A Report on the Malaysian Timber Certification Scheme - Rengah ...

A <strong>Report</strong> on the Malaysian Timber Certification Scheme
January 2004
By Meng Chuo, Wong, IDEAL
1. History and current state of play of the certification scheme
Creation
The Malaysian Timber Certification Council (MTCC) was created in October 1998 and incorporated
under the Companies Act 1965 as a company limited by guarantee. The Council is governed by a
Board of Trustees and started operating in January 1999 (MTCC 2001).
The Council grew out of a joint initiative by the Malaysian Ministry of Primary Industries and the then
Malaysian Timber Industry Development Council – now known as the Malaysian Timber Council
(MTC) – who together organised a ‘Seminar on Timber from Sustainably Managed Forests’ in April
1994. This seminar resulted in the formation of a committee that was coordinated by the Malaysian
Timber Industry Board (MTIB) and had membership comprising government agencies, research institutions,
and industries – as well as non-governmental organisations, which were represented by
the Malaysian Nature Society (MNS) and WWF Malaysia (Ginny Ng et al. 2002). This committee in
turn led to the establishment of the National Timber Certification Council (NTCC), whose name was
changed in 2001 to the Malaysian Timber Certification Council (MTCC).
The Council’s main source of income is the interest from an endowment fund of RM 36,000,000 –
equivalent to 7,650,611 Euro – created by a timber export levy fund. 1
Motivation
According to a leaflet produced by the NTCC and titled Malaysia, Sustainable Forest Management
and Timber Certification: ‘… the forest-based industries contribute significantly to Malaysia’s socioeconomic
development, with the export of timber and timber products valued at US$3.7 billion in
1998’. The economic significance of the timber industry to the nation is clearly a key motivator behind
the scheme. The leaflet also states that, due to the importance of conserving soil, water and biological
diversity as well as protecting the environment, Malaysia has designated a total of 14.33 million
hectares of forested land as Permanent Forest Estate (PFE). Of the PFE, about 10.84 million hectares
are production forests. The same leaflet says:
With the growing concern over deforestation and the associated environmental effects,
consumers of forest products, such as timber, want to be assured that these products have
been produced through sound forest management practices. In this regard, timber certification
has been promoted as a market-linked tool to encourage sustainable forest management
practices in producer countries.
As a leading exporter of tropical timber and timber products, Malaysia is in the process of
implementing timber certification to further enhance sustainable forest management practices
and to supply certified products to meet the requirements of its markets.
However, the underlying purpose of the MTCC scheme was best summed up by the Primary Industries
Minster Dato’ Seri Dr Lim Keng Yaik: ‘Malaysia wanted to revive its timber product exports to
Europe where the trade has suffered from the ill-founded perception that the products did not come
from well-managed forests’ (Lim 2002 quoted by Yong 2002:125).

Target groups
The Malaysian Timber Certification Council scheme is targeted at forest managers and at timber
product manufacturers and exporters.
Certified forest management units
As of October 2003, seven states – out of a total of
13 states – have been certified. In December 2001 As of October 2003, seven
the following three states, with a total of 2,307,238
hectares, were certified: Pahang State, Selangor states – out of a total of 13
State and Terengganu State. The average size of
states – have been certified
these three certified forests is 769,079 hectares.
On 6 October 2003 four more states in Peninsular
Malaysia have been certified: Johor, Kedah, Perak and Negeri Sembilan. A total of 4,111,406 hectares
have now been certified in Malaysia. The average size of these forests is 587,344 hectares. In
all cases the governments of these respective states are the official owners of the certified forests.
Tenure types in Malaysia vary. In Peninsular Malaysia, concessions are allocated for 20–30 years for
forest areas of over 20,000 hectares. Concessions of 0–1,000 hectares are allocated for 1–2 years;
1,001–2,000 hectares for 1–5 years; and 2,001–20,000 hectares for 10–30 years (Woon & Norini
2002).
In Sabah, the state government introduced the Sustainable Forest Management Licence Agreement
(SFMLA) in 1997, which grants the right to plant, rehabilitate and harvest forest under the principles
of sustainable forest management (SFM) for a period of 100 years to a particular forest reserve of
approximately 1,000,000 hectares. While in Sarawak all forest concessions are for 25 years (Woon &
Norini 2002).
Of the three regions, it is in Sarawak that forest tenure seems to be the most problematic. An ITTO
mission to Sarawak, in 1989–1990, pointed out that one of the weaknesses ‘… in the structure of the
concession system is the lack of synchronization between the length of the licence period and the
forest management cycle. The practice of issuing licences for shorter than the felling cycles, without
any guarantee of renewal, is not helpful to long-term management’ (ITTC 1990:35).
Furthermore, politically the ultimate power to issue or revoke a licence in Sarawak lies in the hands of
the Minister of Natural Resources, who is also the Chief Minister. When there was a competition for
power between two rival camps in 1987, 25 timber licenses were revoked that had been previously
issued by the former Chief Minister to his family and political allies (Majid Cooke 1999:88).
Forest types
The MTCC scheme for forest management is generally applicable to the Permanent Forest Estate
(PFE), which in Malaysia includes Dry Inland Forests, Peat Swamp Forest and mangrove Forest.
With regard to plantations, in the Malaysian Criteria and Indicators, Activities and Standards of Performance
for Forest Management Certification (MC&I 2001) plantations established in the PFE are
treated as a fully integrated component of the management of an FMU. This is reflected in a number
of indicators that cover both natural forests and plantation forests – including Criterions 2.1, 3.1, 3.2
and 3.4. 2
In October 2002 a national workshop recommended that the National Steering Committee (NSC) be
expanded to comprise an additional seven members from the plantation sector. Under the expanded
NSC, a Technical Working Group (TWG) should then be formed to draft the plantation standard,
which should in turn be deliberated by the NSC prior to adoption. 3
Plantation sector included from 2002

Level of certification
The MTCC scheme certifies at FMU level, which means different things in different regions. In Peninsular
Malaysia an FMU is the permanent reserved forest (PRF) found in an individual state. In Sabah,
an FMU will be the area covered by each Sustainable Forest Management License Agreement
(SFMLA), while in Sarawak an FMU is defined as an individual concession area.
Cost of certification 4
The direct costs of forest management and chain of custody assessments comprise the professional
fees for the assessors, charged on the basis of a daily fee rate, and expenses incurred for travel,
meals and accommodation, which are often charged at cost.
Based on the experience of MTCC, the cost to carry out the main assessment ranges from RM
48,000 (for a smaller FMU like Negeri Sembilan with 167,837 hectares and involving 10 man-days) to
RM 124,400 (for a larger FMU like Pahang with more than 1.5 million hectares and involving 30 mandays).
Surveillance audits of FMUs to ensure continuous compliance with the certification standard
cost less, e.g. RM 26,600 for the Negeri Sembilan FMU and RM 45,000 for the Pahang FMU. The
professional fees for conducting the assessment would vary from RM 1,200 to RM 2,660 per man per
day.
As for chain of custody certification, the cost of the main assessment varies from RM 4,000 to RM
6,000. The cost of a surveillance audit would be about RM 3,000.
2. Quality of standards
Performance-based standards?
The Malaysian Criteria, Indicators, Activities and Standards of Performance (MC&I) for Forest Management
Certification lists a set of performance-based standards for each criterion. However, there
are doubts as to whether these are sufficiently rigorous. A report on the Assessment of Compatibility
of Malaysian Criteria and Indicators for Forest Certification with FSC Requirements points out that:
‘The minimum performance levels or thresholds for failure for each criterion with the MC&I have not
been predefined’ (Sandom & Simula 2001:19). The report states that the main shortcomings of MC&I
are input oriented rather than output based.
The majority of MC&I indicators tend to concentrate on ensuring the existence of appropriate
legislation, documentation and systems. They assess the quality and quantity of input.
But the MC&I have relatively few output-related criteria or indicators. (Sandom & Simula
2001:27)
Legal matters
Relevant laws and regulations – both national and state – are listed as “Standards of Performance” in
the MC&I. However, issues of legality are not necessarily adequately addressed. This is particularly
true in the case of disputes with the local community over land rights within the FMU of Sarawak
(Remigio undated:4, copy with the author and with FERN).
Native customary laws (adat) are very much part of the legal system in the pluralistic social context of
Malaysia. But users’ rights are being challenged by the MTCC forest management certification scheme.
This is due to the fact that forest lands were often untitled under native customary rights, although
clearly demarcated in the local people’s minds through usage and shared knowledge (Baru Bian
undated; Hong, 1987 in Remigio undated:4). A research report on Sarawak indigenous people’s
rights argues: ‘The ability of indigenous people to use their own adat has been heavily curtailed, as
has their ability to choose to practice a farming system that has served them well over hundreds of

years’ (IDEAL 1999:33). At the national-level consultation of the MTCC in 1999, five social NGOs
expressed in a position statement their concern that native customary rights would be threatened:
The establishment of the FMU requires the constitution of the Permanent Forest Estate
(PFE), the consequence of which, by virtue of the Sarawak Forest Ordinance explicitly extinguishes
the native customary rights and privileges of the local indigenous communities
over their land and resources thereon (Yong 2001:45).
In other words, the MTCC scheme would aggravate the injustice to indigenous communities and
would challenge the legal rights of indigenous citizens as enshrined by the national constitution.
The NGO group has urged the MTCC to bring this concern to the attention of the Sarawak State
government. (Yong 2002:126). The MTCC has, following the consultations in 1999, sent a letter
dated 14 January 2000 to the Sarawak State Ministry of Resource Planning and Management on the
matter 5 . However, the issue has not been resolved.
Economic values
Under Criterion 6: ‘Economic, Social and Cultural Aspects’, the economic aspects take account of
‘the ratio of domestic log production to processing capacity of wood industries’, as well as the ‘existence
and implementation of mechanisms for the effective distribution of incentives, and the fair and
equitable sharing of costs and benefits among the parties involved’ (MC&I 6.1 and 6.2, version 2001).
Unfortunately, the term ‘parties involved’ is narrowly defined and comprises only the State Government
and the Federal Government. 6 Other parties affected in a direct or indirect way – either through
shared benefit or shared cost (such as environmental pollution or degradation) – are not considered.
Further, the performance standards listed under Indicators 6.1 and 6.2 apply to Peninsular Malaysia
only. There are no standards for Sabah and Sarawak.
Other economic aspects detailed in the C&I of the International Tropical Timber Organization (ITTO)
– such as ‘Quantity (volume) and value of wood and non-wood forest products for subsistence use’
and ‘Efficiency of utilisation in terms of the percentage of felled volume processed’ – are omitted in
the 2001 version of the MC&I, although they were part of the 1999 version
Socio-economic aspects
As regards the socio-economic aspects, the standards include criteria for the health and safety of
forest workers and for the creation of employment opportunities. A certified FMU must identify sites
for research, education, recreation, and for the direct use and benefit of local communities. The
management must keep a record of visitors to the forest for recreational purposes. Tenure and user
rights in the FMU must be documented and recognised (MC&I 6.3 – 6.7). 7
However, as pointed out by the MTCC/FSC assessors, minimum performance levels have not been
defined. For instance, under the employment criterion the standards require merely the compilation
of employment data – such as the number of people employed and the average wage rate – without
setting any performance levels to be attained. There is no criterion for the minimum level of employment
of personnel from the local community or for minimum wages in accordance with national
regulations – except for on Sabah, where a minimum employment of Malaysian personnel is specified
(5%).
On the rights of indigenous peoples and local communities, forest dwellers and other forest-dependent
communities, Criterion 6.8 states:
Legal and customary rights of local communities in the FMU must be identified and recognised
in forest planning and management practices and related processes. In making this
assessment the interested parties should be consulted (MC&I 6.8, version 2001).

Another indicator (6.9) requires reports on the extent of participation by indigenous peoples and local
communities, forest dwellers and other forest-dependent communities in forest-based socio-economic
activities.
It is clear that these criteria are input oriented and not performance based. They ask for policies,
rules, reports etc., but do not specify any minimum performance levels.
Several standards are disputed by local communities and NGOs, such as Criterion 6.7 regarding
tenure and user rights over the forest. The performance-based standards for Sarawak are based on
the <strong>Report</strong> of Inquiry on the Constitution of Permanent Forest Estate and the Sarawak Government
Gazette. Such broad-based standards are subject to interpretation: government gazettes on disputed
land alienation are being challenged in court. In the recent case of Nor Anak Nyawai & Others
v. Borneo Pulp Plantations Sdn Bhd & 2 Others, the State Government was asked to rectify the
disputed concession (Chandang 2001).
Community places of
worship and burial
grounds would not be
safeguarded
Cultural and spiritual aspects
Cultural aspects – the ‘Number of important archaeological
and cultural sites identified, mapped and protected’
in the 1999 version of MC&I – are also left out
of the 2001 version. Community places of worship
and burial grounds would therefore not be safeguarded.
Over the last two decades, there have been
numerous complaints about a lack of respect for indigenous
sacred places and burial grounds and their damage by loggers. Without such a criterion in
the MC&I, these kinds of violations of indigenous rights will surely continue to rise.
It should further be noted that both the ‘Number of people dependent on the forest for subsistence
uses and traditional and customary lifestyles’ and the ‘Area of forest upon which people are dependent
for subsistence uses and traditional and customary lifestyles’ have also been deleted from the
2001 MC&I as compared with the 1999 version.
Environmental values
Environmental values are reflected in 4 and 5. Criterion 4 covers biological diversity: ‘Existence and
implementation of procedures to identify endangered, rare and threatened species of forest flora and
fauna’; ‘Existence and implementation of management guidelines’; and ‘Existence and implementation
of procedures for assessing changes of biological diversity of the production forests, as compared
with areas in the same forest type kept free from human intervention’ (MC&I 4.1 – 4.2). Criterion
5 on soil and water covers conservation and protection procedures. Criterion 3.7 is also relevant
here: ‘Availability and implementation of guidelines for reduced/low-impact logging to minimise damage
to residual stand’.
The performance-based standards for Criteria 4 and 5 are incomplete, unspecified and inconsistent
between the three regions of Peninsular Malaysia, Sabah and Sarawak. For Criterion 5.2 – on the
subject of environmentally sensitive areas – there is no performance-based standard tabled at all for
Sabah and Sarawak. And this is also the case for Criterion 4.2, on forest areas reserved for conservation
purposes, in which only Peninsular Malaysia is given a figure of 5%, while Sabah and Sarawak
have no such requirement. For Criterion 4.1, ‘Existence and implementation of procedures to identify
endangered, rare and threatened species of forces flora and fauna’, the criterion for Sarawak is listed
as ‘Procedures for pre-felling inventory’ without any specifications. Similar cases exist for Criterion
4.3, ‘Procedures for the assessment of yield plots and long-term ecological research plots’ and Criterion
5.4, ‘Procedures for identifying and demarcating sensitive areas for the protection of soil and
water’. Also, in Criteria 5.1 and 5.3 on the protection of soil and water and on buffer strips, the
Standards of Performance for Sarawak are listed as the General Harvest Plan and the Detailed
Harvesting Plan.

Comment: It is noteworthy that several important criteria have been dropped in this version of
the MC&I (2001), although they were listed in the previous 1999 version. These include:
· The safeguarding of genetic diversity. 8 Including this criterion could have implications for
national and states’ efforts in the fields of genetic-resource prospecting and conservation.
· The defining and documenting of off-site catchment value before harvesting, and the defining,
demarcation and protection of drainage systems before harvesting (NTCC 1999).
· ‘Monitoring and Evaluation – assessing changes in the water quality of streams emerging
from production forests as compared with streams emerging from the same forest type kept
free from human intervention’. This omission undermines the welfare of local and downstream
communities and burdens them with an unfair health risk and reduced economic opportunity as
a result of reduced aqua production.
· The ‘Forest Ecosystem Health and Condition’ criterion is omitted completely. As road-building
has increased access to the forest concession areas, so human activities (such as illegal
exploitation, hunting, agriculture and encroachment) need to be monitored. This is also the
case for threats, both natural and human-induced. The most potent of these is forest fire during
the dry season – often caused by using burning as a convenient means of land clearance (such
as during the conversion of forest to plantation or by swidden agriculture) and which is becoming
of increasing concern nationwide. There is also the potential threat of pests and diseases
as a result of the use of monoculture or of genetically engineered crop or tree species on
adjacent plantations. Despite warnings of the possible harm from exotic species such as Acacia
mangium (Ng et al. 2002), this criterion has also been taken out of the MC&I.
Standards levels
The certification standards are set at national level. However, the Standards of Performance are
applied according to the regional and/or state laws and regulations of the three regions (Peninsular
Malaysia, Sabah and Sarawak). Some of these are relevant at a national level; some at regional
level; while others are relevant at the level of the FMU (Sandom & Simula 2001:34).
The standards are formulated in a broad way, covering the elements of sustainable forest management
(SFM). The indicators and Standards of Performance demand extensive guidelines, planning
and monitoring data. However, the objectives of these management standards remain unclear and
unstated at the level of the criterion (Sandom & Simula 2001:33).
The MC&I is characterised by a number of input-oriented requirements that specify the
existence of guidelines, regulations, or look for specific data on the level of accomplishment
(e.g., the degree of participation in forest management or the extent of a protected
area). But few indicators or Standards of Performance state the minimum performance level
required for an operation to be compliant (Sandom & Simula 2001:34).
A study commissioned by the MTCC and FSC – the Assessment of Compatibility of MC&I with FSC
Requirements – highlighted the need for improvements to the MC&I. It suggests strengthening the
relationship between indicators and Standards of Performance in the MC&I and also proposes additional
explicit elements for the application of the MC&I to plantations (MTCC 2002a).
As regards coordinating with other national, regional and international bodies dealing with timber
certification, in order to facilitate cooperation and mutual recognition, the MTCC has held discussions
with the FSC since 1999. An outcome of this effort was the drafting of FSC-compatible Malaysian
Criteria and Indicators (MC&I) for Forest Management Certification [MC&I(FSC)]. These were adopted
at the MTCC national-level consultation in October 2002. The document sets out the FSC Principles
and Indicators together with the corresponding indicators and Standards of Performance of the MC&I.

The MC&I(FSC) does include some criteria and indicators omitted by the MC&I (2001). Under Principle
2, for example, the legal and customary tenure rights of local communities or indigenous peoples
are considered. However, its indicators depend on the availability of documentation that native customary
land rights are not always able to provide. The indicators for the appropriate mechanisms to
resolve disputes over tenure claims and usage rights are not specific. It merely mentions ‘records of
all disputes’ and the ‘availability of appropriate mechanisms’.
A similar situation exists as regards Principle 3: Indigenous Peoples’ Rights. The indicators rely on
the availability of documentation and the verifiers rely on existing laws that have already proved
deficient at reflecting indigenous customary concepts or adat practices. In Criteria 3.4, on compensation
for the exploitation of indigenous knowledge about the use of forest species or management
systems in forest operations, both the indicators and verifiers are too general and omit to indicate the
appropriate mechanism or process to identify the community that owns that knowledge.
As for the other principles, they do include some greater detail than the MC&I and cover missing
aspects such as efficiency of utilisation, spiritual and cultural sites, genetic diversity, chemical use,
illegal exploitation, forest fire, monitoring and assessment, and high-conservation-value forest. However,
there are incomplete lists of verifiers and unspecific indicators similar to the MC&I (2001).
New certifications as of January 2005 will be based on this new standard of FSC-compatible Malaysian
Criteria and Indicators for Forest Management Certification– (known as the MC&I2002), which will be
field-tested in the three region (Sabah, Sarawak and Peninsular Malaysia) by the end of 2003.
3. Standards-setting procedures
Stakeholders and the standards-formulating process
In 1994, representatives from the Ministry of Primary Industries, the Forestry Departments of Peninsular
Malaysia, Sabah, and Sarawak, the Forest Research Institute of Malaysia, the Malaysian Timber
Industry Board, the Malaysian Timber Council, and the Faculty of Forestry at the University Putra
Malaysia all came together to form the National Committee (NC) on sustainable forest management.
Between 1994 and 1998, the NC coordinated the development of a technical design for the MC&I
derived from the ITTO’s Criteria and Indicators for the Sustainable Management of Natural Tropical
Forests.
During the early stages
(1994–1998), there was no
environmental nor indigenous
NGO involvement, nor
were any of them asked to
contribute to the process.
During the early stages (1994–1998), there was no
environmental or indigenous NGO involvement, nor
were any of them asked to contribute to the process
(Sandom & Simula 2001). Environmental and conservation
NGOs, such as the Malaysian Nature Society
(MNS) and World Wide Fund for Nature, Malaysia
(WWFM), were invited onto the Board of Trustees
when the National Timber Certification Council,
Malaysia (NTCC) was established in October 1998.
The MTCC Board is made up of two representatives each from academic and research institutions,
the timber industry, NGOs and government agencies. Board members are appointed for a two-year
term. WWF Malaysia resigned from the Board in January 2002 due to disagreements over the MTCC’s
decision to launch a scheme, which used standards that had been developed without balanced
stakeholder participation (Ng et al. 2002).
In Oct. 1999, various social and environmental NGOs from Peninsular Malaysia, Sabah and Sarawak
were invited to their respective informal regional consultations to revise the MC&I to comply with
ITTO C&I. Consultation was not considered to be core to the preparation of the draft versions of the
MC&I. Standards of Performance were developed at state level with a no of stakeholder groups, but
over a very short period of time & through an informal consultation process (Sandom & Simula 2001:11).

The list of organisations attending the informal consultations in Peninsular Malaysia shows a balance
of interests. However, in Sabah and Sarawak there was no organisation in the stakeholder group to
represent social and independent environmental interests (NTCC 2000a, Annex I, in Sandom & Simula
2001:11). In addition, the timeframe for these state-level consultations was very limited. From the
available documentation, it appears that only about one month was available before the national
consultation and finalisation of the MC&I took place (Sandom & Simula 2001:9).
Sandom & Simula’s study of the process reveals that, from the beginning, the scheme initiator lacked
a comprehensive understanding of the need for the broad-based participation of all interest groups.
The process was therefore seen as an after-thought and there was insufficient preparation and little
room to properly equip the stakeholders with the necessary information and skills for meaningful
participation. It should, however, be acknowledged that in the Malaysian context a multi-stakeholder
consultation was a relatively new approach. MTCC acknowledges it was on a steep learning curve in
facilitating and organising these consultations. 9
A national–level consultation on the MC&I was held in October 1999: 85 interested groups were
invited and 58 organisations participated. Of those invited, more than half of them (44) represented
economic interest groups, while 17 of them were social and environmental organisations. The rest
were government, research and academic institutes. There were 111 participants representing the 58
organisations that attended this national consultation. Approximately 28% of the participating organisations
were government agencies, 46% were trade and industry associations, 5% were academic/
research institutions and 21% were NGOs (NTCC 2000a).
The first version of
the MC&I was
adopted during
the national consultation,
despite
the reservations
The first version of the MC&I was adopted
despite the reservations of five NGOs who
stressed the importance of recognising native
customary rights, rules, practices and values.
of five NGOs who stressed the importance of recognising native customary rights, rules, practices
and values in the MC&I (Yong 2001:43-45) and proposed that certification in Sarawak be deferred.
The national level consultation was followed by a Workshop on Forest Certification jointly organised
by the NTCC, FSC, WWF, TFT (Tropical Forest Trust) and GTZ (German Agency for Technical
Cooperation) in December 2000 had 167 participants. Discussions focused on issues surrounding
the harmonisation of standards between the FSC and the MC&I, and also on the formation of a
National Steering Committee (NSC) to oversee standards development. From the minutes of the
workshop, it seems that economic interest groups, forest managers and other government organisations
dominated the discussion. They insisted on a fourth chamber for ‘Direct Resource Managers’ in
addition to the existing social, environment and economic chambers. In the subsequent NSC meeting,
a WWF Malaysia representative questioned the interests of the direct resource management
group and flagged the fact that this group could be biased towards one particular interest (NSC
Minutes 24 April 2001). Nevertheless, this expanded structure of the NSC went unchanged.
Of the 20 organisations representing social and environmental interests in the Workshop on Forest
Certification, half of them issued a joint statement to express their concern that they had not been
adequately consulted. A total of 13 NGOs eventually withdrew from the process in July 2001 in
protest that their views and opinions had not been taken into consideration, particularly on the issue
of indigenous peoples’ rights within FMUs (Yong 2002:133-135). These groups formed JOANGOHutan,
Malaysia – a network of non-governmental, community and indigenous peoples’ organisations. They
demanded that ‘… the process for the development of standards and criteria for timber certification
be participatory, consultative, open, transparent and involve representation of all key stakeholder
groups at all levels who have a genuine interest in forest management and conservation in Malaysia’
(Yong 2002:130).

Those that remain in the process are mainly environmental and conservation organisations such as
WWF Malaysia, the Malaysian Nature Society, Sabah Rotary Club, and the International Federation
of Building and Wood Worker Unions (IFBWW). Yong commented that ‘… the majority of these
groups and individuals are those that tend to be more “culturally-oriented”, rather than those that take
a more independent position on issues of indigenous and local forest communities’ rights’ (Yong
2002:129).
Datuk Daniel Tajem of Sarawak Dayak National Union raised three significant factors in remarks on
the withdrawal of social NGOs:
· The impartiality of the process – because the Forestry Department representatives seemed to
dominate earlier consultations, the NGOs were concerned that the NSC process would also be
dominated by the Forestry Department;
· The interests of the people – in particular the natives in Sabah and Sarawak, where objections to
logging in their backyards were often ignored; and
· The economic argument – what did the people get out of logging apart from polluted rivers?
(Minutes of the Fourth Meeting of the National Steering Committee – 8.29, 25–26 January 2002)
The National Steering Committee (NSC) was formed during the workshop chaired by Dato’ Dr.
Freezailah bin Che Yeom, who is also the chairman of the MTCC. The NSC was composed of four
chambers: economic, environmental, social and one for direct resource managers. Each group was
composed of six members: two representatives from each of the regions, Peninsular Malaysia, Sabah
and Sarawak. However, the membership was later expanded to 28 (MTCC Annual <strong>Report</strong> 2001).
Freezailah explains that the ‘NSC is a consultative and decision-making process aimed at developing
an FSC-compatible Malaysian standard for forest management certification’ (Minutes of the second
NSC meeting, 2.15, 14 August 2001).
A total of five NSC meetings were held between April 2001 and August 2002. During this time, a fourmember
technical working group (TWG) was set up to formulate the verifiers for the FSC-compatible
MC&I. The results of the TWG were then presented to the regional consultations in Peninsular Malaysia,
Sabah and Sarawak that were held between April and August in 2002. Participation in these
consultations again did not reflect a balance of interests. For instance, out of the 22 participating
organisations in the Sarawak regional consultation, over half of them (12) represented corporate
interests, while five other participants came from government organisations. Among the four social
and environmental groups, the two indigenous peoples’ associations present were headed by ruling
party politicians, and the unions were represented by the Sarawak Forest Department Employees
Union and a national trade union. Participant lists for the Sabah and Peninsular regional consultations
were not available at the time of writing.
..interests of indigenous communities
were not represented at all..
These regional consultations
were to
draft MC&I(FSC) for
the regions of Peninsular
Malaysia,
Sabah and Sarawak respectively. Looking at participation in the Sarawak consultation, it is apparent
that economic groups dominated the consultation. Union and environmental/conservation interests
were lightly represented, whereas the interests of indigenous communities were not represented at
all.
At the national-level consultation held in October 2002 in Kuala Lumpur, the MC&I(FSC) were finalised
and adopted as the standard for assessing forest management practices at FMU level for the
purposes of certification. The participant list for the national consultation shows that, out of a total of
106 participants, only 14 of them represented social and environmental interest groups. Those present

included WWFM, MNS, a woodworkers union, a consumer association, a national woman organisation,
a rotary club, an environmental protection association and three indigenous organisations, namely
Persatuan Murut Sabah, Kadazandusun Cultural Association (both newcomers) and Sarawak Dayak
Iban Association. The majority of the participants represented economic interests, while a portion of
them came from government organisations and direct forest manager groups (MTCC 2002b).
In a subsequent dialogue session with Mr. Heiko Liedeker, executive director of the FSC, Mr. Sidi
Munan of the Sarawak Dayak Iban Association claimed that his group of NGOs represents 71% of
the population of Sarawak (MTCC 2002b, 16.21). It should be noted that Iban comprise about 30% of
the state’s population. Mr. Liedeker, however, expressed his view that ‘Mr. Munan’s statement is a
very powerful endorsement’ (MTCC 2002, 16.22).
The report on the Assessment of Compatibility of MC&I with FSC Requirements was of the opinion
that MTCC decision-making procedures represented ‘partial compliance’ but that it was ‘preferable to
proceed to an additional decision-making procedure to explicitly meet the FSC requirements with
detailed records on comments and decision-making’ (Sandom & Simula 2001:13). Nevertheless, the
sharing of information coming out of subsequent consultations and meetings of the MTCC did not
improve. Although proceedings of national level consultations in developing MC&I were sent to all
stakeholder groups, other documents such as the minutes of the national Workshop on Standards
for Certification of Plantation Forests (held on 31 October 2002 in Kuala Lumpur) were not made
available to all stakeholders. The author of this document eventually obtained a copy after repeated
requests over a period of seven months (February to September 2003).
4. Certification process
Registration of certifiers
Eight companies and organisations are registered as independent assessors for forest management
certification: Saytech (Sarawak) Sdn. Bhd., Gaya Tunas Sdn. Bhd., Chemsain Konsultant Sdn. Bhd.,
SGS (Malaysia) Sdn. Bhd., TropBio Forest Sdn. Bhd., Sirim QAS Sdn. Bhd., Forest Research Institute
Malaysia (FRIM), and the Faculty of Forestry at the University Putra Malaysia (MTCC website as
of August 2003).
There are 11 companies registered as assessors for chain-of-custody certification: Saytech (Sarawak)
Sdn. Bhd., Chemsain Konsultant Sdn. Bhd., Gaya Tunas Sdn. Bhd., TQS Management Sdn. Bhd.,
SIRIM QAS Sdn. Bhd., SGS (Malaysia) Sdn. Bhd., JB Agriculture Management Services, KiwiHeng
Wood Industry Consultants Sdn. Bhd., AOQC Moody (Malaysia) Sdn. Bhd., TropBio Forest Sdn.
Bhd., and Bureau Veritas (M) Sdn. Bhd. (MTCC 2001).
It must be noted that a
representative from FRIM,
one of the assessors, sits Clear conflict of interest
exists when
on the Board of Trustees of
the MTCC (2001). Simi-
larly, since May 2001 one of
the two representatives of
the University Putra Malaysia
on the Board of Trus- members on the tees appears also to be an
assessor for the Univer-
sity’s Faculty of Forestry. A
conflict of interest be- Board of Trustees tween these roles is clearly
possible. However MTCC
has acknowledged the problem
and notes that nei-
ther FRIM nor the FF-UPM
are also “independent
assessors” assessments. “In the event
have yet carried out any
that any trustee has any
interest or connection with
either an assessed party or the independent assessor, the normal practice would be for the trustee
concerned to declare his or her interest when these parties are the subject of the relevant discussion
in MTCC” 10 . It would however be better to avoid this problem by prohibiting assessors from being
Board members.

Assessment standards
According to the summary reports on certified forest areas under the scheme, the standard used for
forest management certification is the Malaysian Criteria, Indicators, Activities and Standards of Performance
(MC&I) for Forest Management Certification (Forest management Unit Level), Peninsular
Malaysia (Malaysia – the Netherlands Ad Hoc Working Group) dated 23 December 1999 and the
Keurhout Foundartion Schedule of Conditions. For chain of custody certification, the standard used
for assessment is the Requirements and Assessment Procedures for Chain of Custody Certification.
Consultation
According to the assessment procedures (MC&I), the main assessment itinerary must also include
time for consultation with interested parties within the FMU, including, as appropriate:
· Environmental and social organisations
· Local communities
· Local and national government officials
· Forestry departments
· Educational and research bodies
· Workers unions and trade representatives.
According to one of the assessors for SGS (Malaysia), the company had consulted various stakeholders
both at FMU and national level. He said that SGS assessors ‘had discussion with several NGOs such
as WWFM, MNS, Centre for Orang Asli Concerns, Traffic SEA, IFBWW and others. At the FMU level
we held discussion with Orang Asli groups, local communities, Penghulu, Batin (village head), JKKK
(village committee) leaders etc.’ (email message of 8 August 2003). It should be noted that he used
the term ‘discussion’. Since full accounts of the assessments are not made available to the public, it
is not known how the consultation was carried out and whether stakeholders’ viewpoints are being
reflected in the reports. Comment: When contacted, the director of the Centre for Orang Asli Concerns,
Dr Colin Nicholas, said his organisation had never been consulted during any of the FMU
assessments carried out by SGS (email message of 9 August 2003).
Certification process
What follows is the procedure for MTCC certification.
Applications for certification of both forest management and chain of custody must be made with the
appropriate application form. The MTCC then assigns a certifier from the pool of registered independent
assessors. Certifiers/assessors have to be registered according to the Terms and Conditions
for Registration of Assessors, which define the requirements for the competence and impartiality
of assessors. However, it does not set out any accreditation arrangements, although a link to the
Malaysian Department of Standards is referred to (see Fig.1 in the appendix) (Sandom & Simula
2001:31).
The applicant may arrange with the assessor an optional pre-assessment visit prior to the main
assessment. This visit has three functions: (i) to confirm that the client understands the certification
requirements; (ii) to confirm the scope of the proposed certification; and (iii) to determine whether the
FMU is ready for the main assessment.
The main assessment is then carried out either in accordance with the requirements of the MC&I for
Forest Management Certification or, in the case of chain-of-custody (COC) certification, according to
the Requirements and Assessment Procedures for chain of Custody Certification.
Any cases of non-compliance with the MC&I for Forest Management Certification are met with written
Corrective Action Requests (CARs) from the assessor to the client. A major CAR is raised where
there is non-compliance in the case of an SOP deemed by the assessor to be critical. Minor CARs are
raised when a single observed lapse has been identified in an Standards of Performance. Major

CARs prevent the client from being certified, whereas minor CARs do not preclude the FMU from
being certified.
If a minor CAR is raised during an assessment or on a surveillance visit, the FMU or client has to
respond in writing to the assessor (with a copy to the MTCC) within three months detailing how the
problem has been rectified and the proposed action plan to prevent any future recurrence of the
problem. The effectiveness of any action taken by the FMU or client must be verified at the next
surveillance visit.
In the case of a major CAR, the client must respond in writing to both the assessor and the MTCC
within one month. Failure to respond will eventually lead to a complete reassessment. Any corrective
action notified by the FMU is verified by the assessor within two months of the letter to the MTCC.
Major CARs raised on surveillance visits or reassessment are regarded very serious. The FMU or
client has two weeks to notify the assessor and MTCC of the corrective action it has undertaken. This
action is then verified by the assessor within one month.
When corrective actions have been satisfactorily implemented the assessor will ‘close out’ the CAR.
If a major CAR raised on a surveillance visit or reassessment has not been dealt with satisfactorily
and so has not been closed out, the client is notified that the certificate is to be suspended.
The assessment report for forest management certification is evaluated by a peer review panel that
is appointed based on a criterion set up by the MTCC. The peer review panel normally consists of two
members, selected by the MTCC according to the Forest Management Unit (FMU) being assessed,
and will be given up to 10 working days from receipt of the assessment report to complete and submit
their findings.
Once the assessment report has been evaluated, the Certification Committee meets to decide the
application for forest management and/or chain-of-custody certification, based on the assessment
report submitted. This committee is established by the Board of Trustees of the MTCC and is composed
of four members from each of the interested groups on the Board – i.e. industry, research or
academic institutions, non-governmental organisations and government agencies.
For forest management certification, in cases where the peer reviewers agree with the recommendation
of the assessor, the Certification Committee makes the appropriate certification decision based
on the assessment report and peer review report. Should, however, the peer review panel disagree
with the assessment report, then the MTCC management contacts the peer reviewer/s concerned to
discuss their objections. All discussions are documented and reported to the Certification Committee,
which then makes the appropriate certification decision.
For COC certification, the Certification Committee makes the appropriate certification decision based
on the assessment report.
Where a decision has been taken by the Certification Committee to issue a forest management
certificate to the FMU, summarised information on the certified FMU is made available by the MTCC
to the general public for its information and comment.
(Information extracts from NTCC Malaysia 2000b)
Repeatability
The repeatability of the forest management certification process is doubtful. Sandom & Simula (2001:xii)
have pointed out that, under the MC&I, one has to extrapolate the principle or underlying rule from
one or more indicators and Standards of Performance. This means that the MC&I are subject to
interpretation and could therefore be a potential source of confusion and misunderstanding. The
same authors are also of the opinion that the consistency of an individual Standard of Performance is
not always clear. It is therefore unable to ensure individual criteria to be used to provide a means of

assessing the degree of compliance. Under such circumstances, the lack of clarity in standards could
result in the non-repeatability of the certification process.
We have not looked at repeatability of chain of custody certification process.
Reassessment/surveillance
The validity period of both the certificates for forest management certification and chain of custody,
issued by the MTCC is five years. Following certification, the certificate holders are subjected to
surveillance visits to verify their continued compliance to the certification requirements. For forest
management certification, surveillance visits are conducted once every 6-12 months. Surveillance
visits for chain of custody are conducted once every 6 months for the first two years, and then
annually, unless their have been major CARs identified in the surveillance visits of the second year 11 .
Accreditation
The MTCC accredits certifiers/independent assessors based on the Terms and Conditions for Registration
of Assessors. Only entities such as companies and organisations are eligible to apply for
registration as assessors. The registration of a company or an organisation as an assessor lasts for
a period of one year, but is also renewable annually. In applying for the renewal of its registration, the
applicant has to inform the MTCC of any changes within the company or organisation which may
affect its role as an assessor, such as changes to the professional or managerial staff, financial, trade
or business interests, or financial position. The applicant must be independent, and it must have an
adequate number of qualified and experienced staff to carry out the assessments effectively. A team
comprising a minimum of three auditors is required for forest management certification, while for
chain-of-custody certification, two auditors are needed for the assessment. At least one of the auditors
in each team has to be conversant with Bahasa Melayu (NTCC 2000b).
Complaints mechanism
According to the Procedures in Timber Certification Scheme (NTCC 2000b) 12 , appeals against a
decision of the Certification Committee 13 should be considered either by the full MTCC Board or by a
committee appointed by the Board for this purpose. Following a recent decision of the MTCC Board,
an appeal against the decision of the Certification Committee will now be considered by the Appeals
Committee, which comprises of the four Board members not involved in the Certification Committee
14 .
The Certification Committee is composed of members of four interest groups. Meanwhile, the MTCC
Board of Trustees does not contain any environmental interest group members. The Certification
Committee for 2001 was composed of members from the Ministry of Primary Industries, the Forest
Research Institute, the Forest Officer Union and the Wood Industries Association, and therefore
basically represented government and corporate interests.
The MTCC Certification
Committee composed
of government and corporate
representatives.

5. Transparency of the organisation
Summary reports of the forest management certifications are available on the MTCC website. As
with the other existing forest certification schemes, the full reports are considered the property of the
applicant. They are treated as if there is a contract between the assessor and applicant, unless, for
example, the report has been written for the purposes of assessing compliance with other standards,
such as the Keurhout Foundation Schedule of Conditions, in which case the report would be made
available to the concerned party.
As regards COC certification reports, only the scope of the certification, the holders’ certificate number
and the certificate issuance date is shown on the MTCC website.
6. Label protection and chain of custody
Labelling
Certified products will be packaged and labelled in accordance with the requirements of the MTCC
certification scheme. COC-certified products will bear the MTCC logo. MTCC certified timber has
been shipped to export markets since July 2002. Up to December 2003 a total of 6869 cubic meters
have been exported to the Netherlands, Germany, Belgium, the UK, France and Australia 15 .
Chain of custody
For a certification scheme to be credible, there needs to be ‘a reliable system of tracking the timber
product though the transportation, processing and distribution chain from forest to final end-use (the
chain-of-custody), to provide assurance to end-users that the product has been sourced from
sustainably managed forests.’ (NTCC 2000c)
Malaysian chain-of-custody certification under the MTCC scheme was developed with the support of
the German Agency for Technical Cooperation (GTZ). A set of guidelines entitled Requirements and
Assessment Procedures for Chain-of-Custody Certification (RAP/COC Rev. 4) was finalised in November
2000 (MTCC 2001a). The MTCC website reveals that 29 companies from Peninsular Malaysia
are COC holders as of August 2003.
Segregation of certified product
There are two systems used for chain of custody certification in the MTCC scheme
1) physical segregation, and
2) minimum average percentage system.
1) The most straightforward way to comply with the chain of custody requirements, known as physical
segregation system, is to purchase certified material, keep it separate throughout all stages of
processing and create a finished product that is 100% certified. This system applies to solid wood
products only, such as sawn timber.
2) The minimum average percentage system is based on a client demonstrating that it consistently
meets a set of criteria that ensure the output contains at least a minimum percentage of certified
material. (Extracts from MTCC 2000c, RAP/COC Rev. 4)
1. The percentage of certified materials shall be calculated on a consistent basis by volume, dry weight, or
both. Calculation methods shall be based on verifiable documentation.
2. The minimum average percentage system is applied to either a defined batch period or a physical
batch. The Client shall specify the batch period it is using. The period should not exceed 60 days except
under exceptional circumstances approved by MTCC.
3. The percentage of certified material, which is calculated as a rolling mean (average) of the input, shall
not drop below the minimum threshold.

The minimum percentage for certified material in the different wood-based products would follow these
parameters:
a) Collections of solid wood products
The minimum percentage is at least 70% by volume of the wood used in manufacturing of the product,
or the collection of products, for the collection to be certified.
b) Assembled Products
The minimum percentage is at least 70% by volume of the wood used in manufacturing the product for
the product to be certified.
c) Chip and Fibre Products
The minimum percentage is at least 30% by volume or weight of the new virgin wood chip or fibre used
in the manufacturing of the product to be certified.
d) Assembled Products Containing Both Solid and Chip and Fibre Parts
The minimum percentage must meet the respective thresholds for the components, so that at least
70% (by volume or weight) of the wood and at least 30% (by volume or weight) of the virgin chip and
fibre must be certified for the combined product to be certified.
FOOTNOTES
1
MTCC Annual <strong>Report</strong> 2002
2
2.1: Extent (area) and percentage of total land area under: (a) natural forest, (b) plantation forest, (c) permanent
forest estate, and (d) comprehensive integrated land-use plans. Criterion 3.1: Estimate of level of sustainable
harvest for each main wood and non-wood forest product for each forest type. Criterion 3.2: Quantity
(volume) of wood and important non-wood forest products harvested for each forest type. Criterion 3.4.: Existence
of long term projections, strategies & plans for production, including the use of plantations.
Sandom & Simula point out: ‘… It is assumed that the relevant indicators of the total 29 indicators will also be
applied. This may leave uncovered areas and make application difficult as the criteria and indicators have
evolved from a set originally designed for natural forest management. In applying the C&I for forest plantations,
great care needs to be taken that to ensure that they remain relevant’ (Sandom & Simula 2001:36).
3
NSC, <strong>Report</strong> on National Workshop on Standards for Certification of Plantation Forest, 31 October 2002.
4
Comments to FERN on 20 January 2004 by Mr Chew of the MTCC in a response to a draft version of this
report.
5
Comments to FERN on 20 January 2004 by Mr Chew of the MTCC in a response to a draft version of this
report.
6
As shown in the second column – activities of MC&I, 2001
7
Criterion 6.3: Existence and implementation of procedures to ensure the health and safety of forest workers
(MC&I, version 2001). Criterion 6.4: Employment in the forestry sector: (a) number employed, (b) percentage of
total workforce, (c) average wage rate, (d) injury rate, and (e) mortality rate. Criterion 6.5: Number and extent of
forest sites available primarily for: (a) research, (b) education, (c) the direct use and benefit of local communities,
and (d) recreation. Criterion 6.6: Number of visitors to forest for recreational purposes. Criterion 6.7:
Extent to which tenure and user rights over the forest are documented and recognised.
8
‘Existence and implementation of a strategy for in situ and/or ex situ conservation of the genetic variation
within commercial, endangered, rare and threatened species of forest flora and fauna.’ (NTCC 1999)
9
MTCC comments in an email to FERN in a response to a draft version of this report. Date XX
10
Comments to FERN on 20 January 2004 by Mr Chew of the MTCC in a response to a draft version of this
report.
11
Comments to FERN on 20 January 2004 by Mr Chew of the MTCC in a response to a draft version of this
report.
12
Since changed in ‘Procedures in MTCC timber certification scheme, January 2002’.
13
The functions of the Certification Committee are: 1) to decide on registration and de-registration of independent
assessors under the MTCC timber certification schemes and 2) to decide on applications for forest
management and/or chain of custody certification, based on assessment reports submitted by the independents
assessor.
14
Comments to FERN on 20 January 2004 by Mr Chew of the MTCC in a response to a draft version of this
report.
15
Comments to FERN on 20 January 2004 by Mr Chew of the MTCC in a response to a draft version of this
report.

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