SAPULUT FOREST DEVELOPMENT SDN BHD

PUBLIC SUMMARY OF FOREST MANAGEMENT PLAN

1st JANUARY 2016 - 31st DECEMBER 2025

Sapulut Forest Development Sdn Bhd (57757-K) Lot 2-2, 2nd Floor, Wisma Manikar, Lorong Manikar 1 Off Mile 2.5, Jalan 88400 , , Tel: +6088 – 276 828 - 33, Fax: +6088 – 276 668 Website: mysapulutfmu14.blogspot.com Public Summary of Forest Management Plan Sapulut Forest Development Sdn Bhd

Information of Licensed Area

Company : Sapulut Forest Development Sdn Bhd (SFDSB) Forest Management Unit : 14 Size of Area : 76,613 ha Location : Part of Sapulut Forest Reserve (Class II) Jurisdiction : Tibow Forestry Department, Co-ordinates : Latitudes : 4o 32.5’ and 4o 49 North Longitudes : 116o 27’ and 116o 54’ East Agreement : Sustainable Forest Management License Agreement No. 04/97 (SFMLA 04/97) Contact Person : Mr. Norman Wong (Managing Director) Email : [email protected]

General Locality Map of FMU 14

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Chapter 1 - Introduction

General Background In the past, repeated and bad logging practice within the Sapulut Forest Reserve (FR) made the forest poor in timber productivity, standing timber stock also regeneration. This was the condition of the Licensed Area before it was handed over to SFDSB in 1997, to be managed based on Sustainable Forest Management (SFM) principles. SFDSB signed the Sustainable Forest Management Licensed Agreement 04/97 (SFMLA 04/97) in September, 1997 with the State Government of Sabah, for a total area of 95,300 ha. i. 1st FMP (1st January 2004 - 31st December 2013) The SFMLA 04/97 or Licensed Area of 95,300 ha, was managed by SFDSB based on the 1st FMP. It was first approved on 2nd December 2003. Later, it was revised and approved on 20th December 2004. ii. 2nd FMP (1st January 2014 - 31st December 2023) - approved on 16th December 2016 Based on the First Supplemental of SFMLA which was signed on 21st February 2014, approximately 7,644 ha of the Licensed Area were excised and converted into a Class 1 Protection Forest Reserve which is now known as Maliau Buffer Zone Forest Reserve. The excised area has been placed under the Maliau Basin Management Committee (MBMC) which includes SFDSB as a new member of the Committee. The 2nd FMP was prepared to replace the 1st FMP with the total remaining Licensed Area of 87,656 ha. iii. 3rd FMP (1st January 2016 - 31st December 2025) - approved on 17th March 2017 Subsequently, a second supplementary agreement was signed on 3rd November 2015, when approximately 11,043 ha of the Licensed Area was excised for the purpose of socio economic development of the State. The new 3rd FMP is necessary to incorporate changes in land use of the Licensed Area and update the prescribed activities for the management. It is prepared under the guidance of the Sabah Forestry Department (SFD). The remaining Licensed Area in the 3rd FMP is now 76,613 ha.

Summary of net Licensed Area before and after the excision

Forest Total Excised Total Licensed Remarks Management Plan Area (ha) Area (ha) (FMP) First - 95,300 Before Act of the State Legislative Assembly on 29th March 2012. Second 7,644 87,656 Turned the excised area into a Class 1 Protection Forest Reserve following the First Supplement of SFMLA 04/97 on 21st February 2014. Third 11,043 76,613 The excised area was made to pave the way for socio economic development on 3rd November 2015 based on the Second Supplemental Agreement.

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The 3rd FMP has a number of significant changes, some of which include the following:

 Excision of 11,043 ha from ITP compartments to pave the way for the socio economic development of the State, in addition to 7,644 ha that was excised in the 2nd FMP for the establishment of Maliau Buffer Zone Forest Reserve (Class 1).

 Subscribe to Reduced Impact Logging (RIL), log-fisher and adoption of yarder system as our harvesting technique in the Natural Forest Management (NFM) and Industrial Tree Plantation (ITP) areas.

 Implement pre and post-harvest forest inventory in NFM and ITP areas.

 Adoption of Buffer Alternate Strip Line (BASIL) planting system in the entire ITP areas, gradually.

 Adoption of area-specific flexible cutting regimes for harvesting and 25-year intervals bicyclic felling after initial cut in NFM areas without jeopardizing sustainability of the forest in the long term.

 Update information on Social Impact Assessment.

 Improvement of management practices and widening the scope towards acquiring forest certification.

 Activities that are not compatible with the objectives of SFM were discontinued and aborted.

Policy Statements and Management Objectives As a licensee, SFDSB is committed to manage the Licensed Area in accordance with the terms and conditions as stipulated in the SFMLA 04/97 and conform with the principles of sustainable forest management as prescribed by the Forest Stewardship Council (FSC) and the Malaysian Criteria and Indicators (MC&I) of the Malaysian Timber Certification Council (MTCC) and all existing State forest policies, environmental policies, legislation and regulations, as follows:

 Ensure sustainable management of the forest resources over the long-term in order to provide optimal benefit and financial return for the Company, as well as, the Socio-economic benefits to the state

 Recognize that environmental protection is given due consideration in all the company’s business operations so as to minimize any negative impact on the natural environment

 Ensure the SFM commitment is integrated with other key business objectives of financial performance, operating efficiency, customer satisfaction, health and safety and good corporate citizenship

 Ensure that our business partners, contractors and employees are committed to the Company’s SFM Policy

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 Work in partnership with other business organizations, the Government and interested groups where opportunities exist to benefit both our business and the environment  Protecting the Licensed Area from illegal activities, such as encroachment, hunting, felling and fires, to enhance the safe, sound and responsible management of the forest for future generations

Overall objective - to ensure the perpetuity of the Licensed Area as a plantation and natural resource, which is managed to balance a variety of uses and values in an ecologically sustainable manner.

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Specific objectives -

For over 10-years planning:

a) Application of Environmentally-Friendly practice b) Active intervention management of enrichment planting and silvicultural treatment, monitoring, prevention and suppression of destructive forest agents c) Establishment of Industrial Tree Plantation (ITP) in highly degraded area d) Enhance and restore the ecological connectivity e) Provide employment opportunities to the local communities f) Support the State Government policy to manage the forest reserve based on SFM principles as well as the Sabah Tourism Policy to enable tourism to be developed g) It is envisaged that the Licensed Area will be certified by 31st December 2017

For NFM areas:

a) To manage the NFM area as “growing stock” and harvesting using RIL methods b) To practice regulated harvesting as per SFD approved management regimes (see page 12) for sustainability of the forest c) Subject to statutory requirements and prescribed restrictions, to adopt a 25 years economic cut (harvest cycle) for the entire NFM areas d) To concurrently undertake pre-harvest activities, harvesting and post-harvest activities to take advantage of existing roads and to maintain the operational flow of such activities for greater efficiency e) To undertake post-harvest inventory survey after RIL harvest to estimate the quantity of growing stock available for the next harvest cycle and to determine whether there is sufficient natural regeneration for future harvest cycles f) To undertake one round of silvicultural treatment in the form of climber cutting after NFM harvesting

This summary only covers the NFM area whereas the ITP area will be covered in a separated public summary.

Chapter 2 - General Information

Meteorology

Rainfall - The Licensed Area is located in one of the wettest parts of Sabah with an average annual rainfall of 3,000 mm and a very broad variation, from a minimum of 13.7 mm in January 2006 to a maximum of 1959 mm in August 2010.

Temperature - The temperature at the Licensed Area is between 25oC and 30oC in day time and 18oC and 20oC at night.

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Relative Humidity - The average annual relative humidity at the Licensed Area ranges from 66.3% to 72.0%.

Wind - The wind is predominantly southerly and the speed ranges from a low of 0.3 m/sec to a high of 3.4 m/sec.

Sunshine and Solar Radiation - On the average, Sabah receives about 6 hours of sunshine per day. Solar radiation is closely related to the sunshine duration. Its seasonal and spatial variations are thus very much the same as in the case of sunshine.

Evaporation - The air temperature at the Licensed Area is lower with an evaporation rate of about 2.5 mm/day.

Geology and Soil Geology - The Licensed Area is formed of mainly the Sapulut, Tanjong and Labang Formations. A small area to the southeast corner of the Licensed Area is derived from Kapilit Formation.

Geology Formation

Formation Parent Material Sapulut Sandstone, siltstone, mudstone, conglomerate and limestone. Tanjong Sandstone, siltstone, mudstone, conglomerate, minor limestone and lignite. Labang Sandstone, siltstone, mudstone and limestone. Kapilit Sandstone and mudstone with rare beds of coal, conglomerate and limestone.

Soil - The main soil associations found in the Licensed Area are Lokan (43%), Crocker (35%) and Maliau (16%). Pockets of Labau, , Serudong and Gomantong associations are also found. These associations are generally associated with the geological land form of the area.

Topography The topography of the Licensed Area is undulating with ground elevations between 200 to 1,200 m above mean sea level (AMSL).

Hydrology

The FMU 14 natural landscape varies from low hills and undulating terrain in the lowland to steep and dissected in upland and montane region. Tributaries that could be affected include Sansiang,

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Saburan, Siliawan, Tibow, Palagan, Sabunutan, Beliar, Lambunaan and Sablangan. All these tributaries join Sapulut River and finally reach Kalimantan. A tributary of Pinangah River originating from the northern part of the FMU flows to the River. The largest minor catchment is Sansiang River, followed by Saburan and Salung rivers.

Current Vegetation Cover

Generally it can be categorized into two classes, the old growth forest with various disturbance stages and secondary growth vegetation. The vegetation are very much affected by previous conventional logging activities before the introduction of sustainable forest management.

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Forest Ecosystems The FMU area comprises mixed dipterocarp forest, mixed dipterocarp and kerangas forest, kerangas forest, lower montane forest and secondary vegetation.

Flora and Fauna Diversity Flora - Ten most speciose plant families within Sapulut FR are Dipterocarpaceae, Euphorbiaceae, Lauraceae, Annonaceae, Fabaceae, Orchidaceae, Rubiaceae, Phyllanthaceae, Meliaceae and Myrtaceae. During the recent High Conservation Value (HCV) survey, data retrieved from plant database (BRAHMS) and other research plots, a total of 442 taxa (identified to specific and infraspecific level) were recorded from Sapulut FR, where 112 plant species are endemic to , including 23 to Sabah but none is endemic to Sapulut FR.

Fauna - Sapulut FR has a diverse and abundant wildlife population. However, logging activities in the past may have affected and altered its natural habitat to a certain extent. The situation in the Licensed Area is no exception. A wildlife survey was carried out by HUTAN-Kinabatangan Orang-utan Conservation Programme (HUTAN-KOCP) in December 2011 and recorded 10 mammal and 57 bird species. The data procured from the survey served as the baseline information for further wildlife research and monitoring in the future. Several totally protected species are known to exist within the Sapulut FR including the Borneon Pygmy Elephant, Borneon Orang-Utan, Tembadau, Malayan Sun Bear and Sumatran Rhinoceros, in view of close proximity to Maliau Basin Conservation Area and Kalabakan Forest Reserve. Based on the report from Sabah Wildlife Department, it is very likely that many animal species move between these forest reserves and share similar wildlife species.

Current Infrastructure

Existing infrastructure within the FMU area includes roads, buildings (Base Camp and Forestry Complex) and other facilities consisting of 8 detached Rubber Tapper quarters (Rubber Village) and two fire towers. The base camp is where the administrative building and basic infrastructure facilities are located. The Forestry Complex is a new infrastructure facility to provide a good working environment in the Licensed Area, constructed in 2010 but not yet complete. As of 2013, facilities available in the Forestry Complex are an office with conference room, 1 clubhouse equipped with clinic, guest rooms, gymnasium and lounge, and living quarters.

Social Impact Assessment (SIA)

SIA is an important and the most commonly used social assessment tool to determine the presence, status, influence and possible impact of SFDSB operations on the local community. Two SIA studies were conducted by Kiwiheng Wood and Environmental Consultant Sdn Bhd in 2010 and SFDSB staff in 2015.

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Sapulut FR area is located in the district of / where the Murut Tagol ethnic group represents the majority of the Bumiputera group and they focus on agro-based activity.

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There are no villages or human settlements within the FMU 14 area. Major human settlements are located mainly east and southeast of FMU 14, within the state land along Sg Sapulut, Sg Pampangon and Sg Logongon, namely Kg Bangau, Kg Salarom Taka, Kg Samuran, Kg Sinsingon, Kg Manduluh, Kg Nalasaran, Kg Kaingalan, Kg Salangon, Kg Pulutan, Kg Saliku, Kg Sabulu, Kg Agis, Kg Tikandis, Kg Bulait, Kg Balantos, Kg Sinikalaun, Kg Sosogoh, Kg Kuyoh, Kg Sikait, Kg Sabinait and Kg Sumolombom. In the eastern area of FMU 14, human settlement is limited to Jabatan Perhutanan Tibow which is provided with main office and staff quarters.

In the immediate surrounding of SFDSB licensed area, are Bornion Timber Sdn Bhd and Indah Serimas Sdn Bhd to the north, Maliau Basin Conservation Area to the northeast, Expo Utama Sdn Bhd to the southeast, Top Quantum Sdn Bhd and Zillion Fortune Sdn Bhd to the south; and Idris Hydraulic Sdn Bhd and Jawala Plantation Industries Sdn Bhd to the southwest.

There are tourism attractions located within and in the vicinity of the FMU 14 area including Batu Saap, Batu Punggul and Batu Tinahas. These are gazetted as archaeological sites except for Batu Saap which is located within the FMU 14 area.

Population and Demographics The majority of the population is Bumiputera of the Murut community. Their education level is typical for a rural area where 49% of the population have attained secondary education and mainly work in agriculture as farmers. The population economic level is considered low with the majority having incomes of less than RM 500 per month.

The majority of the population relies on water pipe system for drinking purposes while others collect rain water and rely on river water. However, during dry periods, they obtain water directly from local rivers for daily water use.

Though electricity connection has improved in the last ten years, more than half of the respondents (55%) have no proper electricity.

Telephone connections are getting better with 44% of the respondents receiving good service.

Main roads within the study area are the existing logging roads. The primary mode of transportation is by private (illegal) van, 4WD vehicle and private taxis. Car ownership is very low. All roads within the settlements are in need of maintenance.

Existing Socio-Economic Problems

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Problems reported are lack of employment opportunities, development, land allocation to them for the whole communities and future generations, and infrastructure such as electricity and water supply.

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Public Perception and Acceptance of the Proposed Project The majority of the respondents agreed with the existing SFDSB’s operation. Those who agreed stated that the project may (i) create more employment opportunities; (ii) improve social facilities and economy of the surrounding areas and (iii) provide a good network of roads. Other positive impacts were improve the infrastructure facilities, population health, image of the area and quality of life environment.

Those who disagreed to the project are mainly concerned about the river water pollution. Some of those who disagreed imposed reasonable conditions mainly related to the requirements of clean water supply, either in the form of water storage facility or protection of water catchment areas. Others highlighted an increase in road traffic, dust and safety among other road users and immigration of foreign labour that might cause social problems.

Map of Adjacent Villages to Licensed Area

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Management Implication of the SFMLA

The aspect of the local population indeed provides several management implications for the SFMLA. Issues that need to be dealt with are: a) Encroached Area - Three areas have been identified and inspected as being encroached by the local farming communities. SFDSB will resolve this case according to the present rules and regulations with the guidance and assistance of the SFD. b) Hunting and Other Illegal NTFP Extraction - Hunting and other illegal NTFP extraction (such as medicinal plants, gaharu, rafflesia, orchid, jungle fruits, handicraft plants and other) are difficult to control due to close proximity to Sapulut-Kalabakan main road that cuts across Sapulut FR and an open area along the eastern bank of Sg Sapulut. SFDSB provides appropriate CSRs as before to maintain a good relationship with the local communities and carries out activities such as awareness education; conducts monitoring and enforcement; and has placed appropriate and adequate permanent signboards on all strategic places along the Sapulut - Kalabakan main road and Sg Sapulut. c) Village Watershed Area - SFDSB will cooperate with and assist the local communities in providing clean gravity water supply if requested and depending on the availability of funds. The watershed area will be mapped within the SFDSB master map and excluded of any timber harvesting activities including RIL technique. d) Organic Hill Rice Farming - Introduction of a new system of organic hill rice farming, SRI system, would provide the local communities with more fertile rice clumps and higher rice yield. The SRI system is environmentally friendly, low cost, results in higher yields and allows for permanent cultivation on one farm area. It is hoped that it will reduce the need to open up new lands for shifting cultivation and will not encroach into Sapulut FR anymore in the future. e) Establishment of Sapulut FR Social Forestry (SF) Committee - The purpose of the committee is to provide a communication bridge between the SFDSB management and the local communities. It was suggested that three groups of SF Committee be established namely Sg Sansiang & Sg Sansiang Cluster, Sapulut Town Cluster and Sg Sapulut Cluster.

Chapter 3 - Past Management Reviews

Land Use

The purpose of a forest management plan is to prescribe measures to optimize production, utilization, and regeneration of forest resources. The plan includes description of how the listed land will be managed and treatment schedules such as timber harvesting and reforestation.

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The 1st FMP was formulated to rehabilitate the degraded forests within the NFM areas, establish ITP in degraded areas, protect the Licensed Area from illegal logging, poaching, forest fires and further encroachments by the local communities and to promote social development activities.

The 2nd FMP was formulated to ensure the perpetuity of the Licensed Area as forest plantation and natural resources, introduction of BASIL (Buffer Alternate Strip Line) planting in the highly degraded area within ITP area, restore ecological connectivity and enhance potential support (habitat) of viable wildlife populations, biodiversity conservation and associated ecosystem services.

Comparison of the 1st FMP and 2nd FMP 1st FMP 2nd FMP Land Use planning 3 main land uses: 3 main land uses: i. Conservation i. Conservation ii. Production (NFM) ii. Production (NFM) iii. Production (ITP) a. NFM Conventional b. NFM Mosaic planting with RIL iii. Production (ITP) a. ITP conventional b. ITP with RIL c. BASIL Silviculture Treatment Applied within NFM area only, in the  Confined in the NFM Mosaic (Climber cutting) form of climber cutting, based on the Planting areas. guidelines of Silvicultural Tending  ITP with RIL and BASIL (in the form procedures for Logged Over of bamboo and climber cutting). Dipterocarps Forest by Sabah Forestry Department.

Infrastructures

Various physical infrastructures were built, maintained and repaired by SFDSB during the last 10 years including base camp, forestry complex, nursery, fire lookout tower, and road and parameter boundary.

Forestry Complex Area

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Office with Conference Room Clubhouse

Albizia Cabin 1 Albizia Cabin 2

Carpenter Quarters Ranger Quarters

Community Programme

SFDSB has actively engaged with the local community living adjacent to the Licensed Area by providing direct employment and conducting various community programmes such as training, free rubber seedlings, promoting local handicrafts, offering scholarships and conducting dialogues. The programme has a direct impact on the economic well-being of the local communities.

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Approximately, 40% of the SFDSB’s staff and workers are villagers living in the vicinity of the Licensed Area.

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Logging in NFM Areas In the early stage of operation, from 2005 to 2006, approximately 6,986.5 ha of the NFM areas were logged and yielded about 66,611 m3 of timber. It was Non-RIL conventional logging in the NFM areas which was not planned in the 1st FMP. For 2nd FMP, harvesting is scheduled to commence in 2016.

Non-RIL logging in NFM Compartments

Year Coupe Compartment Gross Area (ha) Volume (m3) 2005 TWU.18/03 NFM Coupe B 1,010.24 15,486.02 TWU. 06/04 NFM Coupe C 2,483.03 45,472.60 2006 TWU. 18/03 NFM Coupe B 1,010.24 5,276.36 TWU. 06/04 NFM Coupe C 2,483.03 375.99 Total 6,986.54 66,610.97

Chapter 4 - Timber Resources

The Licensed Area in the 3rd FMP has been zoned into 3 main land uses:

Forest Land use Gross Area (ha) No. of Compartments Percentage Conservation 2,091 7 2.73 ITP 21,970 55 28.68 NFM 52,552 169 68.59 Grand Total 76,613 231 100.00

The last field inventory of timber resources within the Licensed Area was conducted during the preparation of the 2nd FMP. Comprehensive Harvesting Plan (CHP) results will guide the actual forest stocking for each compartment.

Two forest management practices, covering compartments designated for Mosaic Forest Restoration and NFM with the minimum cutting limits at ≥ 40 cm and ≥ 60 cm DBH, respectively, with the implementation of full RIL, are used for timber harvesting and yield estimations for forest cover within the management area.

Regenerative Stocks - Stand Density and Basal Area

The overall regenerative stocks from seedlings to pole sized trees according to species groupings and forest strata summarized that the stocks under forest stratum 3 (Poor Forest) and 4 (Very Poor Forest) were poorer than forested areas classified under stratum 2 forest cover (Moderate Forest), with the residual stand densities representing about 40% to 25% of the potential stem density

17 Public Summary of Forest Management Plan Sapulut Forest Development Sdn Bhd compared to Class 1 forest cover. However, it does not reflect the patchy development of trees between 05 - 20 cm dbh class within the management area.

Yield Regulation and Long Term Sustainability Management has set a higher standard of minimum cutting limit for harvesting in NFM area at 48 cm DBH, to allow the residual trees grow to ≥ 60 cm DBH in a shorter period for the next harvest cycle.

For the purpose of yield regulation, a 25 year cutting cycle is adopted for this 3rd FMP, based on area control of 2,102 ha year-1 with the Annual Allowable Cut (AAC) of 95,644 m3 year-1. Due to operational limitation of harvesting, a forest stand is considered stocked when at least 15 commercial trees per hectare of between ≥ 60 to < 120 cm DBH are available for harvesting. The Mean Annual Increment (MAI) of volume at 1.82 m³ ha-1 year-1 which is derived based on data from years 2012, 2013 and 2015 measurement of ten (10) PSPs.

Chapter 5 - Management Prescriptions

Forest Function Zoning

The Licensed Area will be managed for timber production from NFM and forest plantation of ITP. There are 231 compartments ranging in size from 67 to 662 ha for the purpose of the management planning while the main management zone is divided into conservation and production zones, as shown below:

FOREST LAND USE Total Compartments Gross Area (Ha)

Conservation 7 2,091 NFM 169 52,552 NFM West 25 7,957 Production NFM East 25 9,905 NFM Central 119 34,690 ITP 55 21,970 Total 231 76,613

There are areas that have been set aside for various uses such as Base Camp and Housing, Rubber Village and staff quarters, fire towers, nurseries, roads etc. Rubber Village was established to create a village environment where the main activities are concentrated for rubber plantation related activities.

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Forest Function Map

Conservation Areas The conservation areas of 2,091 ha are generally at high altitudes with slope gradients above 25o, watershed areas and some HCV forests. These areas are off-limits to harvest for ecological purposes. Other conservation areas, such as the riparian reserves and slope >25o which are scattered all over the Licensed Area will be mapped out at the operational planning level in the Annual Work Plan (AWP).

Production Areas

About 97% of the Licensed Area is designated for production zone with the principal objective being sustainable timber yield. The production zone is divided into two main land uses: NFM and ITP.

NFM Area The NFM area comprising 169 compartments is approximately 52,552 ha or 60% of the total Licensed Area. The NFM area is further divided into 3 management regimes as shown below:

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Zone Management Regime Cutting Limit

NFM West NFM-RIL ≥ 48 cm DBH

NFM East NFM Mosaic Planting under RIL ≥ 48 cm DBH

NFM Central NFM-RIL ≥ 60 cm DBH

Timber Harvesting Timber harvesting will be based on an area control yield regulation and the AAC of 95,644 m3 for the next cutting cycle. Harvesting in all NFM areas will strictly follow the allowable minimum DBH cutting limit with full RIL, including the application of log-fisher and tractor techniques, and subject to the prior approval of CHP.

Timber Stand Improvement (TSI) The objective of TSI is to improve quality and stimulate the growth of the remaining tree stands. Treatments may include mainly vine-climber cutting, liberation thinning and enrichment planting. Approximately 13,914 ha of forest in NFM areas had been silviculturally treated from 2005 up to 2015. For this 3rd FMP, vine and climber cutting will continue to be carried out only in NFM East, while for NFM West and Central, the cutting will be carried out if and when necessary, subject to post harvest Silvicultural & Management Inventory Procedures (SMI) findings and availability of funding. For accessibility, the treatments will be carried out after the restoration plantings are completed. Guidelines and field procedures for Silvicultural Diagnostic Survey developed by SFD will be used for the assessment of TSI. The location and size of area to be treated will only be identified after the diagnostic survey.

Establishment of Permanent Sample Plots (PSP) The establishment of PSP commenced in 2014 and 10 PSPs have been established in the NFM area. The measurement is carried out every 2 years. More PSP will be established if and when necessary. It is envisaged that “BOLEH Monitoring System” may be adopted.

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Chapter 6 - High Conservation Value Forests

The assessment of High Conservation Value (HCV) in FMU 14 follows the national standards as prescribed in the High Conservation Value Forest Toolkit for Malaysia in 2009. The findings are based on full HCVF assessment (HCVs in FMU 14 of Sapulut Forest Development Sdn Bhd) which was carried out by an expert from University Malaysia Sabah.

The HCVs assessment findings that all HCVs are present in FMU 14. These include, HCV 1.1 – 1.3 (Species Diversity), HCV 2 (Large landscape-level Ecosystems and Mosaics), HCV 3(Ecosystem and Habitats), HCV 4.1 and 4.2 (Ecosystem Services), HCV 5 (Community Needs), and HCV 6 (Cultural Values). The impacts of forestry activities and surrounding land-use changes are critically evaluated and form the basis for development of management prescriptions. For retaining the functionality of these HCVs, the recommended prescriptions, amongst other, are establishment for buffer zones and demarcation of the area surrounding the HCV, protection from the potential threats, monitoring, patrolling, etc., and underline the crucial needs for managing the whole FMU at the landscape level.

Figure E.1 Map showing the localities of all HCVs

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HCV in FMU 14 area: Management and Monitoring for the HCVs

HCV Element Threats Management Monitoring Recommendation Recommendations 1 Species Encroachment Demarcate a 50-m wide buffer Regular ground monitoring of Diversity Fire adjacent to all protected areas the buffer zones within the NFM zone. Protected area Forestry activities Demarcate a 100-m wide buffer adjacent to all protected areas within the ITP zone Spatial and Encroachment Demarcate a 100-m buffer zone Regular ground monitoring of temporal Fire around each of these area the buffer zones concentration Forestry of species activities Identified and retain Hornbill

nest trees and areas with high densities of strangler figs and

ensure an appropriate buffer is delineated Encroachment RTE Flora Fire Demarcate a 100-m wide buffer Illegal Ground monitor the boundary around areas with high harvesting of these areas to ensure no concentrations of RTE flora - Forestry encroachment Batu Tantaliwau (Compartment activities 229), Batu Saap (Compartment Invasive plant 197B), Kerangas 1 species Record presence of invasive (Compartment 189), Sungai plant species within these Tibow (Compartment 140), Salt HCVAs lick (Compartment 218) &

Kerangas 2 (Compartment 146)

Demarcate a 100-m wide buffer Monitor population of around Rafflesia populations Rafflesia within these (e.g. ITP compartment 192 & designated HCV areas 218A)

Clearly marked on the ground Monitor compliance with RIL and excluded from harvesting guidelines all prohibited tree species in

NFM areas

Conduct pre-harvesting Monitoring of populations of assessment on RTE species and RTE timber species via CHP adaptive management to inventories, PSP and post ensure a viable population of harvesting inventories RTE Fauna Encroachment RTEs is retained after

Fire harvesting (i.e. lowering of the Establish and monitor seedling Hunting maximum cutting diameter to plots to assess regeneration of Road kills ensure at least 2 seed trees/ha RTE timber species Forestry are retained)

activities

Conduct further surveys within

the Lower Montane areas of

FMU 14 to identify area with

high concentrations of RTE

flora.

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Install signage at the major Patrolling carried out entry points to FMU 14 that frequently and as specified in indicates the applicable the SMART plan punishments and fines for illegal hunting

Develop a SMART-based Monitoring of RTE species enforcement plan; patrolling sensitive to forestry activities carried out frequently as using distance sampling and specified in the plan; potentially camera traps.

Remove all dogs from within the FMU

Conduct community outreach Initiate a road kill monitoring programs to increase program awareness on conservation and the need to conserve RTE species

Retention of nest trees utilized by hornbills;

Enrichment plant of figs in the riparian buffer and steep areas within the ITP area

Retain woody climbers within riparian buffers and steep areas

HCV Element Threats Management Monitoring Recommendation Recommendations 2 Level Encroachment Retention of riparian buffers as Drone-based monitoring to Ecosystems and Fire HCVAs and adoption of low assess changes in forest Mosaics Infrastructure impact forestry practices i.e. RIL condition/health. development and BASIL to maintain Forestry connectivity activities

Consult with relevant Ground monitoring of the stakeholders and experts about buffer zones mitigating the impacts of proposed infrastructure development 3 Ecosystems and Encroachment Demarcate the extent of the Ground monitoring of these Habitats Fire lowland MDF on Labau soils HCVAs Forestry and rehabilitate areas which activities are degraded

Demarcate the areas with Drone-based monitoring to lowland Kerangas forest and assess changes in forest Limestone vegetation condition/health. Monitor stand dynamics in restored areas.

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4.1 Ecosystem Encroachment Demarcate the entire Ground monitoring of these Services Fire catchment. HCVAs

Watershed Forestry Rehabilitate areas which are protection activities degraded in conjunction with Drone-based monitoring to the relevant local communities assess changes in forest condition/health Monitor stand dynamics in restored areas. 4.2 Erosion control Encroachment Demarcate all areas greater Monitor the boundary of these Fire than >25° and cover an area of areas to ensure no Forestry more than 2 ha Demarcate all encroachment activities riparian buffers. Monitoring of riparian forest Rehabilitate areas which are quality using the QBR Sabah heavily degraded rapid assessment protocol. Monitor stand dynamics in restored areas. 5 Basic needs of Encroachment Demarcate the entire Ground monitoring of these local Fire catchment. HCVAs communities Forestry activities Rehabilitate areas which are Drone-based monitoring to degraded assess changes in forest condition / health. Monitor stand dynamics in restored areas. 6 Cultural Encroachment Demarcate the burial ground Ground monitoring to ensure identities of Forestry and a 50-m buffer no encroachment of this HCV local activities communities

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Chapter 7 - Environmental Impact Assessment and Management Standard

Environmental Impact Assessment (EIA) EIA is required under the Environmental Protection (Prescribed Activities) (Amendment) Order 2013 for any forest management activities, especially logging and plantation activities within an area in excess of 500 ha.

A Special EIA was undertaken for this SFMLA FMU titled “Forest Logging and Plantation of 95,300 Hectares within Forest Management Unit (FMU 14), Sapulut, Sabah” by Sinoh Environmental Sdn Bhd and approved by Environmental Protection Department (EPD) on 16 June 2005.

All assessment on environmental issues, the impacts and appropriate mitigation measures to minimize environmental damage are discussed in the report.

Mitigation Measures Key and commonly applied mitigating measures identified from the assessment are as follows:

No Main Topic Mitigation Measures

1. Soil Erosion  Protection of Steep Areas  Reducing land area disturbance  Minimize cutting and filling in all types of road construction  Proper bridges and culverts for stream crossings 2. Water Quality  Preservation of Riparian Reserves  Protection of sensitive areas e.g. watersheds 3. Flora and Fauna Ecology  Reducing damage to residual trees and other vegetation  Protection of significant forest formation and landscape  Wildlife management 4. Socio Economic Considerations  Provision of employment opportunities  Protection of water sources and supply  Workers’ safety and health 5. Biomass and Waste Pollution  Proper disposal of all types of waste 6. Remedial Operation  Rehabilitation of degraded areas  Reducing surface flow current  Removing structures affecting streams and rivers flow 7. Forest Fire Risk  Forest Fire Management Plan

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Comprehensive mitigation framework to manage the impact of the forestry activities in the Licensed Area are shown below:

Forest Function Activity Objective of Mitigation Mitigation of Impact Protection Watershed Reduction of accelerated  Forest zoning by forest function management run off and sedimentation  Delineation of protection compartments according to management restrictions  Natural forest management: no clear felling, long harvesting cycles, natural regeneration.  RIL  No ground skidding across streams  Alignment of roads away from key habitats  Road constructions during dry season only  Stabilization of road banks Wildlife Minimum disturbance of  Forest zoning protection habitats of endangered  NFM mammals  Road construction and harvesting according to standards given above Fire Control Reduction of fire hazard Fire management plan for the forests based on prevention, detection and suppression Pest & disease Prevention of  Application of bio-degradable control contamination of soils and pesticides. vertebrate fauna with  Restriction of use only during pesticides non-breeding season of insectivorous animals.  Restriction of use to production compartments only.  Safe disposal of waste. Timber Forest tending Minimum disturbance of  Elimination of immediate competitors of Production (Silvicultural natural succession and commercial trees only. operation) bio-diversity  No eradication of weeds: only liberation of commercial regeneration.  Use of bio-degradable chemicals. Rehabilitation Minimum disturbance of  Removal of vegetation only along (Enrichment natural succession and planting lines. planting) bio-diversity  Planting of indigenous timber & high value exotics. Conversion to Reduction of accelerated  Forest zoning according to site ITP soil erosion and suitability (slope, depth, nutrients) safeguarding minimum  No blading of top soil water quality  No burning  No terracing  Apply slow-release fertilizer.

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Forest Function Activity Objective of Mitigation Mitigation of Impact Timber Harvesting Safeguarding of future  Felling of trees based on silvicultural Production forest stands at tree marking. compartment level  Directional felling  Employment of low impact yarding systems Road Reduction of accelerated  Minimizing road density by employment construction soil erosion of LDCCS.  Road gradient, width, drainage system and stabilization of banks according to minimum standards Community Community Prevent encroachment  Awareness campaigns Needs forestry  Provision of employment through long-term forest operations  Issuing of licenses for timber felling and hunting according to management plan Recreation / Conversion of Minimum disturbance of Conserving the forest and forest resources for Ecotourism forest for natural succession and recreational purposes with minimum recreation bio-diversity disturbances to the natural habitat

Forest Management Standards Forest Management Standards promote sustainable forestry practices developed by the Forestry Department, to ensure the management is compatible with ecological processes and safeguards all relevant forest functions for society. These are environmental protection, customary land rights, production and recreation.

Forest Management Certification SFDSB initiated the certification process in 2014 and it is envisaged that it will be fully certified by 31.12.2017 by any accredited forest credible certification body such as FSC and MTCC. Besides complying with social and environmental standards of Principle and Criteria for certification, SFDSB will carry out its forest management in accordance with the following guidelines: i. To have strong forest and environmental protections standards, which require protection of HCVFs and good forestry practices that reduce toxic chemical use ii. To ensure strong community protection standards by protecting native people’s rights, require workers to be paid competitive wages and require compliance verification with social and international policies and laws iii. To be transparent in that the forest management system is governed by an equal balance of economic, social and environmental considerations iv. To ensure good governance in every aspect and to be legally verified in its timber production

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Chapter 8 - Monitoring, Internal Auditing and Reporting

Monitoring SFDSB monitoring will include all aspects of forest management such as boundary maintenance, timber harvesting operations (pre and post harvest), silviculture operation, road construction, forest security and protection, soil protection, environmental impacts, wildlife, community forestry development and continuous forest inventory.

Regular monitoring is to ensure compliance and early recognition of problems; and to take corrective actions immediately.

Key Section Monitored Frequency Boundary maintenance Annually Pre-Harvest Inventory (CHP) Each CHP CHP (Post-Harvest) Monthly, weekly or daily Silvicultural Tending Monthly Road Construction Monthly Forest Security & Protection including Wildlife Monthly Environmental Management Annually CF Project Bi-annually CFI Every 2 years

Resource Monitoring

Ecosystem Management (BOLEH) Strategies The objective is to develop a conservation programme with a provision of monitoring of forest growth and dynamics for a review 10 years after implementation. Monitoring the forest ecosystem using the application of remote sensing and GIS as a management tool and establishment of permanent sample plots (PSPs) for documenting detail changes in forest structure and composition. At present, 50 permanent sample plots are actively being monitored by Kitayama et al from Kyoto University and Sabah Forestry Department’s Research and Development Team.

Wildlife Monitoring All wildlife that are found in Sapulut FR should be identified and monitored. However, time and monetary resources are not available. In the past, the sample-based approach has been used for conducting studies in the Sapulut FR. Wildlife monitoring using survey techniques including transects, will be implemented accordingly and for effective monitoring, staff assigned will have to be trained by wildlife experts.

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Internal Auditing

SFD and other third party auditors will carry out their periodic and continuous surveillance and systematic auditing in SFDSB forest operations. SFDSB has also established its own internal auditing that is responsible for carrying out regular internal monitoring and auditing of all forestry activities in the Licensed Area to ensure SFDSB and the contractors are in compliance with the legal requirements.

Reporting

The reporting type and frequency are as follows:

Type Submission to Frequency Internal Use General Manager Monthly Quarterly Annually *Depends on the sensitivity of the topic Environmental Compliance Environmental Protection Once every four months Report (ECR) Department SFMLA Compliance Report Sabah Forestry Department Once a year

Plan Review

The 3rd FMP is subject to a review by the year 2020/21 which provides an opportunity to update the resource situation, to refine the forest zoning scheme and management prescriptions, and to respond to new information or changes in the SFD and/or government policies, management approach, as well as changes in technology and market conditions. The following aspects will be considered during the mid-term review:

 Comparison between the targets and actual achievements of all management activities carried out

 Assessment of the forest resources (especially yield) through the evaluation of growth data from the CFI or BOLEH System plots

 Evaluation of the development in terms of species diversity, soil, water and wildlife protection, and community forestry development

 Assessment of any major changes in the environmental and socio-economic conditions and other requirements should the Licensed Area be certified in 2015

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Chapter 9 - Manpower and Budget Requirement

Manpower

Overall Manpower Summary as of December 2016:

Location Total Kota Kinabalu Office 12 Base Camp, Sapulut 338 Office 15 Office 2 Grand Total 367

For some forestry related activities in the Licensed Area, work will be carried out by qualified private contractors who are required to source labour from local communities living within and adjacent to the Licensed Area.

Budget and Cost Distribution Profits generated from logging in the ITP compartments (internal sources) and loan from the Federal Government agency will finance the forest operations / activities as prescribed in the 3rd FMP for the next 10 years. The cost centers are confined to forest restoration, silviculture, roads, general expenses and administrative cost.

Chapter 10 - Financial Analysis

A total of RM683.3 million is estimated to be required to run the operations and activities in the FMP over the planning period. The generated gross revenue is projected to be at RM563 million and net profit (surplus) at RM6.8 million at current prices while the amount of royalties to be paid to the government is estimated at RM112 million. Based on the sensitivity analysis, the projects remains viable (positive net profit) if revenue declines by 5% and cost by 10%.

CONCLUSION

The 3rd FMP will be a framework to manage the Licensed Area with clear objectives and a set of activities that set the direction towards responsible forestry management. The strategies and

31 Public Summary of Forest Management Plan Sapulut Forest Development Sdn Bhd objectives are developed to be consistent with the resources available, management constraints and also meeting the stakeholders’ concerns and expectations based on the combined needs of the sustainable usage of forest resources and sustainable viability of the company’s resources.

SFDSB vision for the NFM area is to bring back the natural forest and manage it sustainably to ensure a supply of quality timber will always be available from the NFM areas.

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