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Malaysia Unexpectedly Raises Gas Prices by Almost 20%

On Friday, April 11, 2014, Gas Malaysia Berhad announced that it would raise prices across Malaysia.  The extent of the increase ranges from 13% to 20%, based on the tariff category of each industry.  Malaysian glove manufacturers were particularly hard hit by this announcement given they fall into the highest tariff category, meaning that they face an increase of nearly 20%.  Moreoever, the increase will become effective on May 1, 2014, leaving glove manufacturers less than two weeks to react.  

The increase in gas comes on the back of a 17% increase in electricity costs that Malaysian glove manufacturers had to face effective January 1, 2014, as well as, more recently, significant water-rationing measures in Central Malaysia due to limited rainfall.  The water rationing measures have resulted in glove manufacturers in Central Malaysia having to purchase water at up to 10 times the normal rate and / or having to shut down their production for days at a time due to insufficient access to water.

In an article in The Edge, a Malaysian daily, on April 16, 2015, MARGMA President Lim Kwee Shyan said the natural gas hike effective May 1 would raise production costs significantly for rubber glove manufacturers.  Lim notes ““Whist we understand the move, we are concerned that the announced quantum is too high and is a sudden and big burden to us now.”  The association said the gas price adjustment should have been gradual and pre-announced.