Total log export ban not desirable and logical, says Dept
Published on: Saturday, July 04, 2015
Kota Kinabalu: Sabah exports 9 to 12 per cent of its natural production logs not only for economic reasons but to ensure that natural forest management in the State remains viable through access to better priced world markets, said Forestry Director Datuk Sam Mannan.Responding to fresh calls to impose a total ban, he cited statistics between 2010 and 2014, where between 86pc and 91pc or the lion's share of Sabah's natural log production went for local sales. Replying to the call by Sabah Timber Industries Association (STIA) President, Datuk James Hwong, he said imposing a total ban was neither desirable nor logical, for the following reasons:
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"First, local sales are highly subsidised in the form of preferential royalty rates," he said, citing Red Seraya (Class C) for export is charged RM160 per cubic metre in royalties as against RM90 per cubic metre for the same class if processed locally."The difference is RM70 per cubic metre or close to 44pc," noted Mannan."If 200,000 cubic metres allowed for export is diverted for local sales, the cost of missed opportunity to the Sabah Government is potentially RM15 million forgone or 10pc of the total forest revenue. "Secondly, if the world market is shut by virtue of a total ban, the Forestry Department will never know the value of the forests.
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"We will instead be dependent on a few buyers who may collude to create a form of monopoly or oligopoly (limited competition) where the artificial price or revenue derived will not be a true reflection of the value of this natural resource and a high element of rent seeking (privileges over a product to increase income) at a high cost to society," Mannan asserted. He said even developed countries like USA, Canada and New Zealand continue to export logs for economic reasons.
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Significantly higher export price is essential for the sustenance of Sabah's natural forests, Mannan argued. "Sustainable Forest Management (SFM) is an expensive business." "Based on the experiences in Deramakot, the same species, the same quality logs when sold solely for the local market, results in a very high cost of missed revenues. For example, export sales for the Red Seraya group in 2015 fetched an average price of RM777 per cubic metre (ex-stumping) as against RM590 per cubic metre for local sales or a premium loss of 25pc."Deramakot will not be viable if it cannot gain access to the world market. Similarly, FMU/SFMLA licences are in the same dilemma," he said."Market forces best determine the ultimate usage of logs, not decrees to distort the vagaries of supply and demand," Mannan added.He noted that millers who have adapted well to the changing resource scenario, especially those processing Acacias into high value products, do not face raw material constraints. "Nevertheless, the Forestry Department appreciates the support from STIA on various policy measures adopted by the department such as FLEGT (Forest Law, Enforcement, Governance and Trade) , third party audits of licensed areas and mills and development of SFM in Sabah," he said.The growing of trees under plantation or natural systems, has been adequately addressed, through the long term SFMLA/FMU systems, he said."The opportunity for synergy between the growers and timber manufacturers , is there, which needs further strengthening for the benefit of both parties , particularly in instances where the grower is not a manufacturer," Mannan said. The breakdown of natural log production and their utilization in cubic metres over the last five years are as follows: 2010 : Total Production (3,483,928); Total Export of logs (408,049 or 12%) ; Local Processing (3,075,834 or 88%)2011 : Total Production (2,22,466 ); Total Export of logs (308,971 or 14%) ; Local Processing (1,903,495 or 86%)2012 : Total Production (1,965,671); Total Exports of logs (171,000 or 9%); Local Processing (1,794,671 or 91%)Stay up-to-date by following Daily Express’s Telegram channel.
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