Not enough emphasis on Sabah’s plantation timber
Published on: Sunday, September 29, 2019
Text Size:
But we would like to highlight the complexity of the matter of log ban and its connection to the performance of the downstream industry, in particular furniture.
In West Malaysia, the furniture industry is 80-90 per cent dependent on rubber wood, which is a plantation timber. It can be said that for scale manufacturing, a homogenous, reliable supply of sustainable timber is required, and that can only come from plantation timber.
The question becomes how Sabah can be a sustainable source of Forest Plantation Timber–what has to happen before Sabah can do this consistently and be economically viable, on a long-term basis?
Although the Sustainable Forest Management Licence Agreement (SFMLA) was promulgated in 1997, it has been focusing on conservation and natural forest management (hence Sabah has been the host to the Heart of Borneo for the last 10 years or so), and not enough emphasis has been placed on plantation timber.
Due to this focus, rules and regulations are geared towards the monitoring and protection of natural forest. These are not suitable for promotion of plantation forests, thus new rules and regulations are needed. This is currently being discussed with Forestry Department of Sabah (FDS).
The statutory charges for plantation forest in the State are high. In addition to removal of tax incentives from IRD for forest plantation and carry forward losses limited to 7-years, FDS also charges a royalty and other funds for plantation timber.
This is a big disadvantage to the expected returns from plantation timber, and this is recognised by FDS.
This has to be amended to align with other planting jurisdictions in order to make forest plantation economically viable.
In addition, the logistics costs of transporting timber resources from forest to mills are significant. Logistics costs not only include hard transport costs, but also approval procedures to move logs, waiting time, delays, copious paperwork etc.
To address this matter, TAS is in discussion with FDS to update and automate these processes, so that logs can flow into the production line more efficiently. With automation, in addition to labour saving features and tracking, many data points are generated. These data will be useful information for downstream to plan and predict its plantation log supplies, with the aim of making the industry data driven.
For the downstream investors, they have to change their mindset from dependence on natural forest timbers and cheap raw material prices for their business strategy. Instead, they will have to switch to plantation timber, invest in innovation and marketing, so that they can compete with the best internationally, and to pay a fair market price for their plantation timber.
To develop our future forest managers and leaders, academic courses will have to be aligned to what the industry needs than what is currently being taught. There is a big disconnect.
But real progress can only be made if the very top Government Departments and agencies can look at the issues holistically and on a long-term basis, and be willing to make commitments to firstly change their mindset, secondly change the rules and regulations governing the industry, and thirdly translating such changes to improvement in operational and administrative procedures.
Only then can Sabah’s forest plantation and downstream industries compete on the world’s stage without inherent and preventable handicaps. As part of TAS’s values, we believe in open communication, collaboration and transparency. To facilitate better understanding of this complex industry, TAS will organise a forum entitled “Plantation Forest, Processing and Sabah’s Economic Future” on 11th November 2019.
We have invited four distinguished speakers who can help us to “connect the dots” on this systemic subject. Please join us.
Norman Wong,
President
Timber Association Of Sabah
ADVERTISEMENT
