June 20, 2021

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Malaysia's Glove Makers Deserve A Fair & Objective Assessment (Regardless Of Their Share Price)

When Bill Gates first actively went around the world promoting the development of vaccine research and spent much of his wealth raising awareness, there is the lack of attention given by the general public. However, with the Covid-19 pandemic, everyone started to call Bill Gates a visionary. His Ted Talk 5 years ago titled "The Next Outbreak" chalked up close to 33 million in views today with the explosion happening only when Covid-19 erupted in 2020. Feel free to watch it here : 
The argument can be said to be the same for Glove makers. Some 30 years ago, glove manufacturing was not what it is today. Glove manufacturing is an extremely tough, competitive and difficult industry earning only meagre margins as the bulk of the profits are taken by glove distributors abroad. Your big names like Cardinal, Ansell, Kimberly Clark and many others. The Malaysia glove industry came about because of the natural rubber / latex supply due to rubber plantations in the country. The access to raw materials as well as some level of manufacturing capability led to these savvy entrepreneurs to pivot from using Latex or Natural Rubber for tyres to new products like rubber gloves. Some saw the opportunity with the heightened awareness due to AIDS pandemic abroad. For many years, Malaysia glove makers sweat and toil being the "sweat shop" / OEM for foreign distributors, hospitals and government. Fast forward to today, the Glove industry have improved leaps and bounds, most importantly, Malaysia has become a world leader that controls the supply of gloves in the world with an estimated 67% of global market share. From 1980s till today, there were 250-300 glove manufacturers then, now there are only 45 world class players in the country.  
Manufacturing as an industry itself relies on productivity, cost efficiency and economies of scale to achieve cost optimisation in order to be become profitable. It is extremely hard to achieve that because most manufacturers will get pressed by their distributors or clients. Manufacturers are the lowest cost centre in the entire supply chain. Majority of the glove makers in Malaysia are run by family owned companies, very few by large MNC. This is because manufacturing is a hands on, laborious, 24/7 long hours complex operation. A machine breakdown or an electricity blackout for 1 day can easily wipe out the potential profits for the entire month. If not for this global pandemic, glove manufacturers would be extremely happy with a commendable high single digit to low double digit profit margin. 
I think most readers would know some of the things mentioned above by now, apologies for being long winded, but why am I repeating this? The reason I am sharing this is because, I hope readers know it has been an arduous journey for glove makers. This so called "windfall" or "stroke of luck" as stated by some did not happen overnight. It was due to lots of blood and sweat. It is very easy to be envious when others are doing well in a tough time. It is also very easy to condemn and criticise. Talk is cheap but that is the reality of today's world. When we are suffering, we hope the world suffers with us. This is because as human, we take solace in collective suffering. If we are the only one suffering, we would feel very depressed right? 
Actually, this is not the right mindset. In Chinese, there is this saying "将心比心”。Loosely translated, it means having empathy and putting yourself in others position. If you worked hard for all your life as an honest entrepreneur, and you have done right for most part, is it fair to be run down just because you are doing well today albeit with some flaws? Don't get me wrong, I am not defending any company in particular but the glove sector as a whole. In addition, there are many layers of problem with regards to ESG, labour issue in our economic sector which most people know about such as : 

1. Foreign labour dependency is not a singular issue of the glove sector but majority of the sectors in Malaysia because locals are not interested in 3D jobs - dirty, dangerous, demeaning
2. Agency monopoly / cartels exists which control the supply of labour between Governments (politicians) leading to exorbitant agency fees imposed on foreign labours.
3. Hypocrisy of foreign distributors and corporations that forces local glove manufacturer to lower cost, compress margins in order to enjoy profits on their end. (On one hand talk about ESG, on another hand press the price of OEM manufacturers. This is not only applicable in the glove sector but other industries too)
In 2014, I remembered our country's top national Badminton player was embroiled in a doping scandal. This was when he was World No.1 and at the height of his career. It was the worst possible scenario for any athlete. I remembered back then, most Malaysians were skeptical whether it was true. Eventually, our national hero was given 8 months ban due to illegal substance Dexamethasone. The point to note, our national Badminton shuttler wasn't aware and the drug was not performance enhancing but for rehabilitation given to him by those in charge of his care. He paid the price of the ban and came back to competition including the 2016 Olympics where he nearly won our country's elusive Gold medal. He said during his retirement press conference, that his greatest honour was being able to play for the country. I believe he was an exceptional talent. Those that comes in generations or decades. However, the Malaysia badminton ecosystem have always been able to nurture and support talents. This is because the sport itself had the support of the government, association and the people. If the media, government, associations back then chose to only focus on sensationalism / populism without giving the benefit of doubt and crucify him, he probably would not have the chance to rebound and make it for Olympics. Also, imagine, the world's impression of Malaysia's badminton when this doping incident exploded. Just because of one doping case which was a mistake, does it mean all Malaysia's badminton athletes are dopers? 
Few years ago, two former national shuttlers was banned for life for match fixing. One was a promising young star who even won the world junior championship. Due to the match fixing, he was banned for life. I felt the punishment to be harsh as he was young and misguided by a senior national shuttler. This boy trained his whole life to be a national player (neglecting his studies), now that he is banned for life what can he do next with such a long path ahead? People make mistakes, but unlike our national hero's case, his matter was not given the same benefit of doubt and a second chance. So, what has this story got anything to do with glove makers? There are many similarities in the varying ways some quarters of the media, experts or commentators treat our Malaysia glove makers. 

1. Because of the labour and ESG issue highlighted on a few glove makers, the entire glove industry was painted with a stroke of brush across the board as "forced labour industry"? Is that fair? How about those others glove makers who complied with all laws and regulations? Also, when we talk about forced labour, what about the other industries which are much worst? Why is the glove sector singled out? Is it because of the sky high profits they are making now? Have anyone been to the construction "kongsi" and plantation "estates"?
2. Just because the Glove makers are finally doing well, some have been loud to ask for windfall tax incessantly as it is a populist move. How about the years when they were making losses and taking out substantial loans, raising bonds for cashflow purposes? Where was the help? Also, the taxes and levies they have paid over the years to government, jobs created and capital investment made? Granted, MIDA have supported the industry with promotion, patent application and other forms of assistance. However, compared to other industries in our country, the glove sector predominantly was organically developed and grown by entrepreneurs of grit.
3. An objective media shines light in darkness and brings justice to the weak, it also condemns the powerful without fear or favour. I think the role of the media is extremely hard and good journalism should be respected. I have much respect for those who practice true journalism. However, for those media who brings down the ethical standard and good name of a free and impartial press in return of clickthrough or viewership, readers ought to be discerning. The 2 examples below : 

- News portal A decided to publish a letter from an anonymous contributor, referencing his friend (which is tantamount to hearsay) alluding that a glove manufacturer in the country lacks integrity and filled with hypocrisy. It is one thing to report a news with sources and keeping it anonymous to protect the identity. It is another to reproduce a letter by an anonymous writer referencing a friend. Isn't it a tad too much? If indeed the writer's friend went through grave injustice, there is the media and there is the law. The media cannot win your compensation, the law can. As a lawyer myself, I know for a fact we have robust industrial court that protects employees. 
-News portal B decided to conveniently attach the picture of glove manufacturing to a "clickbait" title on FMM letter to manufacturing sector warning of disastrous outcome if the Covid-19 issue does not come under control. FMM in the letter which I sighted, never once mentioned glove manufacturers. So why did the news portal do this? Was it a genuine mistake or a pre-conceived notion / generalisation to imply that Covid-19 cases are all from glove manufacturers? Is this fair to other glove makers who complied with all regulations and have no Covid-19 cases? How about the construction, electronics, furniture manufacturers and others which had Covid -19 outbreak? If this is not coloured lens, I don't know what is.
Yesterday, the government after conducting "Ops Glove" found that 90% of the glove industry players are compliant with the regulations and laws. Which means those who are in violation are in the minority. Those who violated and did not do enough, should pay the price and subject to the repercussions of the law. Everyone deserve a chance to improve and upgrade themselves failing which, they should be held accountable once more. As media reports on the flaws and failings of the glove industry, they should also shower praise for those who done right by the law. They should accord fair opportunity to hear both sides of the story instead of relying only on Andy Hall, the activists who has his agenda. Trial by media, shouldn't happen especially if sensationalism gets in the way of true journalism. Lastly, to be fair to all, apart from "Ops Glove", there should be other "Ops Bina", "Ops Sawit", "Ops Petroleum" etc. That way, it is fair play to all. Selective persecutions should not exist in today's society and I look forward to news portals above to continue to facilitate the role as the guardian of truth when the time comes. 

Food for thought: 

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