Forest Certification in Malaysia

1
Forest Certification in Malaysia

• Mohd Shahwahid H.O.
• Director, Research Management
• Center,
• Universiti Putra Malaysia
• UPM 43400, Serdang, Selangor
• Malaysia
• msho_at_econ.upm.edu.my

2
Paper presented at the Symposium Forest
Certification in Developing and Transitioning
Societies Social, Economic, and Ecological
Effects

• Yale School of Forestry and Environmental
• Studies
• New Haven, Connecticut, USA

3
Ownership and Tenure

• Total area of forests 19.01 million hectares
  (57.9 of land
  
• area)
• Of which
• 16 million ha are natural forest
• 14.19 million ha are designated as Permanent
  Forest Estate (PFE)
  
• 10.53 million hectares of the PFE are production
  forests
  
• 3.66 million hectares being protection forests.
• 1.8 million hectares located outside the PFE are
  designated as national parks and wildlife
  sanctuaries.

4
Ownership and Tenure

• Separation of power over land (forest) matters
  (Article 74(2) of the Malaysian Constitution)
  
• Forestry - jurisdiction of State Governments
  including on power of decision over resource use
  and allocation.
  
• Federal Government provision of advice and
  technical assistance to the states, training,
  research

5

• Two potential conflicting views
• Forests are a physical and economic resource,
  controlled by the State Government, private
  logging companies and individuals.
  
• Forests are a physical, social, cultural and
  spiritual resource, for livelihoods as well as
  the basis of beliefs, identity and survival, by
  indigenous and forest dependent peoples.
• Indigenous communities have usufruct rights over
  forest goods and services.
  
• Native customary rights (NCR) land.

6
Markets

• Total sectoral export (not inclusive of
  furniture) was 13.8 million metric ton valued at
  US2.7 billion (2002).
  
• Low value per unit volume for industrial round
  wood and sawn wood than for wood-based panels.
  Major export destinations of Malaysian forest
  products were China (31.2) and Japan (25.1).
  Other important destinations were Korea (5.6),
  U.S.A. (4.3) and Netherlands (3.5).

7

• Contributor to countrys socio-economic
  development
  
• US3.7 billion in Value Added (4.7) of GDP
• Export of forest sector (excluding furniture)
  2.8 of total export earnings.
  
• Imports were valued at US1 billion net
  exporter of US1.8
  
• Total forest revenue US368.8 million.
• Employment of about 2 of the nations labor
  force.
  
• Industrial Master Plan (1985-2005) earmarked to
  for domestic and export economic growth

8
III. THE EMERGENCE OF FOREST CERTIFICATION

• consumer-driven, market-based and done
• on a voluntary basis
• to allay doubts about forest sustainability
• financial requirements of forest management
  certification schemes
  
• to be based on a Malaysian certification program
• to ensure continued market access of Malaysian
  timber products

9
Initial Support

• Government took leadership. Why?
• Advantages in ensuring
• a consistency of criteria and indicators applied
  
  
• a balance the views of the different parties
  involved
  
• a greater accountability to the public
• a greater transparency in the schemes used and
• an additional channel for presenting their
  interest to labeling authorities.

10
Initial Support

• Two certification programs
• MTCC
• FSC
• Private Sector
• satisfy its client, both the State Government and
  timber product importers
  
• Forest harvesting rights were getting scarcer and
  there was excess demands to obtain these
  privileges.
  
• Perceived view that MTCC is supported by
  Government
  
• To demonstrate and inform consumers that timber
  products are from a well-managed forests, thereby
  ensuring their products continued popularity and
  sale.
• Popularity of FSC certification and MTCC is
  certain markets

11
Initial Supports

• Environmental and indigenous peoplesNGOs
• Why?
• actively participated in the formulation of
  policies and implementation procedures of the
  MTCC to influence and incorporate their
  conservation and social interests.
• means of gaining recognition of native rights to
  forestland, particularly the NCR land.
  
• NGOs set criteria for certification systems
• should be institutionally and politically adapted
  to local conditions, cost effective, accepted by
  all involved parties and compatible with
  generally accepted international principles
• be transparent and credible to consumers and
• based on objective and measurable criteria

12
Institutional Design

• MTCC program
• driven directly by the Government guided by
• ITTOs CI in the first phase
• FSCs PC in the second phase.
• MTCC certification program is supported
• Forest Departments of various states
• Long-term concessionaires from the state.

13

• FSC is initially supported by the
  Malaysian-German SFM Project in Sabah
  
• Private sector either for best practice
  acknowledgement or meeting requirements set by
  international consumers.

14
MTCC Certification Program

• Motivated by the countrys commitment to ITTOs
• Guidelines for Sustainable Management of Natural
  Tropical
  
• Forests and its Criteria for the Measurement of
  Sustainable
  
• Tropical Forest Management (CMSTFM).
• Policy decision-making exercise through two
  levels of
  
• committee
• National Committee on Sustainable Forest
  Management (NCSFM)
  
• Working Party on Sustainable Natural Forest
  Management (WPSNFM)

15

• Implementation monitored by
• Task force to develop an effective mechanism and
  procedures for the periodic monitoring on the
  implementation of all the activities
  
• Technical Monitoring Committee
• National Timber Certification Council, Malaysia
  (NTCC) with wide representations formed in
  October, 1998.
  
• NTCC was later renamed as Malaysian Timber
  Certification Council (MTCC).

16
MTCCs Function

• Development and implementation of
• a timber certification system
• training programs
• standards
• a system to oversee and monitor implementation
  and appeal mechanisms
  
• Establishment of networks and cooperation with
  national and international bodies to facilitate
  cooperation and mutual recognition arrangements
  and
• Collection, processing and dissemination of data
  and information

17
Standards

• FSC 10 principles and 57 criteria (PC) are
  applicable
  
• globally to all FSC-certified forests
• Principle 1 Compliance with laws and FSC
  principles
  
• Principle 2 Tenure and use rights and
  responsibilities
  
• Principle 3 Indigenous peoples rights
• Principle 4 Community relations and workers
  rights
  
• Principle 5 Benefits from the forest
• Principle 6 Environmental impact
• Principle 7 Management plan
• Principle 8 Monitoring and assessment
• Principle 9 Maintenance of high conservation
  value forests
  
• Principle 10 Plantations

18
Standards

• MTCC program is new requiring the formulation of
  criteria, indicators, activities and management
  specifications
  
• Done at
• national level to provide a common framework for
  monitoring and evaluating progress
  
• forest management unit (FMU) level assess
  directly the sustainability of forest resource
  management, conservation and development in
  practice.

19

• CI and activities formulated from reviewing
• PC for Forest Management of the FSC, Tropenwald
  Initiative (TI), Principles and Recommendations
  as enshrined in ITTO's Guidelines on the
  Conservation of Biological Diversity in Tropical
  Production Forests.

20
MTCC

• Launched certification program in October 2001
  but not supported by all parties.
  
• WWF Malaysias concerns were then
• MTCC standard used was not developed through a
  multi-stakeholder, consultative process, and
  emphasizes economic considerations while failing
  to adequately safeguard social values and
  environmental conservation.
• MTCC sees its scheme as being transitional but
  not clearly demonstrated due to the lack of a
  work plan and timeline to progress towards FSC
  compatibility.
• Nevertheless, MTCC label is able, in principle,
  to provide a verification of legal compliance and
  a verification of legal origin but requires
  strengthening.

21

• MTCC argued its phase by phase scheme.
• Relevant concerns tabled by various stakeholders
  are adopted
  
• A new standard developed based on the PC of the
  FSC.
  
• Development of new MCI through several meetings
  of
  
• multi-stakeholder National Steering Committee
  (NSC) and
  
• regional consultation held separately in
  Peninsular Malaysia, Sabah and Sarawak.

22

• MTCC seeks Endorsement from FSC
• NGOs and indigenous people peoples were invited
  to participate, and provided comments and
  critiques in the building of the MTCC scheme
  
• Owing to perceived insufficient response to
  critical stakeholders issues, indigenous people
  and NGOs pulled out.
  
• Differences in Vision too wide.
• Cooperation between MTCC and FSC collapsed.
• Planning for formation of an FSC National Working
  Group (FSCNWG) as a new body to advance the work
  of the NSC.

23
Forestry Problems

• Small scale and isolated illegal logging,
  deforestation, and loss of biodiversity in
  harvesting activities are typical grievances
  faced by a rapidly developing nation.
• Illegal logging within the certified FMUs -
  better chance of being checked.
  
• Monitoring the use of imported illegal logs by
  domestic processors proved more challenging e.g.
  Case of Ramin logs.

24
Roadblocks and Challenges

• a. Indigenous People
• Avenue of access by indigenous people and NGOs to
  forest policy processes.
  
• Critical issues not resolved
• Indigenous people and NGOs felt their presence
  might be used to legitimize consultative process
  
  
• Lack of NGO approval forms the biggest roadblock
  and challenge to MTCC certification.
  
• b. Land and Forest Disputes
• Concern over full recognition of NCR over land of
  the Orang Asal (indigenous peoples), in
  accordance with the native laws and customary
  practice of the particular native community.

25

• c. Lacking Consensus within Social Group
• Multi-Stakeholder National Working Group into 3
  or 4 different sectors is not working well since
  they are not working towards a common goal of SFM
  but instead promoting their own interests.
• d. FSC endorsement for MCI
• MTCC has to adopt the FSCs PC to obtain FSC
  endorsement

26
IV. THE REACTION TO CERTIFICATION

• Forest Policy Community and Stakeholders
• Fear that indigenous people tribal lands were
  signed off to logging concessions without their
  consent. FSC wants more legal rights for workers
  and indigenous peoples.
• Malaysian agencies felt that their own system is
  adequate and an encroachment on its national
  sovereignty.
  
• Despite lengthy and repeated explanations, MTCCs
  program unable to receive support from majority
  of indigenous people

27

• Forest Owners
• ITCs interest produce internationally
  recognized certified timber.
  
• Begun seeking additional certification
• FSC program
• ISO 14,000 EMS

28
IV. THE REACTION TO CERTIFICATION

• Current Status of Forestland Certification
• MTCC has certified
• seven FMUs with a total of 2,310,567 ha (2003).
• MTCC-ITTO SFM project at Ulu Anap involving
  another 170,000 ha (underway)
  
• FSC has certified
• Perak Integrated Timber Complex (PITC) with an
  area of 9,000 ha (2002)
  
• Deramakot Forest Reserve, Sabah involving an area
  of 55,000 ha (1997).
  
• Malaysian-German SFM project at Ulu Baram
  involving 170,000 ha (underway) where the MTCC
  certification program is underway.
  

29
IV. THE REACTION TO CERTIFICATION

• Current Status of the Certified Marketplace
• 9,217 m3 of MTCC-certified sawntimber products
  exported to The Netherlands, Germany, Belgium,
  France and the United Kingdom (Feb 2004).
  
• Danish Ministry of Environment and Energy has
  included the MTCC scheme as one of the accepted
  schemes in its document entitled Purchasing
  Tropical Timber Environmental Guidelines .
• 38 companies have received the MTCC Certificate
  for Chain-of-Custody (CoC) (January 2004)
  
• Sales boosted for certified in eco-sensitive
  markets
  
• Innoprise Corp from Deramakot Forest
• PITC is producing 12,000 m3/year. Facing
  difficulty in meeting demand

30
V. EFFECTS OF FOREST CERTIFICATION

• Power
• Shifts in Power Dynamics among forestry circles.
  
  
• Threat to domination on forestry practices of
  Government agencies.
  
• Despite the determination to improve forest
  management practices, the MTCC scheme has found
  that NGOs and indigenous people have a strong
  influence on market endorsement.

31

• NGOs perceived
• The lack of transparency in its development
  process esp. in the run up to MCI seeking the
  adoption of FSC principles.
  
• The lack of environmental and social benchmarks
  within the standards
  
• The lack of consultation with stakeholders in the
  development of the standards and
  
• The lack of incorporation of stakeholder concerns
  (e.g. the indigenous peoples groups concerns and
  issues)

32
V. EFFECTS OF FOREST CERTIFICATION

• Social
• Certified concessions have an obligation to take
  care
  
• of the interest of local residence.
• PITCs two social programs
• Orang Asli or Indigenous People Program
• Bumiputra Entrepreneur Development Program,

33

• Economic
• Benefit
• PITC receiving average price premiums of 37
  varying between Germany, U.K. and Holland
  
• Cost
• Incremental costs for compliance of additional
  forest management activities.
  

34

• FSC certified PITC
• Increase in direct production cost not inclusive
  of cost of pre-felling and post-felling
  activities by 15 to US23/m3.
  
• MTCC certified KPKKT
• Increase in overall log production cost
  inclusive of pre-felling, felling and
  post-felling activities increased 50 to US44/m3
  

35
V. EFFECTS OF FOREST CERTIFICATION

• Economic
• Shares of the incremental costs
• Forestry Department 11.9
• Concessionaire 23.5
• Harvesting contractor 64.7.

36

• Components of the incremental costs
• Forestry Department Supervisory and monitoring
  costs during tree marking and mapping operations
  and road design
  
• Concessionaire Preparation of EIA, Tree mapping
  and Salary wages for supervision monitoring
  
• Harvesting contractor Salaries and wages,
  material and machinery rental for excavators
  
• Effects upon annual allowable cut
• No change but annual allowable volume reduced.
• Cutting cycle can be longer

37
V. EFFECTS OF FOREST CERTIFICATION

• Environmental
• Greater planning and monitoring of the
  environment
  
• Redrafting of forest management plans to
  incorporate environmental, community
  participation and social considerations
  
• Updating of 150,000 resource map from
  information recorded in the Forest Offence Record
  Book. Buffer zones were reserved even for
  seasonal rivers as well.
• Excavators being used to replace bulldozers in
  cutting earthworks at sloping areas.
  
• Revising License Closing Report to incorporate
  information related to environmental monitoring
  including information on area lost or destroyed
  after logging, number and length of
  secondary/skid trails and area of log yards.

38
CONCLUSION

• New dimension in forest management
• Incorporation of social considerations and
  indigenous peoples concerns apart from
  sustainable timber production issues
  
• Forest management of PFEs has become more
  systematic, transparent and concessionaires more
  sensitive to accepted international trade
  practices and customers requirements.
• The requirements of the CoC have made the country
  more conscious on controlling illegal logging.
  
• Difficulty of resolving issues on NCR land.

39

• Compliance with certification proved to be costly
  while price premiums advantage may not be
  sustainable
  
• MTCC certification would continue to be seeked by
  forest concessionaires and the Forestry
  Department.
  
• Rising adoption of FSC Private firms being
  client oriented are likely to react to increasing
  customers requirement for this certification
  program.
• Firms with MTCC certificates, likely to obtain
  FSC certificate to satisfy both state forest
  owners and wood product importers.
  
• MTCC would continue to seek FSC endorsement.