Hartalega Urges Government to Avoid Cost Hikes in Budget 2026 to Support Manufacturing
HARTALEGA Holdings Bhd is strongly urging the government to refrain from introducing any cost-raising measures in the upcoming Budget 2026, which is scheduled to be tabled on October 10, emphasizing the need for support during a challenging market period.
Chief Executive Officer Kuan Mun Leong stated clearly that the government’s priority should be to stabilize operational costs and significantly improve the overall ease of doing business for manufacturers.
He stressed that companies in the sector want to focus their resources and efforts on value-added activities, and that streamlining processes, such as ensuring faster application processing and reducing unnecessary operational hurdles, would provide essential support.
Kuan also addressed the broader market landscape, noting that the global rubber glove market “is still over-supplied, meaning capacity is definitely more than demand, so prices are quite suppressed.”
This persistent supply-demand imbalance creates significant downward pressure on average selling prices and impacts profitability across the industry.
The CEO generally expects this oversupply situation to continue for the next two years, keeping the glove market highly competitive and challenging despite an underlying trend of steady demand growth.
This prolonged period of capacity overhang means that every additional cost imposed by the government could severely impact the competitiveness of local manufacturers, including Hartalega, relative to regional peers.
Sustained Oversupply Challenges and Demand Growth Projections
The market forecast for the rubber glove sector suggests that despite robust long-term demand growth, the oversupply issue will persist, forcing companies like Hartalega to prioritize cost optimization to maintain their market position.
During the post-AGM press conference for Hartalega, Kuan Mun Leong provided specific demand projections.
“For 2026, we project glove demand to be about 370 billion pieces, which is already matching the demand and consumption during the Covid-19 period,” he said.
He used the pandemic peak as a comparison point to illustrate the current health of the underlying demand, noting that “In 2021, glove usage was 380 billion pieces. That was the highest ever, a historical high driven by the pandemic.”
While consumption levels remain strong and resilient, the massive capacity expansion undertaken globally during the pandemic has yet to be fully absorbed by the market, resulting in the sustained oversupply.
To effectively navigate this challenging pricing environment and stay competitive, Hartalega is undertaking significant internal initiatives.
The company is actively reinvesting its resources into technology upgrades, advanced automation, and comprehensive cost optimization programmes across its manufacturing facilities.
These strategic improvements are focused on drastically improving operational efficiency and lowering the cost per unit, which is the most effective defense against suppressed market prices.
The focus on automation and efficiency is essential for Hartalega to maintain its status as a premium, low-cost producer in the global market.
Addressing Tax Assessment and Corporate Responsibility
In addition to managing the difficult market dynamics, Hartalega is also taking necessary steps to address a significant additional tax assessment, while highlighting its track record of substantial tax contributions.
Chairman Kuan Kam Hon commented on the ongoing issue regarding the Inland Revenue Board’s (IRB) additional tax assessment of RM101.36 million, covering the assessment years from 2017 to 2022.
He assured stakeholders that the company is actively taking all necessary legal and administrative steps required to address and resolve the assessment issue.
While not commenting on the specifics of the assessment, the chairman proactively pointed out the company’s strong history of fiscal responsibility to the nation.
He emphasized that Hartalega has paid more than RM2 billion in corporate taxes since 2020 alone, underscoring the significant economic contribution the glove manufacturer has already made to the national treasury.
This statement serves to contextualize the current assessment and reinforce the company’s role as a major taxpayer.
The simultaneous plea to the government for cost stabilization and the demonstration of the company’s substantial tax contribution highlight the delicate balance that large-scale manufacturers like Hartalega must manage: maintaining global competitiveness while supporting the domestic economy.
The company believes that supportive government policies on operational costs are necessary to ensure that its factories can continue to operate competitively and thus maintain this high level of contribution to national revenue over the long term.
