Future is in industrial timber plantations
Published on: Sunday, March 07, 2021
By: Leonard Alaza
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Sabah has witnessed how excessive logging over the past several decades had heavily degraded its natural forest.
It has been relatively misunderstood by administrations in position of power and influence, not to mention having to endure heavy loads of unfair criticisms from certain interest groups.
Yet, the ITP promises billions of ringgit worth of investments and revenues, and tens of thousands of job opportunities for Sabahans. It brings so much into the economic plate to feed a significant number of the population. It is rightly a sleeping giant that can change the state’s economic game plan beyond the immediate future.
Uncontrolled timber exploitations over the last 50 years saw forest resources in Sabah seriously depleted.
To address this issue, the state restructured its forest policy in 1997 to emphasise on forest management and not just logging. The policy includes provisions for sustainable forest management (SFM).
The Sustainable Forest Management License Agreement (SFMLA) was then introduced after the state government phased out short-term logging licenses.
Several companies including the Yayasan Sabah were awarded with the SFMLA covering a vast hectarage of land most which had been logged over. The idea was to sustainably manage these degraded areas and turn them into productive use to benefit the state.
But as things turned out, not all the SFMLA license holders had the know-how in sustainable forest management. As they were bound to turn the land into productive use, some converted the degraded forest to commercial agriculture, especially oil palm, much to the heavy criticism from certain sections of the public and political circles.
Under the SFMLA, the total hectarage is 1.6 million ha with the natural forest, plantation forest and conservation areas all combined. Out of these, about 600,000 ha are ITP but only about 400,000 ha of them could be used up for tree planting.
To date, 160,000 ha have been planted, leaving a balance of about 240,000 ha more to cover.
The ITP is not just about some companies or government organisation planting trees to profit the state. It is about creating Sabah’s economic future through a sustainable wood-based industry. This industry however is currently non-existent in the state.
Timber Association of Sabah (TAS) has been advocating this agenda with a strong conviction that this is the industry that is going to be the lifeblood of the state’s economy in the immediate future and beyond.
“A performing ITP sector’s contribution to the GDP (Gross Domestic Product) is projected to be RM11.5 billion per annum,” declares TAS President Norman Wong.
The figure gives quite a shout out for a sector which has been in quiet existence inside Sabah’s rural areas.
He says the ITP ticks all the boxes of a lucrative industry in terms of its contribution to the economic, social and environmental wellbeing of the state.
According to him, the ITP’s output is 8 million cubic metres annually. It is also in perpetuity as there are about 400 million trees as “growing stock.”
In contrast, Wong says the natural forest’s output is only 1.6 million cubic metres per annum and has a longer rotation of 25 years as compared with ITP which is only 10 years.
“It means that it is about twelve and a half times more productive than a natural forest,” he says.
The ITP also brings a lot money into the state through new investments in planting worth RM3.6 billion. And annually, it needs an investment of RM520 million for replanting.
The numbers are equally huge in terms of its impact on the social aspect of the State as it creates 30,000 skilled jobs in plantation companies and 50,000 contractual and seasonal employments for Sabahans.
Because all the plantations are remotely located, the ITP companies are deservedly the state government’s strategic partner in its rural development agenda.
A performing ITP sector will itself pave the way by stimulating growth and life in otherwise a sleepy rural community while at the same time helps reduce the rural-urban economic gap, especially through employment opportunities for the locals.
Despite the opinions that some interest groups have about the ITP, it will play an important role in protecting what is left of Sabah’s natural forest.
It is estimated that by 2030 the global demand for industrial roundwood would have increased by 200 per cent.
By that same year, Asia Pacific would have seen an estimate deficit of 63 million cubic metres of the material.
Food and Agriculture Organisation (FAO), a specialiSed agency of the United Nations, has stated that the long-term global demand for wood products were driven by several factors such as demographic changes, environmental policies and regulations and rapid growth of the middle class especially in Asia, among others.
A surge in demand would only mean one thing, that there would be tremendous amount of pressure on whatever is left of the biodiversity-rich natural forest including that of Sabah’s.
Although the decline in harvesting from natural forests has been another important contributing factor to the huge deficit of wood products, there is no telling whether at any point such an enormous amount of market-driven pressure could change all that.
Sabah has witnessed how excessive logging over the past several decades had heavily degraded its natural forest. It would be a tragedy to have to see a repeat of this, what more now as there has been an increase in awareness among people that the earth needs to heal.
To compete in this era of globalisation, the forest sector has to be much more innovative. A high performing ITP sector will set a fertile ground for this to happen. From processing to production and market innovation, it will create value all of which will be captured in Sabah.
How the value is captured in Sabah and by Sabahans is well elaborated by a member of the Sabah Economic Advisory Council (SEAC) Datuk John Lo.
Lo, who is also a regular columnist for the Daily Express, recently drew a critical comparison between the ITP and non-Sabahan oil palm plantations in terms of how some of their values have been captured in Sabah and by Sabahans.
He wrote: “Adding insult to injury, the non-Sabahan oil palm owners have succeeded in owning more than 90pc of Sabah’s oil palm land, have stubbornly refused to go downstream, exporting CPO from Sabah to their factories elsewhere, especially in EU and China.
“Netherlands is host to most downstream factories owned by Malaysian plantation companies. I don’t mind if they have given Sabah a fair deal. But they have not.”
In comparison, Lo wrote that at least, in terms of employment opportunities, two tree plantation companies have given value to local Sabahans.
“There are two tree plantations in the Bengkoka area which the Sabah government agencies are shareholders, have about 400 management staff and field workers. Surprise, surprise, surprise to the non-Sabahan oil palm plantation owners – they have three expatriates, four Malaysians from outside Sabah. The rest are all Sabahans. More than 80pc are from the Kota Marudu/Bengkoka area. This may shock the non-Sabahan oil palm plantation owners!”
This is just the opposite, he claimed, with non-Sabahan oil palm plantation owners: “[cos] they have, in their refusal to employ Sabahans, condemned Sabahans as being unfit to work in the oil palm plantations as executives and in other down-th
Sabah has all the more reason to scale up its ITP development given the fact that it is strategically located in the region.
But to become a major player, the State may emulate China; how the world’s most populated nation has evolved in its decade-long reforestation programme and its contribution to sustainable wood supply and development.
In order to meet industrial needs for wood materials, the China government has to spend large amount of money to import wood and wood products. But due to soaring global demand for these products coupled with rising environmental concern over the pressure on natural forests, the country decided that to import was no longer a solution.
China then made it a national priority to expand its plantation forests while at the same time protect its natural forests. Today, the country is reported to have the world’s largest plantation resource.
What led to this was apparently due to various inter-connected factors mainly, the country’s increasing population, an increasing global concern about environmental problems and the country’s need to fuel its rapid economic development.
With its plantation forestry programme well supported and established, China can rest assured that it has a sustainable wood supply to meet all needs, and in perpetuity.
To ensure that there is a right ecosystem so that the ITP can fully perform its role as Sabah’s economic game changer, TAS has been busy in trying to get everyone, especially policy makers, to see the vision of the future that they clearly see.
According to Wong, the first thing everyone has to realise is that change is happening right under their feet.
“Sabah’s forest and timber industries are undergoing a structural change.”
“As Sabah’s natural forest wood production has seen a declining trend and looks likely will continue, there is a great need to scale up the development of the ITP in order to provide a new source of sustainable plantation timber to replace those taken from the natural forest,” he says.
Considering that the projected surge in global demand for industrial roundwood is merely nine years away, it only makes sense that Sabah has to start building its wood-based industry from the ITP already.
TAS has even paid a courtesy call on Sabah Chief Minister Datuk Hajiji Noor to present to him the big picture, as well as to other relevant parties such as the SEAC prompting Lo, again in his same newspaper column article, to comment by saying, “With appropriate empowerment policies, the tree plantations can give tremendous downstream industries. Right now, oil palm is giving us zilch.”
The state government can be assured that ITP companies like Sapulut Forest Development and Forest Solutions, just to name a few, are dead serious and highly committed about planting the sustainable materials needed for Sabah’s future wood-based industry as much as they want to pioneer the creation of the industry itself.
This is reflected in the financial risk that they have to take in for this vision to become reality.
The investments required for ITP development is outrageous, which is why most banks would shy away from financing. According to Wong, to plant the balance of the 240,000 ha would cost an investment worth RM3.2 billion. To put in context, that is about RM1.28 million a day.
But more than just money, ITP development in Sabah needs a strong political will that would allow room for policy change and well-planned execution. After all, economic prosperity is critical for political stability.
It is estimated that by 2030 the global demand for industrial roundwood would have increased by 200 per cent.
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