MARGMA Calls On BNM To Review New Policy On Conversion Of Export Earnings Into Rigggit

KUALA LUMPUR, Dec 6 (Bernama) -- The Malaysian Rubber Glove Manufacturers Association (MARGMA) hopes Bank Negara Malaysia (BNM) will review its new policy requiring exporters to convert 75 per cent of foreign currency proceeds into ringgit. In a statement, MARGMA said the move would have a detrimental impact on the rubber glove industry. MARGMA President Denis Low Jau Foo said the central bank’s policy meant that it was incumbent upon the manufacturers to immediately convert three quarters of any foreign currency received to ringgit. “Most local manufacturers and exporters have foreign currency accounts to better manage the spikes and volatility of foreign exchange rates. "The rubber glove industry has always used the US currency as a natural hedge to cushion their costings and pricing since 50 to 55 per cent of the foreign currency will be used to offset the difference in purchasing raw materials," he said. These include synthetic and natural rubber latex, as well as chemicals required for rubber glove production. Without this natural hedging, Low said the industry would be placed in a very difficult position as industry players would be forced to do a double conversion on the currency –- from US$ to RM and then from RM back to US$ for all payments. "We are hoping for and believe for the greater benefit of the rubber glove export industry, that a 50 per cent direct conversion from US$ to RM will be more manageable. “We seek an exemption on this new policy in order for the industry to stay competitive in global business," he said. On Friday, the central bank said exporters must convert into ringgit 75 per cent of their proceeds made in foreign currency to correct liquidity imbalances. Low said MARGMA hoped BNM would be open to a dialogue to discuss the matter in a more comprehensive manner as it was engaging both the Malaysian Rubber Export Promotion Council and Malaysia External Trade Development Corporation on the new measure as it would affect exporters, especially those in the rubber glove industry. “We would like to better understand the idea and workings behind this move by Bank Negara (Central Bank) so we can be supportive of a reasonable policy that is workable and conducive for both the central bank and exporters. “Malaysia is a small trading nation, largely dependent on export revenue. Bigger trading nations like Japan and China trigger a devaluation of their currency in order to stay competitive. “We hope Bank Negara will seriously consider the implications of this policy on our industry and all major exporters affected by this new ruling,” he added. The Malaysian rubber glove industry contributes 1.13 per cent to the nation’s gross domestic product. Export revenue from the industry in 2016 is projected to be US$3.21 billion (RM14.3 billion). (US$1 = RM4.44) As the leading supplier of medical examination and surgical gloves, Malaysia claims 63 per cent of the world market share compared with Thailand (21 per cent), China (five per cent), and Indonesia (three per cent). -- BERNAMA