel and palm oil, this makes rubber gloves the fourth item to be added to the list in Malaysia.
According to a local analyst, he says there is no short-term impact on Malaysian glove makers aside from bad publicity.
Still, the listing of child labor or forced labor use may be another blow to the industry after Top Glove and WRP Asia Pacific Sdn Bhd were included on CBP’s arrest list for forced labor allegations, preventing the importation of their products to the NOS.
Since then, the WRP ban has been lifted in March. Meanwhile, Top Glove says it will pay 136 million ringgit over the next 10 months to compensate its migrant workers as part of its efforts to solve the problem, more than its previously estimated sum of 53 million ringgit. However, the world’s largest glove manufacturer has yet to solve the problem after more than three months.
According to Loui Low, head of research at Malacca Securities Sdn Bhd, he believes the news of the report is just a recycling of old facts, but points out that it could have some negative business interest in glove stocks today.
Most of the big four glove stocks, whose share prices have skyrocketed this year, supported by strong global demand for disposable rubber gloves and rising average selling prices, dominated the top losers. from Bursa this morning.
Top Glove opened at a high of RM9.60 this morning before falling as low as 37 sen to a low of RM9.23. It was set at RM9.34 at noon.
Kossan Rubber Industries Bhd fell 12 sen or 1.5% to RM7.86. Supermax Corp Bhd was also down 14 sen or 1.32% at RM 10.50. Hartalega Holdings Bhd, on the other hand, only fell 10 sen or 0.55% to RM18.06.
Low says the list is likely to put pressure on glove companies like Top Glove, whose biggest export market is the United States and Canada, with a combined 27% of 195 export markets.
At the same time, other countries also need rubber gloves, not thanks to the Covid-19 pandemic.
In the DOL report, he claimed that forced labor in Malaysia occurred among adults, mainly by an estimated 42,500 migrant workers from Bangladesh, India, Myanmar and Nepal who are employed in more than 100 rubber glove factories.
“Workers are frequently subjected to high hiring fees to secure employment that often keeps them in bondage; forced to work overtime beyond the time allowed by Malaysian law; and working in factories where temperatures can reach dangerous levels. In addition, workers work under the threat of sanctions, including withholding of wages, restriction of movement and withholding of their identification documents, ”the report says.
Such violations satisfy the International Labor Organization’s forced labor indicators.
While the list does not contain punitive actions, it is intended to serve as a catalyst for strategic and focused coordination and collaboration to address the problems of forced labor and child labor, he said.
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