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“There are plans for government subsidies or incentives to be given for the setting up of production facilities for face masks. And the plan is for the whole supply chain to be securely located within the country itself, ” a source said

PETALING JAYA: Plans are underway to encourage the wholesale production of face masks, an essential item which almost all of it is still being imported from China now.

Sources told StarBiz this is because face masks are deemed a central tool to win the battle against Covid-19 pandemic and thus the item has to be considered in light of national security interests.

“There are plans for government subsidies or incentives to be given for the setting up of production facilities for face masks. And the plan is for the whole supply chain to be securely located within the country itself, ” a source said.

“Even the raw materials such as elastic bands on the face masks should be sourced from local players. That is why the government is keen on creating incentives for the whole supply chain to be located within the country, ” the source added.

However, from a business standpoint, the manufacturing of face masks has a low entry barrier and carries the risk of a glut in the event the pandemic slows down.

A report by AFP stated that in China, the tens of thousands of mask-making companies that mushroomed following the coronavirus pandemic are now struggling to survive.

This has come about after some 73,000 companies registered as mask makers in the first half of the year – including over 36,000 new companies in April alone – as prices and demand soared, the report indicated.

But the influx of new companies led to a “dilution in quality and a surge in scams”, according to China-based researchers at Daxue Consulting, as firms from carmakers to diaper producers converted their production lines to make masks.

Now the outbreak is largely under control in mainland China, domestic mask demand has dropped dramatically, pushing prices down, AFP reported.

The report also said that some of the companies that piled into the industry are now backing out.

This has not stopped a number of locally listed companies from venturing into face mask production. Their announcements on these ventures has led to a surge in their share prices, amidst the red-hot stock market.

These include SCGM Bhd, Notion VTEC Bhd, Xidelang Holdings Bhd, Ni Hsin Resources Bhd, Caely Holdings Bhd and Pecca Group Bhd. Some of these companies reckon that their high quality masks and personal protective equipment will differentiate their products from others and hence provide them with higher profit margins.

Notably, another challenges facing the industry is the government’s decision to put a cap on the pricing of face masks.

Following a recent government announcement, ceiling prices for face masks will be reduced to RM1.20 from RM1.50 per unit from Aug 15. Wholesale prices would also be reduced from RM1.45 per unit to RM1.15 from the same date.

https://www.thestar.com.my/business/business-news/2020/08/10/govt-aims-for-local-production-of-face-masks
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