Sabah Forestry Policy

FOREST INDUSTRY IN SABAH

The timber industry in Sabah was the main backbone of the socio-economic development of the State in the past. Even at a reduced production of late, its contribution remains significant. The total forest revenue collected for the year 2006 was RM505 million or 22.34% of the State Government’s total revenue. For many years in the past, contribution from the forestry sector to the State’s coffer was more than 50% of the State Government’s total collection of revenue. In 2006, foreign exchange earnings from the timber industry to the State were recorded at RM4.33 billion, while 47,222 jobs were generated by this sector. Log production from the natural forests in the year 2006 was 5.34 million m3 while production from plantation forests was 582,264.37 m3 over the same period of time.

It has been the policy of the State Government to further develop the wood based industry in Sabah towards more value-added processing as outlined in the Sabah Industrial Action Plan (SIAP). In spite of this, the development of the value-added processing in the State has been quite slow and the wood-based industry remains dominated by primary processing activities namely the saw-milling and plywood sectors. Compared to the nineties, the total number of active wood processing mills in Sabah has shown a decline due to the dwindling supply of logs. The number of wood processing mills in the future is anticipated to be further reduced unless substantial volume of timber is imported by the local processing mills to meet their raw material requirement.

The installed input capacity of the wood-processing mills in Sabah for year 2006 stood at 9.2 million m3 comprising of sawmill 3.5 million m3;plywood/veneer 4.9 million m3 and pulp and paper 0.8 million m3 . There is a big mismatch between the actual input capacities of mills in relation to the supply of domestic timber. In 2006, the consumption of imported logs, squared logs and sawn timber by local mills was at 118,987.88 m3.

The export of timber products remained dominated by the export of sawn timber, plywood and paper which accounted for 73% of the total forest products export earnings in 2006. Log exports only accounted for 12% of the total forest products export earnings over the same period. The future of the timber industry will witness a much reduced activity arising from the declining raw material supply while supplementary supply of raw materials from import and plantation forest is anticipated to become more important in the future to meet the deficit in the domestic demand. Reduction in size of the wood-based industry is unavoidable and this will definitely result in the reduction of job opportunities and only efficient players will remain in the industry.

11. Timber Royalty

The royalty of timber in Sabah varies depending on what the timber is intended for (example: export or domestic processing), the log diameter and the sources of the logs. The rates are shown below:

1a) Export Royalty On Round Logs Including Treated Poles Effective 1st April 2007

Royalty Royalty (RM/m3) Class (RM/M3) Species

FR/NFM Helicopter Logging ITP/SL/AL

A Belian 270 270 Irrespective of size 270

B Merbau/ 270 135 (i) ≥ 60 cm 270 Merbau Lalat (ii) 45-59 cm (a) 120 (iii) 30-44cm (a) 100 (iv) 29cm and 50 below (a) C Red Seraya 155 77.50 (i) ≥60 cm 155 White Seraya (ii) 45-59 cm (a) 120 Yellow Seraya (iii) 30-44cm (a) 100 Melapi (iv) 29cm and 50 Kapur below (a) Keruing Selangan Batu Agathis Kembang Kembang Semangkok Nyatoh Oba Suluk Pengiran D Any other species not 120 60 (i) ≥ 60 cm 120 mentioned in classes (ii) 45-59 cm (a) 90 A, B and C. (iii) 30-44cm (a) 70 (iv) 29cm and 50 below (a)

E Perupok 120 not Irrespective of size 120 applicable F Macaranga 20 10 Irrespective of size 20 FR/NFM/ITP FR not Irrespective of size G Acacia (i) ≥ 60 cm 115 applicable 20 0

(ii) 45-59 cm (a) 85 20 0

(iii) 30-44cm (a) 65 20 0 (iv) 29cm and 45 20 0 below (a)

FR: Forest Reserve

NFM: Natural Forest Management

ITP: Industrial Tree Plantation

AL: Alienated Land

From alienated Land, state Land and industrial timber plantation approved within Forest Reserve. 1 2 3b) Royalty for Local Processing

Rate (RM/m3) NON-RIL Diameter Class RIL Helicopter FR/NFM FR/NFM Logging ITP SL AL BW/YS Others 1) Logs

≥ 60 cm 70 35 70 80 80 80 80 45-59 cm (a) - - - - 70 70 70 30-44 cm (a) - - - - 30 30 30 29 cm & below - - - - 25 25 25 Macaranga spp. - - 5 5 5 5 5 Logging Residues/Branches (a) - - 5 5 5 5 5

Belian 80 80 80 80 80 80 80 Not Not Perupok 80 applicable applicable 80 80 80 80

Not Not Acacia ≥ 60 cm applicable applicable 75 75 75 5 0 45-59 cm (a) 65 65 65 5 0 30-44 cm (a) 25 25 25 5 0 29 cm & below 20 20 20 5 0

2) Converted Timber 160 Belian: 160 Belian:160 160 160 160 160 Others: Others: 70 140 Logs for SFI's pulp and 3) paper mill (b) - - - 5 5 5 5

FR: Forest Reserve

NFM: Natural Forest Management

ITP: Industrial Tree Plantation

AL: Alienated Land

SL: State land

BW: Benta Wawasan

YS: Yayasan Sabah

(a) Subject to inspection and verification by the Staff of Sabah Forestry Department

(b) As input of paper mill only

1c) Royalty for ‘Confiscated Log’ /Auctioned timber

i. Logs : RM 80/m3 irrespective of size, species and source. ii. Converted Timber: RM 160/m3 irrespective of size, species and source.

d) Processed Timber Export Royalty

Type Rate(RM/M3) All Sawn Timber 10 All Plywood 5 All Veneer 10 All mouldings 5

e) Premium

Type Premium rate RM/M3 a) FR/NFM 60cm and above only

11) Yayasan Sabah & Benta 15 Wawasan

Macaranga: Exempted

12) Other licences after 01 Feb 2002 20

Macaranga: Exempted

13) Other licences before 01 Feb According to licence conditions 2002

Macaranga: Exempted

14) SFMLA 30

Macaranga: Exempted

b) ITP ≥ 45cm ≤ 44cm 1) Yayasan Sabah & Benta Wawasan 15 0 Macaranga: Macaranga: Exempted Exempted 2) SFMLA 20 5 Macaranga: Macaranga: Exempted Exempted ≥ 45cm ≤ 44cm c) State land 20 5 Macaranga: Macaranga: Exempted Exempted d) FR/ITP (NON BW) 20 5 Macaranga: Macaranga: Exempted Exempted

12. Forest Revenue

Comparative collection of forest revenue for the year 2006 and 2007(Jan-Oct) is as follows:

Year RM 2006 RM 505,160,204.70 2007(Jan-Oct) RM 450,375,602.95

Last updated: 02/11/2007

13. Total Set-up of Wood Processing Mills

2006 2007 (As at 31 Oct) Type of mill Total Total licensed Active Inactive licensed Active Inactive Sawmill 173 119 54 172 112 60 V/Ply/BB/LB* 68 38 30 67 37 30 Mouldings 139 70 69 145 70 75 Paper 1 1 0 1 1 0 Chips 5 2 3 5 2 3 Wood 33 16 17 33 15 18 Preservation Plants Kiln Dry Plants 62 45 17 64 46 18 Particle Board 3 2 1 3 2 1 Bamboo 1 1 0 1 1 0 Furniture MDF 2 0 2 2 0 2

(*) Veneer/Plywood/Blockboard/Laminated Board

Last updated: 02/11/2007

4. Productions of Logs and Main Timber Products

Products 2006 2007 (Jan-Sept) (M3) (M3) Logs : Logs from natural forests (Jan – Oct 5,336,080.8 4,534,414.76 07) 8 Plantation logs 582,264.37 341,864.32 Timber Products:-

Sawn Timber 862,187.92 692,565.14 Veneer 210,027.35 184,489.65 Plywood 1,570,478.7 1,169,279.19 0 Blockboard 78,008.02 28,518.42 Laminated Board 40,687.82 28,431.21 Mouldings 224,025.60 161,606.79 Paper (m/t) 116,265.00 84,513.00 Particle Board 90,958.34 64,848.66 Chips 313,396.06 196,033.25 Medium Density Fibre board - - Treated Timber 24,109.75 17,082.49 Kiln Dried Timber 386,665.37 335,633.30

Late updated: 02/11/2007

15. Export of Logs and MainTimber products

Products 2006 2007(January-August) Volume (M3) FOB (RM) Volume (M3) FOB (RM) Logs :-

Logs from natural 1,028,109.2843 520,381,414.56 578,696.3484 270,394,656.80 forests Plantation logs 97,836.1296 18,964,557.85 105,798.5113 20,043,410.70 Timber Products :-

Sawn Timber 624,619.1507 917,542,675.51 390,155.8388 613,959,064.83 Veneer 97,593.4059 130,749,509.64 73,355.5282 99,770,911.32 Plywood 1,409,238.8174 1,992,844,025.49 919,584.0693 1,307,063,888.69 Mouldings 25,942.1740 57,043,031.59 28,729.7077 83,886,058.55 Particle Board 86,611.0100 42,523,057.80 47,954.1113 22,104,719.66 Chips 94,300.0000 33,932,537.99 57,153.1800 20,124,638.05 Paper (m/t) 94,003.1638 253,848,254.76 63,752.8414 170,970,755.00

16. Administrative Charges

Item Rate Note FOREST OCCUPATION PERMIT Logging Camp/logging road & dumping RM250.00/hectare/annum point Prospecting purpose RM1260/hectare/annum and RM120/hectare/annum for road LANDINGS (FOREST RESERVE ONLY)

Class I (less than or equal to 0.50 ha) RM1,000.00/landing/annum Class II (0.51 - 1.00 ha) RM2,000.00/landing/annum Class III (Greater than 1.00 ha) RM5,000.00/landing/annum Notes: A landing is defined as a temporary storage area for logs prior to transportation by land or water within any forest reserve land. ROYALTY FOR POLES OF TREES Royalty for Poles irrespective of sizes:- (MANGROVE TREES ONLY) RM0.50 cent running meter IRRESPECTIVE OF SIZE FIREWOOD (ANY SPECIES) Per stacked m3 RM1.00 Per tonne RM1.50

Item Rate Note

LICENCE FEE (FIREWOOD)

Per person per month. RM10.00 Per person per month for domestic use only RM1.00

CHARCOAL (MANGROVE) Any species in bulk RM10.00/Tonne Already paid in local Processing royalty Sacks not exceeding 50 kgs per sack RM1.50/bag -do- Per oven per month. RM50.00 -do- CHIPS Use of mangrove wood for chipping is (I) Mangrove not allowed. (ii) Inland Hardwood Royalty to be collected based on local processing royalty. No more export royalty. SAWN TIMBER GRADING AND MARKETING CHARGES Marking with mark of origin BINOB RM 0.50/M3

Certificate of Grade and marking with mark of RM 1.00/M3 origin BINOB Certificate of correct measurement. RM 2.00/M3 Certificate of freedom from live borer only. RM 1.00/M3

Certificate of grades, correct measurement, RM 3.00/M3 freedom from live measurement, freedom from live borer and hammer marking.

Miscellaneous inspection RM 1.50/M3 LOG GRADING AND MARKING CHARGES

Marking with mark of origin BINOB. RM 0.50/M3 Certificate of Grade and marking with mark of RM 1.00/M3 origin BINOB. Certificate of correct measurement RM 2.00/M3 Certificate of freedom from live borer only. RM 1.00/M3

Certificate of grades, correct measurement, RM 3.00/M3 freedom from live borer and hammer marking. Miscellaneous inspection. RM1.50/M3 OVERTIME (DURING SCALING) Note : 3% of the basic salary per hour. The scaler shall be paid the normal rate of 1% of the basic salary as overtime and the balance of 2% shall be taken as Government revenue.

Item Rate Note

SAWMILL LICENCE FEES

a. Sawmill a) Own use : RM3,000/annum + RM100/sawbench

b) Commercial use - RM3,000/annum and RM100/sawbench b. Chipmill RM6,000/annum c. Veneer Plant RM6,000/annum and RM2,400 per peeler machine or slicer machine and RM100/sawbench d. Plywood Plant RM6,000/annum and RM2,400 per peeler machine or slicer machine and RM100/sawbench e. Moulding Plant RM2,000/annum + RM100/sawbench f. MDF (medium density fibre board plant) (i) Using wood fibre i) RM6,000 (ii) Using non-wood fibre ii) RM1,000/annum g. Pulp Plant RM12,000/annum h. Paper Plant 1RM12,000/annum for mill using timber fibre 2) RM1,000/annum for non- wood fibre i. Wood-preservation plant RM1,200/annum j. Wood-cement board plant RM5,000/annum k. Blockboard RM5,000/annum and RM2,400per Peeler/slicer machine and RM100/ sawbench l. Carbon Rod Mill RM1,000/annum m. Chopstick Mill RM500/annum n. Kiln Dry Plant RM1,200/annum o. Match Factory RM100/annum p. Furniture factory (*) RM2,000 AND RM100 for each bandsaw

Note: If a mill is an integral part or another mill then only the highest fee will be imposed. Wood Preservation Plant, Kiln Dry Plant and Mobile Sawmill however are excluded from this provision and a separate licence fee is needed. Government owned mill is exempted from payment of annual fee/machines

PROCESSED TIMBER EXPORT LICENCE RM2,500.00/annum

SALE OF MAPS Revised as per items below: Paper map RM94/meter

Transparencies map RM141/meter. Data processing and plotting : RM150/hour

Item Rate Note ISSUANCE OF FOREST LICENCES

Form I RM3,000/issuance including renewal Special Licence RM5,000/issuance issuance Licence Agreement RM20,000/issuance

Form IIB 1. 50 acres & below : RM100 per issuance 2. 51 - 150 acres : RM300 per issuance 3. 150 acres & above: RM700 per issuance

LOGGING VEHICLE Tractors RM1,000.00/annum Skidders RM500.00/annum Others RM500.00/annum Long Distance Cable System (LDCS) No fee imposed EXPORT OF RATTAN Unprocessed Rattan (fresh from the jungle). Export is banned.

Processed Rattan (washed, treated with sulphur or Export is banned. other chemicals, graded, dried, split or unsplit and bundled).

Converted Rattan (whole Furniture or Artifacts ) NIL

EXTRACTION OF RATTAN - COLLECTION FEE

Forest Reserve RM10.00/person/month Stateland NIL RM100.00/annum PERMIT TO POSSESS OR CARRY FIREARMS OF APPARATUS WITHIN A FOREST RESERVE

Permit to enter Forest Reserve:- RM5.00/person/entry Permit to enter Bird Nest Centers in forest reserves (For visitors) Permit to enter forest reserves to collect Bird Nest RM5.00/person/harvest. (For collectors) QUARRY LICENSE (FOREST RESERVE) FOR COMMERCIAL USE

Charges RM5,000/ha/annum Occupation Permit to quarry RM5,000/ha/annum

Annual Fee Grade E } Based on JKR RM2,000.00/annum Grade D } Geological Dept. grading RM6,000.00/annum Grade C } RM12,000.00/annum Grade B } RM24,000.00/annum Grade A } RM50,000.00/annum REMOVAL OF SAND FROM FOREST RESERVE 10% of the value

Occupation : RM5,000.00/ha/annum

GRAVEL STONES (ALONG RIVERBEDS)

Occupation RM1000.00/ha/annum Permit to operate gravel extraction work. Not allowed

ISSUANCE OF REMOVAL PASS RM5.00 per lorry/scow ADMINISTRATIVE CHARGES ON FOREST OFFENCES a. Delay In Extracting Felled Trees None b. Abandoned logs/trees 3 times the export royalty as penalty. c. Felling undersized trees excluding 10 times the local processing ** Macaranga species (**) royalty as penalty (based on the Macaranga highest rate). species is excluded d. Leaving High Stumps RM100.00/stump under this provision e. Illegal feeling 10 times the export royalty rate (refer as penalty. JPHTN/PP1 00-4/1/23 f. Unauthorized used of commercial species for RM100/tree and local processing dated temporary construction work. royalty payment. 24/4/2001) g. Avoidable damage to pole size trees RM500.00/tree h. Failure to deliver by the date specified an RM5,000.00/month or part of a accurate map of any year's working and the location month during which the maps are of all extraction routes. to be submitted. i. Failure to prevent and to report an outbreak of fire. RM1,000.00/detection j. Production of an incorrect specification for any 2 times of the royalty per parcel. parcel or part of parcel of timber. k. Unauthorized removal of logs. 3 times the export royalty. l. Felling prohibited species RM5,000.00/stump m. Failure to declare an area which has been RM5,000.00/detection logged and to request for logging inspection for that particular area. n. Penalty for removing forest produce between 7 RM300.00 per lorry for first p.m. to 7.00 am without authority. offence and RM500.00/lorry for second or subsequent offence. o. Attempting unauthorized export of logs * 10 times the export royalty.

* NOTE :Apart from the penalties stated herein, other charges applicable, e.g. royalty in the case of undersized trees in log form being exported, are to be paid. p. Production of an incorrect mill production report. RM500.00/report q. Failure to mark logs with registered property RM20.00/log mark or serial number. r. Non-maintenance of boundary RM500.00/detection s. Failure to register as a mill contractor/logging RM1000/detection contractor t. Attempting un authorised export of any forest produce or product other than logs. 50% of the fine imposed on unauthorised export of logs as in 24(o).

MINOR FOREST PRODUCE 10% of the value. However (Damar, Fossil, Gums, Gaharu, Cinnamon, Sticks, harvesting of Gaharu is only Tengkawang fruits, etc) allowed on state lands. Harvesting in forest reserve is

not allowed.