Top Glove expands further into Thailand

September 26, 2016 0 By WFTV
KUALA LUMPUR — The World’s largest glove maker commanding a quarter of the world’s gloves market, locally born Top Glove, is expanding in Thailand.
 The company cited rising costs in Malaysia with the doubling of foreign worker levies this year and employment policy flip-flops that have disrupted production, as the main causes for its push in Thailand.
There is also the question of minimum wages that has impacted local producers, say analysts.
Bloomberg reported today the company, which doubled its factory capacity in Thailand’s Phuket this month, will increase its output size by 100 percent at another plant in Songkhla that borders Malaysia, Top Glove chairman Lim Wee Chai said in an interview last Thursday.
The favorable tax breaks in Thailand and the ease of hiring workers prompted the company’s decision, he said.
The stock gained 0.4% at the Friday close in Kuala Lumpur, the highest level in three months.
“We expanded a lot in Malaysia, but now we need to diversify because the risk is high,” Lim, 58, said at the company’s headquarters in Setia Alam, a town outside of Kuala Lumpur. “The Thai government is very supportive, they have an eight-year tax-free incentive; they don’t have foreign workers problem.”
Manufacturers had earlier this year warned the government that sudden changes in policies as the nation tries to cut reliance on overseas labor are threatening businesses and jobs.
The Southeast Asian country is the world’s fifth-largest natural rubber producer with gloves forming the bulk of rubber product exports.
Robotics to the rescue
However, the question is what happens to the Vision 2020 if Malaysian companies start to follow Top Glove to leave the country, and establish themselves outside Malaysia?
Some source told these labour intensive companies will be replaced by those that are adopting robotics.
Top Glove did robotise some of its plants in Malaysia, cutting down on its need for cheap foreign labour amid the ban imposed since last year.
Major manufacturers in the country have also adopted robotics on a larger scale, but the country is still very dependent on foreign workers for its labour-intensive manufacturers.
But for how long can these factories remain in Malaysia, with the rise in the cost of living in the country, and the near impossibility to secure a local workforce to replace foreign labour?
The answer, said one analyst, is to bring the local manufacturing sector to higher levels, where it will be more robotised, using high tech which will then employ more locals who have the necessary qualifications to work in such environments.
But, they said, this will take some time to come since the country is still lagging behind in innovation and in its adaptation of high tech industrial engineering.