State Govt is sued for RM91m over the log export ban
Published on: Tuesday, March 12, 2019
KOTA KINABALU: Boonrich Sdn Bhd, a company linked to former Chief Minister Tan Sri Harris Salleh, is suing the Chief Conservator of Forests and the State Government for RM91.6 million over the log export ban.
It is the first legal action taken against the State Government since Chief Minister Datuk Seri Mohd Shafie Apdal announced an immediate ban on export of logs from Sabah last May.
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The company said it suffered huge losses as a result of the ban as it has been unable to sell logs from its own plantations to ready foreign buyers from India and Dubai.
It contends that banning the export of logs from Sabah was not only detrimental to the company but also to the Federal and State Governments to earn foreign exchange. It also had impact upon the confidence of investors in commercial timber cultivation industry in Malaysia, especially in Sabah.
It also contends that the ban is unconstitutional as power over international trade is vested with the Federal Government on matters relating to trade policies and /or import and exports controls as provided under paragraph 8(b) of List 1 in the Ninth Schedule to Article 74(1) of the Federal Constitution.
Hence, the power to implement control and monitor export, import timber in Malaysia lies with the Malaysian Timber Industry Board as stated in the Malaysian Timber Industry Board (Incorporation) Act 1973 and not with the State.
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It held that the defendants could not supersede the jurisdiction of the Federal Government concerning trade or export by making any circular or enacting state law which is contradictory to Federal law and the latter shall prevail when there is inconsistency between state and federal laws.
It also held that by banning the export of logs from Sabah and expecting the company to sell its timber locally only, the defendants have purposely discriminated against the trade business of the company.
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Its representative Benn Osman said before filing the legal action the company even made a public appeal to the State Government in September 2018 to exclude it from the ban since it was not involved in illegal logging and its logs were not from the natural forest but planted on its own private lands.
He said in a statement that since 1992, Boonrich Sdn Bhd and its associate companies had planted over 200,000 teak trees which have now matured with volumes of not less than one cubic metre per tree.
He also said that for over 25 years, the practice of thinning has been undertaken from time to time as it is the necessary management practice to ensure quality of teak timber.
In fact, he said, the company sold 30,000 teak tress to a European investor and still had over 64,000 matured teak trees available prior to the ban.
The originating summons was filed at the Kota Kinabalu High Court on March 7.
In her affidavit, Boonrich Sdn Bhd Managing Director Halijah Harris said the company started cultivation of teak trees on its land on a commercial basis sometime 27 years ago to meet the strong demand for sustainable timber by the international markets and the world’s concern of the rate at which deforestation was taking place.
She said Boonrich Sdn Bhd was one of the first private companies pioneering the cultivation of timber crop and that commercial timber cultivation was encouraged and promoted by the State and Federal Governments through seminars relating to investment opportunities in the commercial cultivation of teak trees and others.
According to her, a sum of RM1 billion by way of soft loans was even allocated by the Ministry of Primary Industries as an incentive.
Halijah said the company started exporting teak trees since 2002 and, thereafter, continued to sell, supply and export teak trees to buyers overseas.
She said of the 220,000 teak trees planted on company land, 64,828 have matured and ready for harvest and export. In early 2018, it was ready to sell them whose proceeds would allow it to make further investments and to utilise the occupied teak area for the cultivation of another crop, the fast-growing Moringa which can yield higher returns.
She said the company promoted the sale of the teak trees locally and overseas.
According to her, there was no response from the local industry but there was good responses from Dubai, India and China.
However, she said during negotiations with the foreign buyers, the State Government (second defendant in the suit) through Shafie announced in the media a ban on the export of logs from Sabah, including cultivated logs.
She said prior to the ban, the company had received a registration certificate as an “exporter” and “supplier” from the first defendant, the Chief Conservator of Forests, on June 1, 2017.
On September 6 last year, she said cognizant of the ban, the company’s prospective buyers from India, China and Dubai sought confirmation on the sale of the teak trees to which the company wrote to the first defendant for approval to export timber overseas.
She said the first defendant replied to confirm the export ban on all timber logs, including cultivated plantation logs, and that all renewal of certificates could not be processed in the meantime.
She claimed that the company was not given a copy of the Chief Conservator of Forests Circular but, instead, by the Timber Association of Sabah (TAS) in September last year.
She said the company wrote to the Chief Minister’s Office on Sept 25, last year, to seek advice and to request for an appointment with regard to the ban.
Two days later, the company again wrote to the first defendant to request for an exemption from the export ban on the grounds that the timber was commercially cultivated on alienated land and not from natural forest. She said its letter was not responded.
She disclosed that on Oct. 4, the Chief Minister’s Office replied to the company to inform that the Chief Minister was unable to meet its representative since the Circular was still in force.
The company again wrote to the first defendant on Oct. 11, last year, to seek clarification on the ban while stressing that it needed to do replanting on its land since the teak trees had matured and were ready for harvesting. Again, there was no response.
She said the company again wrote to the Chief Minister’s Office on Oct. 19 to seek approval to export teak logs as they were cultivated teak trees. Again its letter was not responded.
Frustrated with having received no replies, Halijah said the company wrote a letter to the Chief Conservator of Forests on Jan. 11, this year, to request for clarification on the ban failing which it stated that it would take legal action.
She said the first defendant replied about a week later to inform that it had been forwarded to the State Attorney-General’s office for advice. She claimed that until now there has been no response from the latter’s office.
On Jan. 21, she said the company again wrote to the Chief Minister’s Office to seek due consideration for exemption from the ban based on several grounds as mentioned in its letter but again, there was no response.
It is the second major suit against the Warisan-led State Government since taking over the reins following the GE14 last May.
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