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Table of Contents Table of Contents ...... i List of Tables ...... iv List of Figures ...... vi List of Maps...... vii List of Appendix...... viii Acronyms...... ix Acknowledgements ...... x Executive Summary ...... xiii 1 Introduction ...... 1 1.1 Scope of Study ...... 1 1.2 Objectives of Study...... 1 1.3 Study Methodology...... 2 1.4 Outputs of Study ...... 3 1.5 Defining the Area under Review ...... 3 2 Natural Resources of Ulu Muda...... 4 2.1 Introduction...... 4 2.1.1 Climate ...... 4 2.2 Biodiversity...... 4 2.2.1 The Forests of the Greater Ulu Muda Area...... 4 2.2.2 Special Habitats...... 5 2.2.3 Wildlife...... 5 2.3 Importance and Economic Values ...... 9 2.3.1 Introduction ...... 9 2.3.2 Direct Use Values...... 9 2.3.3 Indirect Use Values ...... 9 2.3.4 Non-use Values ...... 9 3 Tourism and the Economic Values of Greater Ulu Muda...... 12 3.1 Role of Tourism in Kedah’s Economy ...... 12 3.1.1 Summary of the Kedah economy...... 12 3.1.2 The Tourism Sector...... 12 3.1.3 Why Nature Tourism?...... 15

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3.1.4 Summary: Ulu Muda as an International Nature Tourism Destination .. 17 3.2 Present Ulu Muda Tourism Facilities ...... 18 3.3 Present Ulu Muda Tourism Activities ...... 20 3.3.1 Tourism Potential in Ulu Muda...... 20 3.4 Proposed Development Plans and Implications for Nature Tourism Developments ...... 29 3.4.1 Trans-Eastern Hinterland Highway...... 29 3.4.2 Helicopter-logging of the Ulu Muda forests ...... 29 3.4.3 Proposed State Park...... 33 3.5 Wider Values of Ulu Muda...... 35 3.5.1 Water Supply...... 35 3.5.2 Irrigation...... 36 3.5.3 Summary of Economic Values...... 39 4 Fundamental Aspects of Nature Tourism Development in Ulu Muda...... 41 4.1 Definition of “Nature” and “Ecotourism”...... 41 4.2 Defining the Nature Tourism Destination...... 41 4.2.1 Justification ...... 41 4.2.2 Criteria for Area Selection ...... 42 4.3 Carrying Capacity Concept...... 43 4.3.1 Definition of Carrying Capacity...... 43 4.3.2 Determining Carrying Capacity ...... 44 4.4 Spatial Analysis of Ulu Muda...... 47 4.4.1 Specific Criteria Considered ...... 47 4.4.2 Results of Analysis...... 47 4.5 Recommendations for a State Park...... 48 4.5.1 Proposed Conceptual Management Zones ...... 48 4.6 Institutional Framework for Managing Nature Tourism ...... 51 4.6.1 The Nature Tourism Area ...... 51 4.7 Developing Local Capacity for Nature Tourism ...... 56 4.7.1 Local Community Involvement ...... 56 4.8 Marketing and Promoting Nature Tourism...... 56 5 Conceptual Framework for the Development for Ulu Muda ...... 59

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5.1 Development Concept for “ Inside areas” ...... 61 5.2 Development Concept for Outside Areas ...... 63 5.3 Action Plan Framework for Conservation and Development...... 64 5.3.1 Institutional and Legal Requirements ...... 67 5.3.2 Training and Capacity Building...... 84 5.3.3 Financial Resources and Schedule ...... 86 6 Conclusion and Recommendations ...... 93 Appendix...... 95 References…………………………………………………………………………………… 113

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List of Tables TABLE 1. SELECTED TOURISM INDICATORS (MALAYSIA)...... 13 TABLE 2. ALLOCATIONS AND REVENUE FOR TOURISM...... 14 TABLE 3. ESTIMATES OF NATURE TOURISM AND WILDLIFE-RELATED TOURISM ...... 16 TABLE 4. ESTIMATES OF THE WORLD ECONOMIC IMPACT OF NATURE TOURISM AND WILDLIFE-RELATED TOURISM ...... 16 TABLE 5. SUMMARY OF TOURISM ESTABLISHMENTS AND RELEVANT CHARACTERISTICS ...... 19 TABLE 6. VISITOR NUMBERS TO PEDU AND MUDA LAKE AREAS (2001) ...... 21 TABLE 7. ROOM CAPACITY AND OCCUPANCY RATES BY RESORTS ...... 22 TABLE 8. TOURIST PROJECTIONS FOR PEDU LAKE AREA, MUDA RESORT AND HAT ....24 TABLE 9. BREAKDOWN OF VISITOR EXPENDITURE (RM) AT PEDU AND MUDA AREAS.26 TABLE 10. ESTIMATED TOURIST EXPENDITURE AT PEDU AND MUDA AREAS IN 2001 ..26 TABLE 11. FEATURES WHICH FOREIGN NATURE TOURISTS PARTICULARLY LIKED IN SABAH AND SARAWAK ...... 27 TABLE 12. FEATURES WHICH FOREIGN ECOTOURISTS PARTICULARLY DISLIKED IN SABAH AND SARAWAK ...... 28 TABLE 13. TOP THREE RECOMMENDATIONS BY FOREIGN NATURE TOURISTS FOR IMPROVEMENTS IN SABAH AND SARAWAK...... 28 TABLE 14. COLLECTION OF ROYALTY, CESS AND PREMIUM ...... 31 TABLE 15. GROSS TIMBER REVENUES...... 31 TABLE 16. BREAKDOWN OF REVENUE/COLLECTION DISTRIBUTION FROM TIMBER CONCESSION...... 32 TABLE 17. SELECTED PARK AREAS AND ESTABLISHMENT YEARS ...... 34 TABLE 18. EXPENDITURE AND REVENUE OF WATER TREATMENT - 1999 ...... 36 TABLE 19. ESTIMATION OF OPERATING AND MAINTENANCE COST OF IRRIGATION WATER 3 (RM/M ) ………………………………………………………………………..38 TABLE 20. MADA PADDY PRODUCTION ...... 38 TABLE 21. FACTORS AFFECTING CARRYING CAPACITY ...... 46 TABLE 22. SUMMARY OF MANAGEMENT ZONES ...... 50 TABLE 23. COMPARISONS BETWEEN THE TWO CONTRASTING MALAYSIAN PROTECTED AREA MODELS ...... 54 TABLE 24. TRENDS IN VISITOR NUMBERS TO PARKS AND PROTECTED AREAS IN MALAYSIA...... 57 TABLE 25. SECTORAL MARKETING MATRIX ...... 57

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TABLE 26. PERCENTAGE DISTRIBUTION OF TYPE OF TOURISTS AT PEDU AND MUDA AREAS ...... 58 TABLE 27. INSIDE PARK AREA BY PROPOSED CAPACITY, ATTRACTIONS AND PROPOSED INFRASTRUCTURE REQUIREMENTS ...... 70 TABLE 28. OUTSIDE AND PERIPHERY OF PARK AREA...... 74 TABLE 29. ESTIMATED VISITOR NUMBERS INSIDE PARK AREA ...... 76 TABLE 30. ESTIMATED VISITOR NUMBERS OUTSIDE PARK AREA...... 76 TABLE 31. MARKETING STRATEGIES...... 82 TABLE 32. PROPOSED DEVELOPMENT SCHEDULE, PROPOSED ULU MUDA STATE PARK ...... 87 TABLE 33. CAPITAL COST SCHEDULE, PROPOSED ULU MUDA STATE PARK ...... 88 TABLE 34. OPERATING COST SCHEDULE, PROPOSED ULU MUDA STATE PARK ...... 89 TABLE 35. ANTICIPATED REVENUE STREAMS, PROPOSED ULU MUDA STATE PARK.....90 TABLE 36. FINANCIAL RESULTS (RM), PROPOSED ULU MUDA STATE PARK...... 91 TABLE 37. CASH FLOW STATUS (RM), PROPOSED ULU MUDA STATE PARK ...... 92

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List of Figures FIGURE 1. TOTAL ECONOMIC VALUE OF ULU MUDA FORESTS ...... 11 FIGURE 2. VISITOR NUMBERS AND TREND TO KEDAH, 1990–2000 (MAINLAND AND )...... 14 FIGURE 3. SOCIO-ECONOMIC BENEFITS OF ECOTOURISM ...... 15 FIGURE 4. ROOM OCCUPANCY IN DESA UTARA, 1996–2000 ...... 22 FIGURE 5. COMPOSITION OF VISITORS BY GROUPS (HAT, FEB – MAY 2002) ...... 23 FIGURE 6. FRAMEWORK FOR MEASURING ECONOMIC BENEFITS OF TOURISM ...... 25 FIGURE 7. ESTIMATION OF COMPONENTS OF ECONOMIC VALUES OF ULU MUDA FOREST AREAS (REFLECTED AS ANNUAL SECONDARY VALUES) ...... 40 FIGURE 8. A POSSIBLE INSTITUTIONAL STRUCTURE FOR THE MANAGEMENT OF A STATE PARK ...... 55 FIGURE 9. VISUALISATION OF THE “ INSIDE-OUTSIDE PARK” CONCEPT...... 60 FIGURE 10. CONCEPTUAL TOURISM ACTION PLAN FRAMEWORK...... 66

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List of Maps (Maps are provided at the end of the report) MAP 1. CURRENT EXTENT OF FORESTS IN KEDAH MAP 2. ISOYET MAP FOR EASTERN KEDAH MAP 3. PRESENT TOURISM SITES IN THE ULU MUDA REGION MAP 4. MAJOR TOURISM SITES IN NORTHERN PENINSULAR MALAYSIA MAP 5. PROPOSED DEVELOPMENTS IN THE GREATER ULU MUDA AREA MAP 6. EXTENT OF FOREST COVER IN THE ULU MUDA REGION MAP 7. TOPOGRAPHY AND OTHER IMPORTANT LANDMARKS MAP 8. PROPOSED KEDAH STATE PARK MAP 9. PROPOSED CONCEPTUAL MANAGEMENT ZONES MAP 10. PROPOSED NATURE TOURISM CONCEPT FOR ULU MUDA MAP 11. CONCEPTUAL PLAN FOR “ INSIDE PARK” NATURE TOURISM DEVELOPMENT MAP 12. CONCEPTUAL PLAN FOR “ OUTSIDE PARK” NATURE TOURISM DEVELOPMENT MAP 13. PROPOSED ULU MUDA STATE PARK MAP 14. PROPOSED MANAGEMENT ZONES OF THE ULU MUDA STATE PARK

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List of Appendix APPENDIX 1. MAMMALS DOCUMENTED IN THE GREATER ULU MUDA… … … … … … ....95 APPENDIX 2. VOLUME AND ROYALTY FEES BY TYPE OF WOOD … … … … … … … … .....99 APPENDIX3. EXCERPT FROM ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT OF LOGGING OPERATIONS IN THE VANIMO TIMBER AREA, SANDAUN PROVINCE, PAPUA NEW GUINEA… … … … … … … … … … … … … … … … … … … … … … … … … … ..100 APPENDIX4. PROPORTION OF WATER EXTRACTED FROM MUDA AND RELEVANT RIVERS OF THE TOTAL KEDAH WATER PRODUCTION … … … … … … … … … … … … … ..… 102 APPENDIX 5. WATER REVENUE BY DOMESTIC AND COMMERCIAL VOLUMES, 1999 … .103 APPENDIX 6. ECONOMIC VALUES OF ULU MUDA FOREST AREAS … … … … … … … … .103 APPENDIX 7. PRELIMINARY ANALYSIS OF THE PROPOSED STATE PARK AND EXISTING FOREST COMPARTMENTS LIKELY TO BE AFFECTED … … … … … … … … … … … ....104 APPENDIX 8. BREAKDOWN OF ESTIMATED CAPITAL COSTS … … … … … … … … … … .109 APPENDIX 9. BREAKDOWN OF ESTIMATED OPERATING COSTS … … … … … … … … ....111 APPENDIX 10. RATIO OF LOCAL AND FOREIGN VISITORS, 2001… … … … … … … … ....112 APPENDIX 11. BREAKDOWN OF ESTIMATED REVENUE STREAMS … … … … … … … .....112

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Acronyms DID Department of Drainage and Irrigation DOF Department of Fisheries EEPSEA Economy and Environment Programme for South East Asia FSC Forest Stewardship Council HAT High Adventure Tour JICA Japan International Cooperation Agency JKR Jabatan Kerja Raya JPBD Jabatan Perancangan Bandar dan Desa JNPC Johor National Parks Corporation IMTGT Indonesia-Malaysia-Thailand Growth Triangle KHTP Kulim High Tech Park KLSE Kuala Lumpur Stock Exchange KOPAM Koperasi Pembangunan Ampang Muda LADA Langkawi Development Authority MADA Muda Agricultural Development Authority MOCAT Ministry of Culture, Arts and Tourism PBA Perbadanan Bekalan Air PTKM Pelan Tindakan Kedah Maju SERI Socio Economic Research Institute UPEN Unit Perancang Ekonomi Negeri UNEP United Nations Environment Programme WTO World Tourism Organisation WWF World Wide Fund for Nature

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Acknowledgements The study team received invaluable cooperation and information from many government agencies and individuals in the process of conducting this study. They are, however, not responsible for any errors and omissions that may still remain in the final report. We acknowledge and thank the following individuals for their assistance and contribution to the study:

Kedah State Agencies Dato’ Ku Nahar bin Ku Ibrahim, UPEN Kedah Tuan Haji Puat bin Mohd Ali, UPEN Kedah En. Musthafa Mohamad, UPEN Kedah En. Rosli Abu Bakar, UPEN Kedah Tuan Haji Wahab b. Bakar, District Office of Sik Tuan Haji Abdul Rahman Ahmad, District Office of Sik En. Rosli bin Mansor, Sik Municipal Council En. Abdul Mukhti bin Abdullah, District Office of Baling En. Abdul Aziz bin Hassan, District Office of Baling En. Tuan Haji Halim bin Hassan, District Office of Padang Terap En. Che Hashim Hassan, Department of Forestry, Kedah En. Norhaidi bin Yunus, Department of Forestry, Kedah Ir. Foong Kam Chong, Muda Agriculture Development Authority (MADA) Ir. Loh Kim Mon, Muda Agriculture Development Authority (MADA) Ir. Geh Yean Lian, Muda Agriculture Development Authority (MADA) Tn. Hj. Azmi Johor, Department of Wildlife and National Parks (PERHILITAN) En. Shamsuri Ahmad, Department of Wildlife and National Parks (PERHILITAN) Ir. Tan Lai Seng, Public Works Department (JKR), Kedah Ir. Tajuddin Harun, Public Works Department (JKR), Kedah Tn. Hj. Mohd. Azam bin Mohd. Abid, Department of Town and Country Planning (JPBD), Kedah Pn. Harizah bt. Hassan, Department of Town and Country Planning (JPBD), Kedah Pn. Yip Siew Kuan, Department of Town and Country Planning (JPBD), Project Office Tn. Hj. Gulamsarwar b. Jan Mohamad, Department of Fisheries (DOF), Kedah Ir. Phuah Kim Heng, Department of Irrigation and Drainage (DID)

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Ir. Mohd. Nasir Merican, Department of Irrigation and Drainage (DID) Lt. Kol. Mehat bin Che Man, 6th Brigade, Infantry Malaysia, En. Khairul Nizam, Langkawi Development Authority (LADA) Tn. Hj. Abdul Rahman Ibrahim, Kedah State Development Corporation

Federal Agencies En. Md. Salleh Bin Osman, Ministry of Culture, Arts and Tourism (MOCAT) En. Shaharuddin bin Mohamad Ismail, Department of Forestry, Peninsular Malaysia Pn. Siow Suan Neo, Department of Town and Country Planning (JPBD) Ir. Low Koon Sing, Department of Irrigation and Drainage (DID)

Others Datuk Lamri Ali, Sabah Parks En. Paul Basintal, Sabah Parks En. Hasnizam Hamzah, Johor National Park Corportation (JNPC) En. Abdul Jalil bin Abdul Majid, Public Works Department, Perlis (JKR) En. Razak bin Che Teh, Koperasi Pembangunan Ampang Muda (KOPAM) Capt. (rtd) Shamsur Annuar B. Hj. Saad, High Adventure Travel (HAT) En. Roslan Abd. Karim, Desa Utara Pedu Lake Resort En. Nor Alam Shah Mohd. Yussof Shah, Mutiara Pedu Lake Resort En. Jaafar Ali, Muda Resort En. Salahudin Yaacob, Society General Surveillance (SGS) Malaysia Dr. Geoffrey Davison, WWF Malaysia Mr. David Tan, WWF Malaysia/Likas Wetlands Ms. Tan Hui Shim, WWF Malaysia/Likas Wetlands En. Sanath Kumaran, WWF Malaysia En. Surin Suksuwan, Perlis State Park Project Ms. Lim Pao Li, PE Research Sdn. Bhd.

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THE STUDY TEAM Dr. Reza Azmi, Project Leader, WWF Malaysia Mr. Hymeir Kamarudin, WWF Malaysia Mr. Jeet Sukumaran, WWF Malaysia Mr. Chang Yii Tan, PE Research Sdn. Bhd. Ms. Yeo Bee Hong, PE Research Sdn. Bhd. Mr. Lee Kian Foh, PE Research Sdn. Bhd. Mr. Nyon Yong Chik, GIS Consultant

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Executive Summary

1.0 Background

1.1 Kedah State Development Policies The ‘Pelan Tindakan Kedah Maju 2010’ contains guiding principals and concepts for the development of the State of Kedah Darul Aman from 2001 to 2010. The state government has adopted a broad meaning of ‘development’, defined by the need to balance GDP per capita growth with considerations of equity, promotion of core values and quality of life. The Environmental Index stands as one of five indicators measuring the success of development goals.

1.2 Location of the Ulu Muda Forests and the Study Area The Ulu Muda forests are located in the eastern part of Kedah and are part of a forest area that stretches well into Thai territory. The forest stretches south and connects with the forest areas in Weng, within the administrative districts of Baling, and joins the Belum-Temenggor forests. The study area includes the Ulu Muda forests as well as the following forest reserves: Bukit Saiong, Chebar Besar, Padang Terap, Pedu, Ulu Muda and Bukit Keramat. These areas are reflected as the ‘Greater Ulu Muda’ Forests as these contiguous areas form a fundamental self-contained physiographic, hydrological and ecological units required to facilitate management of the area.

1.3 Uniqueness of Ulu Muda Forests The Ulu Muda area is one of the most interesting natural areas in Malaysia for several reasons: x The flora is characterized by rich Northern Thai-Burmese elements. x High potential for extending the trans-boundary protected area network. x Old-growth primary tropical rainforest within the context of tourism is a major attraction point—as an example, Taman Negara is often promoted as being the oldest rainforest in the world with trees around 130 million years old. x A high concentration of saltlicks and hot springs that are important for many large mammals. x Abundant and diverse wildlife species of Ulu Muda as percentage of the total in Malaysia: 55% mammals, six out of 10 primates, 78% squirrel species, 53% bat species, 175 bird species, seven out of 10 hornbill species, 42 out of 54 reptile species, rich species diversity of river and lake fishes, and wild roaming elephants.

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x Exists as a critical water-catchment forest in an area prone to seasonal droughts and water stress. This water catchment protects the main sources of water that supplies agricultural, domestic and industrial water use in the northern region of Peninsular Malaysia (Kedah, Perlis and Penang). 1.4 Potential for Tourism Development Some of the key facets that will support the development of tourism in Ulu Muda include: x Transboundary park and attraction: the Northern Triangle regional cooperation. x Penang-Kedah-Perlis: the northern Peninsular states sub-regional cooperation. x Langkawi as a tourist destination: within the context of Kedah tourism development. 1.5 Existing Facilities Existing tourism facilities and activities in the region include: x Two resorts operating on the banks of Pedu Lake (Mutiara Pedu and Desa Utara Pedu Lake Resort). Anjung Pedu Resort has been completed but is not operational at the time of writing. x Muda resort in Gubir. x Koperasi Pembangunan Ampang Muda (KOPAM) jetty in Gubir. x High Adventure Travel (HAT) nature tour packages.

2.0 Spatial and Conceptual Guideline as a Nature Tourism Destination Study

2.1 Objectives of Study The objectives of the study are to: x Develop a framework for a management plan for the Ulu Muda Greater Forests; x To explore the potential of the Ulu Muda Forests as a nature tourism destination; x To develop a zoning concept plan for the Ulu Muda forest area through consultation with the relevant Government agencies1.

1 A multi stakeholder workshop was initially planned as part of the study. Due to the change of course of the project, the report built upon the dialogues initiated with State Government agencies and relevant stakeholders directly.

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2.2 Study Methodology The study adopted a consultative approach to capture the views and interests of various government agencies and stakeholders in relation to the Ulu Muda Forests. Dialogues were initiated with relevant government agencies at the State and Federal levels, community group (e.g. KOPAM) and private sectors. Part of the study also involved an extensive literature review related to the study area. Data and information from the dialogues and literature review are translated and assessed through a multidisciplinary approach of economic and landscape-level GIS analysis.

2.3 Outputs of Study The outputs of the study are to: x Highlight spatial projection of proposed development plans for the region; x Develop conceptual zones for sustainable development; x Identify core preservation areas that will boost the State’ s tourism potential; x Explore the use of formal legislation for strengthening the conceptual plans; and x Develop an action plan.

2.4 Defining Nature Tourism Within the context of this study, nature tourism is defined as: “ All tourism directly dependent on the use of natural resources in a relatively undeveloped state, including scenery, topography, water features, vegetation and wildlife” 2 Hence, a nature tourism destination is represented as: “ A specific area that is legally gazetted as a natural nature tourism area with the full range of institutional arrangements implemented as necessary to support and manage it.”

3.0 Significance of Ulu Muda Forests 3.1 In addition to the rich biodiversity of the Ulu Muda forests, the forests play an important ecological and economic role in the northern region:

2 MOCAT, 1996.

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1) The study found that existing tourism receipts is estimated at RM13 million per annum. 2) Water catchment area for irrigation: x The Muda scheme supports paddy production in an area that is regarded as the rice bowl of Malaysia. x The area under this scheme is responsible for 40% of total paddy production in the country and directly involves 63,000 families in terms of agriculture livelihoods. x The contribution of Ulu Muda forests in terms of tertiary irrigation values is estimated at approximately RM600 million annually. 3) Water catchment for water supply: x The Ulu Muda forests provide upstream protection of major rivers that supply 80% of drinking water for Kedah and Penang and 60% for Perlis3. x Critical industrial areas such as the Kulim High-Tech Park and other similar industrial parks in Penang (e.g. Bayan Lepas and Seberang Perai) are located downstream of the Ulu Muda forests. x The study estimated that gross water revenue relevant to the Ulu Muda Forests is RM80 million for Kedah, RM100 million for Penang and RM6.2 million for Perlis annually based on 1999 figures. Increasing water demand projections are likely to increase revenue from water. The Perbadanan Bekalan Air Pulau Pinang (PBA Holdings Berhad) gained a net profit of RM41 million in 20014.

4.0 Proposed Development Plans and Implications for Nature Tourism Developments

4.1 Major Developments within the Greater Ulu Muda Area One of the major impacts on this region would be from the establishment of a new border crossing at Durian Burong and the extension of a highway from here southwards (Trans-Eastern Hinterland Highway). The highway links Durian Burong and Kupang in the . The highway will undoubtedly change the patterns of economy in this region, and may play an important role in catalyzing tourism initiatives for Ulu Muda. However, the potential impacts as a physical barrier for wildlife migration needs to be assessed and the study proposes mitigation measures to be developed where there are significant forests on either side of the road (e.g. -

3 Perlis figure reflects proportion prior to May, 2002 (JKR Perlis, pers. comm.). 4 Kuala Lumpur Stock Exchange, http://www.klse.com.my

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Gulau). The study also proposes that it would be advantageous to maintain forest stretches along the old road between Kuala Nerang to Gubir as “ forests roads” as this adds to the charm of the area for visiting tourists.

4.2 Helicopter-logging of the Ulu Muda forests The proposed heli-logging project is estimated to cover a total area of 122, 798 ha which is to be logged over a period of 10 years through a joint venture company between WTK Holdings Berhad and Yayasan Islam Negeri Kedah5. Whilst this report does not address fully the potential impacts of this proposal, it is clear that the proposals put forward in this study and the logging plans are not compatible. Firstly, the area to be logged includes the core conservation area identified by this study. Secondly, any logging plans will have a negative impact on tourism developments that aim to attract the international nature tourism markets. The study proposes that the following heli-logging implications on existing use need to be considered: x Potential impacts on water catchment areas. x Potential impacts on nature tourism development and wildlife roaming areas. x The annual allowable cut for Kedah was 2,312 ha in 2000 and 2,163 ha in 1999 as set by the National Forestry Council. Within the heli- logging project, an approximate 12,000 ha will be logged annually. The large area of the annual allowable cut needs to be re-considered.

5.0 Recommendations for a State Park 5.1 Over the years, various initiatives have highlighted the significance of the Ulu Muda forests and recommended for its adoption as a State Park or National Park. The most recent was a paper by UPEN Kedah outlining a concept for a State “ Eco” Park6. Other highlights include: x National Ecotourism Plan7 x National Conservation Strategy8 x Kedah Conservation Strategy9

5 WTK Holdings Berhad, 2002. 6 Based on the NEP (MOCAT, 1996). 7 MOCAT, 1996. 8 EPU, 1993. 9 WWF Malaysia, 1984.

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x National Spatial Plan (identified as an environmentally sensitive area)10

5.2 From the detailed analysis of this study, core conservation areas have been identified which will greatly benefit the protection status of the water catchment and also boost potential nature tourism developments in the region. The area proposed for this State Park is approximately 53,903 ha.

6.0 Proposed Nature Tourism Concept for Ulu Muda The inside-outside park concept is proposed to incorporate the sensitivity of the environment and balancing the needs for development of the area. The concept incorporates the following considerations: x Low impact activities within the park area; x Higher impact, mass tourism outside the park area (existing resorts); x Need for the development of appropriate facilities, infrastructure and attractions to meet tourism demand based on the carrying capacity of the area. The inside park areas include the following: Kuala Tera, Sira Hangat, Kuala Labua, Kaji Cuaca Station, Kuala Lasor, Kuala Kalir and Bukit Saiong while the outside park areas encompass: Pedu, Gubir, KOPAM jetty area and Kg. Gulau. A carrying capacity estimation was carried out based upon the infrastructure capacity to maintain the number of visitors. However, there is a need for future studies to verify and assess these capacities on the ground.

7.0 Action Plan Framework for Conservation and Development The action plan framework reflects the ultimate goal towards: a) Achieving a managed state park; b) Promoting socio-economic improvements and spill-overs around population centers; c) Ensuring the integration of environmental considerations and capacity for sustained nature tourism benefits. Key components of the action plan framework to achieve the goals are: x Planning and Institutional Needs x Investment and Infrastructure

10 JPBD, 2002.

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x Product Development x Marketing and Promotions x Training and Capacity Building x Management and Regulation

8.0 Proposed Management Zones Due to the sensitivity of development in the area, three key management zones have been identified: x Restricted areas: Immediate areas close to the dams of Ahning, Pedu, Muda and surrounding Saiong inlet and outlet tunnel. x Nature Reserves: Encompass areas that are environmentally sensitive and important for wildlife conservation. Areas identified include immediate areas surrounding the river courses and lake parameter of Sg. Muda and Sg. Teliang. The Sg. Teliang area has been identified under the Kedah Fisheries Act as a no-fishing zone for fish conservation. At present, the Department of Fisheries issues licenses for fishing in the Muda Lake among the local communities. It is recommended that enforcement and monitoring measures to be stepped up in order to reduce the threat of over-fishing. x Tourism Centres: Points of access for accommodating larger number of tourists such as at Kuala Nerang, Pedu resort-area, Gubir and Gulau.

9.0 Financial Implications To realise the benefits of the proposed Ulu Muda State Park, the key development strategy include: x Infrastructure investment of RM7.4 million to build up accommodation, roads, trails and support facilities; x Ensuring sufficient operating and maintenance costs of RM0.5-0.6 million annually; x Tourist demand, if it rises as expected (12% per annum)11, will ensure financial surplus by the third year of implementation.

11 PTKM 2010

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10.0 Conclusions and Recommendations 10.1 Enhancing the Values of Ulu Muda: Nature tourism development will enhance the use values of Ulu Muda without upsetting other values; existing benefit is estimated at RM13 million and could potentially increase 10 times within a period of 10 years. Infrastructure investments are required to increase its carrying capacity; estimated at 300 persons per day inside the park and 1,230 persons per day outside the park. 10.2 Consultation Process: It is important to consult and involve local communities, NGOs, local guides and staff, and Government agencies for their support and to develop a sense of ownership. It is also vital to involve the private sector in the development of Ulu Muda nature tourism plans. 10.3 Logging Activities: Logging of the catchment conflicts with the concept of nature tourism development proposed here and it is not logical to pursue both options. However, if logging were to take place anyway, it will be critical to limit logging to the southern part of Ulu Muda forests, i.e., only half the proposed area (for Phase 1) for logging (Coupes 1-3 only). Strict guidelines and monitoring efforts need to be implemented to minimise soil erosion, sedimentation to rivers and disturbance to wildlife. The study proposes that the best option would be to ensure that the consent for logging activities would only be given if the venture company is able to secure internationally recognized forest certification (e.g., Forest Stewardship Council’ s certification). This will ensure that the logging activities adhere to strict management guidelines. Furthermore, for the venture company, access to high-premium markets for the logs are almost guaranteed upon being awarded FSC certification. This has been the case with PITC in Perak whose operations had recently been awarded FSC certification by independent assessors. Coupes 4, 5 and 6 (as delineated in the detailed EIA) should definitely not be allowed because of conflicts with nature tourism and biodiversity conservation. Logging could also induce major costs and losses from existing water values. 10.4 Zoning: Core conservation zone identified include Sg. Teliang, Kalir and northern side of Ulu Muda as well as areas on Sg. Muda up to Kuala Lasor as these are most suitable for nature tourism and animal watching as major activities including other lakeside activities. Proposed tourism development areas are: around Charok Tera and lakeside areas around KOPAM. Proposed gateways include: KOPAM area, Gubir ‘dump-site’ and the outside areas of Lasor.

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10.5 Proposed Strategies: The study recommends that the State Forestry Department model be adopted, as it is the least cost option. Also this option does not require the setting up of new institutions, and hence, implementation can be made faster. It is proposed that the Government needs to allocate RM10 million for set-up costs for five years (75% in capital expenditure) before returns are expected. Explore co-financing model with the Economic Planning Unit, Government- to-Government funding (e.g. JICA/DANCED) and multi-lateral aid agencies (e.g. GEF) to obtain required funding. Explore inter-state water-based charges or other financing options to increase State revenue.

11. The Next Steps The proposed next steps are to: x Gazette Ulu Muda as a State Park: The study have outlined the significance of Ulu Muda in terms of its natural resources and contribution to the local, national and regional economy. In order to enhance these values and ensure sustainability of these resources, it is crucial that the first step would be to gazette Ulu Muda as a State Park. x Determine the management structure of the proposed park: While the study has recommended the adoption of a management structure under the State Forestry Department model, the Kedah Government needs to determine the management structure for the establishment of the park. x Allocate sufficient financial resources: Sufficient funds are required to develop the infrastructure within and outside the park. International agencies are a potential source for funds, especially for those projects that can demonstrate support for international environmental activities. The study also proposes that privatisation options be explored as support for partial financing. Within this option, investors will sink their capital in exchange for shares or options to develop tourism infrastructure that is compatible to the sensitivity of the park. Lobbying stakeholder support will also be another key element within this project. Involving the local NGOs to assist in preparing educational and marketing channels will be very important as well. Based on the estimation of the study, it is proposed that Government would need to allocate a small sum of RM10 million for this proposed project.

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1 Introduction This study was commissioned by UPEN Kedah (Unit Perancang Ekonomi Negeri Kedah ) with funds channeled by Ministry Of Culture Arts and Tourism Malaysia as part of an effort to develop hinterland tourism tourism in Kedah, specifically in the Ulu Muda and Pedu areas. The “ Greater Ulu Muda area of Kedah” (which includes, among others, Tasik Muda and Tasik Pedu) has many types of economic-environmental values, e.g., its rich biodiversity and the water that is supplied to and is critical to the economy of Kedah, the northern region and livelihood of its people. In addition to these values, two other resources are as yet not tapped: the standing timber and the tourism assets of the catchment areas of the Muda, Pedu and Ahning dams. Not all development activities can be sustainable nor would they support one another in a consistent manner. Some activities will conflict with others and it is important to make the decisions that yield optimal benefit for the state and its people. The consultants would advocate that nature tourism is the way for the Kedah State Government to derive additional revenue from the forests of the Greater Ulu Muda area while ensuring the continuity of other sustainable uses. However, careful and extensive planning is required to establish and maintain nature tourism operations in the Ulu Muda area, and furthermore ensure that tourism does not conflict or undermine other activities in the area (current or future) or vice versa. To achieve this, an integrated framework for the management and development of the Ulu Muda area is required. This framework needs to be grounded in a common vision for the management of the Ulu Muda area, and hence needs to be developed consultatively with the various government agencies as well as private bodies involved or having an interest in the area. Associated with such a framework are several important issues that are fundamental to the management of an area that supports nature tourism, such as the establishment of a nature tourism destination, a zoning concept plan for the whole area, etc.

1.1 Scope of Study This study presents an integrated framework for the management and development of the Greater Ulu Muda area. It is essential to emphasize that the term “ Greater Ulu Muda” encompasses an area much larger than the Ulu Muda Forest Reserve per se. For the successful management of a critical landscape such as Ulu Muda, the basic spatial unit to be defined needs to specifically include self-contained and complete physiographical, hydrological and ecological features.

1.2 Objectives of Study The objectives of the study are to: x Develop a framework for a management plan for the Greater Ulu Muda forests;

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x Explore the potential of the Ulu Muda forests as a nature tourism destination; x Develop a zoning concept plan for the Ulu Muda forest area through consultation with the relevant Government agencies12.

1.3 Study Methodology Three basic approaches were used to ensure a comprehensive and integrated study: (1) Literature and Published Works Much documentation exists regarding the Greater Ulu Muda area. These were to provide the essential background information required to understand the landscape. In particular, the rich biodiversity of the forests of the area have been documented in earlier studies. Though generally uncoordinated (i.e. carried out as independent “ snapshots” , with different places rapidly assessed at different times for different taxa and different purposes), these studies nonetheless provided valuable insights into the potential of Ulu Muda for nature tourism. (2) Interviews A participatory and consultative approach was used to ensure that all views and interests were represented in this study. Various government agencies and personnel with either direct or indirect relevance to the management of the Greater Ulu Muda area, from the District to State to Federal levels were contacted and interviewed. In addition, the views of communities and private entrepreneurs working in the area were also sought. (3) Landscape-level GIS Analysis State-of-the-art Geographical Information Systems (GIS) technology was used to analyse the landscape use and patterns in detail. Using GIS operations, it is possible to analyse the most efficient means to conserve the natural and environmental assets that are important for conservation and tourism development, taking into account geographical, environmental and other constraints. Based on this, proposed zoning concepts and the boundaries of nature tourism destinations were identified. (4) Economic Analysis Economic valuation of the natural and environmental assets will provide an appreciation of the values of the study area. Existing assets were subjected to established methods of economic valuation. The analysis also relied on existing studies and cost estimates. Assumptions used in the analysis are also highlighted and discussed in the relevant section. The study also conducted interviews to collect data of actual prices from tour operators, resorts and transportation companies.

12 A multi stakeholder workshop was initially planned as part of the study. Due to the change of course of the project, the report built upon the dialogues initiated with State Government agencies and relevant stakeholders directly.

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1.4 Outputs of Study The outputs of the study are to: x Highlight spatial projection of proposed development plans for the region; x Develop conceptual zones for sustainable development; x Identify core preservation areas that will boost the State’ s tourism potential; x Explore the use of formal legislation for strengthening the conceptual plans; x Develop an action plan to provide guidance for nature tourism development.

1.5 Defining the Area under Review As mentioned above, the area under review was taken to be the Greater Ulu Muda area. This was based on the fact that the boundaries of the area so defined were the minimum needed to encompass the fundamental self-contained physiographic, hydrological and ecological units required to facilitate the management of the area. (See Map 1, Current Extent of Forests in Kedah provided at the end of the report).

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2 Natural Resources of Ulu Muda

2.1 Introduction

2.1.1 Climate Kedah experiences two seasonal peaks of rainfall: a larger one around October, and the other around April-May. The intervening periods are generally drier, with a more extreme dry season recorded from December to March. The ecology of Kedah is strongly influenced by this distinct seasonality in rainfall. Average rainfall for the state (1950-1965) was 2,420 mm (see also Map 2, Isoyet Map for Eastern Kedah). There is a large variation in rainfall within the state, with a low of 1,958 mm (Kuala Nerang) and a high of 4,989 mm (Gunung Jerai).

2.2 Biodiversity

2.2.1 The Forests of the Greater Ulu Muda Area The Ulu Muda area represents a very unique area in the Malaysian context. Due to its northern locality, its flora and fauna incorporate a large degree of the so-called “ northern element” , i.e., biological components of Continental or Mainland Asia, as well as the Sundaland elements found further to the south. This means that the overall biota of the Ulu Muda forests is distinct from that of other parts of Malaysia, such as Belum, Taman Negara or Endau-Rompin. This “ northern element” is particularly evident in the floristics of the Ulu Muda forests. Unlike many of the other forests in Malaysia, the Ulu Muda forests include a large Thai-Burmese component. While some of the forests in the Greater Ulu Muda area have been logged, enough primary forest remains to be able to consider Ulu Muda a “ High Conservation Value Forest” (HCVF) area (see Map 6, Extent of Forest Cover in the Ulu Muda Region13.). The global importance of such old-growth primary tropical rainforest cannot be underestimated; this importance, moreover, is rapidly due to such areas becoming scarce. Apart from providing essential habitat for some of the region’ s more spectacular, significant or endangered wildlife, the forest itself is important in other ways: x Water catchment—supplying over 30% of the water to the agricultural sector of Kedah; x Climate regulation—forests play a critical role in the hydrological cycle;

13 Note: In this map, the forests of Ulu Muda are shown in remote sensing image (1999). Some of the best forest cover left in this region are in dark green. Most of the forests on the Thai-side of the border are disturbed forests, with the exception of the area to the north of the map

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x Pest control— many potential agricultural pests are regulated or kept in check by natural predators in the primary rainforest.

2.2.2 Special Habitats

2.2.2.1 Saltlicks Along Sg. Muda and some of its tributaries lie a number of hot springs and saltlicks. These represent critical resources for many species of animals, such as the elephant, tapir, deer, etc. The presence of these saltlicks, and the continuity of Ulu Muda Forest Reserve with other forests (in Thailand as well as Malaysia) are partially the reason for the apparent abundance of wildlife observable in Ulu Muda. For the saltlicks to continue to function, strong measures must be taken to protect them and suitably large buffer zones around them, as well as corridors for animals to approach them.

2.2.2.2 The Altitudinal Ecotones Altitudinal ecotones are the transition zones between a major habitat type and another along an elevational cline. These altitudinal ecotones are prime biodiversity hotspots. The most critical and rich altitudinal ecotones in Kedah appear to at the 150 m and the 1,000 m mark, as identified by the Kedah Conservation Strategy14. The former represents the hill-foot boundary, i.e., the basal junction of hill slopes with level land. The latter represents the transition from hill to montane forest. Any continuous natural habitat extending across these altitudes should be considered as hotspots, and special consideration should be given to the areas’ maintenance and management.

2.2.3 Wildlife

2.2.3.1 Mammals A total of 109 species of mammals (including 17 big mammals) in 31 families and 11 orders have been recorded from Ulu Muda (Appendix 1). This represents over 54.8% of the mammals of Peninsular Malaysia, including many of the more significant species (endangered, endemic, or charismatic).

Primates The Ulu Muda area is known to have six of the 10 species of non-human primates in Peninsular Malaysia: the White-handed Gibbon (Hylobates lar), the Agile Gibbon (Hylobates agilis), the Long-tailed Macaque (Macaca fascicularis), the Pig-tailed

14 WWF Malaysia, 1984.

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Macaque (Macaca nemestrina), the Banded Leaf-monkey (Presbytis femoralis), the Dusky Leaf-monkey (Presbytis obscura) and the Slow Loris (Nycticebus coucang). The presence of both gibbon species in the Greater Ulu Muda area is particularly notable. Sg. Muda marks the border between the ranges of the White-handed Gibbon and the Agile Gibbon. This area therefore represents a superlative “ natural living laboratory” , where these important primate species can be studied and conserved more effectively than many other places. Moreover, the daily morning choruses of these gibbons, rising over the forest canopy and projecting over two miles, means that it is relatively easy and safe for visitors to encounter these animals from a distance. Thus, from their very first day in Ulu Muda, tourists will experience some of the more exotic of Malaysian wildlife through the gibbon calls. The other primate species also serve to enhance the tourist experience. Night-spotting along the main roads provide for very rich and rewarding wildlife tourism.

Large Mammals Various factors make Ulu Muda a very suitable habitat for large mammals— the large stands of intact forest, the proximity to other forest areas, etc. Moreover, the presence of saltlicks along Sg. Muda draws large mammals in from the surrounding area. Thus, it is hardly surprising that most of the large mammals of Peninsular Malaysia can be found in the Ulu Muda area. Elephants, for example, are common enough to be encountered in virtually every survey of the area. Similarly with a number of other large mammals— tigers, sun bear, sambar deer, tapir, etc. Past studies have estimated that there are not more than 150 elephants in the northern forest areas. The potential of these large mammals in ecotourism cannot be underestimated. In fact, it would be not be an understatement to say that in the future, large mammals, such as the elephant, will form the primary attraction for nature tourists from around the world. However, it is important to note that there is a direct relationship between land area under natural (forested) cover and the number of large mammals that are supported. For this reason, management of the Greater Ulu Muda area is fundamental and essential to the success of nature tourism in Kedah. A basic decision needs to be made— how many elephants need to be supported by the Kedah State Park? This will translate directly to the minimum land area needed for the State Park. It must be further understood that disturbances and disruptions in the Greater Ulu Muda area may have significant impact upon wildlife and the nature tourism experience based on wildlife watching within the Ulu Muda park area. For example, if forested corridors facilitating movement of big animals in and out of the area (from places such as Belum or Thailand) are disrupted, the abundance and consequent frequency of encountering such animals in Ulu Muda will be severely diminished.

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Other Mammals Ulu Muda represents one of the richer sites in the Peninsula in terms of small mammal diversity. For example, 78.6% of the diurnal squirrel species of Peninsular Malaysia have been documented here; in fact, more species of squirrels have been recorded here than in the Krau Wildlife Reserve. Ulu Muda is also known to have 53% of all the bat species of Peninsular Malaysia. The numerous other mammals encountered at Ulu Muda not only play an important role in maintaining ecosystem health and diversity, but also serve to enrich the tourism experience. For example, night-spotting along the main roads allows one to encounter a wide variety of secretive mammals, such as civets, martens, etc.

2.2.3.2 Birds Over 174 species of birds have been recorded from the Ulu Muda area thus far. This includes seven out of the 10 species of Hornbills found in the Peninsula, as well as other significant birds, such as the Great Argus Pheasant, ospreys, fish-eagles, etc. This high diversity is also coupled with high abundance and frequency-of-encounter: A single five-day survey recorded 26% of the resident and regularly migrant birds of mainland Peninsular Malaysia. All these point toward Ulu Muda as having the potential to become a prime attraction as a destination for birding tourism. Currently, it is quickly poised to become a favorite among local birders (e.g. the Malayan Nature Society Birding Group). With careful and proper tourism promotion of the area, it can become an international birding tourism destination. As exemplified by the only known observation of breeding Hooded Pitta (Pitta sordida Muelleri) in the Peninsula, Ulu Muda offers not only a rich diversity and abundance in birds, but also the opportunity for seeing unique birds not found elsewhere.

2.2.3.3 Reptiles and Amphibians The herpetofaunal diversity of Ulu Muda is only starting to be explored. Nonetheless, preliminary results have been nothing short of superlative. Over 54 species of reptiles have been identified in surveys so far; in comparison, Endau-Rompin has 26 species recorded. Over 42 species of amphibians have been identified, and at least two new (yet to be described) species have been found; in comparison, Belum and Temengor combined have 33 species; and Endau-Rompin, 27. Moreover, many of the species found here are unique to Malaysia, as this represents the southern limit for many continental species. All indications are that future herpetological investigations of Ulu Muda will yield many new discoveries. The importance of this cannot be underestimated. In this day and age of modern biotechnology and pharmaceuticals, we are increasingly looking toward our natural heritage to provide the raw sources for medical and pharmaceutical innovations. Herpetofaunal sources are a particularly promising option. Amphibians secrete a wide variety of chemicals in their skin, and they are just beginning to be investigated.

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Recently, a painkiller 200 times stronger than morphine, but without its negative side- effects (such as addiction) was derived from the skin of a South American frog. The venom of the Malayan Pit Viper (Caloselasma rhodostoma), found only in northern Peninsular Malaysia, has proved incredibly beneficial in a variety of contexts. Some of the components in the venom have an anti-clotting effect, allowing better blood flow and preventing clots in stroke victims. At the 13th Annual Conference on Clinical Hematology and Oncology, Canadian researchers reported that an anticoagulant compound derived from the Malayan Pit Viper appears to offer a useful therapeutic alternative to heparin in certain high-risk patients. In addition, a substance called ANCROD, also derived from the venom of the Malayan Pit Viper, allows stroke victims to recover their mental and physical abilities. These discoveries are only the tip of the iceberg. As we come to understand our herpetofauna better, the many unique species found in the hinterlands of Kedah will undoubtedly yield a range of useful and beneficial innovations.

2.2.3.4 Fishes The fact that there is a large lake as well as many primary rainforest streams and rivers in the area means that there is great freshwater habitat diversity. Ulu Muda has two distinct assemblages of freshwater fish, with 20 species having been identified at the lake and 13 species recorded in a single survey of the rivers, as listed below: River fish: keli gunung, keli batu, ikan putih, keli bukit, tengas, ikan laga, haruan bukit, susuh batu, baung pucuk pisang, ikan pasir, ikan gobi and belut paya. Lake fish: tengas, haruan, keli, chemperas, sebarau, kawan, sia, baung, belida/selat, kalui, terboi, rong, kepor, kerai, lampam jawa, susur batang, tilapia, kelah, sepat siam and tapah. A huge, lucrative and ever-growing market of recreational fishing tourism is poised to be exploited at Ulu Muda. The diversity of fishes and fishing habitats cater to a wide variety of tastes and inclinations.

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2.3 Importance and Economic Values

2.3.1 Introduction The unique natural characteristics of Ulu Muda have the potential of attracting tourists from all over the world. Tourism benefits in Ulu Muda belong to a wider system of intricately linked processes and evolution. Long term sustainability and success of nature tourism in the area critically depends on the health of its forest ecosystems. If carefully managed and utilised wisely, the Ulu Muda forests would not only yield significant benefits to the local and State economy, but also contribute valuable inputs to the economy of the northern region and nationally. To reflect its importance, Ulu Muda has been identified as one of the “ Ten Very Special Places for Malaysian Ecotourism” in the National Ecotourism Plan (NEP)15. The economic benefits of the Ulu Muda forests can be categorised into three broad categories. These include: (1) Direct Use Values, (2) Indirect Use Values and (3) Non-Use Values (see below, Figure 1).

2.3.2 Direct Use Values Direct use values include extractive uses such as irrigation, water supply, timber harvesting and collection of non-timber forest products for local communities. The river systems within Ulu Muda forests also provide important fish sources for local communities. The non-extractive components of direct use values in Ulu Muda include nature-based tourism (e.g. birding and trekking), recreational fishing, and scientific and educational purposes.

2.3.3 Indirect Use Values Indirect use values provide important ecological services such as watershed protection, flood mitigation, and climatic and temperature regulation. These are closely linked to people as these services provide important support for the continuous supply of water to paddy fields downstream, reduce the impact of flooding, and contribute to climatic regulation due to the large contiguous forests. Indirect use values also provide important biological support such as habitats and food sources for wildlife. Wildlife, especially wild elephants in the Ulu Muda forests are unique attractions that make this destination stand out from other similar parks in Malaysia.

2.3.4 Non-use Values Non-use values involve a wider group of people. Due to the uniqueness of the Ulu Muda forests in terms of a northern contiguous forest element, the Ulu Muda forests represent an important national and global biodiversity heritage. It also forms an important link to the traditional and cultural livelihoods of the local communities. With the discovery of new vaccines and medicinal properties from forest-based

15 MOCAT, 1996.

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resources, the Ulu Muda forests could also contain important medicinal and pharmaceutical values that are yet to be known. These values highlight the multifunctional uses of the Ulu Muda forests. Whilst these benefits illustrate the important link to the local communities, residents of Kedah, Malaysians and global communities, the challenge of this framework is to demonstrate a whole range of values in monetary terms. Direct values, particularly tourism, timber and hydrological values (agriculture and water supply) are highlighted in this study as partial values of the Ulu Muda forests in this study. This section illustrates the range of economic benefits of the Ulu Muda forests. In order to ensure wise use of its resources, it is important to assess the benefits and costs of various development and management options. Furthermore, it is also important to identify who benefits and who pays for the services of the forest ecosystems. Parts of these components are analysed and discussed further in this report.

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Figure 1. Total Economic Value of Ulu Muda Forests

ECONOMIC BENEFITS OF ULU MUDA FORESTS

DIRECT USE VALUES INDIRECT USE NON USE VALUES Extractive VALUES Existence Values - Irrigation Ecological services - Globally and nationally - Water supply - Watershed protection unique biodiversity heritage - Flood mitigation (distinct Northern Forest - Sustainable timber harvesting - Non-timber forest products - Climatic and temperature element, unique species such as wild elephants, Biological support Rafflesia) Non-extractive -Nature based tourism - Habitat for flora and - Traditional/cultural (e.g. trekking, birdwatching) wildlife. appreciation - Scientific & educational - Food sources for wildlife purposes Option Values - Pharmaceutical & Medicinal values

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3 Tourism and the Economic Values of Greater Ulu Muda

3.1 Role of Tourism in Kedah’s Economy

3.1.1 Summary of the Kedah economy Kedah is situated northwest of Peninsular Malaysia, bordering Thailand, Penang and Perlis. It has an area of 9,425 km2, comprising about 2.8% of the size of Malaysia. The Pelan Tindakan Kedah Maju (PTKM) 2010 covers the period of 2001–2010 and provides strategies for the development of Kedah. The strategies in the Plan target Kedah to become a developed state by the year 2010. Between 1980 and 1991, the State has recorded an average annual population growth rate of 1.72%. The annual growth rate has increased to 2.09% between 1991 and 2000. The average Gross Domestic Product (GDP) growth rate for Kedah between 1991 and 2000 was recorded at 9.6% per annum. This rate surpassed the national average GDP growth rate of 8.7% per annum. In terms of the average per capita GDP growth rate, Kedah recorded 6.9% per annum compared to the national per capita GDP growth rate of 6.3%. Over the last two decades, the economic structure of Kedah has evolved and changed considerably from being predominantly agriculture-based. In 1995, Kedah contributed 56% of Malaysia’ s rice production16. The State’ s GDP contribution from the agricultural sector in Kedah decreased from 35% in 1990 to 21% in 1998. Whilst maintaining a strong agricultural base, Kedah has experienced rapid growth especially in the manufacturing and construction sectors. The sector has grown from contributing 24% of the State’ s total GDP in 1990 to 37% in 1998. The tourism sector has also more recently emerged as a major economic sector with Langkawi being the prime tourist attraction in Kedah.

3.1.2 The Tourism Sector At the national level, the tourism industry has emerged as a major economic sector, ranking second after manufacturing in terms of foreign exchange earnings17. Tourism receipts represent 6% of the national GDP in 1995, 9% in 2000 and expected to account for 10% in 2005 (see Table 1). International tourist arrivals increased at an average of 6.5% per annum during the 7th Malaysia Plan, while tourism receipts increased two-fold from 1995 to 2000 registering a 13.6% annual growth. This trend is expected to continue with increased tourist arrivals at an average rate of 6.9% per annum to reach 14.3 million by 2005. Tourism receipts are targeted to grow at an average annual rate of 9.5% to reach RM29.5 billion in 2005 (see Table 1). Kedah received approximately 1.15 million

16 Ministry of Agriculture, 2000. 17 NST, 9 April, 2001.

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visitors in 2001 of which around 52% are foreign visitors (0.6 million). Based on the international tourist arrivals in Kedah for year 2001, the percentage of international tourist arrivals to Kedah in proportion to the national figure is approximately 6%.

Table 1. Selected Tourism Indicators (Malaysia) Indicator 1995 2000 2005 Number of Tourist Arrivals 7,469,000 10,221,000 14,273,000 Arrivals: Annual Growth Rate (%) 6.5 6.9 - Total Tourism Receipts (RM) 9,927,800 18,756,700 29,499,500 Receipts: Annual Growth Rate (%) 13.5 9.5 - Gross Domestic Product (RM) 166,625,000 209,396,000 299,785,000 Ratio of Tourism Receipts to GDP 6 9 10 (%) Employment 67,214 78,671 79,603 Tourist Arrivals, Kedah NA 1,750,000 NA International Tourist Arrivals, Kedah NA 600,000 NA (Year 2001) Proportion of International Tourists NA 6 NA Visiting Kedah (%)

Source: 8th Malaysia Plan, Economic Report 2001/2002 and Pelan Tindakan Kedah Maju 2010.

Recent world incidences such as the Bali event in 2002 may impact upon tourist sentiments and affect visitation rates especially amongst international travellers. While efforts to ensure a safe and secure destination are important, the alternative market of domestic tourism is seen to be growing since 1997. Under the aggressive promotional activities of Cuti-Cuti Malaysia, domestic tourism increased by 89.9% to 15.8 million trips in 1999 compared to 8.32 million trips between August 1997 and July 199818. The number of domestic hotel guests also increased by 46% to 1.02 million in March 2002 compared to 698,000 in March 1998, i.e. at 9.9% per annum compounded growth19. This increase has also been attributed to the fact that alternative Saturdays have been declared as non-working days for Government agencies and banks. To support the planned rapid growth, financial allocation for the tourism sector have increased significantly from RM605 million during the 7th Malaysia Plan to RM1 billion during the 8th Malaysia Plan. The receipts from tourism have also recorded an increasing trend in terms of average annual revenue (Table 2).

18 8th Malaysia Plan. 19 Ibid

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Table 2. Allocations and Revenue for Tourism Plan Allocation Mean annual Mean annual (RM ) allocation revenue during Plan (RM ) period (RM ) Eighth 1,009,000,000 202,000,000 -- Seventh 605,000,000 121,000,000 11,657,000,000 Sixth 533,000,000 107,000,000 5,506,000,000 Fifth 140,000,000 28,000,000 2,555,000,000

Compiled from: NEP, 8th Malaysia Plan and Economic Report 2001/2002.

Parallel with tourism development in the country, the number of tourists in Kedah have increased four-fold from 380,000 visitors in 1990 to 1.57 million visitors in 2000, or an increase of 15.2% per annum, i.e., higher than the national average of 9.9% per annum20. Domestic tourists account for 65% of all visitors while the remainder are foreign tourists. However, a major proportion of tourists visit Langkawi (68%) compared to mainland Kedah. As presented in Figure 2, the number of visitors to mainland Kedah in 1990 was approximately 148,650. Visitor numbers peaked at approximately 677,800 in 1996 before declining to 479,100 the following year. Subsequently the number stabilised at 499,600 in 2000.

Figure 2. Visitor numbers and trend to Kedah, 1990–2000 (Mainland and Langkawi)

1,400,000

r 1,200,000 e

b 1,000,000 m

u 800,000 N

r 600,000 o t i

s 400,000 i V 200,000 -

0 1 2 3 4 5 6 7 8 9 0 9 9 9 9 9 9 9 9 9 9 0 9 9 9 9 9 9 9 9 9 9 0 1 1 1 1 1 1 1 1 1 1 2 Yea r

Main Land Langkawi

Source: Pelan Tindakan Kedah Maju 2010.

20 PTKM 2010.

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The PTKM 2010 forecasted a 12% annual growth from 1.75 million visitors in 2001 to 4.9 million visitors by 2010 for the whole of Kedah. Visitors to mainland Kedah are projected to increase from 0.56 million in 2001 to 2.2 million in 2010, which is at an even higher rate of 16.2% per annum. During the PTKM 2010 period, the State Government will emphasise tourist development at two sites, i.e., island tourism at Langkawi, and nature tourism at the Ulu Muda forest area.

3.1.3 Why Nature Tourism? The NEP (1996) estimated that up to 10% of all future tourism would be from the ecotourism sector. In addition to direct economic returns, nature tourism also provides an important avenue for diversifying the economic base of the Kedah State and in turn enhances development in rural areas. These benefits can be sustained continuously with careful zoning and sound management of the area. The NEP (1996) also highlighted the socio-economic benefits of ecotourism discussed in Boo (1990) and Lindberg (1991) (see below, Figure 3).

Figure 3. Socio-economic Benefits of Ecotourism

x Ecotourism generates local employment, both directly in the tourism sector and in

various support and resource management sectors such as land management and wildlife management; x Ecotourism stimulates profitable domestic industries including hotels, restaurants, transport systems, souvenir and handicraft sales, and guide services; x Ecotourism generates foreign exchange; x Ecotourism stimulates rural economies by creating a demand for agricultural produce, and by injecting capital; x Ecotourism stimulates improvements to local transport and communications infrastructure, which benefit local people; x Ecotourism promotes the maintenance of parks and reserves, which can become showcases for the country and which can therefore enhance investment; x Ecotourism encourages the economically productive use of land, which may be marginal for agriculture, enabling larger tracts of land to remain covered in natural vegetation, safeguarding water supplies and other environmental services.

Source: The National Ecotourism Plan (1996).

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It is often difficult to provide an estimation of ecotourist composition due to the different definitions of ecotourism. The NEP estimated that foreign tourists visiting nature-related sites approximate at 6.7% of Malaysia’ s tourist arrivals in 1994. This estimate is based on a survey carried out by Tourism Malaysia in 1994. These figures would likely be an underestimation today, with the success of the Malaysia, Truly Asia promotions. The NEP had also projected that in 2000 and 2010, 10% of Malaysia’ s tourist arrivals would comprise of nature-based tourists or ecotourists. A more recent estimate21 indicated that ecotourism and all nature-related forms of tourism account for approximately 20% of total international travel. In terms of general tourism projections, the NEP compiled tourism arrival figures from various sources and these are shown in Table 3and Table 4. According to the World Tourism Organisation, there were approximately 528 million international tourist arrivals worldwide in 1994 (Table 3). The direct tourism expenditure was US$416 billion, which makes up 6% of the world’ s GDP22 (Table 4). Based on Fillion (1994), the NEP estimated the numbers and impacts of nature tourists and wildlife- related tourists by applying the following proportions: 40% to 60% of all international tourists are nature tourists, and 20% to 40% are wildlife-related tourists (Table 3).

Table 3. Estimates of Nature Tourism and Wildlife-related Tourism Year Total International Nature Tourists Wildlife-related Tourism Arrivals Tourists 1988 393 million 157–236 million 79–157 million 1994 528.4 million 211–317 million 106–211 million

Source: The National Ecotourism Plan (1996).

Table 4. Estimates of the World Economic Impact of Nature Tourism and Wildlife-related Tourism Year Total International Nature Tourism Wildlife-related Direct Economic Impact Tourism Impact Impact 1988 US$388 billion US$93–223 billion US$47–155 billion 1994 US$416 billion US$166–250 billion US$83–166 billion

Source: The National Ecotourism Plan (1996).

21 World Tourism Organisation (WTO), 1998. 22 World Travel and Tourism Council (WTTC)

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3.1.4 Summary: Ulu Muda as an International Nature Tourism Destination The potential for Ulu Muda to rank as one of the world’ s premier nature tourism destination is very strong. The following are some unique attributes of the area. x The large stands of beautiful intact old-growth forest, coupled with a network of trails that are well mapped, provide for excellent jungle-trekking opportunities. x The wide range of charismatic wildlife (e.g. elephants, tapir, sambar, etc.), in conjunction with a number of easily accessible and heavily used saltlicks facilitate wildlife watching on a scale equal to any other tropical rainforest site in the world. x The diverse and bio-geographically special avifauna is an attraction that will draw avid birders from across the country as well as globally. x The variety of fishing opportunities (lakes and rivers) will be an attraction for an equally wide variety of recreational fishing tourists, from those who like to fish off the comfort of jetties near their chalets, to those who prefer remote jungle streams. x Ulu Muda also offers much for the less adventurous nature tourist. Boasting luxury accommodations of the highest international standards, yet nestled in the heart of some of the most spectacular examples of pristine wilderness remaining in Malaysia, tourists can relax by a lake while appreciating the choruses of gibbons greeting the dawn.

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3.2 Present Ulu Muda Tourism Facilities The present tourism facilities in the Ulu Muda region can only be characterised as emerging (Map 3, Present Tourism Sites in the Ulu Muda Region). It is almost entirely geared towards tourists in resorts and is supported by a network of tour agents and operators. The range of accommodation provided includes campsites, dormitories, individual chalets and luxurious private suites. The market is entirely made up of domestic group tourists (e.g. company trips, family group holidays or special events). Table 5 provides a summary of the tourism establishments in Ulu Muda (including Pedu) by selected characteristics such as capacity, type of tourist market, price range and type of set-up. Currently, the two major resorts located along the banks of Pedu Lake are Desa Utara Pedu Lake Resort and Mutiara Pedu. The maximum capacity of these resorts is 186 rooms. These three-star resorts provide accommodation with price ranges from RM150 to RM200 at promotional rates and RM200 to RM300 at walk-in rates. A third resort that had recently been completed and yet to open is Anjung Pedu Resort. Away from Pedu, the Muda resort over in Gubir provides accommodation in scenic settings. Built along the same concept as a government resthouse, the MADA resort provides a maximum capacity of 106 persons. Apart from resort-centred staff leading tours, there is so far only one tour operator, High Adventure Travel (HAT) (Kedah) that specialises in nature and adventure tours. HAT was established in December 2001 and started bringing groups to Ulu Muda in February 2002. The operations have stopped since June 2002 due to low water levels. HAT offers a variety of packages that range from one to four days, costing approximately from RM180 to RM400. Currently, there is limited infrastructure available for the independent traveller. The main village centres where provisions and eateries can be found are at Kuala Nerang and Gubir. Gubir is presently the least developed with only a handful of roadside shops and a provision store. The nearest petrol station lies just outside Gubir and also at Kuala Nerang. Public transport is available from Alor Setar, Sik and Kuala Nerang into the Ulu Muda region, but services are not well advertised. It is also possible to arrange for charter taxis from main centres such as Sik and Alor Setar. At the Koperasi Pembangunan Ampang Muda (KOPAM) jetty in Gubir, village boats may be rented with or without a boatman-cum-guide. These are broad wooden boats usually powered by a modified water-pump. There are a total of 52 such boats that are especially popular during weekends and holidays. Boats are rented out at RM40 per day and RM45 for overnight rentals. The fee for the time of a boatman per day is RM60. Other relevant charges include car and motorbike parking fees at RM3 and RM1 respectively. Boats are most commonly rented for fishing trips along the lake or tributaries and fishermen are most often from within the state or nearby from neighbouring districts.

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Table 5. Summary of Tourism Establishments and Relevant Characteristics Area (Year Type of set- Capacity & Price Range Visitor Established) up Features (Standard rooms) Market Type Desa Utara Pedu Resort (3-star) x 106 rooms RM150–RM200 (off High-end, Lake (1995) x peak), leisure, 1 main house business, team RM200–RM250 (40-60 pax) building (peak) x Kampung ambience Mutiara Pedu Lake Resort (3-star) 80 rooms RM160–RM200 (off High end, (1995) peak), leisure,

business, team RM 200–RM300 building Anjung Pedu Resort x 20 chalets Not available at time Medium to low (completed, not in x of writing end operation at time 1 Type A main of writing) houses (16 pax) x 4 Type B main houses (30 pax) Muda Resort Resort x 28 rooms RM 60–RM100 Medium to low end, training, x RM10 (Dormitory) 20-bed team building, dormitory meetings High Adventure Tour operator Campsites, RM180–RM400 High to low Travel (HAT) observatory tours end, nature, (1 to 4 day tours) education Koperasi Community 52 broad wooden RM 40 per day Fishing Pembangunan jetty area boats enthusiasts RM 45 overnight Ampangan Muda

(KOPAM) RM 3 car park fee RM1 motorbike fee

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3.3 Present Ulu Muda Tourism Activities As outlined above, the present tourism activities in the Ulu Muda region is essentially catered towards domestic group tourists. The resorts are venues for seminars, meetings and small conferences. Special group events are also popular. Resort activities on offer range from team building activities (e.g. obstacle courses, etc.), golf, and water sports (e.g. jet skis, sailing and boat cruises). Jungle walks are also provided, and this includes longer, more demanding treks (e.g. Gunung Fakir Terbang and Gunung Batu Tajam). To a large extent, nature tourism plays a small role in the activities provided. More recently, activities deep within the Ulu Muda forests are also being offered through HAT. This includes treks, wildlife observations and adventure activities (e.g. jungle survival, trekking and rafting). The Kedah State Government has also constructed a wildlife observation hide at Sira Hangat. So far, HAT which works through the village co-operative (KOPAM) has exclusive rights to the hide. Fishing is an important sector of nature tourism. Apart from activities organised by HAT and resorts, the KOPAM co-operative has been the main platform for fishermen into the Muda lake and river systems. Boats can be rented from the co-operative and fishing weekends are essentially self-catered and organised. Currently, no monitoring system is in place to control access, fish catches or other illegal activities. Bird watching is a major nature activity with a well-established network of bird watchers and enthusiasts. Active members of the Malaysian Nature Society (MNS) have been promoting the region as an important bird-watching destination. Since 2001, there have been at least two major MNS birding trips to the region and a number of private trips made by its members.

3.3.1 Tourism Potential in Ulu Muda Nature tourism in Ulu Muda provides a complimentary activity to water catchment protection in the area due to its geographical setting. In addition it also provides long- term benefits to the local communities in terms of employment generation. Equally important, tourism activities also contribute in conserving national and global heritage in terms of biodiversity within the last remaining forests of Northern Peninsular Malaysia. Opportunities arise in terms of Federal-State initiatives. In particular, protection of Ulu Muda would contribute towards Malaysia’ s efforts in implementing the National Biodiversity Policy and also support the implementation of the National Spatial Plan. The study assessed the tourism potential of Pedu and Muda areas. The following section presents data compiled from the three resorts (Desa Utara, Mutiara Pedu Lake, Muda) and the sole adventure tour operator (HAT) at Ulu Muda.

3.3.1.1 Tourist Numbers The total number of visitors to the Pedu and Muda Lake areas was approximately 44,000 in 2001. The bulk of the tourists reside at Mutiara Pedu Lake Resort and Desa

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Utara Resort whilst Muda Resort caters mainly for arranged group trips such as school trips, training trips, and Government department trips (MADA Resort, personal communication). Comparing these figures to the total visitors to mainland Kedah, the percentage of tourist numbers to the Pedu and Muda areas is approximately 7.6% (Table 6). This figure is expected to increase based on the emphasis placed by the PTKM 2010 on the Ulu Muda area and higher resource allocation for tourism development during the 8th Malaysia Plan.

Table 6. Visitor Numbers to Pedu and Muda Lake Areas (2001) Mutiara Desa Muda Kopam HAT Anjung Utara Resort Pedu Visitors 19,382 19,987 3,300 1,333 NA NA Local (%) 90 80 100 100 NA NA Foreign (%) 10 20 0 0 NA NA Visitors to Pedu + Muda Lake 44,000 Visitors to Mainland Kedah 560,000 Visitors to Pedu + Muda of 7.9 visitors to Mainland Kedah (%)

Notes: 1. Visitors to Mainland Kedah figures from PTKM 2010. 2. Figures for Mutiara Lake Resort based on interview. 3. Figures for visitor numbers for Desa Utara is estimated by multiplying room occupancy with 2.5 (Resident Manager of Desa Utara, personal communication). 4. Figures of 2001 data for Desa Utara are not available. Year 2000 figures are used as a proxy for year 2001 figures. 5. Not applicable (NA) as HAT only started operating in 2002 and Anjung Pedu is presently not in operation.

Room Capacity and Occupation Rates By the end of 2000, room occupancy in Desa Utara was recorded at 7,995 room nights whilst room occupancy in Mutiara in 2001 was 7,527 (Table 7). The occupancy rate for Mutiara was estimated at 26% compared to Desa Utara at 21% for the entire year (Table 7). Analysing the occupancy rates over school holidays based on 130 days yielded an occupancy rate of 72% at Mutiara and 58% at Desa Utara (Table 7). The data reflects that existing capacities of the resorts are not fully utilised especially during off-peak seasons and demonstrates the opportunity to further extend the use of present capacities.

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Table 7. Room Capacity and Occupancy Rates by Resorts Mutiara Desa Utara (2001) (2000) Room Occupancy (room nights/year) 7,527 7,995 Number of rooms 80 106 Maximum capacity/year (room nights) 29,200 38,690 Occupancy rate (%/year) 26 21 Number of Public and School holidays 130 130 (days) Maximum capacity over holiday season 10,400 13,780 (room nights) Occupancy rate over holiday season (%) 72 58

In addition to the above scenario, Figure 4 indicates that visitor numbers are increasing from year to year based on room occupancy in Desa Utara between 1996 and 2000. Overall, tourist numbers increased by approximately 1.4 times and at 8% per annum from 1996 to 2000. What is important to note is that since 1998, there has been a rising trend in room occupancy, which indicates rising demand.

Figure 4. Room Occupancy in Desa Utara, 1996–2000

8 5 0 0

8 0 0 0

7 5 0 0

r 7 0 0 0 e b m u N 6 5 0 0

6 0 0 0

5 5 0 0

5 0 0 0 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 Y e a r

R o o m O c c u p a n c y

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3.3.1.2 Adventure Tours and Local Capacity High Adventure Travel (HAT) (Kedah) was established in 2001 and started bringing groups to Ulu Muda in February 2002. These trips depend solely on visitor transfers by catamaran or outboard engine boats to the sites. Due to low water levels, tours had been stopped since June 2002. HAT is presently focusing rigorously on their efforts in marketing and promotional activities and has recommended various alternative routes in order to ensure continuation of the packages independent of reservoir water levels. Approximately 150 visitors visited Ulu Muda through HAT packages within the four months that they were operating between February and May 2002. In terms of future projections, HAT is optimistic of achieving 5,000 visitors for the year 2003, 15,000 for 2005 and 30,000 for 2010 based on additional tie-ups, confirmed packages and strategic marketing efforts (HAT, personal communication). Figure 5 provides a preliminary breakdown of the visitor groups that experienced HAT’ s services. School groups make up the majority at 62% followed by media groups at 29%, and foreign groups at 9%. This trend is expected to be similar in the next few years (HAT, personal communication).

Figure 5. Composition of Visitors by Groups (HAT, Feb – May 2002)

29%

62% 9%

Sc hool c hildren Foreign v is itors Media groups

At the KOPAM jetty, approximately 400 boats were rented from January to September 2002. Based on this figure, the estimated number of boats rented out in a year is approximately 530. These boats can take four to five persons per boat. Over the past three years (2000 to 2002), KOPAM received approximately 4,000 visitors, which makes up an average figure of approximately 1,330 visitors per year (En. Razak bin Che Teh, KOPAM Head, personal communication). Presently, KOPAM has 280 members, of which 30 are active. The committee members of KOPAM meet once every one or two months. The activities of KOPAM

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are still at initial stages having been set up only three years ago in 1999 (En. Razak bin Che Teh, KOPAM Head, personal communication) Amongst the activities planned include providing assistance to members in marketing traditional products. The types of fish that have been caught by fishermen in the area include talapia, baung, subarau, tengas, kelah and haruan.

3.3.1.3 Tourism Projections (Short, Medium and Long Term) Short, medium and long-term projections are estimated based on the PTKM 2010 projection of 12% annual growth in tourist numbers and interviews with HAT (Table 8). It is important to note that these projections do not include visitors to Anjung Pedu. It is also important to note that the projections need careful assessments based on local conditions and status of tourism development in Ulu Muda. As the PTKM 2010 estimate of 12% growth is applied to the whole of Kedah, the projected figures for the Pedu and Muda area may be different. It is also important to consider the carrying capacity of supporting the projected figures in Ulu Muda. These issues are discussed further in this report.

Table 8. Tourist Projections for Pedu Lake Area, Muda Resort and HAT Year Pedu Lake HAT Muda Resort KOPAM Total Resorts Present, 2001 19,382 19,987 3,300 1,300 43,969 Short term, 2003 49,000 5,000 3,600 1,400 59,000 Medium term, 2005 61,000 15,000 4,000 1,600 81,600 Long term, 2010 109,000 30,000 5,000 2000 146,000

Notes: 1. Pedu Lake Resorts based on PTKM 2010 estimate of 12% annual growth. 2. HAT projections are based on personal communication, HAT. 3. Muda and KOPAM projections are based on a conservative estimate of 5% annual growth.

3.3.1.4 Economic Benefits of Tourism in Ulu Muda In order to understand the exact nature and magnitude of tourism benefits on the Kedah economy, the relevant data portrayed in Figure 6 need to be analysed. In view of the scope and resources of this study, tourism expenditure and receipts are estimated based on secondary data. This is to provide an indication of the magnitude of economic benefits of tourism in the Ulu Muda area. In addition it is also important to highlight the potential costs of tourism such as social and environmental impacts. The issue of social impacts is beyond the scope of this study and would benefit from further studies.

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Figure 6. Framework for Measuring Economic Benefits of Tourism

Contribution to

GDP Leakages of Expenditure foreign exchange and Receipts from imports of goods and

services. Economic Benefits Of Tourism

Linkages with other sectors and extent to which tourism stimulates growth and Contribution to production in the Employment foreign exchange economy generated earnings

Tourism receipts are estimated based on a breakdown of relevant expenditure of visitors at the Pedu and Muda Lake areas. The starting point of the analysis is Alor Setar. This means that travelling expenditure to Alor Setar (by air or land transport) have not been taken into account. Therefore, the actual tourism receipts may be higher if items such as airport tax and fuel costs are incorporated. Table 9 shows an estimate of the expenditure incurred by visitors to the resorts in Pedu and Muda Lake. The major cost items include accommodation, travel, food and beverage and facilities. This information is based on published prices and interviews with tour and resort operators. The total expenditure by a tourist at the Pedu Lake resorts is estimated at RM340 (see Table 9). Accommodation cost per person is obtained by averaging the room charges (ranging from RM150 to RM300) and dividing by two to reflect cost per person. Travel expenditure is obtained from a survey of taxi fares from Alor Setar to Pedu Lake. RM80 reflects a return journey per person. Based on interviews with the resort operators, the average number of days spent by visitors is 1.5 days. Food and beverage as well as expenditure on relevant facilities at the resorts are estimated at RM50 and RM15 respectively. The same applies to visitor expenditure in Muda Resort. As most of the visitors to Muda Resort attend training courses, the common mode of transport is by bus. Based on interviews with two bus companies in Alor Setar, the average price for a return journey per person is estimated at RM30. HAT expenditures are based on packages and cost of travelling. The average cost of HAT packages is RM305. Discounts of

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between 35% and 45% are provided for school trips. Based on a discount of 35%, the average package price for school children is approximately RM200. The cost of travelling by bus per person is RM30. For HAT, this yields an estimated expenditure of RM335 for adults and RM230 for school children. Most of the visitors at KOPAM are local communities from nearby towns. The estimated expenditure at KOPAM per person is RM25 (see Table 9).

Table 9. Breakdown of Visitor Expenditure (RM) at Pedu and Muda Areas Pedu Muda HAT HAT KOPAM Anjung Lake Resort Adult School Pedu Accommodation/ 113 60 305 200 - NA Package Travel 80 30 30 30 10 NA Nights 1.5 1.5 Inclusive Inclusive NA NA Food and Beverage 50 30 Inclusive Inclusive 5 NA Facilities, Boat 15 Inclusive Inclusive 10 NA Expenditure/Tourist 340 165 335 230 25 NA (RM)

Based on the expenditure per tourist, the total tourism receipts at Pedu and Muda Lake areas is estimated at RM14 million (see Table 10). This only includes tourism receipts at the resorts at Pedu and Muda Lake. HAT only started operating in 2002 and Anjung Pedu has yet to start operations at time of writing.

Table 10. Estimated Tourist Expenditure at Pedu and Muda Areas in 2001 Pedu Lake Muda KOPAM HAT Anjung Resort Pedu Tourist numbers 39,400 3,300 1,333 NA NA

Expenditure/Tourist 340 165 25 NA NA (RM) Total (RM) 13,396,000 544,500 33,300 NA NA Grand total (RM) 13,973,800

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3.3.1.5 Economic Benefits of Water Recreation A major attraction of the Pedu and Muda areas is due to the lake area, in terms of its tranquility and potential for relaxation. Visitors derive enjoyment from the lake through activities such as water sports, sightseeing and angling. The enjoyment derived due to the lake area may be represented through two types of values. The first is reflected in the expenditure spent by tourists to travel to the site. The second is the quality of the enjoyment, i.e., tourists derive more benefits over its costs. This is known as the consumer surplus. Due to the scope of this study, primary data collection of the benefits of water recreation has not been estimated. Nevertheless, examples of studies have shown that the consumer surplus from water recreation can be significant. For example, a study on the East Lake in Wuhan, China found that the economic benefits of recreational pursuits amounted to RMB 41.62 million per annum (US$5 million) 23.

3.3.1.6 Nature Tourists’ Perception The above discussion has demonstrated the potential and benefits of tourism. While that deals with benefit flows, it is important to have an idea of the attributes that attracts and promotes the sustainability of tourism benefits. Results from the survey carried out by the NEP (1996) of foreign ecotourists may provide some initial indication. As the profiles of tourists to Sabah, Sarawak and Kedah are different, these results can only contribute as learning experiences. Based on 358 questionnaires collected from Sabah, the top three features that ecotourists liked were nature, friendliness of people and food. The top three features in Sarawak were almost similar in Sabah (Table 11). Fifty-three questionnaires were analysed from Sarawak.

Table 11. Features Which Foreign Nature Tourists Particularly Liked in Sabah and Sarawak Praise Sabah Sarawak Top Nature Nature Second Friendliness of people Friendliness of People Third Food Caves Fourth Climate Food

Source: The National Ecotourism Plan, 1996

The highest complaint of ecotourists in Sabah was litter, followed by costs of transport and logging effects. In Sarawak however, tourists were sensitive to logging effects followed by litter and costs of transport (see Table 12). The study did not analyse further the reasons for their dislike in terms of costs of transport.

23 Du, Yaping. 1998.

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Table 12. Features Which Foreign Ecotourists Particularly Disliked in Sabah and Sarawak Complaint Sabah Sarawak Top Litter Logging and its effects Second Costs of Transport Litter Third Logging and its effects Costs of Transport

Source: The National Ecotourism Plan, 1996

Interestingly, the top three recommendations for improvements in Sabah and Sarawak were similar (Table 12). The top priority was guidebooks followed by maps.

Table 13. Top Three Recommendations by Foreign Nature Tourists for Improvements in Sabah and Sarawak Suggestion Sabah Sarawak Top Guidebooks Guidebooks Second Maps Maps Third General Information General Information

Source: The National Ecotourism Plan, 1996

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3.4 Proposed Development Plans and Implications for Nature Tourism Developments In analysing the tourism potential of the Ulu Muda forests, an attempt was made to understand the patterns of development within the surrounding landscape. Thus, we begin with a regional overview followed by an examination of the three primary districts of concern, namely: Padang Terap, Sik and Baling. Firstly, at a regional level, the northwestern region of Peninsular Malaysia has a number of important nature tourism sites (see Map 4, Major Tourism Sites in Northern Peninsular Malaysia). These include the limestone caves and formations protected within the Perlis State Park, the islands and reefs of Langkawi, the beach and lowland forests of Pantai Acheh in Penang and the montane forests high up on Gunung Jerai. Apart from natural areas, this region is also the seat of one of the oldest civilisations in the history of the Peninsula and has a rich cultural history that dates back to those early days in folk traditions, myths and archaeological artefacts. At the district level, the most current data available as to the proposed developments in the area can be summarised from the District Structure Plans, which were approved by the Kedah State Government in 1997. Of importance are the areas of continuous forest cover to the Ulu Muda forests, which will be one of the key ecological criteria in assessing the potential of nature tourism in this region. In addition to the District Structural Plans, we will also consider three additional developments which we consider to be directly relevant to this present study: the proposed Trans-Eastern Hinterland Highway, the proposed helicopter logging of the wider Ulu Muda forests and also existing proposals for an Ulu Muda State Park. Some of the key development considerations are highlighted in Map 5 (Proposed Developments in the Greater Ulu Muda Area).

3.4.1 Trans-Eastern Hinterland Highway This proposed road will eventually link Durian Burong (a new international border crossing) and Kupang in the Baling district. This will be a highway that will follow, to a large extent, the existing national road system. The highway will essentially divide the forests of Ulu Muda (in its broad sense) into eastern and western flanks of the highway (Map 5). From an ecological perspective, the highway will be a major barrier to wildlife movement and may pose a threat to animals that attempt to cross this road (e.g. civets, primates, snakes and other reptiles). Mitigation measures should be developed where there are significant forests on either side of the road (e.g. Kuala Nerang-Gulau). It will also be advantageous to maintain forest stretches along the old road between Kuala Nerang to Gubir as “ forests roads” as this adds to the charm of the area for visiting tourists.

3.4.2 Helicopter-logging of the Ulu Muda forests Details of this proposal have not been forthcoming, but the project is undergoing a full EIA study at the time of writing and further information will be made public soon.

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From the early proposal, it is likely that an area of 121,406 ha will be logged over a 10-year period within the following forest reserves: Ulu Muda, Bukit Saiong, Bukit Keramat, Chebar Besar, Padang Terap and Pedu. The benefit of logging is assessed based on available preliminary information. The estimated timber volume to be harvested per hectare is 35 m3. This is obtained by applying the average volume per tree from an existing experimental plot of the Sg. Weng study and multiplying by seven trees per ha24, 25 (Table 14). The Sg. Weng study, which started in 1994, is located within the Ulu Muda Forest Reserve and is co- coordinated by Jabatan Pengairan dan Saliran (JPS). The premium, cess and royalty rates are obtained from Forestry Statistics, Peninsular Malaysia, 2000, while the composition of wood type is based on Kedah Forestry Department’ s past timber production (Appendix ). It should be noted that royalty rates might vary based on the tendering exercise practised in Kedah. However, in this case, the concession has been appointed and the uniform royalty rate for Kedah is applied. The cutting cycle is assessed based on the Selective Management System of 30 years adopted by the Kedah Forestry Department. This reflects a sustainable forest management as an approach adopted at the national level. It should be noted that the heli-logging concession is proposed on a 10-year cycle. Based on the 30-year cutting cycle, the study estimated that the collection of premium and royalty to the State is approximately RM1.8 million while the collection including cess is about RM2.6 million.

24 A guideline of three trees per acre is suggested (pers. comms., Forestry Dept). This translates to approximately seven trees per hectare. 25 NST, 18 May, 2002.

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Table 14. Collection of Royalty, Cess and Premium Unit RM/ha Volume/tree 4.7 Volume/ha (cu.m/ha) 35 Total Area for Logging (ha)26 72,840 Annual Coupe (ha/year) 2,428 Premium (RM/ha) 375 375 Cess (RM/cu.m) 10 353 Average Royalty (RM/cu.m) 364 Collection from Premium, Cess and Royalty (RM/ha) 1,098 Collection without Cess (RM/ha) 744 Total from Premium, Cess and Royalty (RM/year) 2,665,216 Total without Cess (RM/Year) (to the State) 1,805,704

Multiplying the average volume of timber harvested by log prices in 2000 would yield a gross revenue of approximately RM20 million per hectare which brings to a total of RM50 million per year (Table 15). Incorporating the annual collection from royalty, cess and premium, the total value of the proposed helicopter logging is approximately RM52 million per year. A further breakdown of the revenue and collection shows that the benefit ratio from the concession is approximately: State (3% from premium and royalty), Federal (2% from cess), Islamic Foundation (19%) and WTK (76%) (Table 16).

Table 15. Gross Timber Revenues Gross Annual Gross Annual collection Total Value Revenue Revenue (RM) (royalty, cess, (RM) (RM/ha) (RM/year) premium) Revenue/Collection 20,651 50,143,106 2,650,293 52,793,399

26 Based on 60% loggable areas according to slope and terrain limitations.

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Table 16. Breakdown of Revenue/Collection Distribution from Timber Concession WTK Islamic State Federal Total Foundation Forestry Forestry Department Department (Cess)

Revenue/Collection 40,112,502 10,028,126 1,805,704 859,512 52,805,844 (RM) Ratio 76% 19% 3% 2% 100%

Note: Estimation based on ratio of proposed logging concession.

While it is recognised that these estimates are based on preliminary data and averages of past timber production patterns in Kedah, the results provide an indication of the magnitude of timber benefits from the proposed helicopter logging.

3.4.2.1 Impacts of logging The Sg. Weng study was developed to provide lessons learnt in terms of the impacts of logging in a water catchment area. Based on preliminary results of the experimental logging study in the Waduk and Wakil catchment areas in Ulu Muda, the sediment yield was found to be 18 times over pre-logging conditions during a low rainfall year in 1998. This observation has been attributed to the construction of roads, skid trails and landings27. Whilst the results are preliminary in nature, it shows the linkages of how an activity could impact upon another, therefore would warrant careful consideration to minimise irreversible damages. Hence, it is critical to examine the impacts of logging on the other functions of the Ulu Muda forests especially as a water catchment for water supply and irrigation. The economic analysis of these benefits and potential impacts are discussed further below. The following heli-logging implications on existing use need to be considered: x Potential impacts on water catchment areas; x Potential impacts on nature tourism development and wildlife roaming areas; x Implications of the Malaysian effort towards timber certification; x The annual allowable cut for Kedah was 2,312 ha in 2000 and 2,163 ha in 1999 as set by the National Forestry Council. Within the heli-logging project, an approximate 12,000 ha will be logged annually. The large area of the annual allowable cut compared to annual allowable cut needs to be re- considered.

27 Lai, 2000.

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It is also relevant to bear in mind that the credibility of WTK as a responsible logging company has been questioned repeatedly by the international NGO community (see Appendix , http://www.forestmonitor.org/reports/vanimo/vanimo.rtf. It will be difficult to begin a campaign to market the Ulu Muda region as a premier nature tourism destination, whilst at the same time there may be similar international campaigns against WTK and the proposal to log a nationally important watershed.

3.4.3 Proposed State Park There have been several attempts at proposing parts of the Ulu Muda forests as a potential National or State Park and Wildlife Sanctuaries. More recently, Kedah UPEN has been developing ideas for a State “ Eco” Park. The proposed boundary of the State “ Eco” Park is given in Map 5 (see above) and the area proposed by the Kedah Forestry Department covers approximately 34,902 ha. The recommendation for the proposed State Park in ths study is 53,904 ha. Section 4.4 discusses the criteria for selection and justification in detail. Table 17 highlights major parks in Malaysia in terms of their areas and establishment years. Taman Negara has the largest area (443,300 ha), followed by Endau-Rompin (Johor and Pahang) and Kinabalu Park. The establishment of the proposed Kedah State Park would strengthen the network of park areas in the northern region. The State “ Eco” Park had been designed to buffer the Ulu Muda lake area and some of the major tributaries. The Sira Hangat area was one focus for nature tourism activities and an information centre has also been proposed at the existing KOPAM village jetty area. Access into the area may be by boat (via the KOPAM jetty) or by opening up of several proposed 4WD tracks (i.e. old logging routes). Apart from management issues that we will raise in the following sections, it is probably important here to highlight the unsuitability of expanding the existing KOPAM jetty to accommodate tourist and other facilities. Firstly, this contradicts existing planning guidelines for development of lakeshore activities around a dam28 . Secondly, the area is a security- and environmentally-sensitive zone of the lake (proximity to the dam structure and possessing steep banks). As a site for future expansion, this will not be a suitable zone for development. We will take this issue up in the preceding sections below.

28 JPBD, 2000.

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Table 17. Selected Park Areas and Establishment Years Park Area (ha) Year Established Taman Negara, total 443,300 1939 Pahang 247,700 1939 Kelantan 110,300 1938 Trengganu 85,300 1939 Endau Rompin 89,214 Johor 48,905 1993 Pahang (reserve) 40,309 1986 Perlis State Park 5,000 1997 Sabah, total 243,261 (Terrestrial) 75,370 1964 Kinabalu 27,972 1979 Tawau Hills 139,919 1984 Crocker Range Sarawak, total 134,648 Bako 2,727 1957 Gunung Mulu 52,865 1974 Niah 3,138 1974 Lambir Hills 6,949 1975 Similajau 7,064 1976 Gunung Gading 4,106 1983 Kubah 2,230 1988 Batang Ai 24,040 1990 Loagan Bunut 10,736 1990 Tanjung Duta 1,379 1994 Talang Salang 19,414 1999

Various sources: Kasim, O. et. al (eds)., 2000, http://www.wwfmalaysia.org/projects/forests.htm#perlis, http://www.perlis.gov.my/national_park.htm, MNS, 1995.

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3.5 Wider Values of Ulu Muda In order to provide a comprehensive analysis of the functions of the Ulu Muda forests, wider economic values such as water supply and irrigation components need to be taken into consideration. This is due to the significance of the area not only at the state level but also to the northern region and national level. A breakdown of tourism, water supply, irrigation and timber were calculated. These values are integrated within a framework in Figure 7 as primary, secondary and tertiary values. Primary values are direct and extractive costs while secondary values are obtained from receipts from environmental services of the forest. Finally, tertiary values reflect the value of activities in which water is a primary input.

3.5.1 Water Supply The Muda and Kedah rivers play a significant role in providing water supplies (both irrigation and potable water) to the States of Kedah, Perlis and Penang. This section discusses water supply in terms of potable water for domestic and commercial uses. The Muda and related rivers of the water catchment provide 80% of the water supply for Kedah29 (see Appendix 4), 80% for Penang30 and 60% for Perlis31. The Ulu Muda forests are closely linked as it provides protection for the water catchment areas of the Muda and Pedu rivers. For a wider perspective of the Ulu Muda forests, this study incorporates water production from rivers that are located downstream of the Muda, Pedu and Ahning dams. These include the following rivers and areas: Sg. Muda, Sg. Padang Terap, Sg. Ahning, Sg. Chepir, Terusan Mada Utara and Kuala Nerang. Whilst the supply of water provides a comfortable day-to-day lifestyle for domestic households, the continuous and reliable supplies to industrial areas are particularly critical. For example, the industries at Kulim High-Tech Park (KHTP) depend on the KHTP Treatment Plant that obtains raw water from Sg. Muda. This demonstrates the significance of protecting Sg. Muda from upstream disturbances, as disruption to the water supply to the KHTP could lead to disruptions to industrial operations and result in considerable economic losses. The magnitude of the economic activities of KHTP is significant— RM13 billion was invested in developing the area of which approximately RM10 billion are from foreign investors32. In addition, critical industrial areas in Penang such as Bayan Lepas and Seberang Perai are also located downstream of Sg. Muda. Based on domestic and commercial consumption of water in 1999 from the Malaysia Water Industry Report, 2001, the proportion of water derived from the Muda and Kedah rivers for domestic and industrial consumption is estimated (Appendix 5) and the gross revenue of water supply is calculated. The

29 JKR Kedah data, 2001 pers. comm.s. 30 SERI, 2000. 31 This figure reflects the proportion prior to May 2002, JKR Perlis, pers. comms. 32 British High Commission, Kuala Lumpur, www.britain.org.my/trade/state_summaries/kedah.htm.

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values demonstrate a link to Ulu Muda forests in terms of water catchment protection and minimising the risk of water disruption. From the calculations, the gross water revenue for the Kedah is RM80 million, Penang at RM100 million, and Perlis at RM6.2 million; while the total production cost is approximately RM142 million33 (Table 18). These reflect Ulu Muda forests’ significant contribution in terms of hydrological values. The institutional capacity in Kedah and Perlis are maintained with the State JKR while the Penang water supply body has been corporatised as Perbadanan Bekalan Air Pulau Pinang (PBA Holdings Berhad). PBA was incorporated on 25 May, 2000, and its turnover in 2001 was RM100,993,000, yielding a net profit of RM41,424,00034. This figure is expected to increase with increasing projections of water demand.

Table 18. Expenditure and Revenue of Water Treatment - 1999 Total Total Revenue Proportion Expenditure Revenue (RM) Expenditure (RM) from Muda (from Muda (from Muda and (RM) and related and related related rivers) rivers rivers) Kedah 93,486,319 99,774,150 0.8 74,789,055 79,819,320 Penang 75,308,141 125,821,660 0.8 60,246,513 100,657,328 Perlis 11,332,879 10,467,582 0.6 6,799,727 6,280,549 Total 180,127,339 236,063,392 141,835,295 186,757,197

Notes: 1. Total Expenditure and Total Revenue Figures from the Malaysian Water Industry Report, 2001. 2. Proportion from Muda and relevant rivers based on JKR Kedah data, SERI paper and interview with JKR Perlis. 3. Relevant rivers and areas include Sg. Muda.

3.5.2 Irrigation The Malaysian rice industry has always been accorded special treatment based on the strategic importance of rice as a staple food commodity35. The Muda scheme is the most significant in terms of paddy production in Malaysia. It contributes about 40%

33 Malaysia Water Industry Guide, 2001 34 Kuala Lumpur Stock Exchange, http://klse.com.my 35 MOA, 1999.

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of the total paddy production in the country in 199536. In addition, the Muda scheme also provides a crucial source of income for 63,000 families in the northern region37. Overall, irrigation from the Muda and Kedah rivers are supplied to 60 schemes. The Muda irrigation scheme occupies the largest area at 97,000 ha over the State of Kedah to the State of Perlis. The Seberang Perai irrigation scheme of 8,000 ha in Penang38 is the second largest. In addition to the above two major granary areas, there are 58 secondary and minor irrigation schemes of 18,800 ha (8,400 ha) in the Muda river basin and 24 schemes (10,400 ha) in the Kedah river basin39. This section estimates agricultural values for the Muda scheme. Irrigation water is an intermediate good as it is an input used to produce a final product. The primary values of irrigation are estimated based on the total operating and maintenance cost of the water infrastructure for irrigation. The secondary values are reflected in terms of the gross expenditure from the State (from farmers and the State Government) for maintenance and operating costs. Finally, the tertiary values encompass the value of the product (paddy production). The operating and maintenance cost of MADA was approximately RM49 million annually. The Kedah State Government contributes RM1 million while Perlis contributes RM0.5 million annually40. The remaining costs are met by the Federal Government (around RM447.5 million annually). Farmers pay RM15 per acre per year yielding approximately RM3.5 million towards the state tax system. The operations and maintenance costs for irrigation and drainage facilities are estimated at approximately RM80 per acre (MADA, personal communication). This yields an estimated primary value of RM19 million for the total scheme (Table 19). Incorporating the contribution by the state and water fee collected from farmers, the existing secondary value of water is reflected atRM4.5 million. The secondary value may not reflect its true values as irrigation are highly subsidised. As mentioned, the tertiary values of Ulu Muda forests in terms of irrigation are based on the value of paddy production. The total area under paddy production under the MADA scheme in 1999 was estimated to be 96,233 ha41. The gross average yield was 4.5 tonnes per hectare for the main season and 5.0 tonnes per hectare for the off- season crop. Off-season commences during the dry season around February/March and ends in July/August (first season of the year) whilst the main season is the second season that begins in August/September and ends in January/February the following year42.

36 MOA, 1999 37 MADA, 2001. 38 JICA, 1995. 39 Ibid 40 MADA, 2001. 41 Ibid 42 Ho, 1996.

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Table 19. Estimation of Operating and Maintenance Cost of Irrigation Water (RM/m3) Pedu Discharge (Average of 1992 to 2001)

Discharge (acre feet/year) 576,370 Discharge (m3/year) 709,603,689 Operating and maintenance cost 80 (RM/acre/year) Total area (acre) 238,000 Total operating and maintenance cost 19,040,000 (RM/year)

Based on MADA statistics (2001), the net rice production in 1999 was 403,815 tonnes during off-season and 376,559 tonnes during the main season. This brings a total value of RM622 million per year based on the price of RM798 per tonne comprising guaranteed minimum price and subsidy from the Government (Table 20). This is reflected as tertiary values in this study. There is a significant difference between secondary and tertiary values as the secondary values reflect subsidised prices.

Table 20. MADA Paddy Production 1999 1999 1999 (Total) (Off-season) (Main Season) Cropped area 96,307 96,159 192,466 Unit yield (t/ha) 5 5 10 NET Production (t) 403,815 376,559 780,374 Price (RM/t) 798 798 798 Total Agricultural value (RM) 322,284,752 300,531,738 622,816,489 Agro-hydrological value 145,028,138 135,239,282 280,267,420

In addition to the direct water values highlighted above, there are also other ‘downstream’ values or costs in terms of water utilisation. For example, irrigation water supports double cropping in the Muda paddy schemes. It has been estimated that the cancellation of a cropping season could lead to a loss of RM200 million (MADA, personal communication) in a year.

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3.5.3 Summary of Economic Values The benefits presented as primary, secondary and tertiary values are reiterated as: x Primary values are direct and extractive costs. x Secondary values are obtained from receipts from environmental services of the forest. x Tertiary values reflect the value of activities in which water is a primary input.

While these values are indicative in nature, it provides an important overview in terms of the magnitude of values to guide policy options for the area. The values highlight the significance and also stress the need for careful protection of present sources in order to minimise the impacts of potential costs in light of the risks involved. Based on calculations of the various benefits of the Ulu Muda forests, the primary value (tourism, water supply and irrigation) is RM161 million while the secondary value is estimated at RM205 million. The tertiary value of the Ulu Muda forests is estimated at approximately RM2.5 billion (see detailed breakdown, Appendix 6). The tertiary figure reflects the significance to the Kedah economy as it contributes approximately one-third to the State GDP. The benefit estimates are integrated in Figure 7 based on the framework of the Total Economic Value highlighted earlier. As discussed, the Ulu Muda forests provide a variety of resources. For the purpose of this study only four components of direct values are analysed (timber, water supply, irrigation and tourism). The figures highlighted are secondary values for comparison at the same level. Benefit of water supply is RM187 million, irrigation RM5 million (tertiary values of irrigation is RM622 million), and tourism RM13 million. Whilst these benefits are complementary, extractive activities such as logging may pose a conflict depending on the method of logging and considerable changes may occur. Logging benefits are estimated at RM53 million. In total, the benefits from water supply, irrigation and tourism are approximately RM205 million compared to timber benefits of RM53 million. It is also important to consider the other values that have not been accounted in this study, such as the pharmaceutical potentials of the Ulu Muda forests. As the present benefits of utilisation depend upon the management of the Ulu Muda forests, the potential impacts and changes to the forest processes needs to be critically assessed. In addition, to ensure the sustainability of the economic benefits of the Ulu Muda forests, it is important that a cost-effectiveness calculation be undertaken to establish which development option is most beneficial. Therefore it is important to identify who benefits and who pays for the services of the forest ecosystems of Ulu Muda. Appendix 6 illustrates a possible way of highlighting the distribution of the benefit flows. As an example, the State of Penang gains approximately RM100 million (1999) in gross water revenue every year. This figure is expected to increase as water demand increases. Since the incorporation of PBA Holdings Berhad as a public-listed firm, the turnover for year 2001 was RM100,993,000.

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In addition to the water supply from Muda and Kedah rivers, the Muda Reservoir also plays an important role in providing a source of water during extreme drought. This scenario occurred in 1998 when extreme drought required water to be released from the Muda Reservoir to supplement water needs in Penang. This illustrates the importance of the inter-relationships between the management of Ulu Muda forests upstream and implications on users downstream. The analysis of benefit distribution shows that there are significant opportunities for win-win strategies in terms of cost sharing for ensuring the long-term sustainability of the benefit flows from the Ulu Muda forests.

Figure 7. Estimation of Components of Economic Values of Ulu Muda Forest Areas (Reflected as Annual Secondary Values)43

ECONOMIC BENEFITS OF ULU MUDA FORESTS

DIRECT USE VALUES INDIRECT USE NON USE VALUES Extractive VALUES Existence Values Ecological services - Globally and nationally - Irrigation, RM 5 mil. - Water supply, RM 187 mil. - Watershed protection unique biodiversity heritage - Timber harvesting, RM53 mil. - Flood mitigation (distinct Northern Forest - Non-timber forest products - Climatic and temperature element, unique species such as wild elephants, Biological support Rafflesia) Non-extractive - Tourism, RM13 mil - Habitat for flora and - Traditional/cultural (e.g. trekking, birdwatching) wildlife. appreciation - Scientific & educational - Food sources for wildlife purposes Option Values - Pharmaceutical & Medicinal values

43 Secondary values reflect direct receipts from environmental services of the forest.

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4 Fundamental Aspects of Nature Tourism Development in Ulu Muda

4.1 Definition of “Nature” and “Ecotourism” The two definitions that have been accepted by the Malaysian Government for Nature Tourism and Ecotourism are: Nature Tourism is essentially all tourism directly dependent on the use of natural resources in a relatively undeveloped state, including scenery, topography, water features, vegetation and wildlife44. Ecotourism is environmentally responsible travel and visitation in relatively undisturbed natural areas, in order to enjoy and appreciate nature (and any accompanying cultural features, both past and present) that promotes conservation, has low visitor impacts, and provides for beneficially active socio-economic involvement of local populations45. What distinguishes Ulu Muda from many other places is its natural attractions. The opportunity to experience adventures in a primary rainforest and view wildlife such as elephants and gibbons in their natural settings is increasingly rare in today’ s world, and a growing number of people are willing to pay larger amounts of money for the experience. With proper management and planning, there is no reason why Ulu Muda cannot generate the same amount of revenue as Masai Mara (Africa) or Yellowstone (USA). The key is to develop a niche market in which Ulu Muda stands out. That niche market is tropical wilderness.

4.2 Defining the Nature Tourism Destination

4.2.1 Justification The essential condition for Ulu Muda to be established as an international nature tourism destination, thereby developing tourism as a significant part of the State economy, is defining its nature tourism destination. This is a fundamental and essential condition. A “ nature tourism destination” , in this context, is a specific area that is legally gazetted as a natural nature tourism area, and with the full range of institutional arrangements implemented as necessary to support and manage it. The presence of such an area will not only provide the critical component needed to attract tourists and maintain tourism both nationally and internationally, but will also ensure that investments in nature tourism infrastructure, facilities, promotions and etc., are safeguarded.

44 NEP, 1996. 45 Ceballos-Lascurain, 1993, cited in the NEP, 1996.

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There are many secondary benefits to the presence of such an area in Ulu Muda. The fact that Ulu Muda represents a relatively special opportunity to create a transboundary-protected area (with adjacent parks in Thailand) means that a protected nature tourism site will instantly gain international recognition. As pointed out the Ulu Muda forests also provide important benefits such as water catchment protection, increased economic activity for the local community and micro-climatic regulation.

4.2.2 Criteria for Area Selection The nature tourism destination must be selected under rigorous ecological criteria. This is the most practical approach when considering long-term sustainability and management. If the nature tourism destination area is essentially convergent with a basic ecological unit, ecosystem processes and dynamics should be sufficiently self- sustaining to require minimal management intervention. Any other situation will inevitably result in severe problems in the long run, as management authorities eventually find themselves facing problems that arise from outside their management area but that have major impacts within. Ideally, the Greater Ulu Muda area should be analysed in detail at the landscape level, taking into account the criteria specified below to develop a proposed nature tourism area.

4.2.2.1 Water Conservation Hydrology is an essential high-conservation value aspect of forests, and many forest ecosystem components critically depend on the quality and quantity of water. Thus, at the very least, the nature tourism destination should encompass a full watershed or river basin. Similarly, river valleys falling in the protected area must be protected up to the ridges.

4.2.2.2 Wildlife Habitats In addition, specific components of the ecosystem may need to be separately considered, to take into account special requirements. For example, elephants may need a larger land area to support their population. Suitable corridors must be maintained to allow movements of larger animals to and from critical areas. Special habitat types, such as saltlicks, need to be protected, with suitable-sized buffer zones established. Past studies have indicated that there are no more than 150 elephants roaming the northern forest areas.

4.2.2.3 Ecotones Continuous natural habitat that extends from lowlands to uplands (e.g. hillslopes up to crests and ridges)— i.e. a continuum of altitudinal clines— should be maintained where possible. Many studies point toward altitudinal ecotones as being biodiversity hotspots. Moreover, a recent study of mountain amphibian fauna found that it is not only the presence of such ecotones, but the continuous natural cover extending across the ecotones that is essential in promoting a wide diversity.

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4.2.2.4 Buffer zones Just as important as the designation of a nature tourism area, is the formulation and implementation of management prescriptions for the surrounding areas, i.e. the management of a buffer zone around the nature tourism area. These should support the management of the actual nature tourism area itself. In addition to the ecological criteria for selection, the carrying capacity framework is discussed to incorporate potential visitor impacts in the planning of tourism development in Ulu Muda.

4.3 Carrying Capacity Concept

4.3.1 Definition of Carrying Capacity Tourism development in Ulu Muda poses specific challenges because the quality and biological diversity of the natural life and ecosystem needs to be strictly maintained to ensure tourism is sustainable in the long run. The concept of carrying capacity used in recreational and tourism planning arose out of ecological studies based on the maximum numbers of animals that the environment can support on a long-term basis46. There are various definitions of carrying capacity. For the purposes of this study, carrying capacity can be defined as: “The maximum number of people who can use a site without an unacceptable alteration in the physical environment, without an unacceptable decline in the quality of experience gained by visitors, and without an unacceptable impact on the society, economy, and culture of the tourism area”. 47 The concept of carrying capacity is important because it helps to determine the range where the “ level of development and use that will not result in serious environmental deterioration, social and cultural or economic problems” 48. Tourist arrivals that exceed the carrying capacity of a place will ultimately translate into a reduction in the number of tourists. The natural environment should be managed to ensure that tourism destinations are able to compete in the long run to attract tourists for many generations to come. This approach to tourism development ensures long-term benefits to the economy and local development. Competition among ecotourism destinations is intense— environmental considerations and sustainability practices are fast becoming important promotional and marketing requirements, as these are driven by customer demands and expectations.

46 Miller, 1998. 47 Inskeep, 1991. 48 WTO, 1994.

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4.3.2 Determining Carrying Capacity In practice, it is difficult to determine the actual carrying capacity of a destination, even though there is general agreement on the definition of carrying capacity for ecotourism. It is difficult to establish with certainty the carrying capacity of Ulu Muda because of natural variations. The pressure on some locations within the area compared to the rest; the degree of environmental, biological and social impacts; maintenance of tourist facilities and services; tourist safety; and other specific situations49 for Ulu Muda needs to be taken into account. A long-term carrying capacity study based on research and monitoring of the carrying capacity indicators will ascertain with greater accuracy the carrying capacity of Ulu Muda. If such monitoring data is not available, planners should make decisions based on preliminary carrying capacity studies, rather than on no information at all. As a short-term solution, a preliminary carrying capacity study would indicate the approximate carrying capacity based on information available. In the long-term, carrying capacity would need to be revised based on monitoring data. The “ limits of acceptable change” approach is commonly used to assess if carrying capacity has been exceeded. It determines carrying capacity based on changes in environmental or resource conditions. When certain limits are reached or exceeded, it would result in, and be reflected by, unacceptable changes in social, biological, environmental, physical or economic conditions. The first step to determining the limits of acceptable change is to decide whether the level of damage or change is acceptable or unacceptable. The second step is to rectify the unacceptable change according to the type of damage being caused, and to use the most cost-effective and environmentally friendly way of halting it50. Actions should then be taken to address the issues and the causes of the change (e.g. limit or reduce number of tourists to the degraded area of the park, upgrade tourist facilities such as trails, changing rooms, introduce environmental management practices, etc.).

4.3.2.1 Factors Affecting Carrying Capacity Human activities impact the forest physically, ecologically, and the surrounding towns socially and economically. These impacts influence the overall carrying capacity, hence are referred to as factors affecting the carrying capacities of the environment. These factors, described below, are dependent on each other. The overall carrying capacity of Ulu Muda would be determined by the lowest number of tourists that each factor can support. x Physical: There are physical limitations on the facilities available at Ulu Muda, such as number of rooms for tourists staying overnight, or boats available to ferry tourists into the park.

49 Chamberlain, 1997. 50 MOCAT, 1997.

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x Ecological: These are the results of direct and indirect impacts of tourism activities on natural systems. Suitable biological indicators need to be identified to reflect degradation of ecological quality. x Social: This is based on the perception of visitors in terms of comfort with various levels of crowds, and associated levels of satisfaction with regards to their experience at Ulu Muda. x Economic: Economic limitations are based on tourism receipts to cover the costs to manage and maintain the park, as well as to cover the operating costs of resorts, and also other services. Table 21 below describes the factors affecting the carrying capacity of Ulu Muda.

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Table 21. Factors Affecting Carrying Capacity Factors Description / Examples Response when carrying capacity is exceeded Physical Man-made infrastructures: Deterioration such as: environment x Roads x Badly maintained trails, visitor x Jetty centres & tourist facilities (e.g. x Boats toilets). x x Viewing hides Pollution: Litter, solid waste and poor water quality x Trails x Resting / Picnic Huts x Water supply x Wastewater treatment x Other infrastructure/tourist facilities such as solid waste management system, toilets, etc. Ecological Ecosystem: Deterioration such as: environment x Fish life in lake x Reduced sightings of mammals x Birds / birds / fishes. x x Mammals Increase in indicator species x Forests that reflect deterioration.

x Biodiversity Psychological Perception by tourists of the x Reduction in tourists. level of crowdedness and x Reduction in repeated tourists. satisfaction of experience. x Tourists start to seek other destinations. Social Tolerance of local communities Outward response–hostility and fishermen towards tourists among town / kampung folks. and tourism activities. Economic Cost effectiveness in terms of x Unable to recover operational operating tourist resort. costs in the long run. x Poor maintenance of park / resort facilities. Source: Adapted from Lee (1999)

Carrying capacity can be increased or decreased, to a certain extent, by increasing investment and improving environment management practices. In addition to managing people’ s conduct, infrastructure and facilities will address the deterioration of environmental quality (e.g. proper waste management and disposal, and sewage

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system). Hence if the factors above could be effectively managed, carrying capacity could be managed.

4.4 Spatial Analysis of Ulu Muda

4.4.1 Specific Criteria Considered The following criteria have been used to analyse the Ulu Muda forest landscape. These criteria were used to identify specific zones or areas that needs to be conserved or where strict management guidelines will need to be enforced. The criteria used are: x Buffers around saltlick areas (1 km radius); x Buffers around water-channels and lakes (10 km on either side of Sg. Teliang and Muda and around lake perimeter; 100 m around other water channels); x Macro-forest landscapes (maintaining connectivity to large stands of forests); x Maintenance of altitudinal range from key lowland ecotone (150 m contour up to peaks); x Maintenance of natural topography between river-valleys and ridges (an important animal corridor); x Security zones (e.g. security camps, dam area, tunnel, and water intake points); x Special unique habitat areas (e.g. presence of swampy areas, unique floristic zones, etc).

4.4.2 Results of Analysis The criteria and considerations briefly outlined in the previous sections had been analysed over the larger Ulu Muda forest landscape. Three broad regions have been identified that appear to be the most important natural areas for conservation. They are areas identified as: Thailand, Trans-border and Muda (see Map 7, Topography and Other Important Landmarks).

4.4.2.1 Thailand This forested area appears to be important as it appears to be relatively undisturbed (LANDSAT remote sensing image, 1999) and captures the important ecological zone between the 150 m contour level and the higher peaks towards the common Thai- Malaysian border.

4.4.2.2 Trans-border The trans-border area is basically an extension of the Thai forests identified above, and continues from the ridges along the common Thai-Malaysian border all the way

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to the eastern perimeter of Pedu Lake, the northwestern perimeter of Muda Lake and the river valley of Sg. Teliang. This forested area appears to be predominantly undisturbed forests and forms a natural continuum from the Thai forests. The effective size of the protected area is significantly larger considering the potential for the creation of a trans-boundary protected area.

4.4.2.3 Muda The Muda segment continues along the eastern and southern perimeter of the lake and extends to provide a significant buffer around Sg. Muda up to its upper stretches (Kuala Lasor) and also the major concentration of saltlicks.

4.5 Recommendations for a State Park It is recommended that the boundary of a State Park for the Ulu Muda area should at least incorporate the conservation zones proposed above. These areas should be considered strict conservation areas. It is further recommended that the boundary of the State Park be extended as much as possible to encompass the entire catchment forest of Ahning and Pedu Lake. Map 8 (Proposed Kedah State Park) highlights the concept of a State Park that the project recommends. Based on the available digital data (Forest Reserve compartment numbers and area and proposed crude boundary of the State Park), the total area proposed as a State Park is approximately 53,903 ha. The recommended compartments are provided in Appendix 7.

4.5.1 Proposed Conceptual Management Zones Due to the sensitivities of developments in the area (e.g. dam security, environmental protection and reducing wildlife disturbances in critical areas), three key management zones have been identified (these zones are illustrated in Map 9, Proposed Conceptual Management Zones) and described in Table 22): a) Restricted Areas, b) Nature Reserves, and c) Tourism Centres. The Restricted Areas identified include the immediate areas close to the dams of Ahning, Pedu and Muda, areas surrounding the Saiong tunnel and its inlet and outlet. It is recommended that any developments should be prohibited where they may pose a threat to the integrity of the dam structures, impact on dam hydrology or pose a security risk. Nature Reserves generally encompass areas that are either environmentally sensitive or may be important areas for wildlife conservation. Areas that have been identified include the Sg. Muda and Sg. Teliang area, and areas around river courses and the lake perimeter. These areas should not be developed with any permanent physical structure. An exception might be around the Sira Hangat area, where it may be developed as a key focal tourist area. Here, hides and canopy walkways might pose short-term environmental impacts but may in the long run, reduce human impacts on

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the areas surrounding the saltlicks. It must be stressed that with these structures in place, there should be no need for anyone to enter the saltlick areas. A further note, the Sg. Teliang area has already been identified under the Kedah Fisheries Act as a no-fishing zone for fish conservation. Given that the immediate future of tourism in this region will be largely group-based, the Tourism Centres identified are strategically located as points of access or are areas that may be suitable for accommodating large-scale tourism. The four centres identified include: Kuala Nerang, Pedu resort area, Gubir and Gulau. At present, Pedu is the main centre for tourism activities with at least two major resorts in operation. Gubir is the main centre for settlements in the immediate Ulu Muda area; and with the development of the Trans-Hinterland Highway, it will play an integral role as a main point of access. This will be an ideal location for any proposals for establishing an information centre or village-centred services (e.g. secure car parks, transport shuttle between village and KOPAM jetty area, and other amenities).

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Table 22. Summary of Management Zones Management Location Feature Management Zone Considerations/Guidelines RESTRICTE Ahning dam area Dam structure x No developments due to D AREAS security risks Pedu dam area Dam structure x No developments due to security risks Muda dam area Dam structure x No further developments due to security risks x Expansion of existing jetty needs to be controlled x Jetty facility could be upgraded x Site cannot accommodate large-scale tourism (if need be, shuttle-buses from Gubir could be provided) Saiong tunnel- Water tunnel x No physical developments area and inlet/outlets due to security risks x Area could be developed as an access point into the forest (4WD trails or forest trails) NATURE Sg. Muda Saltlicks x Sensitive wildlife area for RESERVES nature tourism x No physical structures to be considered x Exceptions are wildlife observation hides or walkways that could reduce human impacts at saltlicks Sg. Teliang Restricted x Sensitive wildlife area for fishing zone nature tourism x Conservation area for freshwater game fish River and lake Low-impact x Environmentally sensitive channels zones areas x No physical developmental structures x Important wildlife corridor

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Table 22 (continued). Summary of Management Zones Management Location Feature Management Zone Considerations/Guidelines TOURISM Kuala Nerang Major town x Possible site for tourist CENTRES information centre Pedu Resort centre x Main centre for resort facilities Gubir Village centre x Key tourist information centre x Possible site for managing mass-tourist activities Gulau Village centre x Possible access route into Muda forest x Possible site for tourist information centre

4.6 Institutional Framework for Managing Nature Tourism Currently, the institutional framework for the management of the Ulu Muda area and activities within the area are fragmented and dispersed. The Forest Department has jurisdiction over the forests around the greater Ulu Muda area. The Department of Fisheries has jurisdiction over fishing activities in the lakes and streams of the area. Other departments, agencies, authorities and bodies also play a role (e.g. PERHILITAN, MADA, Security Forces, etc). These numerous agencies with their overlapping areas of jurisdiction and interest make it very challenging to manage nature tourism in the area, as well as to manage the area for nature tourism. Just as important, it creates an institutional context unconducive to the expansion of the nature tourism market sector through a number of ways; e.g., by creating many layers of bureaucracy that has to be negotiated just to attain permission for a jungle fishing trip.

4.6.1 The Nature Tourism Area Ideally, a single central authority should have full jurisdiction over the area, responsible for both the management of the area as well as the activities within the area. Within the Malaysian context, there are two very successful models for this: the Forest Department State Park Model and the Park Corporation Model (see Table 23).

4.6.1.1 The Forest Department State Park Model The first Forest Department State Park Model has been implemented in Perlis (i.e. the Perlis State Park). In this system, the Forest Department continues to be the primary

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managing authority for the forests in the area, but with the management responsibility transformed from timber resource management to biodiversity management. Under Section 10 of the National Forestry Act 1984, forest areas may be classified into 11 categories51. A new classification can be added to these categories to enable the establishment of a State Park and accorded protection under existing forestry laws and management. Three essential steps are required to implement this system: (1) The State Forestry laws must be amended to include a new classification of forest. (2) The relevant forest reserves or other land area to be designated as a State Park must be gazetted under the legal instrument above. (3) The Park Rules must be legally gazetted and published.

4.6.1.2 The Park Corporation Model This is the system used in Johor, with the Endau-Rompin National Park. An independent corporation is established and tasked with the management of the park area and activities within the park area. Table 23 discusses the various differences of the two models.

4.6.1.3 Recommendations of a State Park Institution Table 23 discusses the pros and cons of the two models. The funding sources between the two models may be similar. However, the State forestry funding provides a consistent source of funding for the Forestry State Park model. The Parks Corporation model is more flexible in terms of human resource capacity. It is easier to gain and retain human resources and required expertise (direct contract recruitment to specific posts that are in turn easily created as needed). Nevertheless, with existing legislation and staff under the forestry department, this would facilitate a less costly and faster adoption of a State Park. Approximately 37% of the Kedah total land areas are maintained as Permanent Forest Reserves52. The National Forestry Council recommends that the total Permanent Forest Reserves should not be reduced. However, should there be a critical need to degazette an area, a replacement area of similar size and quality needs to be provided. In view of the limited forest areas, finding a suitable area of similar size and quality may prove to be difficult53. Based on the assessment of the two models in relation to the existing scenario in Kedah and consultation with relevant agencies, this study proposes the Forestry Department State Park model.

51 Department of Forestry, Kedah, pers. comms. 52 Ibid 53 Ibid

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A single authority taking responsibility for supervising nature tourism activities within the Ulu Muda area provides for the best approach in ensuring that nature tourism of the area is safe and sustainable. This body will serve to coordinate nature tourism activities, keep tourist loads within the designated carrying capacity of the various zones, train nature guides, etc. Based on the Perlis State Park and Johor Parks staff structure, Figure 8 outlines a conceptual institutional framework for Ulu Muda. This conceptual framework will be used to analyse the staff costs in the Action Plan (see below). The State Park Unit would comprise of representatives from relevant agencies of the Ulu Muda forests. Again, it should be stressed that a collective discussion and consultation process of all agencies involved is required for the actual institutional structure.

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Table 23. Comparisons Between the Two Contrasting Malaysian Protected Area Models Forest Department State Park Corporation Model Park Model Management State Forest Department Independent State-established Authority Corporation Funding Sources and State FD budget, Federal Federal (MOSTE, MOCAT), Financing (MOSTE, MOCAT), special special State allocation, Mechanisms State allocation, independent donors, independent donors, individual collection, etc. individual collection, etc. Examples Perlis Johor, Sabah Pros x Many funding sources: x Easier to gain and retain Federal (MOSTE, human resources and MOCAT), State (FD) as required expertise (direct well as third-party (aid contract recruitment to agencies such as specific posts, that are in DANIDA etc.) turn easily created as needed) x However, existing staff could be involved in enforcement and management roles. x Less costly and less time-consuming Cons x Human resources: Staff x Fewer funding sources can easily be transferred (e.g. no allocation from into entirely different State FD budget) departments, or even x State FD does not have States, as they remain direct control over the under the institutional land any more arrangements of the Forest Department. This makes it difficult to build up capacity and retain core, experienced staff.

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Figure 8. A Possible Institutional Structure for the Management of a State Park

A ssistan t D irecto r (D evelo p m en t)

S T A T E P A R K U N IT

U n it H ead

R esearch O fficer

V isito r M a in ten an ce (2 ) P a tro ls (3) S erv ices (3 )

4.6.1.4 Institutional Arrangements for Control of Access Access to the nature tourism destination needs to be controlled, for the safety of visitors, residents as well as wildlife. Due to the current institutional arrangements for the management of the Ulu Muda area, the controlling of access to the area falls under several different agencies, primarily the Forest Department, the Wildlife Department, the Department of Fisheries and the military. If nature tourism levels are to increase in the Ulu Muda area, not only will these multiple jurisdictions be cumbersome, it may also be difficult to effectively enforce. The ideal situation is a single authority responsible for granting permission to the area, i.e., the nature tourism authority, with enforcement support provided for by various other bodies.

4.6.1.5 Control of Access and Illegal Harvesting Illegal harvesting of forest products— animals, plants, minerals (including “ medicinal” rocks)— can have a serious impact on the integrity of the area if unchecked. Furthermore, poachers or illegal harvesters themselves may pose a threat to visitors who stumble upon them and their activities. Illegal harvesting can be controlled by strict enforcement of access, and access itself can be controlled through ensuring that access to the forest is channelled through a few supervised entry checkpoints.

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4.6.1.6 Wildlife Disturbances Apart from poaching, wildlife may be disturbed through a number of activities that may increase as tourist levels increase. The simple presence of too many people in an area for too long periods of time, or too often, may be enough to discourage animals from visiting the area. The key to minimising the impact of visitors on animals is to balance visitor loads with carrying capacity, together with a zonation plan that limits and distributes visitor loads to sites.

4.7 Developing Local Capacity for Nature Tourism For successful nature tourism development, local capacity needs to be involved, not only with the tourism sector (as guides, etc.), but also in managing nature tourism in the long term. Human resource development must thus address the following sectors: x Nature tour guides; x Nature tour operators (local and regional); x District/State administrators (managers of the larger administrative landscape); x State enforcement officers (e.g. fisheries, wildlife, forestry); x Village community (multiple-levels).

4.7.1 Local Community Involvement Nature tourism development in this region must be sensitive to the needs and aspirations of the wider local community. Tourism centres identified at Kuala Nerang, Gubir and Gulau are major concentrations of settlements in this region. Furthermore, the KOPAM village jetty is currently managed by the local village co-operative. Some of the areas where we can see strong local village participation include: x Nature tour guides; x Voluntary or paid local enforcement (wildlife, fisheries, etc.); x Entrepreneur developments (amenities, shuttle-services, car park facilities and other services). Skills and levels of awareness will probably be the immediate limiting factor for local community development, although other factors such as access to capital might also be important. However, three avenues are open for creating opportunities for local communities: enhancing skill levels through apprenticeship; participation in official training centres and courses; and internships with established companies.

4.8 Marketing and Promoting Nature Tourism The number of visitors to Malaysia that are interested in Malaysian nature has been on the rise since the 1980s (Table 24). It appears however that more and more people are beginning to see Peninsular Malaysia as a “ developed” country and prefer instead to visit Borneo, which has more to offer in terms of pristine wilderness. For example, the

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NEP estimated that 10% of tourists to the Peninsula are ecotourists whilst the percentages in Sabah and Sarawak may be in the vicinity of 50%. Nonetheless, it is this very market that tourist operators in Kedah would like to tap into. The question is how? One way is to develop different strategies for targeting local, national and international tourists. However, it should be cautioned that the strategies developed should be compatible with one another. Table 25, for example, outlines at least one way of sectoring the marketing and promotional activities.

Table 24. Trends in Visitor Numbers to Parks and Protected Areas in Malaysia Site Period Mean rate of change, % per annum Taman Negara 1989–1994 (5 years) +23% 1984–1994 (10 years) +14% Cameron Highlands 1985–1989 (4 years) +4% Gunung Mulu NP 1987–1994 (8 years) +18% Sepilok WS (Foreigners) 1988–1994 (7 years) +40% Gomantong/Sukau 1989–1994 (5years) +134%

Adapted from: National Ecotourism Plan 1996.

Table 25. Sectoral Marketing Matrix Level of Marketing Types of Tourist Tourism Local National International Category Corporate groups Mass X Domestic package Mass X holidays Foreign package Eco, Mass X holidays Independent domestic Eco, Local X X tourist Independent foreign Eco X X tourist Local clubs and Eco, Mass X X societies

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School/university Mass X X groups

Note: Locals are essentially domestic tourists but reside within the State and do not usually book package holidays. Recreational fishermen from nearby villages or from Alor Star could be categorised as a “local” tourist.

The feedback from ground operators is that national and local domestic tourists dominate much of the present level of tourism (Table 26). It is the international nature tourists that the operators are having difficulty marketing to. Further discussions especially on marketing strategies are incorporated in the Action Plan in Chapter 5.

Table 26. Percentage Distribution of Type of Tourists at Pedu and Muda Areas Domestic International Total (%) Tourists (%) Tourist (%) Desa Utara 80 20 100 Mutiara Pedu Lake 90 10 100 Muda Resort 100 0 100 Anjung Pedu N.A. N.A. N.A.

Source: Desa Utara Pedu Lake Resort and Mutiara Pedu Lake Resort.

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5 Conceptual Framework for the Development for Ulu Muda The initial sections of the report discussed the tourism potential of Ulu Muda encompassing Langkawi-Penang-Alor Setar and Thailand while Chapter 4 presented proposed spatial recommendations of the Ulu Muda forests. This chapter will present the conceptual framework and guidelines of the Ulu Muda forests as a nature tourism destination (and potential ecotourism destination). These proposals are aimed at facilitating further discussions and the detailing of more specific implementation plans. However, it is important to note that more specific studies and detailed site-assessments will help fine-tune the management considerations involved in tourism planning at Ulu Muda. The conceptual framework has been developed based on the central attraction of Ulu Muda, which is its natural environment. Planning and careful management of this fragile natural environment will be the key to a sustainable tourism industry for Kedah. Based on our understanding of the region, we have developed a concept for sustainable tourism that is based on its carrying capacity. This carrying capacity will depend greatly on the quality and scale of existing facilities that balances itself with the natural environment. Our contention is that all activities in the forest areas, including visitations by larger groups of tourists should be managed so that it does not bring about unacceptable change to the natural environment. In so doing, these developments will also provide a catalyst for growth to the surrounding village economies. This vision is presented in Figure 9. This vision is based on an understanding that the natural environment will need to be managed to ensure that multiple-use of its resources can occur without negatively impacting on any one particular resource. The central components of this vision are addressed in the previous chapters and include the following: x Park Establishment x Management Interventions x Development Opportunities As discussed above, the central attraction of the Ulu Muda forests are its natural attributes. The inside-outside park concept is proposed to incorporate the sensitivity of the environment and balancing the needs for development of the area (this concept is illustrated in Figure 9). The concept essentially incorporates the following considerations: x Low impact activities within the park area, and closer contact with the environment and wildlife is targeted at specific tourism markets that would be willing to pay higher fees and spend more money on-site; x Higher impact, mass tourism, focused outside the park area; x Development of infrastructure, facilities and attractions planned to meet tourism demand and based on the carrying capacity of the area.

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Figure 9. Visualisation of the “Inside-Outside Park” Concept

Outside Park Area Inside Park Area

Potential Protected Area in Thailand

d Kalir n Pedu a

l Kuala i

a Nerang Bukit h Safari

T Saiong entrance n i

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e r Kuala

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c Dumpsite Carok e Sira t

o Tera r Hangat P

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5.1 Development Concept for “Inside areas” The areas identified within the park offer a variety of attractions to visitors to the area (see Map 11, Conceptual Plan for “Inside Park” Nature Tourism Development). Based on the uniqueness of the areas, proposed capacity and infrastructure development are presented to encompass nature tourism planning up to year 2010. The main concept is to integrate environmental considerations within development planning to ensure that the very attractions that draw visitors are not compromised. 1. Kuala Tera: The waterfall area and surroundings offer an attractive area for developing as a recreational centre. Other potential activities include fishing, other river-based activities, bird watching and elephant tracking. Kuala Tera is a potential site identified for supporting a relatively higher number of tourist numbers with overnight facilities and amenities sufficient for not more than 80 people a day. It can be reached by catamaran or by upgrading the existing logging track. The riverbank needs to be assessed to determine if sufficient docking space is available for boats and catamaran. 2. Sira Hangat: This is a saltlick area representing the focal wildlife arena. Hence it is a valuable resource for attracting visitors for wildlife viewing. Due to the sensitivity of this area, visitors need to be managed to ensure that visitor activities would not affect the number of animal visits. There is an existing hide that accommodates 15 people. The number of visitors to the hide needs to be controlled and areas of the saltlick should be identified as being out-of- bounds to minimise disturbances to the saltlick. 3. Kuala Labua: Presently PERHILITAN maintains a campsite at this site that is being used by HAT as a base camp. Due to the proximity of this area to the saltlicks, it is proposed that an alternative site be identified, such as the Kaji Cuaca Station to accommodate a higher number of people (maximum 30). HAT has proposed a canopy walkway over the river/lake to Sira Hangat to provide the unique experience of a bird’ s eye view of the river. It is recommended that a detailed assessment be carried out on the potential visitor numbers who would use the canopy walkway and the potential to reduce impact of tourism on the saltlick areas. Kuala Labua can be reached via the reservoir when the water level is sufficiently high and on land via a jungle trail. The reservoir banks need to be assessed to determine if sufficient docking space is available for boats and catamaran. 4. Kaji Cuaca Station: This ‘island’ is presently maintained by MADA. The area can be developed to accommodate higher visitor groups of up to 30 people per day in order to reduce disturbances to the saltlick areas in Kuala Labua. 5. Kuala Lasor: An existing old logging track connects Kg. Gulau and Kuala Lasor. Presently, this is the route some locals are using to access the upper reaches of Sg. Muda. This track can be upgraded to transport visitors to Kuala Lasor via 4WD vehicles from licensed tour operators. A permanent camping ground has been proposed to support a maximum of 10 people a day. The

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attractions of this area include river-based activities such as fishing. This is an area that will be best developed for tented-camps by small groups. 6. Kuala Kalir: It is proposed that this area be packaged as an adventure-type package to attract visitors who would prefer the option of trekking and camping. Potentially, this could include niche nature tourists who are willing to pay higher rates for such experiences. 7. Bukit Saiong: Bukit Saiong can be seen from the KOPAM jetty and is accessible from the abandoned Safari Park entrance. A jungle trail needs to be developed and maintained. The steep terrain and unique shape at the peak beckons adventure seekers. Besides scaling the hill, the potential of other adventure-type activities such as rock climbing and abseiling needs to be explored. Due to its accessibility, self-guided treks for nature enthusiasts are another strong possibility.

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5.2 Development Concept for Outside Areas The idyllic and serene environment surrounded by rich tropical forests outside the park areas also has high potential for attracting larger groups of visitors. These areas may cater largely for leisure visitors and corporate training packages and would demand less contact with the natural environment. Nevertheless, the environment at the periphery of the park area could be packaged and enhanced to attract these visitors as part of their activity on the trip. The next sections highlight various locations linked to nature tourism development (see Map 12, Conceptual Plan for “Outside Park” Nature Tourism Development). 1. Gubir. To develop Gubir as a key gateway into Ulu Muda entails expansion of an office administration building with telecommunications access. This is also an ideal centre for developing an information booth or education centre to provide information about the facilities in the region (both Pedu and Muda), about possible tours available and whom to contact for more information, access to local guides and fishermen, and also to direct them to the KOPAM jetty prior to entering the forest area. Secondly, secure car park facilities could be provided for long-term parking or for large coaches, this will reduce the need for expanding the present car park at the KOPAM jetty area. A shuttle-service for ferry passengers between Gubir and KOPAM jetty is a possible spin-off for entrepreneurs. The recognition of Gubir as a focal point for tourism will also ensure that further entrepreneurial initiatives could result (e.g. providing facilities such as eateries). The position will be further enhanced with the development of the Trans-Hinterland Highway from Durian Burong. 2. KOPAM jetty area. The KOPAM jetty area will not be a suitable place for further development expansion in the long-term. This is due to its proximity to the dam structure and the security risk posed if large numbers of visitors are to use this area. However, the jetty would be a suitable area to upgrade to accommodate small numbers of tourists. Furthermore, the present office could be upgraded to act as a 24-hour control and monitoring station. A communication system could also be established to allow for efficient communication between Pedu, Gubir and the jetty area. 3. Kg. Gulau. Kg. Gulau could be developed as second gateway into Kuala Lasor. This could potentially involve developing community homestay programmes or other small-scale facilities such as food stalls and handicraft centres. The location of this gateway is, however, a control gateway for overland access to Kuala Lasor. 4. Pedu area. Presently the two resorts at the Pedu Lake area organises events such as cultural shows and activities such as fishing, canoeing and other water sports within the vicinity of the resort. These resorts also promote jungle trekking packages to Bukit Batu Tinggi and Bukit Batu Fakir especially on school holidays. A golf course situated in Mutiara resort caters to golf enthusiasts. The Pedu area is also a haven for bird watchers. The attractions in

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the area could be enhanced by marketing the wider Ulu Muda area as a nature tourism destination.

5.3 Action Plan Framework for Conservation and Development The tourism action plan framework (Figure 10) incorporates a timeline for planning (in this case to 2010), potential and projections of nature tourism and wider economic importance of the Ulu Muda forests. The framework reflects the ultimate goal of a tourism action plan towards: a) Achieving a managed State Park; b) Socio-economic improvements and spill-overs around population centres; and c) Ensuring integration of environmental considerations and capacity for sustained long-term nature tourism benefits. Realising the significance of the Ulu Muda forests for its natural resources and economic benefits, careful planning and commitment of relevant institutional/legal requirements would be the first step to ensure that the enabling environment for a successful State Park is secured. Management and regulation considerations need to be incorporated at the onset of tourism development to ensure that the impacts of nature tourism activities are carefully monitored and steered to sustain continuous ecosystem health and tourism benefits. The discussion above has highlighted various components of the proposed tourism plan framework. These will be elaborated further in the following sections. In order to become a managed State Park, concerted effort in implementing various components of the action plans is needed (Figure 10). Based on the plans and recommendations, investment and appropriate infrastructure, as in the necessary facilities and services for a nature tourism destination will be required. These facilities also play an important role in reducing tourism impacts to the natural environment. A key feature of a successful tourism attraction involves tourism product development. The knowledge and the uniqueness of Ulu Muda’ s natural attributes can only be shared with the local communities and visitors if these resources are innovatively packaged according to various market niches to draw the interest of potential visitors. In addition, these nature tourism products also need to be marketed and promoted in order to reach targeted market groups. In order to meet the expectations of various visitor groups to the area, sufficient skilled human resource is critical. This involves appropriate training and capacity building programmes in meeting the desired requirements. In essence, experiences of tourism destinations elsewhere have shown that the role and participation of local communities is of utmost importance if a nature tourism destination were to achieve meaningful local relevance and to meet the goals of sustainable tourism. The action plan framework also highlights some assessments of tourism potential and benefits of the Ulu Muda forests. Based on the analysis of present tourism figures, visitors to the Pedu and Muda areas are estimated to be in the region of 44,000 in 2001 while the capacity to receive tourist numbers is approximately 262,800. A

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preliminary assessment showed that tourism receipts received in 2001 was around RM13 million and hence on average a visitor spends approximately RM300 on a visit. Incorporating the projection estimate from the Pelan Tindakan Kedah Maju 2010 of 12% per annum and interviews with various tour operators, the estimated visitor numbers to Pedu and Muda area will reach around 90,000 in 2005 and 150,000 in 2010 with the implementation of the tourism plan. Assuming that expenditure per tourist increases to around RM500, tourism receipts in 2005 is estimated at RM54 million and RM150 million if expenditure per tourist increases to RM1,000 in 2010 (Figure 10). While these are preliminary assessments of projected figures, the discussion provides an insight into the potential benefits from nature tourism of the Ulu Muda forests. Another critical feature is the potential of socio-economic spill-overs at nearby towns and centres such as Gulau, Gubir and Kuala Nerang. Besides benefiting the local communities, the process also contributes to the policies of the Kedah State Government in terms of providing more opportunities and raising the living standards of rural communities. Beyond the tourism potential, it is also important to highlight the wider values of the Ulu Muda forests. A rapid assessment of the tertiary values of Ulu Muda in terms of tourism, water supply and irrigation yielded an annual benefit of RM2.5 billion which is approximately one-third of the Kedah GDP (1978 prices).

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Figure 10. Conceptual Tourism Action Plan Framework

Investment Cost Environment and Ecology

Year 2001 2005 2010 Managed Planning & Institutional Needs State Park Investment & Infrastructure Product Development Marketing & Promotions Training and Capacity Building Management and Regulation

O+M

Items/Year 2001 2005 2010 Tourist numbers 44,000 90,000 150,000 Capacity (Pax/Year) 262,800 262,800 300,000 Tourism Receipts 13,400,000 54,000,000 150,000,000 (RM) Average Tourist 312 500 1,000 Spending (RM/Pax) Annual Growth Rate 12 12 12 (%), Kedah Maju 2010

Socio-economic spillovers at nearby town centres

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5.3.1 Institutional and Legal Requirements It will be imperative that the Kedah State Government endorses the gazettement and development of a Kedah State Park. This Kedah State Park should encompass the minimum area as proposed in Map 13 (Proposed Ulu Muda State Park). It is also recommended that in addition to this, the entire catchment of Pedu and Ahning be included within this proposed park. It is also recommended that the Kedah State Government raise the possibility of developing a transfrontier boundary park with Thailand in any upcoming Indonesia-Malaysia-Thailand Growth Triangle (IMTGT) discussions or at any other regional forum. The area that should be highlighted is identified in Map 13. It should also be stressed that the Kedah State Government is committed to this process and is hoping to initiate the formulation of a Kedah State Park. An institutional entity needs to be identified to carry out management and development objectives of the proposed State Park. The organisational body and structure needs to be adapted to the characteristics and circumstances of the Kedah State Government. In order to decide on a suitable organisational structure, it is important to determine the respective roles of the Government and private sector in the development and management of tourism of the area. A multi-stakeholder dialogue would facilitate discussions amongst various Government bodies on the most suitable institution for governing the proposed State Park. For the purpose of developing a conceptual management plan framework, the institution would generally be identified as the “ park authorities” . Within the proposed park authority structure, mechanisms for inter-agency cooperation, local community involvement and private sector participation also needs to be identified. The institutional structure recommended in this study is the Forestry Park Model as discussed in Section 4.6. With the establishment of a State Park, visions and objectives of the park need to be put in place to drive the management needs and considerations for the area. As an example, the Endau Rompin Park in Johor was established with the objective towards “ the preservation and protection of wildlife, plant life and objects of geological, archaeological, historical and ethnological and other scientific and scenic interest and through their conservation and utilization to promote the education, health, aesthetic values and recreation of the people” 54. Ideally the objectives of a park can be developed collectively together with relevant stakeholders such as the local communities and Government agencies in order to enhance ownership and sustainability of the park. This is proposed as a future step for the development of a more comprehensive management plan of the proposed State Park.

54 http://www.johorpark.com/Endau/about.htm.

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5.3.1.1 Proposed Infrastructure Requirements In considering the development opportunities, it is recognised that: x We need to maximise the use of existing facilities; x We need to focus on a key natural attraction and ensure that adequate control and management can be set in place; x We need to consider that large-group tourism as well as small-group nature tourists need to be accommodated. This section discusses a conceptual plan of proposed infrastructure and tourism development needs in the Ulu Muda forests based on the “ inside and outside” park concept. Zoning guidelines have also been identified that will assist in developing this plan (see Map 14, Proposed Management Zones of the Ulu Muda State Park). It should be emphasised that these conceptual plans provide an indication of a potential scenario based on the certain assumptions (see below). The study recommends an in- depth analysis and field surveys in order to create a more comprehensive plan.

5.3.1.2 Assumptions of the concept plan 1) Proposed development plan is compatible with the surrounding environment and do not adversely impact upon the natural heritage of the Ulu Muda forests. 2) Attractions inside and outside park areas are sufficient to disperse visitor numbers. 3) Proposed development is compatible with the activities of various Government agencies managing the area. Careful consultations with relevant Government agencies is critical to ensure that proposals of the park do not conflict with existing management schemes in the area and that partnerships with existing Government agencies can be enhanced. Table 27 and Table 28 propose maximum visitor capacity and infrastructure requirements for accommodating projected visitor numbers. Based on a conceptual assessment, the study estimates a maximum capacity of 24,000 visitors per annum within the park area up towards year 2010. This leaves the remaining 126,000 visitors outside park areas from the total estimated of 150,000 visitors. The overall estimation is based upon projections from HAT and 12% annual growth from the PTKM 2010. It is important to note that visitors who are reflected as visiting the outside park areas may also include visitors who will visit the inside park areas. This is because some visitors may be staying at the resorts in Pedu and Muda but also visit the inside park areas on a one-day trip or stay overnight for a proportion of their visit to Ulu Muda. Hence, the overall projected visitor numbers to Pedu and Muda areas may be less than 150,000. The capacity based on infrastructure provisions within the park shows that 24,000 visitors would be the maximum that the park would accommodate. This is less than the projections from HAT to attract 30,000 visitors by year 2010. Hence, it is important to consider that the implications of high visitor numbers to a sensitive area

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need to be assessed carefully so as to ensure that the resources attracting visitors are not destroyed. A 12% projected growth is adopted based on the PTKM 2010 for Pedu areas. While 12% may be an estimate to reflect projected increase for Kedah as a whole, the projection rate may need to be scaled down to adapt to the sensitive environments of Ulu Muda. Accommodation: The areas identified for development of overnight facilities within the park areas include Charok Tera, Kaji Cuaca Station, Kuala Lasor and Kuala Kalir. Facilities such as basic campsites at highly sensitive centres are proposed whereas small scale youth hostels and chalets are proposed for higher capacity areas such as Charok Tera and Kaji Cuaca Station. Outside park areas, it is proposed that the present resort areas be extended to accommodate projected visitor numbers. Tourism Centres and Gateway: The Gubir area is proposed as the main tourism centre to provide information and directions for tourist flow into Pedu and Muda areas. Other facilities such as car parks, stalls, handicraft centres are proposed to promote local community participation. It is also proposed that a park administration building and staff quarters be located at Gubir. Other tourism gateways include the KOPAM Jetty, Kuala Gulau and Gubir “ Dump-Site” area. Support facilities such as car parks and sufficient amenities have also been proposed at these areas. Access routes: The plan proposes upgrading two existing old logging tracks to accommodate 4WD vehicles at: x The rubbish dump (Gubir)-Charok Terau- Sira Hangat, and x Kg. Gulau-Lasor. Other points to consider include controlling access and road maintenance. Canopy and hides: One hide has been established at Sira Hangat. It is proposed that the hide be maintained for low impacts and minimal disturbances to the area. A suggestion was made by HAT to build a canopy walkway over the sira. If the effect will be to minimise human impact on the ground around the sira, then this is a workable idea. Visitors could arrive by boat and take the canopy walkway to the hide. Visiting the sira by foot could then be entirely forbidden. Jungle trail: The Pedu and Muda areas offers interesting jungle treks such as scaling Bukit Saiong, Bukit Fakir Terbang and Bukit Batu Tajam. Various jungle trials have been proposed including: x Sira Hangat-Kuala Lasor, x Charok Tera route–Sira Hangat, x Trail up Bukit Saiong, x Trail up Bukit Batu Tajam, and x Trail up Bukit Fakir Terbang.

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Table 27. Inside Park Area by Proposed Capacity, Attractions and Proposed Infrastructure Requirements

Site Attractions Proposed Proposed Infrastructure requirements Notes Max Max (visitors/day) (Visitors/year) Muda Charok - Water falls 80 8,000 - Overnight facilities near waterfall area - Assess possibility of developing Tera - Trekking - 15 simple (e.g. A-frame) chalets (2 night safari concept with a connecting 4WD track towards - Elephant pax/chalet) Sira Hangat, leaving at least the Tracking - 2 Youth hostel type dormitories last 1 km as a jungle trail. - River (25pax/domitory)

activities - Waste treatment facilities (septic tanks) - Fishing - Water pipes - Bird watching - Upgrade existing logging track to accommodate 4WD vehicles to an area close to Sira Hangat

Kaji Cuaca - Bird 30 3,000 - Overnight facilities - Explore potential of using this Station Watching - Basic amenity facilities site as an overnight facility (max. 30 per night) to replace Kuala

Labua as an overnight facility.

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Table 27 (continued). Inside Park Area by Proposed Capacity, Attractions and Proposed Infrastructure Requirements Site Attractions Proposed Proposed Infrastructure requirements Notes Max Max (visitors/day) (Visitors/year) Muda Kuala - Trekking - Existing campsite (PERHILITAN site) - Overnight activities to be Labua - Canopy - Canopy walkway to Sira Hangat supervised. Walkway - Assess need for establishing canopy walkway based on - River activities tourism numbers and impacts on saltlick area. - Wildlife viewing - No accommodation to be allowed due to the potential - Fishing impacts on the high-animal use - Bird area (visitors to stay at Pulau Watching Kaji Cuaca).

Sira Hangat - Wildlife 15 1,500 - Animal hide to accommodate 15 people - Sensitive saltlick area, overnight viewing in existence. activities needs to be supervised. - Canopy - 1km jungle trail south to connect to route - Need to reduce movement within Walkway from Charok Tera. the saltlick by visitors as human scent might reduce animal movement to the saltlick.

Lasor - River 10 1,000 - Upgrade and maintain present logging - Attract international tourists with activities track from Kg. Gulau (20 km) option of trekking and camping. - Fishing Overnight campsite to accommodate 10 pax/day UPEN Kedah and WWF Malaysia 71

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Table 27 (continued). Inside Park Area by Proposed Capacity, Attractions and Proposed Infrastructure Requirements Site Attractions Proposed Proposed Infrastructure requirements Notes Max Max (visitors/day) (Visitors/year) Muda Kalir - Bird watching 10 1,000 - Overnight campsites to accommodate 10 - Attract international tourists with - Elephant pax/day option of trekking and camping. tracking - Jungle trail - Fishing Bkt. Saiong - Trekking 15 1,500 - Jungle trail - Adventure and educational tourism. - Space for campsite to be identified for visitors to set up tents.

KOPAM Control 100 5,000 - Upgrade existing jetty - A plan had been submitted to Area Gateway - Upgrade pathway to boats develop a resort in the area. Since it is a sensitive dam area - Upgrade stalls (simple kampung style) and due to the lack of space, it is - Upgrade existing ‘office’ into a 24-hour recommended that the proposal monitoring station should be abandoned. - Basic amenities (2 rest rooms)

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Table 27 (continued). Inside Park Area by Proposed Capacity, Attractions and Proposed Infrastructure Requirements Site Attractions Proposed Proposed Infrastructure requirements Notes Max Max (visitors/day) (Visitors/year) Muda Muda Lake - Recreational 30 3,000 - Subsistence fishing by local fishermen - Fish stocks are one of the most and Sg. freshwater pressured resources within the Muda fishing Muda region. The development of recreational fishing activities will depend upon careful and controlled management of fishermen and their catch. Pedu Bkt. Fakir - Trekking 15 1,500 - Jungle trail - Adventure and educational Terbang tourism. - Space for campsite to be identified for visitors to set up tents.

Bkt. Batu - Trekking 15 1,500 - Jungle trail - Adventure and educational Tajam tourism. - Space for campsite to be identified for visitors to set up tents.

TOTAL 305 27,000

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Table 28. Outside and Periphery of Park Area Site Potential Proposed Proposed Infrastructure Requirements Notes Activities/Centre Max Max (visitors/day) (Visitors/year) Muda Gubir - Control - Control gatepost - The gatepost is to control and “ Dump Gateway monitor access. - 4WD Road Track to Charok Tera (10 Site” km) - Possible entry fee collection area. (Control Gateway) Gubir - Tourism Centre 200 20,000 - Office administration building with - Focus facilities as a tourism (Tourism telecommunications access (e.g. short- centre. - Muda Resort Centre) wave radio) - Organise a shuttle-service to ferry - Park rangers staff quarters passengers between Gubir- Dumpsite entrance-KOPAM jetty. - 1 Information and education booth - Possible entry fee collection area. - Car park facilities (including coaches)

- Food stalls & handicraft centre - 1 Rest and recreation centre - Basic amenities - Expand present Muda resort to reach max 200 persons/day

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Table 28 (continued). Outside and Periphery of Park Area Site Potential Proposed Proposed Infrastructure Requirements Notes Activities/Centre Max Max (visitors/day) (Visitors/year)

Kg. Gulau - Potential of 10 1,000 - 1 control gatepost - Need to control and monitor (Control homestay access. - Car park area Gateway) programmes - Potential area for fee collection. - Assess homestay programmes after 2005 for implementation

Kg. - Potential of 10 1,000 - Assess homestay programmes Belantik homestay after 2005 for implementation programmes

Kg. Batu - Potential of 10 1,000 - Assess homestay programmes homestay after 2005 for implementation programmes

Pedu Mutiara, - Resort, 1,000 100,000 - Expand existing capacity (1000/day) - Marketing both Pedu and Muda as Desa corporate a destination would help diversify - Develop nature education centre that Utara, training the attraction of Pedu resorts. contains boardwalks, tree climbs, and Anjung flying fox facilities to raise interest of Pedu visitors at the outside park areas. TOTAL 1,230 123,000

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Based on the above assessment, the conceptual estimation of visitor numbers based on the concept of carrying capacity are summarised below (Table 29 and Table 30). The conceptual estimates show that in order to manage the potential impacts to the park, it is proposed that approximately 300 visitors are allowed into the park each day. On the other hand, the outside park areas would be able to maintain a higher number at approximately 1,230 visitors per day. This is to ensure that the potential of tourism at Ulu Muda is tapped but at the same time measures are set in to mitigate potential damages especially to sensitive areas.

Table 29. Estimated Visitor Numbers Inside Park Area Inside Park, Pax/day Overnight Accommodation 145 Sira Hangat 15 Carok Tera 80 Kalir 10 Kaji Cuaca Station 30 Fishing 100 Tracking 45 Local fishermen 30 Total 320

Table 30. Estimated Visitor Numbers Outside Park Area Outside Park, Pax/day Pedu Resorts (Mutiara, Anjung 1,000 Pedu, Desa Utara) Gubir (Muda Resort) 200 Nearby villages (Kg. Batu, 30 Gulau and Belantik) Total 1,230

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5.3.1.3 Product Development

Potential Tourism Product Development Tourism in Ulu Muda should be packaged around the attractions available. Tourism products could be developed around the following themes: x Nature tourism, x Recreation and outdoor tourism, x Education tourism, x Rural tourism. It is possible for tourism products in Ulu Muda to have components from different themes. The following sections provide some tours and activities that could be developed to attract tourists to the area. In addition to the packaging of the various tourism products, relating the products to local knowledge, stories and historical perspectives would add value to the tourism products. 1) Nature Tours Nature tours would focus on activities in nature or which interacts with nature. Such products rely on the natural endowment of Ulu Muda. Although nature tourism is based on natural resources, it is necessary that physical facilities are developed for safe and easy access; and management systems be established and implemented to ensure proper management of natural resources. For instance hides need to be built and maintained, boats to be serviced regularly, and guidelines developed for waste management, maximum passenger on boats, etc. Examples of potential tourism activities include the following: x Bird watching, x Elephant watching, x River and lake cruises, and x Rafting. It is desirable that such tours be led by experience guides, or conducted by tour operators. This is to ensure that such activities are regulated in terms of safety and impacts on the environment. 2) Recreational Activities Tourists also require a venue for recreation and outdoor activities. Lakes, waterfalls, and rivers provide opportunities for recreational activities all year round. Some locations in Ulu Muda could be developed as venues for such activities to attract locals in Kedah, as well as weekend tourists. For instance, Malaysians enjoys picnics during weekends. The availability of picnic areas may

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also be sufficient for other travellers to make a detour from their journey. In addition, other tourists could also enjoy such facilities. Examples of recreational facilities that could be promoted in Ulu Muda include: x Canopy walk for tourists in the park to appreciate the vastness of the park, and also the heights of the trees and forests. x Fishing and angling to tap the rich freshwater resources or simply a quiet way to enjoy Ulu Muda. x Trails and treks within the park to experience flora and fauna on the ground. x Trails for orienteering and hash runs. x Waterfalls for a fun time in the water. x Mountain biking trails. x Picnic areas to share food. Tourism development in this area requires facilities such roads, jetty, changing rooms, paths, etc., to be built and maintained. 3) Educational Tours Educational tours combine education and nature. Ulu Muda should be developed as a convenient destination for schools to organise trips (either day trips or overnight trips) for students to learn about nature, biology, ecology, the role of Ulu Muda as a water catchment and nature reserve, as well as the need for its conservation. Other technical educational topics that could be developed in the near future are sustainable tourism, ecotourism, dam management, etc. These will depend on how successfully Ulu Muda creates a reputation for itself in such areas. Developing educational tours would create a flow of tourists during school terms and weekdays. However, it necessary for the park to have facilities such as a hall, exhibition corner, displays and interpretation which schools could easily use as teaching aid or tools to facilitate learning. As a complement to educational tours, tourists can enjoy and experience nature and activities that are available in Ulu Muda. 4) Rural Tourism and Other Tourism Rural tourism is a theme that needs to be further explored and developed. It is defined as activities of a person travelling and staying in rural areas (without mass tourism) other than those of their usual environment for leisure, business and other purposes55. Towns in Ulu Muda have the potential to develop this form of tourism. This would cater to the demands of tourists wishing to experience living a simple

55 Modified from the definition of European Environmental Agency http://glossary.eea.eu.int/EEAGlossary/R/rural_tourism

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kampung life in Kedah, with the opportunity to visit Ulu Muda for recreation and nature tourism. Tours and accommodation could be developed as homestay programmes. It is possible to package nature tours and educational tours with homestay programmes. At this point activities for rural tourism need to be identified. These could be based on agricultural activities, processes or products (if agricultural activities are focused upon, then it is likely to be termed as agricultural tourism56, e.g., paddy and sugar cane plantations), arts and crafts (including products from orang asli communities), local cultures and the way of life in such kampung areas. In addition to identifying such activities, it is necessary to develop a programme for locals to carry out rural tourism. The development of rural tourism requires accommodation and basic tourist facilities to be constructed, interpretation tools for participating tourists and tourism management training for the locals.

Setting Goals and Objectives Although Ulu Muda offers various tourism potentials, it is crucial that ecotourism in Ulu Muda develop competitively. Nature tourism in Ulu Muda needs to have a very clear direction on where it wants to head, with clear objectives. Based on the objectives, the type of preferred tourism activities could be specified, and targeted tourist arrivals could be set. The targets then become performance indicators against which success can be assessed, e.g., targets of 3 million visitors a year, each staying an average of 10 days, spending on average RM1,000, and with more than half being under 30 years of age57.

Marketing and Promotions The marketing of Ulu Muda needs to be targeted at market segments that would appreciate the attractions available. Marketers of travel and tourism products need to have a good understanding of their customers and must be able to develop strategies that recognise and take into account the likely response of different consumer groups58. Rather than trying to compete within an entire market in a broad, unfocused way, organisations have to recognise and identify those market segments that they can best serve. For each attraction or tourism product, the marketing of tourism should target the market segments identified. The positioning of Ulu Muda should also be made to attract the market segments.

56 Defined as visiting a working farm or any agricultural, horticultural or agribusiness operation for the purpose of enjoyment, education, or active involvement in the activities of the farm or operation – http://www.sfc.ucdavis.edu/agritourism/definition.html 57 Example taken from the Australian Tourism Commission http://www.thetimes100.co.uk/document.asp?HeaderID=24&SectionID=422 58 Australian Tourism Commission

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Tourist Market Segments The following are the market segments for tourism in Ulu Muda: x Nature tourists x Leisure tourists and tour package tourists x Day-trip tourists x School children and students x Corporate and institutional tourists

1) Nature tourists This market segment is rather specialized. They are likely to more educated, expecting to see in greater detail the flora and fauna that is in the park. They are also very critical of how sustainably the park is managed. It is foreseen that this market segment would contribute significantly to the tourism economy of Ulu Muda. This market segment is likely to be willing to pay for guides and services to get into the park. The activities of this segment of tourists will likely to be inside the park. Attractions to be promoted are highly specialised— such as elephant viewing from a hide, bird watching and jungle trekking. 2) Leisure Tourists and Tour Package Tourists This segment consists of tourists who are travelling from other states in Malaysia. These could either be an independent family holiday on a package tour or simply making a weekend trip. This segment includes international as well as Malaysian tourists. It includes backpackers and other independent travellers. Although these groups may consider Ulu Muda as a destination, it is also possible that these tourists have made plans to visit Penang, Alor Setar, or Langkawi. In this case, Ulu Muda could be marketed as one of the destinations where tourists can also enjoy within the region. Attractions that could be promoted to this group of tourists include short treks, fishing, waterfalls, canopy walks, rural tourism, rustic Malaysia, etc. This also includes promoting Ulu Muda as a Cuti-Cuti Malaysia destination. They are less demanding in terms of expectations to see wildlife. The activities of this segment of tourists will likely be within the fringe (periphery) of the park. 3) Day-trip Tourists Tourists from this segment are likely to live around Ulu Muda, within a two-hour drive from Ulu Muda. These are likely to be families, workers or young adults looking forward to get away from the routine of daily life.

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Ulu Muda should be promoted as a destination as a weekend getaway for recreational activities. Ulu Muda should be positioned as an ideal place for weekend picnics for tired workers wanting some time away from work and the city to be occupied with recreational activities for a change. This group is likely to be frequent or repeat visitors. The activities of this segment of tourists will likely be within the fringe (periphery) of the park. 4) School Children and Students This segment consists of students from primary and secondary schools as well as other institutions of higher learning. They will be attracted by the opportunities that Ulu Muda can provide as an outdoor classroom, with supporting learning facilities. Tours to Ulu Muda should be promoted as part of school trips to learn about nature, biology, geography, and even engineering. This would ensure continual flow of tourists outside the peak periods during school holidays or weekends. In addition, the need for wildlife and nature conservation can also be highlighted. This is where the importance of the role of the park and park management could better be appreciated. The activities of this segment of tourists will likely be within the fringe (periphery) of the park, with limited access to the inside of the park, depending on the nature of the tours that are conducted. 5) Corporate and Institutional Tourists This segment is mainly from corporations or governmental institutions. It is rather common to organise meetings and conferences in venues that are “ out of the corporate environment” . Some of the tourist facilities in Ulu Muda would be able to cater for such needs such as company retreats, annual trips, training seminars or workshops, etc. Ulu Muda should be promoted as a location for meetings and company trips, etc. These are likely to be for corporate functions, corporate training, and team- building activities or for activities of governmental agencies. Depending on the objectives of this market segment, activities could be conducted outside (such as an annual trip) or inside the park area (such as survival training).

Marketing Strategies Marketing strategies need to be formulated to meet the objectives of tourism development, although proper market research needs to be conducted to better determine the strategic approach to marketing Ulu Muda. The following are examples of common marketing strategies that could be considered at this stage (Table 31).

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Table 31. Marketing Strategies Private-sector Government-sector Regional ƒ Promote Ulu Muda as a ƒ Market Ulu Muda through marketing destination for nature tourism. Tourism Malaysia as the next upcoming tourism destination ƒ Encourage tour operators to develop packages that either in the northwestern region. includes Ulu Muda as a ƒ Tie-up with local and destination or part of a tour international websites that package (especially for tour promotes nature and nature operators that serve Kedah, travel (e.g. wildmalaysia.net). Penang and Perlis State). Penetrating ƒ Partner with specialised tour ƒ Developing more feature niche markets operators (bird watchers, etc.). stories written by naturalists on various niche activities (e.g. ƒ Partner with conservation organisations such as WWF birdwatching, mountain bike and MNS to promote (inner) groups, etc). Ulu Muda as destinations for ƒ Encouraging more natural nature-based activities such as history producers to consider birdwatching and elephant using Ulu Muda as a location viewing. These are in line for movies or documentaries. with activities that conservation groups organise and appreciate. Partnering with these organisations will create demand for such activities in the area. It will also help establish Ulu Muda as a base for their ecotourism activities (e.g. WWF has education centres in Cameron Highlands, and Fraser’ s Hill). ƒ Tie-up with local and international websites promoting nature and nature travel (e.g. wildmalaysia.net, frogweb.org). Info-base of ƒ Developing local guides of the flora and fauna. the local ƒ Encouraging natural history writers to contribute to the local natural history information base. ƒ Encouraging local nature groups to write about the local natural history.

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Marketing Tools The following are examples of typical marketing tools that Ulu Muda can explore to implement its marketing strategy. x Create official websites (e.g. www.ulumuda.com) to promote the attractions, products and facilities that are available. It should also provide information on how to get there, etc. This website needs to be maintained regularly and could be used as a communication portal between the park, tour operators, and groups or tourists interested in the Ulu Muda area. Links should be made to partner organisations, as well as other ecotourism and travel websites— such as wildmalaysia.net or www.cuti.com.my. x Produce brochures and guides. It is necessary to produce a tourist map indicating interesting places to visit in the Ulu Muda area. This should be left at all tourist attractions in Ulu Muda to encourage tourists to visit other attractions nearby. At the same time Ulu Muda should be included as a destination in brochures of tourist places in Kedah. x Include in guidebooks and travel publications. In order to establish the area as a destination for travellers, it is crucial to have media coverage of Ulu Muda to highlight its attractions, uniqueness and facilities. Media coverage should include newspapers, travel magazines and guides, travel programmes (local and international), (photo) books, and other publications. Hence it is necessary to work closely with the media as well as travel writers.

Promoting Ulu Muda as a Nature Destination In terms of marketing and positioning Ulu Muda as a prime ecotourism destination, it is very important for Ulu Muda to host a series of events at the state, national, regional and international levels. These events will provide a platform to convey to the audiences the tourism attractions of Ulu Muda. Ulu Muda has to be very selective in terms of which events to host, to position itself strategically to identified market segments. The following events could be organised: x Bird watching competitions, x Orienteering and cross-country races, x Academic conferences, e.g., on nature tourism, biodiversity, dam management, etc., x Fishing and angling competitions, and x Other festivals: Some of the festivals or events that Ulu Muda could host include the following: o World Day for Water, 22 March, o Malaysia Water Festival, 13 April–12 May,

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o World Environment Day, 5 June, o International Youth Day, 12 August, o World Habitat Day, 7 October, o Malaysian Environment Week, 21-27 October, and o International Day for Biological Diversity, 29 December.

5.3.2 Training and Capacity Building Human resources is the key element in ensuring the success of the conceptual tourism action plans. Hence, involving a pool of people with matching skills and equipping them with sufficient capacity would be required for the implementation of these plans. Manpower planning could be elaborated in four steps59: 1) Surveying and evaluating the present utilisation of manpower in tourism and identifying any existing problems and needs. 2) Projecting the future manpower needed. Projections are made for the number of personnel required in each category of employment. Then the qualifications for each category of job are determined. 3) Evaluating the total human resources that will be available in the future. 4) Determining training needs and formulating the education and training programmes required to provide the qualified manpower. Based on the conceptual plans of the Ulu Muda forests, the following categories have been identified as key focus areas for training and capacity building initiatives: x Resort operators: involves standard manpower needs such as general management, specialist management, food preparation and kitchen, food and beverage services, reception and administrative services and housekeeping. x Nature guides: This is an important skill to be developed, as guides with sufficient knowledge of the natural characteristics of Ulu Muda would enrich the visitors’ experience and hence enhance the nature tourism packages. x Homestay support and programmes: These programmes require well- planned packages and suitable families that are equipped for having visitors stay with them. The suitability of homestay programmes need to be assessed and possibly developed during the second phase of the action plan. Management and regulation: In addition to the conceptual planning based on carrying capacity, it is also crucial to ensure that management and regulations are incorporated to monitor and enforce the proposed plans for tourism development. This section highlights four recommendations as management and regulation measures:

59 World Tourism Organisation, 1994

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1. The first consideration will be on an understanding of the key elements of the natural biodiversity of Ulu Muda, which will help the future managers of the Park and also contribute to the development of nature tourism. These include: x Long-term monitoring of wildlife movement using camera-traps at the saltlick areas (e.g. Sira Hangat); x Population assessment of the elephant herds in the region and monitoring of the homeranges of selected herds; and x Periodic bird surveys by professional ornithologists to understand the patterns of bird diversity of the Ulu Muda region. 2. The second consideration focuses on enforcement. In particular, it will be important to begin to enforce the “ off-limits” zones proposed (see Map 14). This could be undertaken by enforcing the Fisheries Act, which prohibits fishing in certain zones, e.g., Sungai Teliang. Regular presence of the different authorities (or organising joint enforcement activities) on top of regular monitoring of people in and out of the area (as proposed below, see No. 5) will help to reduce any illegal activities and begin to assert a management presence in the area. 3. The third consideration is on the development and maintenance of nature trails. Nature trails are a key feature of any park, and it will be important at this early phase to maintain at least a selection of nature trails on a regular basis. The key trails to focus on include: x Bukit Fakir Terbang, x Bukit Batu Tajam, and x Kuala Kalir. 4. Lastly, the movement of people into the Ulu Muda area need to be controlled and monitored and any possible illegal activity needs to be restricted. It is recommended that a management presence be established at the KOPAM jetty area (Map 13) immediately. This presence should ensure that: x Movement of people into and out of the Ulu Muda area are recorded, x Movement of fishermen (local and outsiders) are recorded, and x The fish catch for each boat at the end of their trip is weighed and documented. It is possible that this activity could be assigned to local cooperative members, provided a suitable allowance scheme is proposed. Where 4WD road access is being considered60 (e.g. Gulau and Gubir, see Map 13), a control gate will need to be established at the onset to prevent any illegal harvesting of the forest and to restrict entry into the forest area.

60 Note: It is also recommended that a 4WD track should not be considered from the old Safari Park area (see Map 13). This is largely due to security considerations and in the long term, as it is not an area suitable for development.

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5.3.3 Financial Resources and Schedule This section provides a snapshot of possible financial flows from the proposals made in this study. The financial analysis has been developed based on cost estimates of the Johor Parks Corporation. The analysis rely on a number of assumptions discussed below and provide only indicative figures as the exact costs can only be determined with a more detailed costing study.

5.3.3.1 Scope of analysis and definitions The conceptual analysis is conducted from the point of view of the proposed park management authority. The proposed scope for this analysis encompasses tourism plans within the park areas (including proposed accommodation such as youth hostels, campsites and chalets), tourism centres and gateways at the park peripheries and outside areas. Various attractions outside the park area such as the proposed education and interpretative centre and other facilities such as tree house and flying fox equipment are incorporated within the management of the park authority. It is important to make a clear distinction that the components involving the private sector such as resorts in Pedu area, Muda resort, packages run by HAT and KOPAM are not included in the cost and benefit estimates of the exercise.

5.3.3.2 Development Schedule The development schedule for Ulu Muda State Park outlines infrastructure requirements and proposed construction timelines. The main components of infrastructure development are accommodation and support facilities such as tourism centres, gateways, recreational facilities, interpretation centre and park administration office. Other infrastructure needs include utilities such as electricity, water supply and sewerage facilities and roads and trails. Table 32 shows a proposed development schedule. By the end of the second year all of the proposed accommodation facilities would be ready. Utilities such as electricity, water supply and permanent structures outside the park areas such as the tourism centre would be installed by the end of the first year. The proposed roads and jungle trails are to be completed by the second year. Due to the magnitude of the development requirements and existing facilities, the proposed infrastructure would be completed by 2006.

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Table 32. Proposed Development Schedule, Proposed Ulu Muda State Park Year 2004 Year 2005 Year 2006 Accommodation (buildings) 1) Campsites (Kuala Lasor and Kuala Kalir) 1 1 2) Youth hostel type (Charok Tera and Kaji 3 Cuaca Island) 3) Chalets: A-frames (Charok Tera) 15 4) Staff quarters at Gubir 2

Support facilities (Items) 1) Tourism centre & administration office 1 2) Car park facilities (Gubir and Gulau) 2 3) Interpretation and education centre at Pedu 1 4) Recreation centres (Pedu and Muda) 2

Roads and Trails (km) Service Roads (Upgrade existing logging trail) 1) Gubir ‘Dump-site’ to Charok Tera 10km 2) Charok Tera to 1km away from Sira Hangat 10km 3) Kg. Gulau to Kuala Lasor 20km Jungle Trails 1) From end of Charok Tera route to Sira 1km Hangat 1) Safari entrance to Bukit Saiong 8km 2) Safari entrance to Kuala Kalir 10km 3) Pedu to Bkt. Fakir Terbang 5km 4) Pedu to Bkt. Batu Tajam 5km

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5.3.3.3 Financial Cost Estimates The financial cost estimates include fixed (capital) and variable (operating costs) costs. Fixed costs are concerned with capital investments in infrastructure that make up the park such as visitor and education centres, visitor accommodation, administrative office, staff quarters, roads and trails, transport vehicles and utilities. Operating and maintenance costs are the second category of costs such as staff salaries, benefits, utilities, transport, maintenance, visitor services, administration, education and conservation programmes and promotions and marketing. Where possible, the costs have been estimated based on actual expenditures of the Johor Parks Corporation. The total expenditure for capital cost is estimated at approximately RM7.3 million (Table 33). The bulk of the capital investments will be made in the first two years. Visitor accommodation makes up 50% of the total capital costs. The total capital cost estimated is RM7.3 million. The detailed breakdown of the capital costs is presented in Appendix 8.

Table 33. Capital Cost Schedule, Proposed Ulu Muda State Park Year 2004, (RM) Year 2005, (RM) Support Facilities 1,110,000 400,000 Visitor Accommodation 3,610,000 Vehicles & Boats 165,000 Roads & Jungle trails 1,810,000 180,000 Survey Boundary 50,000 50,000 Total 6,745,000 630,000 TOTAL OVERALL 7,375,000

Table 34 shows the operating cost schedule for the park. The major cost items are salaries and wages, visitor services, and road maintenance. A rough estimation of the operations and maintenance costs is calculated based on 10% of the capital costs excluding accommodation costs. These include other costs such as administrative, marketing and promotions and education and conservation programmes. When other major costs such as salaries and petrol are included, the total operating costs is estimated at around RM493 million in 2004. The operational costs are projected to rise over time to reflect the popularity of the park through an increasing number of tourists. Hence, this is reflected in the higher costs. The details of the estimates are presented in Appendix 9. Depreciation has not been taken into account. The argument is that all investments are assumed to be provided by the Government, as is their usual responsibility. Hence, the park does not have to carry out the burdens of infrastructure replacement, but will rely on the Government. Additional assistance can be sought in terms of partnerships with

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NGOs in carrying out items incurred in operational costs such as conservation and education programmes.

Table 34. Operating Cost Schedule, Proposed Ulu Muda State Park Year 2004, Year 2005, Year 2007, Year 2010, (RM) (RM) (RM) (RM) Operations & Maintenance 337,500 369,000 369,000 369,000 costs (10% of capital costs) Petrol 10,000 12,000 13,200 14,520 Salaries 145,728 174,873 192,361 211,597 Total 493,228 555,874 574,561 595,117

5.3.3.4 Anticipated Revenues Due to the substantial amount required to establish the park, various mechanisms need to be identified in order to meet some of the costs. Entrance fees and user charges are increasingly becoming a norm at National Parks. A study on entrance fees around the world especially on Marine Reserves show that there are parks that charge as high as US$100 per entry (e.g. Cocos Island, Costa Rica charges US$105, Galapagos in Ecuador charges US$100 and Tubbataha in the Philippines charges US$50). The most common fee level charges are US$1 to US$5 per day or US$10 to US$30 per year. Lessons learnt on implementation of entry fees are widely documented. At some places, the high charges do not impact upon visitor numbers. For example, even though the charges for Galapagos are high, tourists are not deterred to visit the island due to its unique biodiversity. Some charges implemented without sufficient notice and consultations were met with resistance, which resulted in decreased visitor numbers to the island, as substitute sites were also available. For the case of Ulu Muda, the main attraction is the unique and rich wildlife that the forest maintains for wildlife viewing. This product niche is not available at other parks in Malaysia. A conservative rate of RM5 is proposed for local visitors and RM30 for foreign visitors. Ideally, in-depth studies to ascertain visitor opinions and demand is required to set entry fee rates. This includes the use of facilities such as the canopy walkway and bird watching tower within the park. Table 35 shows the anticipated revenue streams for the Park. The revenue is anticipated to rise from RM0.3 million in 2004 to RM1.8 million by 2010. Visitor numbers are estimated for the four years from 2004, 2005, 2007, and 2010. The composition of locals to foreigners for 2004 and 2005 are 80% to 20%. It is anticipated that foreign visitors will increase to 30% in 2007 and 40% in 2010. These estimates are based on present ratios of the Ulu Muda area and also figures from Sabah Parks, Taman Negara and Endau-Rompin National Park, Johor (Appendix 10). The estimation of visitor numbers in 2004 to 2010 is based on present levels of

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visitors and also the carrying capacity of the park. The breakdown of the analysis is presented in Appendix 11.

Table 35. Anticipated Revenue Streams, Proposed Ulu Muda State Park Year 2004, Year 2005, Year 2007, Year 2010, (RM) (RM) (RM) (RM) Fees (Entrance, Camera, Video) 48,000 60,000 145,000 340,000 Visitor Accommodation 228,000 285,000 570,000 1,140,000 Licenses & Permits 31,000 41,000 62,000 102,000 Others (Car Parking, Facilities) 4,000 105,000 210,000 320,000 Total 311,000 491,000 987,000 1,902,000

5.3.3.5 Financial Results Table 36 shows the financial results or profit-loss account of the park, based on the revenue and costs schedule estimated and discussed above. The estimation shows that the revenue is expected to cover the operating costs only after year 2005 onwards. It should be noted that the revenue stream increases significantly from 2004 to 2005. This is to reflect the availability of recreation centres that would cater to leisure tourists as an additional activity in the vicinity of the Pedu resort. The financial results show that expenditure is greater than revenue in 2004 and 2005. This means that ways need to be identified to cover the operations of the Park for the first few years. This figure reflects a conceptual cost estimate to provide an idea of the process of financial planning of a proposed park. More concrete strategies and revenue schemes need to be designed in order to gain positive earnings. In addition, it needs to be noted that the present conceptual plan is dominated by infrastructure development. A further study needs to assess how capital expenditures could be reduced while maintaining the same level of enjoyment to visitors managed within the capacity of the park.

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Table 36. Financial Results (RM), Proposed Ulu Muda State Park Year 2004, Year 2005, Year 2007, Year 2010, (RM) (RM) (RM) (RM) Revenue 311,000 491,000 987,000 1,902,000 Expenditure 493,228 555,874 574,561 595,117 Gross Profit/Surplus (182,228) (64,874) 412,439 1,306,883

5.3.3.6 Cash Flow Status The cash flow status is shown in Table 37. The establishment of the Park requires initial capital investments. It is envisaged that the Government will have to provide the initial grants to launch the Park’ s establishment. Based on the proposed estimates of the capital costs, substantial financial resources are required. Besides the direct benefits of establishing the Park as discussed in earlier sections, contributing to the establishment of parks would also be consistent with various Government policies. For example, at the national level, the Ulu Muda Forest areas have been identified under the National Spatial Plan as a sensitive area to be protected. In addition, the National Ecotourism Plan also identifies Ulu Muda as one of the “ Ten Very Special Places for Malaysian Ecotourism” . Based on these motivations, proposed contributions from the Federal Government are highlighted towards contributing to the establishment of the Park. Besides safeguarding the unique heritage of Kedah and benefits of tourism to be generated, the nature-based tourism concept for Ulu Muda Forest areas provides an important spin-off for rural development. Hence, it is also envisaged that the State Government would contribute to the establishment of the Park. These present the basis for the details in Table 37. Assistance from foreign funding for the establishment of parks in Malaysia is not a new concept. Recent examples include the establishment of the Endau-Rompin Park through DANCED funding. The cash inflow includes revenue from the running of the park and also financial contributions from the Government and foreign conservation grants. From the conceptual cash flow status table, it is estimated that the Park would incur losses for the first year in 2004 at approximately RM1.9 million and would cover its costs from Year 2005 onwards at RM0.8 million in 2005.

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Table 37. Cash Flow Status (RM), Proposed Ulu Muda State Park 2004 2005 2007 2010 Cash Inflow 311,000 491,000 987,000 1,902,000 Proposed State Grants 1,000,000 500,000 Proposed Federal Grants 2,000,000 500,000 500,000 500,000 Proposed Overseas Funding 2,000,000 500,000 Total CASH INFLOW 5,311,000 1,991,000 1,487,000 2,402,000 Cash Outflow Support Facilities 1,110,000 400,000 Visitor Accommodation 3,610,000 Vehicles & Boats 170,000 Roads 1,810,000 180,000 Survey Boundary 50,000 50,000 Expenditure 155,728 186,874 205,561 226,117 Maintenance Costs 337,500 369,000 369,000 369,000 Total CASH OUTFLOW 7,243,228 1,185,874 574,561 595,117 Net Cash Flow (1,932,228) 805,126 912,439 1,806,883

5.3.3.7 Financing Options Various financial options need to be explored to ensure that there will be sufficient funds for the capital infrastructure of the Park. For example, Federal Government funding could cover the construction of roads and trails while the State Government could contribute towards the costs of accommodation and support facilities. Outside sources of aid such as DANCED and GEF, or NGOs such as WWF Malaysia and MNS would also provide the enabling support for the establishment of the Park. Areas for potential contribution include specific education and conservation programmes that would add value to the enjoyment of the Park.

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6 Conclusion and Recommendations While the study focused on a nature tourism development, the wider issues that underlines the importance of Ulu Muda lies in its economic valuation. The study has demonstrated that the water values that Ulu Muda contributes are critical. In addition to maintaining the most important paddy scheme in the country, the Ulu Muda forests also harbour sources of water for critical industrial areas such as the Kulim High-Tech Park and industrial parks in Penang such as Bayan Lepas and Seberang Perai. Hence, this is an aspect that needs further attention to assess who benefits from the Ulu Muda forests and who bears the costs, and potential mechanisms to be developed for ensuring that both parties would benefit from a joint vision and cooperation. The potential spin-off of economic improvements for rural development through increased visitor flows to the area is also another potential contribution of Ulu Muda forests that need to be considered. An example is the case of Jerantut in relation to the Taman Negara model. However, the potential social impacts of tourism development also need to be assessed. Besides socio-economic development, the importance of wildlife conservation of the Ulu Muda area is invaluable in terms of its wildlife. At the same time the significance of contiguous forest systems joining the Thai-border areas create an opportunity for developing a trans-border park that would be of international significance. In view of the economic importance of Ulu Muda Forests, it is critical to consider the potential impacts and risks from proposed projects such as logging in the environmentally sensitive areas. Based on the assessments and consultations undertaken in this study, specific recommendations and conclusions of the study are: x Nature tourism development will enhance the use values of Ulu Muda without upsetting other values; existing benefit is estimated at RM13 million and could increase up to 10 times in 10 years. x Infrastructure investments are required to increase its carrying capacity. Preliminary estimations are 300 persons per day inside the park and 1,230 persons per day outside the park. These estimations require further assessments. x Consulting and involving government agencies, local communities, NGOs and local guides are important to establish a sense of ownership and support from these stakeholders. x It is also vital to involve the private sector in the development of Ulu Muda nature tourism plans. x Logging of the catchment conflicts with nature tourism development and it is not logical to pursue both options. - However, if logging were to take place anyway, it will be critical to limit logging to the southern part of the Ulu Muda forests, i.e., only half the

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proposed area (for Phase 1) for logging (Coupes 1-3 only). Strict guidelines and monitoring efforts need to be implemented to minimise soil erosion, sedimentation to rivers and disturbance to wildlife. - The use of the FSC Guidelines will enable the logging firm to gain market share in markets that would otherwise not accept timber from non- sustainable forests. Access to these high-premium buyers is being facilitated by buyers’ groups such as the 95+ group in the United Kingdom (http://www.wwf-uk.org/95+group/). Coupes 4, 5 and 6 (as delineated in the detailed EIA) should definitely not be allowed because of conflicts with nature tourism and biodiversity conservation. Logging could also induce major costs and losses from existing water values. x Core conservation zones identified include Sg. Teliang, Kalir and the northern side of Ulu Muda as well as areas on Sg. Muda up to Kuala Lasor as these are most suitable for nature tourism and animal watching as major activities including other lakeside activities. x The study recommends the State Forestry Department model to be adopted as it is the least cost option. This option does not require the setting up of new institutions, and hence, implementation can be done faster. x The Government needs to allocate RM10 million for set-up costs for five years (75% in capital expenditure) before returns are expected. x Explore co-financing model with the Economic Planning Unit, Government- to-Government funding (JICA/DANCED), and multi-lateral aid agencies (GEF) to obtain required funding. x Explore inter-state water-based charges or other financing options to increase state revenue. The commitment of a State Park by the Government can be demonstrated by the proposed steps: - Gazetting Ulu Muda as a State Park based on the benefits and significance of the area as a natural asset and for its contribution to the local, national and regional economy. - Determine and adopt the management structure of the Proposed Park and mobilise required institutional requirements for the establishment of the State Park. - Allocating sufficient financial resources for the development and operations of the State Park.

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Appendix

Appendix 1. Mammals Documented in the Greater Ulu Muda

Order Family Species Artiodactlya Bovidae Bos gaurus hubbacki Artiodactlya Bovidae Capricornis sumatrensis Artiodactlya Bovidae Naemorhedus sumatrensis Artiodactlya Cervidae Cervus unicolor Artiodactlya Cervidae Muntiacus muntjak Artiodactlya Suidae Sus scrofa Artiodactlya Tapiridae Tapirus indicus Artiodactlya Tragulidae Tragulus javanicus Artiodactlya Tragulidae Tragulus napu Carnivora Felidae Neofelis nebulosa Carnivora Felidae Panthera pardus Carnivora Felidae Panthera tigris Carnivora Felidae Prionailurus bengalensis Carnivora Mustelidae Amblonyx cinereus Carnivora Mustelidae Lutra perspicillata Carnivora Mustelidae Martes flavigula Carnivora Ursidae Helarctos malayanus Carnivora Viverridae Arctictis binturong Carnivora Viverridae Arctogalidia trivirgata Carnivora Viverridae Paguma lavarta Carnivora Viverridae Prionodon linsang Dermoptera Cynocephalidae Cynocephalus variegatus Insectivora Erinacidae Echinosorex gymnurus Insectivora Erinacidae Hylomys suillus Insectivora Soricidae Crocidura monticola Megachiroptera Pteropodidae Balionycteris maculata Megachiroptera Pteropodidae Chironax melanocephalus Megachiroptera Pteropodidae Cynopterus brachyotis Megachiroptera Pteropodidae Cynopterus horsefieldi Megachiroptera Pteropodidae Dyacopterus spadiceus Megachiroptera Pteropodidae Eonycteris spelaea Megachiroptera Pteropodidae Macroglossus sobrinus

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Appendix 1 (continued). Mammals Documented in the Greater Ulu Muda Order Family Species Megachiroptera Pteropodidae Megaerops ecaudatus Megachiroptera Pteropodidae Penthetor lucasi Microchiroptera Emballonuridae Emballonura monticola Microchiroptera Emballonuridae Taphozous longimanus Microchiroptera Emballonuridae Taphozous melanopogon Microchiroptera Emballonuridae Taphozous saccolaimus Microchiroptera Hippsoideridae Coelops frithi Microchiroptera Hippsoideridae Hipposideros armiger Microchiroptera Hippsoideridae Hipposideros bicolor Microchiroptera Hippsoideridae Hipposideros cervinus Microchiroptera Hippsoideridae Hipposideros cineraceus Microchiroptera Hippsoideridae Hipposideros diadema Microchiroptera Hippsoideridae Hipposideros larvatus Microchiroptera Hippsoideridae Hipposideros ridleyi Microchiroptera Hippsoideridae Hipposideros sabanus Microchiroptera Megadermatidae Megaderma spasma Microchiroptera Mollosidae Tadarida mops Microchiroptera Mollosidae Tadarida plicata Microchiroptera Nycteridae Nycterus javanica Microchiroptera Rhinolophidae Rhinolophus accuminatus Microchiroptera Rhinolophidae Rhinolophus affinis Microchiroptera Rhinolophidae Rhinolophus lepidus Microchiroptera Rhinolophidae Rhinolophus luctus Microchiroptera Rhinolophidae Rhinolophus pusillus Microchiroptera Rhinolophidae Rhinolophus sedulus Microchiroptera Rhinolophidae Rhinolophus stheno Microchiroptera Rhinolophidae Rhinolophus trifoliatus Microchiroptera Vespertilionidae Glischropus tylopus Microchiroptera Vespertilionidae Kerivoula minuta Microchiroptera Vespertilionidae Kerivoula papillosa Microchiroptera Vespertilionidae Miniopterus schreibasii Microchiroptera Vespertilionidae Murnia suilla Microchiroptera Vespertilionidae Myotis muricolor Microchiroptera Vespertilionidae Myotis ridleyi

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Appendix 1 (continued). Mammals Documented in the Greater Ulu Muda Order Family Species Microchiroptera Vespertilionidae Myotis siligorensis Microchiroptera Vespertilionidae Pipistrellus imbricatus Microchiroptera Vespertilionidae Pipsitrellus javanicus Microchiroptera Vespertilionidae Pipsitrellus stenopterus Microchiroptera Vespertilionidae Pipsitrellus tenus Microchiroptera Vespertilionidae Tylonycteris robustula Pholidota Manidae Manis javanicus Primates Cercopithecidae Macaca fascicularis Primates Cercopithecidae Macaca nemestrina Primates Cercopithecidae Presbytis femoralis Primates Cercopithecidae Presbytis obscura Primates Hylobatidae Hylobates agilis Primates Hylobatidae Hylobates lar Primates Lorisidae Nycticebus coucang Proboscidea Elephantidae Elephas maximus Rodentia Hystericidae Atherurus macrourus Rodentia Hystericidae Hystrix bachyura Rodentia Muridae Chiropodomys gliroides Rodentia Muridae Leopoldomys sabanus Rodentia Muridae Maxomys rajah Rodentia Muridae Maxomys surifer Rodentia Muridae Maxomys whiteheadii Rodentia Muridae Niviventer crimoriventer Rodentia Muridae Rattus tiomanicus Rodentia Muridae Sundamys muelleri Rodentia Pteromyidae Petaurista petaurista Rodentia Rhizomyidae Rhyzomys sumatrensis Rodentia Sciuridae Callosciurus caniceps Rodentia Sciuridae Callosciurus nigrovittatus Rodentia Sciuridae Callosciurus notatus Rodentia Sciuridae Callosciurus prevostii Rodentia Sciuridae Lariscus insignis Rodentia Sciuridae Ratufa affinis Rodentia Sciuridae Ratufa bicolor

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Appendix 1 (continued). Mammals Documented in the Greater Ulu Muda Order Family Species Rodentia Sciuridae Rhinosciurus laticaudatus Rodentia Sciuridae Sundasciurus hippurus Rodentia Sciuridae Sundasciurus lowii Rodentia Sciuridae Sundasciurus tenuis Scandentia Tupaiidae Tupaia glis

Sources: Nor Azman, H. 1997. Small Mammal Diversity and Relative Densities in the Sungai weng Sub-catchment, Ulu Muda Forest Reserve. Kertas kerja Bengkel ke-3 Kajian Kesan Pembalakan terhadap Tadahan Wakil dan Waduk MUDA/PEDU. Universiti Putra Malaysia, Serdang 21-22 April 1997.

Norsham, S. Y., Saiful, A.A, Fuad Shariff, Norhayati, A., M. Zakaria Hussin, Lim, B.L. & M. Nordin. 1998. Observation of Mammalian Fauna in the Sungai Weng Sub-catchment, Ulu Muda Forest Reserve. Kertas kerja Bengkel ke-3 Kajian Kesan Pembalakan terhadap Tadahan Wakil dan Waduk MUDA/PEDU. Universiti Putra Malaysia, Serdang 21-22 April 1997.

Saiful A.A. & M. Nordin. 1997. Primate and Squirrels in the Sg. Weng Sub-catchment, Ulu Muda Forest Reserve. Kertas kerja Bengkel ke-3 Kajian Kesan Pembalakan terhadap Tadahan Wakil dan Waduk MUDA/PEDU. Universiti Putra Malaysia, Serdang 21-22 April 1997.

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Appendix 2. Volume and Royalty Fees by Type of Wood Proportion Volume Average Total Royalty Fee (Average of 1999 (cu.m/ha) royalty fee (RM/ha) and 2000) RM) Heavy Hardwood 0.13 4.7 9.4 44 Medium 0.28 9.7 13.2 128 Hardwood Light Heavy 0.59 20.6 9.4 192 Hardwood Total 1.00 35.0 31.9 364

Note: Estimations based on Forest Department Annual Report

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Appendix 3. Excerpt from Environmental and Social Impact Assessment of Logging Operations in the Vanimo Timber Area, Sandaun Province, Papua New Guinea61 by Forests Monitor Limited and Individual and Community Rights Advocacy Forum Inc. (ICRAF)

SUMMARY An environmental and social impact assessment of the Vanimo Timber Area was conducted in early May 1999. This assessment found that: x The WTK Reality Group of Malaysia through their operation of Vanimo Forest Products (VFP) has violated at least 13 of the key standards from the PNG Logging Code of Practice. x VFP has failed to fully comply with the Project Agreement concerning the Vanimo Timber Area. x The East-West Highway has never been completed by VFP. x Poor quality road and bridge construction has severely limited development and transport options for people in the Vanimo region. x Culturally significant areas, including gravesites, have been negligently damaged by VFP. x A fledgling palm seed export business has been threatened by VFP. x Sediment and nutrient runoff from negligent logging operations have damaged stream ecosystems. x Clean water sources near villages for drinking and processing sago have been damaged by VFP. x Undersized logs are regularly cut from the forests. x Extensive damage from logging operations has retarded the regeneration capacity of the forest. x Sago palms have been damaged by logging operations. x The time taken for villagers to find food sources in the forests have increased. x Malnutrition, low birth weight babies, malaria and sexually transmitted diseases have become more common in the region. x Limited numbers of local men and no local women are employed by VFP. x Birds of Paradise and New Guinea Pigeons are reportedly smuggled out on the logging boats.

61 http://www.forestmonitor.org/reports/vanimo/vanimo.rtf

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x Police have been used to protect the interests of VFP. x The Forestry Authority has not enforced the PNG Logging Code of Practice.

Conclusions The logging practices of WTK are causing irreversible damage to the forest resources, including residual trees, flora and fauna, and impairing vital forest functions (such as the maintenance of watershed integrity and soil quality). Few benefits are reaching the customary landowners who depend on the forests not only to provide small cash incomes, but also as their only means of subsistence and livelihood. Although it has been 10 years since the release of Judge Thomas Barnett Commission of Enquiry into the Papua New Guinean Forestry Sector (1987-1989) few things seem to have changed in the ways that companies such as WTK operate. “ In many cases, the timber industry has made life harder for the landowners at all levels. Not only do they have to face destruction of their environment, but they face the destruction of their society.”

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Appendix 4: Proportion of water extracted from Muda and relevant rivers of the Total Kedah Water Production Treatment Plant River Total Production (cum/day), 2001 Loji Air Sg. Muda 10,088 Loji Air Teloi Kanan Sg. Muda 1,204

Loji Air Pinang Tunggal Sg. Muda 36,960 Loji Air Sungai Petani Sg. Muda 162,530 Loji Air Sg. Muda 13,052 Loji Air Batu 5 Sik Sg. Chepir 8,639 Loji Air Kulim Hi-Tech Sg. Muda 54,985

Loji Air Bukit Pinang Terusan Mada Utara 87,756 Loji Air Pelubang Sg. Padang Terap 242,300 Loji Air Kuala Nerang Kuala Nerang, Sg. Pedu 25,194 Loji Air Padang Sanai Sg. Ahning 1,164 Loji Pembersih Nami Sg. Muda 3,443 Loji Air Lubuk Merbau Sg. Muda 1,278 Loji Air Jeneri Sg. Muda 6,416 Total from Muda and relevant rivers 655,009 Total Kedah 841,316 Proportion of Muda and relevant 78% rivers compared to Kedah total Source: JKR Kedah, personal communication

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Appendix 5. Water Revenue by Domestic and Commercial Volumes, 1999 Domestic Commercial Total (cu.m) Ratio: Ratio: Revenue: Revenue: Domestic Commercial Domestic Commercial (cu.m) (cu.m) (RM) (RM) Kedah 104,860,480 29,921,628 134,782,108 0.78 0.22 62,099,431 17,719,889 Penang 115,934,059 79,867,425 195,801,484 0.59 0.41 59,599,204 41,058,124 Perlis 13,209,145 2,186,129 15,395,274 0.86 0.14 5,388,711 891,838 Total 234,003,684 111,975,182 345,978,866 127,087,346 59,669,851

Note: Estimation based on data from Malaysia Water Industry Guide, 2001.

Appendix 6. Economic Values of Ulu Muda Forest Areas

Primary Values (RM, Secondary Tertiary (RM, million) values (RM, million) million) TOTAL (Tourism, Water Supply, Irrigation) 161 2 05 2,559

Tourism Tourism Receipts 13 Consumption (Market Value) Domestic Kedah 62 Penang 60 Perlis 5 Total Production 127 142 NRW: 45% Industrial Kedah 18 Water Supply Penang 41 UM Forests Perlis 0.9 60 1937 Production Cost (O&M 0 for dams & canals) Irrigation 19 MADA 5 622 JPS JPS ? Seberang Perai Seberang Perai ?

TIMBER Revenue & Collection Scenario (60% 53 loggable)

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Appendix 7. Preliminary Analysis of the Proposed State Park and Existing Forest Compartments Likely to be Affected Compartment Original Proposed State % Original Compartment ID Compartment (m2) Park (m2) Affected 001b 3716463 1118219 30 001c 1642794 1193 0 002 1880779 1626764 86 002c 2863514 30820 1 003 6367282 367674 6 003b 2679694 2505553 94 004 1906426 60560 3 004b 1986422 1986422 100 005 2107210 2091803 99 005b 1526147 751379 49 006 2207055 1846156 84 006b 2754338 1602718 58 007 1545029 1010170 65 007b 2287878 184177 8 007c 2183084 135991 6 007c 2183084 1659714 76 008 1838240 786975 43 008b 3010077 944803 31 008b 3010077 2986926 99 008c 2136591 3957 0 009 2604634 630188 24 009 2604634 122905 5 009b 3261771 2917043 89 009b 3261771 3087426 95 009c 1639141 1301278 79 010 2047732 2010489 98 010b 1498422 536676 36 010c 4771400 4664118 98 010c 4771400 4664118 98 011 1977077 1775969 90 011b 2370337 839653 35 011c 4143223 4143223 100 011c 4143223 4095378 99 012 2135643 788199 37 012b 1656661 1555115 94 012c 2497868 2480516 99 012c 2497868 2413088 97 013b 3616582 1665300 46 013c 3400615 3400615 100 013c 3400615 3382470 99 014 2334903 1150191 49 014c 2729599 2675739 98 014c 2729599 2315614 85 015 3291997 3281954 100 015 3291997 3095023 94 015c 2547520 1760262 69

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Appendix 7 (continued). Preliminary Analysis of the Proposed State Park and Existing Forest Compartments Likely to be Affected Compartment Original Proposed State % Original Compartment ID Compartment (m2) Park (m2) Affected 016 1247762 1150501 92 016b 2631482 2599252 99 016b 2631482 2599252 99 017 3624214 2211196 61 017b 2839342 2839342 100 017b 2839342 2839342 100 018 4506233 2038261 45 018b 2175278 895750 41 018b 2175278 1722802 79 019 4172324 23335 1 019 4172324 3220636 77 019b 1864866 1362625 73 019b 1864866 1362625 73 020 3322776 2843527 86 020 3322776 2843527 86 020b 2567495 77794 3 020b 2567495 2567495 100 021 4619212 4522770 98 021 4619212 4226048 91 021b 2763480 2763480 100 022 2629633 2629633 100 022 2629633 2404563 91 022b 2499130 2416463 97 023 4273126 4258178 100 023 4273126 3820155 89 023b 3766767 3766767 100 024 1996777 1670908 84 024b 2546754 2459772 97 024b 2546754 2410774 95 025 2453408 1380981 56 025 2453408 1503560 61 026 2900654 2878259 99 026b 1493240 403224 27 026c 2463636 2398649 97 027 1998875 1702162 85 027 1998875 1576646 79 027b 3581822 276088 8 028 2950390 1433911 49 028b 1245181 989449 79 028b 1245181 653072 52 029 1582061 852399 54 029 1582061 561721 36 029b 3794916 789006 21 030 1324259 795393 60 030 1324259 600436 45 030b 3145914 981667 31

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Appendix 7 (continued). Preliminary Analysis of the Proposed State Park and Existing Forest Compartments Likely to be Affected Compartment Original Proposed State % Original Compartment ID Compartment (m2) Park (m2) Affected 031 2665201 11381 0 031b 1318433 682157 52 031b 1318433 567798 43 032 1091655 820297 75 032 1091655 379443 35 033 3741961 2618849 70 033 3741961 1715550 46 035 2422883 1564739 65 035 2422883 722931 30 036 4908796 3624655 74 036 4908796 2042665 42 038 4940804 3796693 77 038 4940804 3438994 70 039 5763010 5577099 97 039 5763010 4747088 82 040b 3247307 125196 4 040b 3247307 3081653 95 041 2766593 2436259 88 041b 3510781 70997 2 042 3228667 349924 11 042b 3473818 3378966 97 043b 1735345 1735345 100 044 6116594 1285271 21 045 3413651 2255243 66 046 3112972 295392 9 046b 2237265 1581593 71 047 1895166 1706938 90 048 1829735 29555 2 050 1733155 608365 35 066 6916126 158642 2 067 10221931 8314 0 072 5944161 6273 0 073 5609393 46681 1 090 3956835 9223 0 091 4527229 113718 3 091b 10937408 106007 1 092 6441752 86038 1 093 5550125 185703 3 095 5910514 102107 2 096 6136366 5794318 94 097 9514863 9317021 98 098 6442461 185234 3 107 6571839 193329 3 108 5245341 5224041 100 109 9386568 9386568 100 110 6120335 5987556 98

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Appendix 7 (continued). Preliminary Analysis of the Proposed State Park and Existing Forest Compartments Likely to be Affected Compartment Original Proposed State % Original Compartment ID Compartment (m2) Park (m2) Affected 111 5979369 5905863 99 112 6484016 6379449 98 113 6363432 6214822 98 114 8039969 7795848 97 115 5693900 5552696 98 116 3204842 3135721 98 117 5040005 70432 1 118 6285118 6285118 100 119 9494451 9444696 99 120 5322665 58737 1 126 5199136 30750 1 127 8090398 8067489 100 128 5246635 5210205 99 129 4064961 4064961 100 130 6032750 5890525 98 131 5116848 243001 5 132 3791857 3640999 96 133 5049001 28434 1 134 5947301 157252 3 136 8072623 60634 1 137 9837592 9791290 100 138 9114064 36100 0 139 13539039 13453253 99 140 5657271 3475 0 141 4555996 258867 6 142 5104715 4932168 97 143 4139385 3878021 94 144 5070793 4058988 80 144b 4943349 3075119 62 146 3909807 3909807 100 147 3627353 3534191 97 148 4667497 3291653 71 149 6395799 5390036 84 149 6395799 368151 6 150 4957285 183815 4 150 4957285 4779230 96 151 4682699 14693 0 151 4682699 293788 6 152 6950595 6916521 100 153 7816547 7715093 99 154 6319995 6212055 98 155 7437584 7200996 97 156 3796145 3796145 100 158 6521179 6349648 97 159 3131463 3111085 99 160 7361589 7286026 99

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Appendix 7 (continued). Preliminary Analysis of the Proposed State Park and Existing Forest Compartments Likely to be Affected Compartment Original Proposed State % Original Compartment ID Compartment (m2) Park (m2) Affected 161 8378669 8314605 99 162 6099809 6084171 100 163 7642266 7642266 100 164 4429895 4358519 98 165 7396265 7264052 98 166 3226091 3222658 100 167 6960369 6859905 99 168 5545519 5544482 100 169 5781861 5604802 97 170 4111677 51823 1 170 4111677 4081487 99 171 5372383 171165 3 171 5372383 4987459 93 172 3523583 3523583 100 173 6245925 6225415 100 174 3934877 3795936 96 175 7641099 7501463 98 176 3807033 2039603 54 177 3860460 3860460 100 Total Area (m2) 832125948 539033590 Total Area 83, 213 53, 903 65 (ha) Note: Original digital data (MADA, personal communication). Analysis has been made using Arcview GIS software ver 3. Some compartment ID numbers are duplicated, and in order to run the analysis, a unique suffix has been added to the original ID number. Figures in bold indicate compartments that are affected, but only minimally (less than 30% of the compartment affected).

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Appendix 8. Breakdown of Estimated Capital Costs Pax/day Buildings Total Size RM/unit Cost/item 2004 2005 pax/day (sqm/p) Accommodation 67 130 3,610,000 3,610,000 (buildings) 1) Campsites (Kuala 10 2 20 10 700 140,000 140,000 Lasor and Kuala Kalir) 2) Youth hostel type– 25 2 50 30 1,000 1,500,000 1,500,000 Charok Tera Kaji Cuaca Station 30 1 30 30 1,000 900,000 900,000 3) Chalets: A-frames 2 15 30 30 1,000 900,000 900,000 (Charok Tera) 4) Staff quarters at Gubir 1 2 2 20,000 20,000 (Normal House) 5) Long House 9 1 9 150,000 150,000 Support facilities 1,510,000 1,110,000 400,000 (Items) 1) Tourism centre & 1 500,000 500,000 administration office 2) Car park facilities 2 20,000 40,000 40,000 (Gubir and Gulau) 3) Interpretation and 1 300,000 300,000 education centre at Pedu 4) Recreation centres (Pedu and Muda) (food 2 50,000 100,000 100,000 stalls, handicraft centres, rest rooms) 5) Bird Watching Tower 1 50,000 50,000 50,000 6) Canopy Walkway 1 500,000 500,000 500,000 7) Kopam Jetty Upgrade 1 20,000 20,000 20,000 Roads (km) Service Roads (Upgrade 1,990,000 1,810,000 existing logging trail) 1) Gubir “ Dump-site” to 10 50,000 500,000 500,000 Charok Tera 2) Charok Tera to 1km 10 50,000 500,000 500,000 away from Sira Hangat

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Appendix 8 (continued). Breakdown of Estimated Capital Costs Pax/day Buildings Total Size RM/unit Cost/item 2004 2005 pax/day (sqm/p) 3) Kg. Gulau to Kuala 15 50,000 750,000 750,000 Lasor Jungle Trails 60,000 180,000 1) Safari entrance to 8 10,000 80,000 80,000 Bukit Saiong 2) Safari entrance to 10 10,000 100,000 100,000 Kuala Kalir 3) Pedu to Bkt. Fakir 3 10,000 30,000 30,000 Terbang 4) Pedu to Bkt. Batu 3 10,000 30,000 30,000 Tajam

Vehicles 170,000 170,000 4WD 2 80000 160,000 160,000 Boat 1 10000 10,000 10,000

Boundary surveys 100,000 50,000 50,000 Total 7,380,000 6,750,000 630,000

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Appendix 9. Breakdown of Estimated Operating Costs Estimation of Staff RM/person Total Total, 2004, 2005, RM 2007, 2010, Annual RM RM RM RM RM Operating Costs Maintenance costs 377,000 337,500 369,000 369,000 369,000 (10% of Capital Costs- Accom) Petrol 10,000 10,000 12,000 13,200 14,520 Salaries 10 121,440 Park Officer 2 2000 4,000 55,200 Ranger 8 600 4,800 66,240 Allowances 24,288 Total Salaries 145,728 145,728 174,873.60 192,361 211,597 TOTAL 532,728 493,228 555,874 574,561 595,117 EXPENDITURE

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Appendix 10. Ratio of Local and Foreign Visitors, 2001. Local Foreign Total Ratio Local Foreign Visitors Taman Negara 34,091 31,383 65,474 52% 48% Kinabalu Park 121,151 75,865 197,016 61% 39% Endau Rompin 3,557 1,423 4,980 71% 29%

Source: Tourism Malaysia, personal communication

Appendix 11. Breakdown of Estimated Revenue Streams Visitor Numbers Total RM Revenue Pax2004 Pax Pax, Pax, RM/ 2004, RM 2005, 2007, 2010, RM Streams 2005 2007 2010 pax RM RM Total Visitors 4,000 5,000 10,000 20,000 Entrance Fees: 3,200 4,000 7,000 12,000 5 16,000 20,000 35,000 60,000 Local Foreign 800 1,000 3,000 8,000 30 24,000 30,000 90,000 240,000 Accomodation: 400 500 1,000 2,000 30 12,000 15,000 30,000 60,000 Campsites Youth Hostel 2,400 3,000 6,000 12,000 50 120,000 150,000 300,000 600,000 Chalets 1,200 1,500 3,000 6,000 80 96,000 120,000 240,000 480,000 Camera 1,200 1,500 3,000 6,000 5 6,000 7,500 15,000 30,000 Video 400 500 1,000 2,000 5 2,000 2,500 5,000 10,000 Car Parking 800 1,000 2,000 4,000 3 2,400 3,000 6,000 12,000 Coaches 80 100 200 400 10 800 1,000 2,000 4,000 Licences 1 1 2 2 1000 1,000 1,000 2,000 2,000 Permits 1,500 2,000 3,000 5,000 10 15,000 20,000 30,000 50,000 Fees from other 10,000 20,000 30,000 10 100,000 200,000 300,000 facilities Total 295,200 470,000 955,000 1,848,000 Profit (198,028) (85,874) 380,439 1,252,883

Note: Fees from other facilities include education centre, recreation centres

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FORMULATION OF A SPATIAL AND CONCEPTUAL GUIDELINE FOR THE SUSTAINABLE NATURE TOURISM DEVELOPMENT OF THE FORESTS OF ULU MUDA

FINAL REPORT DECEMBER 2002

THE WORLD WIDE FUND FOR NATURE (WWF) MALAYSIA N

Pedu Catchment Outline Muda Catchment Outline Beris Catchment Outline Ahning Catchment Outline State Boundaries Dams Forest Extent (1992) Ahning Logged Inland Forest PERLIS STATE Mangrove Forest Unlogged Inland Forest

4 0 4 8 Kilometers Pedu

Muda

Alor Setar %U

Beris

KEDAH STATE

P. PINANG STATE

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 1 Ulu Muda as a Nature Tourism Destination Current Extent of Forests in Kedah World Wide Fund for Nature (WWF) Malaysia %U

%U N

0 80 0 1 90 1

Pedu 00 %U 20

%U Ulu Muda

2 21 2 00 0 2 0 5 0 0

2 9 0 3 0 200 %U 2 3000 6 0 2 0 2700 800 23 240 00 00 0 00 23 4 2 0 2 6 10 0 2 0 00 0 0 0 0 0 0 3 2 22 0 8 0 5 0 2 0 2 0 0 27 0 3200 %U 0 3 1 3 0 3 0 90 0 2 %U Northern Natural Areas Isosyet Kedah State Boundary State Boundaries

4 0 4 8 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 2 Ulu Muda as a Nature Tourism Destination Isoyet Map for Eastern Kedah World Wide Fund for Nature (WWF) Malaysia %U

N

$T Potential /existing Access Points %U Tourism Localities Major Roads Major Rivers Dams State Boundaries District Boundaries Baling Padang Terap Sik

3 0 3 Kilometers

Bukit Fakir Terbang

%U# %U %U# %U Mutiara Pedu Golf Resort and Lake Resort

%U# Anjung Pedu Resort %U#

%U# Sungai Teliang %U Desa Utara Resort

%U# Bukit Batu Tajam %U# $T%U Kuala Kalir Bukit Saiong

# Naka %U %U# KOPAM Jetty %U %U# Kuala Labua Gubir %U %U#

$T %U# Sira Hangat # %U # MADA Resort %U# %U Air Terjun Charok Terau %U

Kuala Lasor

%U#

$T

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 3 Ulu Muda as a Nature Tourism Destination Present Tourism Sites in the Ulu Muda Region World Wide Fund for Nature (WWF) Malaysia N

%U Timah Tasoh Lake Perlis State Park%U

Machinchang %U %U Gunung Raya

Pedu Pulau Dayang Bunting %U %U %U Pulau Singa Besar Ulu Muda %U

Gunung Jerai %U

Pantai Aceh %U

%U Northern Natural Areas Major Roads State Boundaries

5 0 5 10 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 4 Ulu Muda as a Nature Tourism Destination Major Tourism Sites in Northern Peninsular Malaysia World Wide Fund for Nature (WWF) Malaysia %

Proposed International border-crossing N

% Tourism Localities Major Rivers Proposed Trans-hinterland Highway Pedu Catchment Outline Muda Catchment Outline Beris Catchment Outline Ahning Catchment Outline Dams Proposed State "Eco" Park Northern Forest Reserves State Boundaries

4 0 4 Kilometers

% % % % % % % % # Sungai Teliang % % % Proposed State "Eco" Park

% Proposed recreational area % Gubir % % % % % # % # %

%# Sira Hangat

% Sungai Muda

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 5 Ulu Muda as a Nature Tourism Destination Proposed Developments in the Greater Ulu Muda area World Wide Fund for Nature (WWF) Malaysia N

Khao Nam Kang National Park

Proposed Trans-hinterland Highway Pedu Catchment Outline Muda Catchment Outline Ahning Beris Catchment Line State Boundaries Khao Nam Kang

2 0 2 4 6 Kilometers Thai-Malay border

Proposed Highway

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 6 Ulu Muda as a Nature Tourism Destination Extent of Forest Cover in the Ulu Muda Region World Wide Fund for Nature (WWF) Malaysia N

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ÊÚÊÚ ÊÚÊÚ

ÊÚ ÊÚ ÊÚ r r rr ÊÚ r r rrr

r Salt Lick Locations ÊÚ Security Dam Features Proposed Trans-hinterland Highway Major Rivers Tunnel Ecotone (150m) Proposed State Eco Park Dams Core Conservation Areas (Malaysia) Core Conservation Areas (Thailand) Beris Catchment Outline Ahning Catchment Outline Muda Catchment Outline Pedu Catchment Outline State Boundaries

4 0 4 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 7 Ulu Muda as a Nature Tourism Destination Topography and other Important Landmarks World Wide Fund for Nature (WWF) Malaysia N

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%U %U %U ÚÊ%U %U %U %U ÚÊÚÊ%U ÚÊÚÊ %U %U U%%U ÚÊ %U %U ÊÚ $ Salt Lick Locations Ú %U $ $ %U $ ÚÊ Security Dam Features ÚÊ%U $%U %U Tourism Localities ÚÊU% $%U %U# %U %U U% Access Points $ Proposed Trans-hinterland Highway $$ Major Rivers %U $ Pedu Catchment Outline MADA Resort Muda Catchment Outline Beris Catchment Outline Ahning Catchment Outline State Boundaries %U Proposed State Eco Park Dams Khao Nam Kang Proposed Protected Core Area (Ulu Muda) Potential Protected Area (Thailand) Compartments Boundaries U%

2 0 2 4 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 8 Ulu Muda as a Nature Tourism Destination Proposed Kedah State Park World Wide Fund for Nature (WWF) Malaysia ÊÚ Restricted Security Zone N ÊÚ

ÊÚ

Zone for Tourism Centre %U %U Pedu Resorts %U ÊÚ%U %U %U %U ÊÚ%UÊÚ ÊÚÊÚ %U %U $%U ÊÚ %U ÊÚ %U #Y #Y %U #Y Gubir ÊÚ%U$ #Y%U %U %U %U %U#Y #Y #Y#Y %U #Y

%U ÊÚ Security Dam Features Gulau $ Access Points $ #Y Salt Lick Locations %U Tourism Localities Tunnel Major Roads Proposed Trans-hinterland Highway Major Rivers Muda Catchment Outline Pedu Catchment Outline Tourism Zones Restricted Tourism Center Dams State Boundaries Beris Catchment Outline Ahning Catchment Outline Proposed Protected Core Area (Ulu Muda) Forest Reserve Compartments Potential Protected Area (Thailand)

2 0 2 4 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 9 Ulu Muda as a Nature Tourism Destination Proposed Conceptual Management Zones World Wide Fund for Nature (WWF) Malaysia Core Protection Zone N ÚÊ ÚÊ

ÚÊ

Mutiara Pedu Golf Resort and Lake Resort $ $ $# ÚÊ$ $ Visitor Zone $ $ ÚÊ$ÚÊ

ÚÊÚÊ $ $ Conservation & Management Zone #$ ÚÊ $ ÊÚ Ú $ xz xz $# xz KOPAM Jetty ÚÊ$ xz$ ÚÊ# xz$# $ # $ $ Sira Hangat xz xz $xzxz

$ Air Terjun Charok Terau # Access Points ÚÊ Security Dam Features # xz Salt Lick Locations $ Tourism Localities Major Rivers State Boundaries Management Zone (Visitors) Dams Management Zone Conservation Active Management Khao Nam Kang Protected Areas (Thailand) Compartments Boundaries 2 0 2 4 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 10 Ulu Muda as a Nature Tourism Destination Proposed Nature Tourism Concept for Ulu Muda World Wide Fund for Nature (WWF) Malaysia # c (proposed border crossing) N

c Tourism Localities Access Point

Primary Potential Thai Protected Area ÚÊ # Secondary

Proposed # ÚÊ Highway r Salt Lick Locations ÚÊ ÚÊ Security Dam Features Tourism Concept ÚÊ #S Focal Wildlife Arena V& Jetty Launch 'W Temporary Camp ÚÊ #Y Permanent Lodge a% Tented Camp V& Tourism Centre (Gubir) Tourism Centre (Pedu) c c $ Tourism Centre (Pedu) c Trails Concept Ê 4WD Úc # $ Trail c Tunnel Major Roads c Proposed Trans-hinterland Highway Tented Camp c Major Rivers ÚÊc Dams ÚÊ Proposed Protected Core Area (Ulu Muda) States Boundaries ÚÊ Potential Protected Area (Thailand) c # a%c Forest Reserve Compartments ÚÊc 2 0 2 4 Kilometers ÚÊ Alte rnative Pe rma nent Camp Ê c Jetty Launch Ú # ÚÊ c r r # V&c r# ÚÊc r'Wc Temporary Camp ÚÊ r# ÚÊ # #Sc cV&# c #Yc r Tourism Centre (Gubir) rr c r Focal Wildlife Arena Permanent Lodge

%# ac Tented Camp ÚÊ

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 11 Ulu Muda as a Nature Tourism Destination Conceptual Plan for "Inside Park" Nature Tourism Development World Wide Fund for Nature (WWF) Malaysia ÚÊ N ÚÊ Pedu

ÚÊ

Pedu Resorts Kuala Nerang

ÚÊ Ulu Muda Forests #

Key conservation areas ÚÊÚÊ ÚÊ % ÚÊ ÚÊ r r r Gubir ÚÊ r ÚÊ% r Sira Hangat r rrr Proposed Highway Kopam Jetty Area

Gulau % Access Point % r Salt Lick Locations ÚÊ Security Dam Features Tunnel Major Roads Pedu Catchment Outline Muda Catchment Outline Major Rivers Proposed Trans-hinterland Highway Tourism Zones Restricted Beris Tourism Center Beris Catchment Outline Ahning Catchment Outline Protected Areas (Muda) Dams State Boundaries Potential Protected Area (Thailand) Forest Reserve Compartments

3 0 3 Kilometers

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 12 Ulu Muda as a Nature Tourism Destination Conceptual Plan for "Outside Park" Tourism Development World Wide Fund for Nature (WWF) Malaysia N

Proposed Durian Burong Crossing

% Access Points Security Dam Features Ahning ÚÊ r Salt Lick Locations Interland High Areas Major Rivers Pedu Catchment Outline Muda Catchment Outline Beris Catchment Outline ÚÊ Ahning Catchment Outline State Boundaries Dams ÚÊ Khao Nam Kang Protected Areas (Muda) Pedu Potential Protected Areas (Thailand) Compartments ÚÊ 3 0 3 Kilometers

ÚÊ Ulu Muda forests

ÚÊÚÊ ÚÊ % Muda ÚÊ ÚÊ r r rrSira Hangat ÚÊ% r Kopam Jetty Area rr Proposed Highway r

%

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 13 Ulu Muda as a Nature Tourism Destination Proposed Ulu Muda State Park

World Wide Fund for Nature (WWF) Malaysia Proposed Durian Burong Border Crossing N r Salt Lick Locations ÊÚ Security Dam Features % Access Points Tunnel Major Roads Pedu Catchment Outline Muda Catchment Outline Proposed Trans-hinterland Highway ÊÚ Major Rivers Tourism Zones Restricted Tourism Center ÊÚ Ahning Catchment Outline Beris Catchment Outline Pedu Dams Proposed Protected Core Area (Ulu Muda) State Boundaries Potential Protected Area (Thailand) ÊÚ Forest Reserve Compartments Kuala Nerang 2 0 2 4 Kilometers Pedu Resorts

ÊÚ # Ulu Muda Forests Key conservation areas ÊÚÊÚ ÊÚÊÚ % ÊÚ ÊÚ r r r ÊÚ r Gubir ÊÚ% rSira Hangat r rr Proposed Highway r KOPAM Jetty Area

Gulau %

Beris

Spatial and Conceptual Guideline for the Sustainable Development of the Forests of MAP 14 Ulu Muda as a Nature Tourism Destination Proposed Management Zones of the Ulu Muda State Park World Wide Fund for Nature (WWF) Malaysia