Log ban is welcome but does STIA use teak?

Published on: Sunday, April 18, 2021

By: Datuk John Lo

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FOLLOWING the CM’s recent log ban statement, a lively debate has ensued for and against the ban. Our CM’s approach on the log ban, like other pressing issues, is pragmatic and balanced, taking into consideration of Sabah’s best interest.

He has the benefit of advice from Datuk Sam Mannan who is his technical adviser and one of the longest serving Chief Conservators of Forest. Mannan’s worldwide reputation in forest management/conservation has brought Sabah international accolades, admiration and respect.

I have the greatest respect for the present Chief Conservator of Forests, Fred Kugan. As a layman, I think he has the best vision for Sabah’s long term timber industry and needs to generate revenue/employment. I am confident that our CM would have gotten the best possible advice from Mannan and Kugan.

I am also sure CM would accommodate specialist, high value timber logs like teak which no downstream players can use. A sensible timber policy should consider natural justice and the business interest of those who have planted trees like teak in response of the past Government’s encouragement.

They should not be punished after having invested/waited for more than 20 years, a very long gestation by any standard.

Sabah’s Evolving Timber Industry.

The timber industry was Sabah’s economic mainstay in the 1960s and 1970s. It has given untold prosperity for Sabahans. Sheer failures in economic management, the then government, very foolishly, ignored basic principles of sustainable forest management, went on a rampage of felling timber in unprecedented scale in the mid-1980s.

Result? Vast track of timber land has been destroyed. It took Mannan years of struggle to put together and implement a plan to restore forests as we know it today. Let it be a lesson – so easy to cut God’s given trees, so difficult and costly to restore the damages inflicted by greed.

Then there is the question of FMUs [Forest Management Units]. Some 33 FMUs were given out but only about 5 are working today.

Had all these FMU owners done what they have committed to do in the agreements, Sabah would have plenty of ITP [Industrial Tree Plantation] logs and some very vibrant down-stream industries.

The Sabah government would also have a healthy source of revenue. Plenty of high pay jobs for Sabahans. It is good that the Government is undertaking a thorough review of and weed out non-performing FMUs.

What is the present status of Sabah timber industry? From being the most important source of government revenue, it has shrunk to about RM200 million.

Thanks to his years of dedicated efforts, Mannan has arrested the decline and stabilized Sabah’s forestry, Sabah’s greatest asset. This is his greatest legacy for Sabah.

Sabah’s Best Economic Interest.

Reality 1 – The stabilized forestry that Mannan has worked so hard to establish should and must be maintained at all cost. We should/must not increase cutting anymore natural forest logs even when there is great financial pressure to do so.

Reality 2 – There is no connect between the ITP planters and downstream players, each lobbying for their respective interest but ignoring Sabah’s best economic interest which is simply that Sabah needs a vibrant, sustainable timber industry, one that will give a sizeable revenue and many well pay jobs for Sabahans. We can no longer cut more natural forest logs. Instead, we should reduce.

Reality 3 – Sabah’s best alternative is to encourage ITPs and implement a well-planned downstream industrialization plan.

Reality 4 – ITPs are being planted on degraded, desecrated land that have become unsuitable for agriculture.

Reality 5 – IF THERE ARE LOGS, DOWNSTREAM INDUSTRY WILL PROSPER. WHEN THERE ARE NO LOGS, DOWNSTREAM STAKHOLDERS WILL PACK UP THEIR MACHINERIES AND GO TO WHERE THERE ARE LOGS. Simple harsh reality of business.

Reality 6 – No Brainer– Sabah’s best economic interest for all stakeholders is to ensure a sustainable supply of logs from ITPs.

Equitable Returns For All Stakeholders.

Ban log export? No ban? Decision should be based on Sabah’s ultimate long term economic interest and supply and demand. Pragmaticism is key. No emotion.

This can only be possible if there is a comprehensive, overall timber master plan which I understand Datuk Joachim and Kugan are working hard with their respective teams.

Such a plan, incorporating ITPs and related downstream industrialization, can ensure win win for Sabah government, Sabahans First Policy, tree planters/investors and downstream players.

In Sabah’s long-term interest, recognition and credit should be given to ITP investors cos of the followings –

[a] long gestation, normally 10 to 15 years.

[b] Heavy investment in 100s of millions.

[c] Inherent risks like fire.

[d] Difficulty in obtaining loans from financial institutions. No Malaysian banks want to give loans for ITP start-ups.

[e] Administrative delays which deteriorate log quality and dimmish cash flows. These needs urgent review.

[f] ITP Investors are having to self-finance basic infrastructure like roads, water and electricity.

[g] Uncertainties of land tenure, many of which are caused by local politicians.

[h] Obligated to solve many local community’s problems that should have been done by government.

Like NZ and other countries that have established a viable, sustainable timber industry, Sabah must institute an equitable system of returns for all stake holders, letting the law of supply and demand to prevail and most importantly, to prevent some stakeholders from profiteering at the expense of other stakeholders.

Existing downstream stakeholders have an important role in the downstream industrialization of ITP timber.

What is glaringly absent and much needed now is leadership from the private sector. Selfish lobbying for narrow interest will destroy the whole timber industry.

ITP Downstream Industrialization Will Promote New Investments.

ITP downstream industrialization offers a wide variety of investment opportunities, the likes of which will go way beyond the present scenario. Good example is Sabahan Tan Sri Majid Khan who is already a leading investor/manufacturer of furniture.

In West Malaysia and Indonesia. Reason he can’t invest in his home state of Sabah is simply Sabah has yet to establish a viable timber industry and supporting supply chain. To his credit, he has already invested in ITP.

Another Sabahan ITP company, Sapulut Forest Management has already been conducting research in engineered timber in collaboration with UiTM KL and a Swedish research institute. It is planning to manufacture engineered timber in Sabah.

This will open up tremendous variety of uses of ITP timber in the construction industry. The Merica Group which has JVs with Rakyat Bersatu Sabah and Sofoda respectively, has major downstream investment plans.

It is looking for more land to expand its ITPs to cater for its industrialization plan. Exceptionally rare for a GLC and thanks to Dr. Esther’s leadership, Sabah Softwood has gone into cutting edge research in ITP. Thanks to them, they are paving for Sabah’s future economic foundation in ITPs.

These few ITPs are doing the correct thing – they collaborate and share research outputs. This augurs well for Sabah’s future.

These pioneering endeavours will give Sabah a new timber industry, new source of government revenue, new source of skilled/well paid employment, new source of sustainable timber supply for our future generation.

Datuk Joachim and Kugan are rolling out the new Sabah Timber Industrial Master Plan which will effectively transform and give Sabahans a new “SUN RISE TIMBER INDUSTRY” from ITPs!

The good old days of timber boom in the 1960s and 1970s will return, this time, in a responsible and sustainable manner, supported by downstream industrialization and jobs for Sabahans.

Sam Mannan (inset) is internationally acclaimed as a conservationist and helped stabilise Sabah’s forestry.