KUALA LUMPUR: Malaysian Rubber Products Manufacturers Association (MRPMA) has appealed to Bank Negara Malaysia to rescind the new ruling which requires them to convert 75 per cent of export earnings into ringgit.
"This sudden and restrictive move will have a detrimental impact on rubber product exporters, particularly the small and medium players," said its president Datuk Dr Ong Eng Long.
“We have more than 100 members and we represent the whole rubber industry, not just rubber medical devices manufacturers,” he told the Business Times in an interview today.
Ong was commenting on the central bank's recently announced measures to enhance liquidity of the foreign exchange (FX) market which came into effect on Monday.
One of the measures require exporters like MRPMA to convert 75 per cent of their export earnings into ringgit. MRPMA members reportedly contribute RM18 billion worth of rubber exports last year.
“The larger manufacturers have the financial muscles to withstand currency fluctuation shocks but our medium and smaller manufacturers, which are operating at very thin margins do not have the resources to deal with this,” Ong said.
MRPMA vice president Lim Sum Teck meanwhile appealed that BNM revert the ruling, pointing out that bankers stood to benefit from the new policy.
“We are rubber manufacturers, we are not currency traders. Apart from stearic acid, most of the chemicals our members use to process dry rubber are imported and priced in US dollar,” Lim said.
“We appeal to Bank Negara to revert to status quo. It looks like the bankers stand to benefit from this new policy and it is to the detriment of our members, particularly the medium and small manufacturers,” Lim added.
In a separate interview, Top Glove executive director Lim Cheong Guan noted that rubber gloves manufacturers buying nitrile latex from a local manufacturer are now quoted in ringgit.
“Prior to BNM’s announcement, we have been buying nitrile latex quoted in USD from a few suppliers, some imported and one local,” he said.
“Now, the local supplier is quoting in ringgit. As for nitrile latex sourced from Japan and South Korea, it will continue to be quoted in US dollar,” Top Glove’s Lim explained.
He added rubber glove manufacturers face additional risk from BNM’s new policy as they are now forced to do a double-conversion on the currency — from US dollar to ringgit and then from ringgit back to US dollar for all payments.
In a text reply, Karex chief executive officer Goh Miah Kiat said his company has been hedging up to 70 per cent of foreign exchange proceeds.
As the world’s biggest condom manufacturer, Goh said Karex takes a neutral stand and that all its locally sourced material is priced in ringgit.