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Sabah TLAS Audit Report Sabah Legality Standard Principles 1 – 4

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Sabah TLAS Audit Report Sabah Legality Standard Principles 1 – 4 FDS-TLAS-006 Sabah TLAS Audit Report Sabah Legality Standard Principles 1 – 4 Sabah Forest Industries Sdn. Bhd. Licensee Reference # GFSSBH 003-023 (84330K) Contact Edmund Gan Guan Su Date of Report 26/05/2019 Person (General Manager – Forestry) Date of close out - Telephone +6087 801 018 Office Kompleks SFI No. 10, Jalan Jati, W.D.T. Ext. 2931 Address 31, 89859 Sipitang, Sabah, Malaysia. Fax +6087 801 576 Email [email protected] Approved By Dr. Kevin T. Grace Statements Audit Statement GFS 013 LVS Issuance Date 01 June 2019 Issuance Date 31 May 2020 Assessment Details Assessment Dates 21st - 24th May 2019 Scope of Assessment TLAS P1-P4: FMU 7 - NFM [JP(KSG)108/96(CO)], ITP [JP(KSG)107/96(CO)] and Titled Land Species Industrial Tree Plantation (ITP) Logs: Acacia mangium, Eucalyptus pellita, E. hybrid, E. grandis Mixed Tropical Hardwood (MTH) Logs: Drybalanops spp. (Kapur), Dipterocarp spp. (Keruing), Shorea inappendiculata (Selangan batu), Parashorea spp. (White seraya), Shorea ovata (Red seraya), Yellow seraya, (Melapi), Sapotaceae spp. (Nyatoh), Duabanga moluccana (Magas), Octomeles sumatrana (Binuang), Alstonia spp. (Pulai), Eugenia spp. (Obah), Lauraceace (Medang), Planchonia valida (Putat), Lithocarpus & Quercus (Mempening), Dillenia spp. (Simpor), Pentace spp. (Takalis), Annonaceae (Pisang-pisang), Neolamarckia cadamba (Laran), Magnolia candolii (Chempaka), Hopea sangal (Gagil), Vatica spp. (Resak), Koompassia malaccencis (Kempas), Gluta spp. (Rengas), Campnosperma spp. (Terentang) Lead Assessor Franklin Emang Assessor(s) Mohd Akram Mansur, Siti Radiah Mohamad FDS Staff Christopher Matunjou (DFO Sipitang), De-Almida G.Y (ADFO Sipitang), Justin Lohuji (MCEE Kota Kinabalu), RH. Albinus Thomas (PPD Sipitang), PH. Jasmi Jasel (PPD Sipitang), PH. Richard Lazaga (PPD Tenom), Juliani Kulumpang (PPD Tenom), Mark Lennon G.M (PPD Tenom) 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. 1 FDS-TLAS-006 Summary Information Overview of Licensee: • Sabah Forest Industries Sdn. Bhd. (Sabah Forest Industries) is the signatory to the Timber Licensed Agreement [JP(KSG)108/96(CO) and JP(KSG)107/96(CO)] focusing on Natural Forest Management (NFM) and Industrial Tree Plantation (ITP) management totalling approximately 158,623 ha and 118,000 ha respectively in the Forest Management Unit (FMU) 7. In addition, Sabah forest Industries operates an area of approximately 12,000 ha of plantations held under a titled land. The total size of the FMU 7 is approximately 288,623 ha. st • Timber Licensed Agreement commenced on 1 January 1996 and is valid for 99-years, expiring on 1st January 2095 for all activities within the concession. • Since the designation of the Timber Licensed Agreement, approximately 50,797 ha have been degraded through conventional harvesting activities and as such, the exact size of area previously designated under NFM regime was shifted to ITP. • The previous assessment was conducted in February 2018 that resulted in 2 gap(s) and 0 observation(s) (report #: G161-223). • The NFM area is under License [JP(KSG)108/96(CO)] which is located within the Sipitang Forest Reserve and Ulu Sg. Padas Forest Reserve; The ITP area is covered by License # [JP(KSG)107/96(CO)] which is located within Sipitang Forest Reserve, as well as Ganui Titled Land (CL 195317805) and Mendolong Titled Land (CL 195317821). • Land use classification: Land classification FMP Area (ha) Current (ha) Total Concession Area 288,373* 288,373* Production Area − Natural Forest Management Area 80,543 137,661 − Plantation Forest (ITP) 108,534 50,151 Protected Forest & Conservation Areas 98,073 98,073 Social Community & Agriculture** - 1,265 Infrastructure, Roads, Buildings, etc. 1,223 1,223 * Based on registered survey plotted on GIS. ** The 81 villages identified are not within the SFI licensed area but nearby. The state government has designated 1,265 ha (adjacent to state land) for CBNRM for social issues (not given/gazetted to the communities) but for potential activities to be jointly conducted by Sabah Forest Industries, Government agencies, NGO and communities. Environmental Context: • During the development of the EIA concession, the majority of mammals sighted in the area include the Sambar deer, Barking deer, Napoh, Pelandok and Wild boar. Other large endangered mammals such as the Sun bear and Clouded leopard have been sighted in the area. Other commonly observed species include the Pig-tailed and Long-tailed monkey. • Protected bird species such as the Rhinoceros, Helmeted and White Crested Hornbill were also recorded from the area. Social Context: • A socio-economic study of the surrounding villages was conducted as part of the EIA that was submitted and approved by the Department of Environment in 1987. This was followed by another socio-economic study carried out from 1990-1994 under a funding scheme of the World Bank. • The SBS studies found that there are approximately 98 villages living within the vicinity of the FMU, out of half are directly affected by the Sabah Forest Industries operation. 2 FDS-TLAS-006 • Based on the above information, there are no less than 8,000 people living within the vicinity of the FMU. • Of the total population, 80% practices shifting cultivation involving food crops (typically hill paddy), whereas 70% have established some sort of fruit trees orchard. • Many villagers are still practicing customary lifestyles including hunting, fishing and collecting of Non-Timber Forest Products (NTFP) for their consumption and sale of traditional goods (e.g. floor mats). Scope of Assessment • The scope of the evaluation is to verify compliance of Sabah Forest Industries Sdn. Bhd. with the Sabah Forest Management License Agreement [JP(KSG)107/96(CO) & JP(KSG)108/96(CO)] for FMU 7. • 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 Sabah Forest Industries 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. Itinerary & Mandays: FMU 7/SFI/Sipitang/ Dates: 21-24 May 2019 (Total Mandays = 14) Date Activity GFS Staff Mandays 20 May 2019 Public Holiday (Replacement) - Wesak - 0 Monday day Travel to Sipitang. Franklin Emang, 21 May 2019 Opening meeting at PPD Sipitang. Mohd Akram Mansur, 3 Tuesday Document review at SFI Office. Siti Radiah Mohamad Field Visit to Solob area: Solob log yard, Solob weighbridge L.23, Franklin Emang, 22 May 2019 L.24 (latest harvesting operation,2018), Mohd Akram Mansur, 3 Wednesday L.24 riparian reserve, Kinta Insan Siti Radiah Mohamad campsite, manned gate, Licensed boundary (SFI/State land). Field visit to Mendulong Area: Franklin Emang, 23 May 2019 Segalong campsite, SFI wood yard, SFI Mohd Akram Mansur, 3 Thursday wood yard weighbridge. Siti Radiah Mohamad Document review at SFI Office. Franklin Emang, 24 May 2019 Closing meeting at PPD Sipitang. Mohd Akram Mansur, 3 Friday Travel to Kota Kinabalu & Sandakan. Siti Radiah Mohamad Dr Kevin Grace, 25-26 May 2019 Reporting GFSSBH 003-023 2 Franklin Emang Total 14 3 FDS-TLAS-006 Highlights of Assessment (Major Gaps = 0; Minor Gaps = 1; Observations = 1) Sabah Forest Industries Sdn. Bhd. has complied with the Sabah Legality Standard (FDS-TLAS-002) as no non-compliance was identified during the assessment on 21-24 May 2019. Currently, Sabah Forest Industries has temporarily ceased their forest operations. As per AWP 2019 draft, a total of 3 coupes with 6 compartments are planned to be harvested (total target area: 1,050ha) as well as to focus on restocking the harvested area (total target area: 450 ha) starting on the 3rd quarter of 2019. Summary of status of operations by Principle: Principle 1. Sabah Forest Industries demonstrated compliance with the license requirements, management planning, and submission of documents or reports such as the EIA monitoring report to the relevant authorities. Currently, Sabah Forest Industries is still under receivership and the sale of the company is still in process. A new FMP will be prepared based on the execution of the new Timber License Agreement (Ref.#: SFI/ FOR/ 1003/ 2018.08; dated 18th October 2018). Principle 2. Sabah Forest Industries has submitted notification to EPD on the company unable to submit the ECR reports since 1st Quarter 2018 due to the cessation of operation in their concession area. The company will resume the reporting once the operations commence in the near future (Ref. #: SFI/FOR/EPD/2019/2 dated 06th March 2019). February 2018: Gap 005/2018 (Minor) Checklist 2.1.3 Inadequate implementation of mitigation measures in regards to scheduled waste storage and oil spillage prevention was observed at the contractor’s base camp. May 2019: Gap 005/2018 (Minor) – Closed Adequate measures were taken to address the scheduled waste storage and prevention of oil spillage at the contractor’s base camp. Observation 001-2019 - Checklist 2.1.3: Sabah Forest Industries had stopped reporting of ECR to EPD as of the first quarter 2018 but continued logging to September 2018.
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