U.S. Customs placed a detention order on imports of products made by subsidiaries of the world’s largest medical glove maker, Malaysia’s Top Glove Corp Bhd, an action taken against firms suspected of using forced labour.
The bar on Top Glove products comes at a time when demand for medical gloves and protective gear has skyrocketed due to the coronavirus pandemic, which has hit the United States harder than any other country.
The U.S. Customs and Border Protection (CBP) website showed Top Glove Sdn Bhd and TG Medical Sdn Bhd were placed on its list on Wednesday but there was no statement explaining the action, though its “withhold and release” orders, detaining imported goods, are specific to forced labour issues.
Top Glove, which also has production facilities in China and Thailand, said the move might be related to foreign labour issues, specifically recruitment fees paid by migrant workers to employment agents.
“We are reaching out to the CBP through our office in U.S., customers and consultants, to understand the issue better and work towards a speedy resolution of the matter, within an estimated 2 weeks,” it said in a bourse filing.
In a conference call, Top Glove bosses told reporters and analysts that shipments from the two units represent half of its U.S. sales, and 12.5% of its group sales. However, the group said other subsidiaries could still sell to the U.S. and that others countries would easily take up the returned shipments.
“We continue to ship because we can ship. Worst comes to worst, other countries will take up as well because the order book is more than 100%,” Executive Chairman Lim Wee Chai said on the call about already logging orders for up to 18 months ahead.
Top Glove said it had been bearing all recruitment fees since the start of this year, but it had still to resolve an issue regarding retrospective payment of recruitment fees paid, without its knowldege, by workers to agents before January 2019.
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“Over the past few months we have been working on this issue, which involves extensive tracing, to establish the correct amount to be paid back to our workers, on behalf of the previous agents,” the company said.
A Reuters query reached CBP outside its office hours.
Top Glove’s share price had slipped 2.57%, a minor blip after a rise of over 350% this year.
Last year, CBP took similar action against another Malaysian glove maker, WRP Asia Pacific Sdn Bhd. The detention order on imports of WRP’s goods was lifted in March after remedial action was taken.
Top Glove Managing Director Lee Kim Meow said the company has engaged the same consultant that had advised WRP on the matter. He did not name the consultant.
“We have engaged them today and already set a plan in motion to take us quickly out of this detention order,” he said.
Independent migrant worker rights specialist Andy Hall said in a note to reporters on Thursday that forced foreign labour in Malaysia’s gloves industry can only be addressed and reduced when past recruitment fees and related costs, which hold such workers in debt bondage, are fully repaid.
“In order to ensure no future debt bondage of these workers, ethical recruitment practices or zero cost recruitment policies should be put in place in practice, if the industry moves ahead to recruit more foreign workers in the future,” he said.
World consumption of protective gloves is expected to jump more than 11% to 330 billion pieces this year, two-thirds of which are likely to be supplied by Malaysia, according to the Southeast Asian country’s rubber glove manufacturers group.
Top Glove’s annual glove production is 78.7 billion pieces, and its 45 factories also make face masks, condoms and dental products. During a results briefing last month, the company said it had achieved unparalleled growth, boosted by an increase i demand from almost everywhere.
