FDS-TLAS-006

Sabah TLAS Audit Report Legality Standard Principles 1 – 4

Sapulut Forest Development Sdn. Bhd. Licensee Reference # GFSSBH 003-040 (057757-K) Contact Teddy Sius @ Lawrencius (FMU Date of Report 09/08/2019 Person Executive Manager) Date of close out - Lot 2.1, Level 2, Block B, Wisma Telephone +6088 276 828 Office Manikar, Lorong Manikar 1, Off mile 2.5, Address Jalan , 88400 Kota Fax +6088 276 668 Kinabalu, Sabah.

Email [email protected] Approved By Dr. Kevin Grace

Statements Audit Statement GFS 025 LVS Issuance Date 01 September 2019 Expiration Date 31 August 2020

Assessment Details Assessment Dates 05 – 09 August 2019 Scope of Assessment Sabah TLAS P1 – 4: SFMLA 04/97 FMU 14 NFM RIL harvesting & ITP – BASIL Planting & Salvage Logging Species Mixed species from RIL harvesting & Salvage logging Lead Assessor Priera Bagang Assessor(s) Christoph Muziol, Franklin Emang, Cynthia D. John FDS Staff Abdul Jamal Ibrahim (DFO Tibow), Ibrahim Duraman (ADFO Tibow), RH Anselmus Pedro (KPPM Sansiang), PH Jackson Baun (PPM Sansiang), PH Juscerik Kadam (PPM Sansiang)

OBJECTIVES: • The objective of this checklist is to verify compliance to the Criteria listed in the Sabah Legality Standard as defined by Principles 1 - 4 for Sabah dated 01st January 2015 (FDS-TLAS-002). • Compliance is defined when all applicable criteria are observed to be compliant. A Minor Gap to any indicator does not constitute non-compliance to a criterion. A Major Gap to any applicable indicator does reflect non-compliance to a criterion. Compliance for a criterion where multiple minor gaps are identified in indicators under the criterion may reflect non-compliance to the criterion. • All issues identified under this standard shall be considered appropriate to the scale and degree of forestry operations undertaken by the parties under the agreement.

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Summary Information

Overview of Licensee: Sapulut Forest Development Sdn. Bhd. (Sapulut Forest Development) is the signatory to the SFMLA 04/97 focusing on NFM and ITP management totalling approximately 76,613 hectares in the Sapulut Forest Reserve. Tenure of the SFMLA for FMU 14 starts on 10 September 1997 and is valid for 99-years which expires on 9 September 2097 for all activities within the concession. Sapulut engages subcontractor for forest activities; Jaya Enterprise & Megabig Enterprise (RIL harvesting), Tunas Rimba Enterprise & Evergreen Enterprise (CHP contractor), and Simgaya Enterprise (Salvage logging) whereas silvicultural and planting activities are carried out by Sapulut Forest Development workers.

The previous assessment was conducted in August 2018 that resulted in 1 Gap(s) and 1 observation(s) (Report #: G161-266).

Land classification FMP Area (ha) Total Concession Area 76,613 Production Area Natural Forest Management Area 52,552 Plantation Forest (ITP) 21,970 Protected Forest & Conservation Areas 2,091 Social Community & Agriculture 0 Infrastructure, Roads, Buildings, etc. 0

Status of operation by compartment in NFM areas (Aug 18 – Jul 19) Total CHP CHP data Date Total logs Operation Total area Total logs Cpt area data (vol) complete harvested Start date logged volume (m3) (Ha) (pcs) d (pcs) 229 361.4 3,960 11,476.43 July 2018 July 2019 361.4 3,895 8,220.04 230 353.3 7,901 20,316.39 Jan 2018 July 2019 353.3 4,158 7,812.78 258 168.2 1,634 5,466.54 July 2018 Mar 2019 168.2 508 1,073.77 259 197.6 2,332 6,865.34 July 2018 Mar 2019 197.6 698 1,357.77 260 173.4 1,200 3,475.10 July 2018 Nov 2018 173.4 1,196 2,428.44 268 269.2 2,805 8,742.50 July 2018 On-going 269.2 1,404 2,855.57 269 134.1 1,810 6,505.28 July 2018 operation 134.1 873 2,138.17 260B 179.6 1,869 5,877.72 July 2018 Nov 2018 179.6 1,226 2,664.72 Total 23,511 68,725.30 13,958 28,551.26

Status of operation by compartment in ITP areas (Aug 18 – Jul 19) Total area Total area Total logs harvested Total logs volume Cpt Start date (Ha) logged (pcs) (m3) 196 190.33 July 2018 190.33 2,389 2,995.10 195A 133.19 July 2018 133.19 1,434 2,021.44 195B 240.34 July 2018 240.34 8,184 11,119.93 210A 108.82 July 2018 108.82 976 1,321.71 210B 131.29 July 2018 131.29 1,447 1,749.73 210C 154.79 July 2018 154.79 2,818 3,786.48 214B 130.53 July 2018 130.53 3,518 4,632.88 218B 141.06 July 2018 141.06 452 579.36 218C 208.5 July 2018 208.5 3,125 3,454.55 Total 24,343.00 31,661.18

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Environmental Context: In 2000, the Government of Sabah issued approximately 26 timber licenses to third party contractors to carry out harvesting activities over approximately 26,481 ha. Harvesting activities were completed by the year of 2005. Sapulut Forest Development has currently managed the forest concession for NFM, restoration and planting of fast-growing species.

Despite the historic logging of the FMU, there is an abundance of wildlife activities in the area. Wildlife studies have documented more than 40 species of mammals and not less than 150 species of birds were recorded in the area, which account for approximately 23% and 33% of the total number of mammals and birds recorded in Borneo respectively.

Sapulut Forest Development has an approved Special Environmental Impact Assessment for their licensed area (Title: Forest Logging & Plantation of 95,300ha FMU14 Sapulut, Sabah) (Ref. #: JKAS/PP/12/600-1/01/3/10(88) dated 16 June 2005.

Social Context: There is no community settlement within the licensed area. Local settlements are located within the bordering State land, which consists of 10 villages with an approximate of 1,500 people.

The surrounding villages are Kg. Sapulut, Kg. Labang, Kg. Bigor, Kg. Tonomon, Kg. Simatuoh, Kg. Liningkar, Kg. Samuran, Kg. Tataluan and Kg. Salung. The local communities are mainly from the Murut Tagol ethnic group. The communities are sedentary agriculturists, who do not have to use the resources in the SFMLA area because State land forest resources are sufficient to meet the local needs.

Local people regularly ask Sapulut Forest Development to enter the FMU area to collect NTFP and hunting, due to local tradition, the local people prefer wild boar which they request permission before entry and hunting activities. Sapulut has undertaken SIA, which was completed in April 2015.

Scope of Assessment • The scope of the evaluation is to verify compliance of Sapulut Forest Development Sdn. Bhd. with the Sabah Forest Management License Agreement (SFMLA 04/97) for FMU 14. • The assessment is in accordance on the terms of the agreement for the “Sabah Legality Standard Principles 1 - 4 dated 01st January 2015 (FDS-TLAS-002). • Site evaluation to verify and report the level of compliance by Sapulut Forest Development Sdn. Bhd. and contractors to the standard in respect to each of the criteria within this report. • Compliance is defined when the auditee demonstrates that the indicators consist of none or only minor gaps against any applicable criteria of the standard. Non-compliance to the Sabah Legality Standard occurs when the auditee does not demonstrate adequate compliance to a criterion.

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Itinerary & Mandays: FMU 14 / Sapulut Forest Development Sdn. Bhd. / Tibow Dates: 05 – 09 August 2019 (Total Mandays = 22) Date Activity GFS Staff Mandays Priera Bagang, Christoph 05 August 2019 Travel to Tibow and opening Muziol, Franklin Emang, 4 Monday meeting Cynthia D. John Priera Bagang, Christoph 06 August 2019 Field visit to NFM and ITP areas Muziol, Franklin Emang, 4 Tuesday Cynthia D. John Priera Bagang, Christoph 07 August 2019 Field visit to campsite and Muziol, Franklin Emang, 4 Wednesday document preparation Cynthia D. John Priera Bagang, Christoph 08 August 2019 Document review Muziol, Franklin Emang, 4 Thursday Cynthia D. John Priera Bagang, Christoph 09 August 2019 Closing meeting at PPD Muziol, Franklin Emang, 4 Friday Cynthia D. John 10 – 11 August Dr. Kevin Grace, Reporting GFSSBH 003-040 2 2019 Priera Bagang Total 22

Highlights of Assessment (Major Gaps = 0; Minor Gaps = 1; Observations = 1)

Sapulut Forest Development Sdn. Bhd. has complied with the Sabah Legality Standard (FDS-TLAS- 002) as no non-compliance was identified during the assessment on 05 - 09 August 2019.

Summary of status of operations by Principle:

Principle 1. August 2018: GAP 002/2018 (Minor) - Checklist 1.8.3, 2.1.5 Sapulut Forest Development has identified the riparian reserve and buffer zones in the licensed area, however, there was inconsistency in maintaining signs to identify the buffer zones.

August 2019: GAP 002/2018 (Minor) - Closed All buffer zones sampled were marked on the ground by wooden signboards.

Principle 2. August 2018: Observation 001-2018 – Checklist 2.6.10 Assembly Point sign was not posted at each campsite. Fire extinguishers were observed insufficient in Prisma Maju Juta temporary campsite. There were only 4 fire extinguishers available during the assessment. The validity of fire extinguishers is until 23/07/2019.

August 2019: Observation 001-2018 (Addressed) Assembly Point is identified with signboard at all contractors’ campsites. Adequate number of fire extinguishers were provided at camp sites.

August 2019: GAP 003/2019 (Minor) – Checklist 2.1.3 Inconsistency in maintaining environmental mitigation measures observed in Simgaya and Sapulut Forest Development campsites.

Principle 3. August 2019: Observation 001-2019 – Checklist 3.1.3 Observed some OPSs were expired in 2018 (June, July, Dec) and 2019 (January, February, April) and one pending payment for renewal. Sapulut submitted renewal application letters for the expired OPs to PPD Tibow before the expiry date but are still being processed. Sapulut submitted a follow-up letter to PPD Tibow in regards to the renewal applications that expired in 2018. To date, no feedback was received

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Highlights of Assessment from PPD Tibow on the renewal applications (Ref. #: SAP/JPHTN-TO/OP/008/19/FM dated 16th January 2019).

Principle 4. Social Impact Assessment (SIA) was completed in 2015. Sapulut Forest Development continues to have a good communication and support with the local communities.

Summary Results: (Major gap = 0 , Minor gap = 1 , Observation = 1 )

Gaps raised against indicators & criteria during the August, 2019 assessment. GAP Type Checklist Status Description 002/2018 Minor 1.8.3 Closed August 2018: 2.1.5 Sapulut Forest Development has identified the riparian reserve and buffer zones in the licensed area, however, there was inconsistency in maintaining signs to identify the buffer zones.

August 2019: All buffer zones sampled were marked on the ground by wooden signboards. 003/2019 Minor 2.1.3 New August 2019: Inconsistency in maintaining environmental mitigation measures observed in Simgaya and Sapulut Forest Development campsites.

Observations raised against indicators & criteria during the August, 2019 assessment Obs # Checklist Description August 2018: Assembly Point sign was not posted at each campsite. Fire extinguishers were observed insufficient in Prisma Maju Juta temporary campsite. There were only 4 fire extinguishers available during the assessment. The 001-2018 2.6.10 validity of fire extinguishers is until 23/07/2019. Addressed

August 2019: Assembly Point is identified with signboard at all contractors’ campsites. Adequate number of fire extinguishers were provided at camp sites. August 2019: Observed some OPSs were expired in 2018 (June, July, Dec) and 2019 (January, February, April) and one pending payment for renewal. Sapulut submitted renewal application letters for the expired OPs to PPD Tibow 001-2019 3.1.1 before the expiry date but are still being processed. Sapulut submitted a follow-up letter to PPD Tibow in regards to the renewal applications that expired in 2018. To date, no feedback was received from PPD Tibow on the renewal applications (Ref. #: SAP/JPHTN-TO/OP/008/19/FM dated 16th January 2019).

Highlights of Close Out Visit (if applicable) Dates - Not applicable

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Recommendations Sapulut Forest Development Sdn. Bhd. has demonstrated compliance with the Sabah Legality Standard (FDS-TLAS-002) for its designated area and is recommended to receive a GFS Audit Statement and STCC from FDS.

Gap(s) and observation(s) identified in this assessment should be addressed before the next surveillance visit. Actions required to close the gap(s) and observation(s) include: Gap 003/2019 (Minor) – Checklist 2.1.3: Maintain environmental mitigation measures as stipulated in the quarterly ECR report and construct a containment wall for genset houses. Observation 001-2019 – Checklist 3.3.1: Ensure OP have been paid and follow up with the forestry on OP renewal The next surveillance audit will be scheduled in June 2020.

End of Summary Report

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