Malaysian Timber Certification Scheme

MALAYSIAN TIMBER Doc. Number: AD 34-02 CERTIFICATION SCHEME: Version Date: 01 February 2013 MC&I(NATURAL FOREST) (ASSOCIATED DOCUMENTS) Page: 1 of 15

MALAYSIAN TIMBER CERTIFICATION SCHEME

PUBLIC SUMMARY OF RECERTIFICATION AUDIT OF TERENGGANU FOREST MANAGEMENT UNIT AGAINST THE REQUIREMENTS OF MC&I(NATURAL FOREST)

Public Summary Date: 4 March 2016

Project Number: MY02661

Client: Terengganu State Forestry Department

Web Page: http://trgforestry.terengganu.gov.my/ Jabatan Perhutanan Negeri Terengganu Tingkat 8, Wisma Negeri Address: 20200 Kuala Terengganu Terengganu

Country: Malaysia

Certificate Number. SGS-MTCS/FM-0103 Certificate Type: Malaysian Timber Certification Scheme

Date of Issue: 1st April 2013 Date of Expiry: 31 March 2016 Forest Zone: Tropical

Scope: Forest Management of 522,400.77 ha of Permanent Reserved Forest in Terengganu State for the production of timber.

Total Certified Area: 522,400.77 ha

Contact Person: Dato’ Haji Azmi bin Nordin - State Director of Forestry

Tel: +6(09)-6222 444

Fax +6(09)-623 6552

Email: [email protected] / [email protected] / [email protected]

Recertification Audit 17-21 May 2015 Date:

Audit Team: Abdul Haye Semail (Lead Auditor) Dr. Savinder Kaur (Auditor) Mohd Faisal Jaafar (Auditor) Mohd Saifuddin Rozlan (Auditor)

SGS (Malaysia) Sdn. Bhd., No.26, Jalan Anggerik Vanilla 31/93, Kota Kemuning, 40460 Shah Alam, Selangor, MALAYSIA CONTACT PERSON: Abdul Haye Semail - Tel: +6 (03)5121 2320 - Fax: +6 (03)5122 5927 AD 34-02 Page 2 of 15

INTRODUCTION

The Terengganu Forest Management Unit (FMU) has been certified under the Malaysian Timber Certification Scheme (MTCS) since 2001; first under the Malaysian Criteria, Indicators, Activities and Standards of Performance (MC&I) for Forest Management Certification or in short MC&I(2001) and thereafter under the Malaysian Criteria and Indicators for Forest Management Certification or in short [MC&I(2002)].

The Terengganu FMU managed by the Terengganu State Forestry Department was issued with a forest management certificate (SGS/MTCS/FM-0103) under the requirements of the MC&I(2002) after a Stage 2 Audit which was conducted in November 2009. The certificate issued was valid for three years from 1 April 2010 to 31 March 2013. The Recertification Audit for the FMU against the requirement of the newly adopted MC&I(Natural Forest) was conducted on 9-13 September 2012 where subsequently the FMU was issued the new certificate with a validity from April 2013 to March 2016.

During this certification cycle, two Surveillance Audits were conducted for the FMU under the new MC&I(Natural Forest) i.e. Surveillance 01 Audit on 02-05 September 2013 and Surveillance 02 Audit on 02- 05 June 2014. Following to the Surveillances and in view that the FMU is due for another Recertification Audit, the Recertification Audit has been scheduled and conducted on 17-21 May 2015. This report provides the findings of the said Recertification Audit.

With a total land area of 1,295,566 ha, the Terengganu FMU is located to the east coast of Peninsular Malaysia. There are a total of 44 Forest Reserves within the Terengganu FMU covering an area of 544,936.77 ha of Permanent Reserved Forests (PRF) where 416,736.01 ha has been classified as production forest while the remaining 128,200.77 ha has been classified as protected forest under various functional classes defined in Section 10 of the National Forestry Act, 1984.

There is also an area designated as National Park amounting to 77,507 ha that is a totally protected area which is not managed by the FMU and hence is not included in the scope of the certification. In addition, an area amounting to 33,000 ha has been designated as a stateland. Operations within such area carried out by the Terengganu Forestry Department are also not included in the scope of this audit. Logs produced from these sources are not certified and hence cannot enter the PEFC chain of custody system for forest products. Furthermore, although part of the PRF, operations within the following PRFs are also excluded from the scope:

• Plantation Forests – 3,860 ha [Merchang Forest Reserve (FR)]

• Second Hydro Electric Dam – 18,676 ha (within Tembat and Petuang FRs) Logs produced from the Merchang, Tembat and Petuang PRFs are denoted as ‘P” (’Pembangunan’ – indicating that such forest reserves have been allocated for development). The special denotations on the RPs is to prevent logs harvested from these sources from entering the PEFC chain of custody system for forest products produced from logs harvested from PRFs.

The process and mechanism for public or local stakeholders’ participation in forest management are in place. Overall, there are no claims or disputes with regard to land tenureship within PRF in Terengganu FMU either orally or in writing. The Terengganu State Forestry Department continues to collaborate with relevant parties in ensuring positive solution to any problem that may arise. As a government department, the State FD participates in inter-departmental discussions (Majlis Bersama Jabatan) pertaining to any community rights’ issues. The process found to be undertaken systematically through the various arrays of committees from the local village level right up to the State Government.

A wide range of stakeholders were contacted four weeks before the planned audit to inform them and solicit their views on relevant FMU management issues. The stakeholders included environmental and social interest groups, local government agencies and authorities as well as local village heads. Until the end of the AD 34-02 Page 3 of 15

consultation period, there is only one feedback obtained in the form of press-cuttings. Details of the feedback are as in Annex 3.

For this on-site Recertification Audit, there were also on-site consultations held with the staff of the Terengganu FMU, field workers of the contractors at the harvesting sites, as well as other stakeholders i.e. government agencies and local communities including the Orang Asli. AD 34-02 Page 4 of 15

SUMMARY OF FINDINGS OF RECERTIFICATION AUDIT

The Recertification Audit assessed the implementation of forest management practices in the Terengganu FMU against the requirements of the MC&I(Natural Forest). The summary of the outstanding CARs closed- out and new CARs raised are listed in Annex 1 below.

RECERTIFICATION AUDIT Issues that were hard to Nil assess Number of CARs closed Four (4) Minor CARs and Four (4) Observations closed Number of CARs remained Two (2) Minor CARs remained outstanding outstanding Number of Observations One (1) Observation remained outstanding remained outstanding Number of New CARs raised Two (2) Minor CARs are raised Number of new Observation Six (6) Observations are raised raised Certification Decision The forest management of the Terengganu State Forestry Department to be recertified as: The management system is capable of ensuring that all of the requirements of the applicable standard(s) are met over the whole forest area covered by the scope of the evaluation; and The certificate holder has demonstrated, subject to the specified corrective actions, that the described system of management is being implemented consistently over the whole forest area covered by the scope of the certificate. The issues highlighted as Minor CARs must be adequately addressed and the adequacy of the actions taken need to be verified during the first surveillance visit to be conducted within 12 months from the date of assessment.

MALAYSIAN TIMBER Doc. Number: AD 34-02 CERTIFICATION SCHEME: Version Date: 01 February 2013 MC&I(NATURAL FOREST) (ASSOCIATED DOCUMENTS) Page: 5 of 15

Annex 1

SUMMARY OF CORRECTIVE ACTION REQUESTS (CARS) AND OBSERVATIONS

Summary of CARs closed out (from Surveillance 02 Audit) CAR Indicator Non-conformance Objective Evidence Close-out Evidence No. Forest managers have not 12 9.2.1 Forest managers have not fully assessed, During the re-certification audit, the audit team noted that the adequately determine the Terengganu FD has developed an HCVF management plan presence of HCVF attributes in identified and demarcated the presence of HCVFs in the forest reserves. E.g. Fauna for Sal tree (Johannesteijsmannia altifrons) found in the FMU in accordance with Compartment 34 of the Jerangau FR. The FD is also in the relevant federal, state and local such as Paedocypris fish (Rimba Bandar Bukit Bauk) (Pg.ix of MTR); endangered process of establishing two other HCVF areas (currently laws, appropriate to scale and already designated but without a management plan) for intensity of forest management species (IUCN red List), e.g. Malayan tiger, Asian Elephant, Malayan Tapir etc. keruing sarawak (Jerangau FR-Compartment 34) and chengal operations in the FMU, and in besar (Pasir Raja FR Compartment 5). The evidence for this consultation with relevant (prevalent in Tembat, Cherul, Pasir Raja FRs). is as per letter of appointment dated 19 April 2015 (ref: PHNT stakeholders. 63/8/5 (8)) titled, “Menjalankan Kerja-Kerja Bancian There is no evidence of stakeholder Kepelbagaian Spesies Flora Di Kawasan Hutan Yang consultation with relevant agencies on Mempunyai Nilai Pemeliharaan Yang Tinggi (HCVF) Di Kompt potential HCVF (all attributes) identified 34, Hutan Simpan Jerangau” from the Terengganu FD to a through scientific expeditions such as the local consultant who has been appointed to conduct species Gunung Mandi Angin (2004) and Bukit Bauk inventory where the keruing sarawak is located. In addition, (2006) and Dungun Timber Complex. the FD has also engaged with PERHILITAN to re-confirm the potential HCVF areas for fauna (which are already identified in Surveillance 02 Audit: previous scientific research and listed in the MTR (Table 24). Evidence of the engagement is per the letter dated 18 May 2015 (ref: PHNT6/3/8/17 (141) titled, “Mesyuarat Konsultasi Verification during the Surveillance 02 Audit Stakeholder Bagi Hutan Yang Mempunyai Nilai Pemeliharaan showed that a Stakeholder consultation has Yang Tinggi (High Conservation Value Forest) HCVF been conducted on 25 May 2014 that was Terengganu”. attended by various organisations such as Minor CAR 12 closed government agencies, local authorities, NGOs, research institutions and the private sector. Among the matters discussed were

as follows: • Status of conservation and management of HCVFs containing the following: o Gigantic Chengal tree in Compt. 5, Pasir Raja FR; o Keruing Sarawak tree area in Compt. 31, Jerangau FR; and o Pokok Sal in Jerangau FR;. • Proposal to include a new area as HCVF; o Compt. 129 of Cherul FR where such area known to have Keruing Mengkai that is endemic to Terengganu only. The audit team notes that the Terengganu FMU is in the process of engaging a consultant to conduct a landscape-level high conservation value assessment for flora and fauna. Although the stakeholder consultation process has been conducted, the assessment is yet to be done. This will remain a Minor CAR until a report on the assessment, identification and demarcation of HCVFs has been completed (next audit, re-certification).

Inadequate implementation of 14 6.2.1 There is no up-to-date information on Minor CAR 14 be maintained to be verified during next guidelines to identify and protect Audit endangered, rare and threatened features of special biological interest such species of flora and fauna, as salt licks, nesting and feeding areas in including features of special the FMU biological interest such as seed Recertification Audit: trees, salt licks, nesting and feeding areas in the FMU. During the Recertification Audit, the Terengganu FD has incorporated a baseline assessment of features of special biological interest such as salt licks, nesting and feeding areas in the FMU during the pre-F and post-F surveys (refer to letter dated 20 August (ref: P.H.N.T.100/6/16 Bhg.8 () from the Terengganu State FD to all DFOs, titled, AD 34-02 Page 7 of 15

“Maklumat Mengenai Kedapatan Hidupan Liar Dan Kepentingan Biologinya Di Kawasan Lesen”. However, the audit team is unable to evaluate the effectiveness of this initiative as the actual implementation only commenced in April 2015

15 6.3.1 Inconsistency of implementation Generally, the audit team noted that the During the recertification audit, the audit team has visited the of management guidelines to measurements taken during the audit tallied following areas: with the measurements captured during the assess post-harvest natural • Pre-Felling Inventory area: regeneration and measures to actual activities i.e. Pre-Felling, Post-Felling supplement natural regeneration and Tagging, with a slight deviation of o Compt. 43, Belara FR; in the FMU. 0.5cm – 3cm. However, audit team observed that some of the measurements o 3 inventory plots within 1 lines has been verified where were found to be inconsistent whereby out 29 trees has been measured. of 56 trees measured for each areas: • Post-Felling Inventory area: • 6 trees were missing; o Compt. 92, Jerangau FR; • 4 trees were of the wrong species; o 4 inventory plots within 2 lines has been verified where • 1 tree was not recorded; and 31 trees has been measured. • 4 trees were with inaccurate Based on the verification, the audit team noted that the measurement (with deviation >3cm). measurements taken during the audit tallied with the measurements captured during the actual activities i.e. Pre- Felling, Post-Felling and Tagging, with a slight deviation of 0.5cm – 2cm. The audit team observed that there is also no discrepancy in recording the tree species and there is also no missing tree observed during the audit hence agreed to close the minor CAR issued during previous audit. Minor CAR 15 closed

16 6.3.3 Harvesting is designed not taking Verification within the Forest Harvesting The Terengganu FD has provided evidence of a clause into consideration the need for the Plans at Terengganu Selatan and inserted into the Rancangan Mengusahasil Hutan which conservation of biological Terengganu Barat District Foresty Offices stipulates the need for maintenance of biological corridor in a corridors and buffer zones for showed no evidence of the need for the letter dated 30 April 2015 (ref: PHNT 100/0/16/Bhg.6 (93) from features of special biological conservation of biological corridors and the Terengganu FD to all District Forestry Offices titled interest for wildlife buffer zones for features of special “Maklumat Mengenai Pemuliharaan Koridor Biologi Dan Zon biological interest for wildlife for the Penampan Untuk Ciri-Ciri Kepentingan Biologi Yang Istimewa proposed licence areas. Bagi Hidupan Liar Di Kawasan Lesen”.

Moreover, the FD maintains the river buffer zones which are one of the ways to maintain biological corridors. Minor CAR 16 closed During the Recertification Audit the audit team has taken 17 6.10.1 The forest manager does not The audit team notes that there is no evidence provided to show that the forest action to verify the Minor CAR and observed that the FD has AD 34-02 Page 8 of 15

ensure that conversion from conversion from natural forest to iron mine taken action to request the concession owner of the area i.e. natural forest to forest plantations within Compartment 1 to Compartment 6 of Kumpulan Pengurusan Kayu Kayan Sdn Bhd. to prepare the or nonforest use secure long term Besul (T) FR [e.g. Lesen L3005-3011/2014 Cost Benefit Analysis for the area to be utilized as mining in conservation, economic and (HS) (P)) (Kawasan Kelulusan Lombong)] Compartment 1 to Compart 6 of the Besul (Tambahan) FR. social benefits. will enable clear, substantial, additional, Letter [Ref No.: P.H.N.T. 100/6/16/Bhg. 8] dated 08 July 2014 secure, long-term conservation, economic is evidenced. and social benefits across the FMU. This is not supported by any social, environmental However, further verification revealed that though the area and economic cost-benefit analysis for the has been approved by the state government for conversion, conversion of the above area. In addition, the project has been put on halt and there is a decision from there was no mention of the proposed forest the concession owner of the area i.e. KPKKT to revert back conversion in the FMP or Mid-Term Review the area into the PRF. Unfortunately, there is no written of the FMP documentation to confirm the decision. Nevertheless, the audit team is of the view to close the Minor CAR 17 due to this development. However, Observation 05 has been issued to monitor this and to be verified during the next Surveillance Audit. Minor CAR 18 be maintained to be verified during next 18 8.2.1 Forest managers does not gather The audit team notes that there is no Audit adequate relevant information, evidence of wildlife /biodiversity inventory appropriate to the scale and analysis or research which can provide intensity of the forest information on the composition and management operations, needed observed changes in the flora and fauna, to monitor the items (a) to (e) especially for proposed licence areas, as listed in Criterion 8.2. specified in item 8(c). Recertification Audit: Verification during the Recertification Audit showed that the Terengganu FD has incorporated a baseline assessment of features of special biological interest such as salt licks, nesting and feeding areas in the FMU during the pre-F and post-F surveys (refer to letter dated 20 August 2014) (ref: P.H.N.T.100/6/16 Bhg.8 () from the Terengganu State FD to all DFOs, titled, “Maklumat Mengenai Kedapatan Hidupan Liar Dan Kepentingan Biologinya Di Kawasan Lesen”. However, the audit team is unable to evaluate the effectiveness of this initiative as the actual implementation only commenced in April 2015 (Minor-CAR 18 maintained).

AD 34-02 Page 9 of 15

Summary of new CARs raised during Recertification Audit

CAR No. Indicator Non-conformance Objective Evidence/Close-out Evidence Status There is insufficient consultation with affected communities New Minor CAR raised during 01 4.4.1 Forest managers did not evaluate, pertaining to forest operations (i.e. timber harvesting). There Recertification Audit through consultations, social impact of is also no mechanism to gauge long-term social- forest operations directly affecting environmental impacts to local communities. Local communities, and the people and communities do not have access to information on the groups directly affected by the forest results of the social impact evaluations. operations did not have access to information on the results of the social impact evaluations. The village head (Pengerusi JKKK) of Kg. Air Putih (in an interview on 20 May 2015) voiced his grievance that he was not consulted during the rapid SIA exercise prior to timber harvesting (only Kg. Teladas headman was consulted) for the two license at Sg. Nipah FR. The social impact form only indicated consultation for post-logging impact assessment (no free, prior and informed consent). He expressed his desire to have access to information on results of social impact evaluations. The community interviewed also has a host of issues pertaining to damage to access roads, reduced river water quality, etc. and are requesting an inter-agency dialogue with the community to resolve their issues. Moreover, the long-term social-environmental impact is not assessed as the current social impact form only gauges impact to communities immediately after the logging license is closed without subsequent follow-up. An interview with the village head of Kg. Basong on 18 May 2015 indicated that long-term social and environmental impacts from past logging at Telemong FR such as reduced water quality, sedimentation and flooding have not been assessed by the FD with the communities. In view of this, there is a need to have more consultations with local communities as per recommendations in the MTR (Pg.123) which states that the Terengganu FD is ‘encouraged to conduct an SIA involving forest-fringed communities to ascertain their grievances and employ mitigation measures to reduce the impacts to the communities. AD 34-02 Page 10 of 15

New Minor CAR raised during 02 5.1.1 Investments and reinvestments are not The audit team notes that budget constraints impede the Recertification Audit adequately made in forest implementation of management prescriptions to maintain management, including for forest ecological productivity of the forest as follows: administration, research, human • HCVF management plan for keruing sarawak and cengal resource development, protection, besar (9.1.1) economic, conservation, environmental and social aspects, consistent with the • To conduct inventory for fauna and subsequently tenure of the FMU. assess, identify, demarcate HCVF areas for fauna and other attributes recommended in the MTR (2012) (9.1.1); • To conduct periodical patrolling of forest areas, especially access points to forest reserves through Orang Asli villages and logging concession area as to prevent inappropriate activities within the FMU (6.2.4); and • To allocate sufficient staff to fill in the vacant positions, e.g. no ADFO for Besut (Terengganu Utara), lack of field staff to conduct forest patrolling activities, to implement the HCVF (this has already been recommended within the MTR).

Summary of Observations status (from Surveillance 02 Audit)

CAR Follow-up Evidence Indicator Observation Status No. 11 3.3.1 There is evidence of a request made by the Terengganu FD to the The Terengganu Barat District Forestry Office has sent two follow- Observation JAKOA, through a letter dated 23 October 2013 [Bil. (49) dlm. up letters to JAKOA dated 25 August 2014 (ref: (4) dlm. PHDTB closed PHDTB.1/2/1/6 bhg.4] entitled “Memohon Maklumat Berkaitan Aktiviti 1/5/2/14) and 9 April 2015 (ref: (5) dlm. PHDTB 1/5/2/14) of the Pengeluaran Kayu Gaharu Oleh Penduduk Orang Asli Kg.Sg.Berua, same title. The JAKOA responded, in letters dated 2 September Hulu Terengganu”. However, there has been no response from 2014 (ref: JHEOA. TR/TA1.009 Jld.4) from the Terengganu State JAKOA pertaining to the request sent. The Terengganu Barat District JAKOA and 25 April 2015 (ref: JAKOA.SA1.120.Jld.5 (30)) from Forestry Office needs to follow up on the letter sent to JAKOA as part the JAKOA headquarters that JAKOA does not have such of its effort to maintain updated records on Orang Asli special sites of information. Hence, the onus is now on the FD to map out such cultural, ecological, economic or religious significance in the district. areas on their own. 12 5.6.1 The AAC for Terengganu FMU for 2011-2015 has been set at 25,265 Summary of the AAC allocated to Terengganu FMU for RMK 10 as Observation ha or 5,053 ha/year. Nevertheless, during the recertification audit it of Recertification Audit are as follows: closed was noted that an approval has been given by the FDPM HQ to absorb an area of 1,000 ha of AAC allocated for 2013-2015 to be utilized in 2012. Following to the above development, since then, other proposals has been made to absorb an area of allocated AAC AD 34-02 Page 11 of 15

for a subsequent year to be utilized in the preceding year. Examples Year Allocated AAC Proposed Actual AAC of documented evidence and communications verified during the audit AAC approved AAC after achievement are as follows: after absorption in the absorption as of 2014 respective as of 2013 year • Letter Ref No: Bil (7) dlm.PHNT.SULIT.121/BHG.2 dated 8 April 2011 5,053 5,501 5,501 5,501 2010 “Penyediaan Kertas Kerja Majlis Perhutanan Negara (MPN) bagi Catuan Tebangan Tahunan (CTT) Rancangan Malaysia 2012 5,053 6,405 6,045 6,045 Kesepuluh (RMK-10)” 2013 5,053 4,605 4,586 4,586 • Letter Ref No: JH(S) 443 Jld. 6 (9) dated 23 July 2012 “Permohonan Tambahan Kuota Catuan Tebangan Tahunan (CTT) 2014 5,053 4,377 5,567 5,437 Seluas 1,000 Hektar bagi Tahun 2012” 2015 5,053 4,377 3,566** 1,719.82* • Letter Ref No: JH(S) 443 Jld. 6 (16) dated 5 August 2013 st “Permohonan Tambahan Kuota Catuan Tebangan Tahunan (CTT) Note: * until 1 Quarter Seluas 1,000 Hektar bagi Tahun 2013” ** the AAC is as per in 2014, for 2015 the AAC is set at • Letter Ref No: JH(S) 443 Jld. 6 (31) dated 29 May 2014 3,964.96 additional of 128 ha brought forward the unutilized AAC “Permohonan Tambahan Kuota Catuan Tebangan Tahunan (CTT) from 2014 Seluas 1,000 Hektar bagi Tahun 2014” Although there is a change in the AAC per year as a result of the Summary of the AAC allocated to Terengganu FMU for RMK 10 are approval of the proposed absorption of AAC to the allocated AAC, as follows: the overall AAC for 2011-2015 remains unchanged.

Year Allocated AAC Proposed Actual AAC AAC approved AAC after achievement after absorption as in the absorption of 2014 respective as of 2013 year 2011 5,053 5,501 5,501 5,501 2012 5,053 6,405 6,045 6,045

2013 5,053 4,605 4,586 4,586 2014 5,053 4,377 5,567 2,032*

2015 5,053 4,377 3,566 -

Note: * until 1st Quarter

Although there is a change in the AAC per year as a result of the approval of the proposed absorption of AAC to the allocated AAC, the overall AAC for 2011-2015 remains unchanged. An Observation 12 is raised on this issue for the FMU to continue to monitor and control the AAC for 2015 in view that the total AAC available for 2015 is only 3,566 ha after the absorption exercise, in order to avoid over extraction. 13 6.2.4 Interviews with PERHILITAN has indicated that there is The Terengganu FD has instructed all DFOs to carry out Observation reason to suspect that forest workers are conducting monitoring of forest workers to curb any prohibited activities closed AD 34-02 Page 12 of 15

inappropriate activities such as hunting, fishing and trapping in the forest reserves. This is evident in a letter dated 13 fauna as well as being conduits for outside poachers. August 2014 (ref: PHNT.100/6/16/Bhg. 8() titled, “Pekerja- Unfortunately, there is no concrete evidence to support the Pekerja Hutan Menjalankan Aktiviti-Aktiviti Yang Dilarang allegation made by PERHILITAN. In view of this an Di Dalam Hutan”. The implementation of this was seen in a Observation 13 is issued for the Terengganu Forestry document dated 15 April 2015 (ref: Bil (19) dlm. PHDTU: Department to closely monitor the activities of foreign workers 1/3/174) of the same title from the Terengganu Utara in logging concession areas, as per the recommendation of District Forestry Officer to the range offices at Kuala PERHILITAN. Terengganu, Setiu and Kampung Raja instructing the forest rangers to take immediate action against any forest worker found to have engaged in prohibited activities 14 8.3.1 Interviews with the Forester In-charge at Bukit Diman FCS Further verification at all three FCS visited found that the Observation revealed that the copy of delivery order (DO) from the licensee delivery order (DO) from the licensee is kept together with closed is not kept at the FCS or district office. The DO from the the copy of the Removal Pass issued by the FCS before licensee is important for counterchecking since the details in being submitted to the DFO. the RP must tally with that in the DO. 15 9.2.2 The Terengganu Forestry Department has to take special care Maintained and to be verified during next Surveillance Audit Observation not to compromise any potential HCVF values identified maintained through scientific expeditions, such as the habitat of the Paedocypris fish at Rimba Bandar Bukit Bauk (identified through the Bukit Bauk expedition due to it being an endemic species).

Summary of new Observations raised during Recertification Audit

CAR Follow-up Evidence Indicator Observation Status No. 1 3.3.1 In the re-certification audit, the audit team strongly recommends that the FD New Observation ensures adequate record-keeping on information pertaining to special sites of the raised Orang Asli. 2 4.3.3 Workers of the logging contractors are subjected to the terms and conditions New Observation stated within their employment agreement. However, the terms and conditions raised that spell out in the employment contracts are found to be inconsistent between contractors. This situation may cause incompliance to the Employment Act 1955 in the future. 3 6.2.4 The FMU manager does not have an effective system for community policing New Observation which can assist the FMU manager to tackle such issues. An interview with the raised Kg.Orang Asli Sg.Sayap (Terengganu Utara) on 19 May 2015 revealed that there are foreign nationals who encroach into the Hulu Besut FR. There is a need for AD 34-02 Page 13 of 15

FD to increase cooperation with the Orang Asli to address foreign encroachment in the state. 4 6.2.5 The Wildlife Department (PERHILITAN) suggests (in an interview on 20 May New Observation 2015) that the current system of inviting logging contractors for the taklimat lesen raised to raise awareness on the prohibition of inappropriate activities such as hunting, fishing and trapping fauna should be conducted on-site together with all forest workers as the information may not trickle down to the workers. PERHILITAN has reiterated its request for regular monitoring of the activities of forest workers in logging concession areas. 5 6.10.1 Refer Minor CAR 17: New Observation During the Recertification Audit the audit team has taken action to verify the raised Minor CAR and observed that the FD has taken action to request the concession owner of the area i.e. Kumpulan Pengurusan Kayu Kayan Sdn Bhd. to prepare the Cost Benefit Analysis for the area to be utilized as mining in Compartment 1 to Compart 6 of the Besul (Tambahan) FR. Letter [Ref No.: P.H.N.T. 100/6/16/Bhg. 8] dated 08 July 2014 is evidenced.

However, further verification revealed that though the area has been approved by the state government for conversion, the project has been put on halt and there is a decision from the concession owner of the area i.e. KPKKT to revert back the area into the PRF. Unfortunately, there is no written documentation to confirm the decision. Nevertheless, the audit team is of the view to close the Minor CAR 17 due to this development. However, Observation 05 has been issued to monitor this and to be verified during the next Surveillance Audit. 6 7.2.1 The audit team found that the revision of the forest management plan for New Observation Terengganu Forestry Department is still pending. The FD explains that this is due raised to a new JPSM format (final draft) which differs from the previous format. Since the previous forest management plan expires in 2015, the FD must hasten its appointment of a consultant to draft the new plan, which should incorporate the results of monitoring or new scientific and technical information, as well as to respond to changing environmental, social and economic circumstances

MALAYSIAN TIMBER Doc. Number: AD 34-02 CERTIFICATION SCHEME: Version Date: 01 February 2013 MC&I(NATURAL FOREST) (ASSOCIATED DOCUMENTS) Page: 14 of 15

Annex 2

Forest Reserves in Terengganu FMU

SGS (Malaysia) Sdn. Bhd., No.26, Jalan Anggerik Vanilla 31/93, Kota Kemuning, 40460 Shah Alam, Selangor, MALAYSIA CONTACT PERSON: Abdul Haye Semail - Tel: +6 (03)5121 2320 - Fax: +6 (03)5122 5927

AD 34-02 Page 15 of 15

Annex 3

ISSUES RAISED BY STAKEHOLDERS

Comment Response Nr Recertification Audit 1 Newspaper cutting from Berita Harian There is no visit made to the site during this audit as the dated 09 March 2015 on case has been placed under investigation by the State FD encroachment in Rasau-Kerteh Forest following the publication of the news Berita Harian. Reserve (Compartments 41 & 42) The audit team has verified the report which is incorporated in the letter dated 19 March 2015 [ref: Bil. (17) dlm. PROD 134/02/13] from the Dungun Range Office to the Terengganu Selatan District Forestry Department, entitled “Laporan Pencerobohan Hutan Kompatmen 41 & 42 Hutan Simpan Rasau Kerteh, Dungun, Terengganu”. This is a report on encroachment in the Rasau Kerteh Forest Reserve. It was reported that the area involved an area totalling to 17ha and is complete with photographs and site plan of the encroached area. Based on the report, the audit team observed that a total of 2 excavators, 1 tractor and 1 back-hoe were confiscated and a total of 245 logs with an average of 198m3 have been seized. The case has been brought up to the State Forestry Department Headquarters for further investigation.

------SGS (Malaysia) Sdn. Bhd., No.26, Jalan Anggerik Vanilla 31/93, Kota Kemuning, 40460 Shah Alam, Selangor, MALAYSIA CONTACT PERSON: Abdul Haye Semail - Tel: +6 (03)5121 2320 - Fax: +6 (03)5122 5927