Sustainable Forest Finance Toolkit - PwC

Malaysia – country briefing note 1 of 2New Application HOMENature of forest and timber movementsMalaysia remains a heavily forested country despite highrates of forest conversion for palm oil and other uses inrecent decades. The country’s forest areas are divided into:• Gazetted areas for production forest• Protected areas for high conservation and tourism values• Industrial tree plantations or reforestationGazetted areas for production forest tend to be areas thathave been logged previously; in some cases several times,often to the extent that they can no longer be consideredprimary forest, but rather degraded or secondary forest.Other areas gazetted for production forest do however haveconservation value in several regions, which are discussedfurther below. Protected areas include Taman Negara withinthe peninsular of Malaysia and a series of national parkswithin Sabah and Sarawak in East Malaysia, on the island ofBorneo.In terms of timber movements, Malaysia remains one of theworld’s largest exporters of tropical hardwoods, if not thelargest. Exports consist, first, of primary unprocessed timberproducts, destined for local markets and originating from EastMalaysia. These tend to be, for example, sawn timber andlogs shipped from Sabah or Sarawak to Vietnam, China orother local countries.The second export category is secondary processed timberproducts, which originate predominantly from peninsularMalaysia and are shipped and exported to US and EUmarkets. For example, the UK remains one of the largestimporters of Malaysian timber products to this day.Protected forest and enforcementThere remain significant areas of land within Malaysia thatare protected through their designation as national parks orareas of scientific interest. Among these are the TamanNegara within the peninsular of Malaysia, which is famous forits 130 million years-old rainforest, its viable population ofIndo-Malay tigers and its populations of indigenous tribes.Within Sabah and Sarawak, famous protected areas withhigh scientific values include the Danum Valley conservationarea and the Maliau Basin, which remains largelyunexplored, and is an area of primary untouched lowland rainforest.Generally speaking, these areas are well protected and thepark boundaries are well enforced. However, all these areassit alongside forest concessions where production practicesand potentially illegal logging or informal deforestation maythreaten the integrity of these protected areas.One challenge for the enforcement bodies across Sabah,Sarawak and peninsular Malaysia remains that of enforcingan effective and scientifically sound level of allowable cut(AAC). This defines a sustainable level of timber harvestingand, in many cases, is not monitored on the ground to ensurethat forest operators are taking timber only at a sustainablerate.Page 63Special places and certificationWithin Malaysia, particularly within Sabah and Sarawak,there are huge areas of forest with high conservationvalues. Many areas gazetted as production forest withinthese two states have been proven to act as habitats forendangered species such as the clouded leopard, theSumatran rhino and the Asian pygmy elephant.Conservation priorities and the attentions of NGOs andother stakeholders make sustainable management ofthese production forests and clear delineation of highconservation areas essential.The national level certification standard is the MalaysianTimber Council Certification Standard (MTCS (previouslyMTCC)) (endorsed by PEFC in May 2009). The MTCS isthe standard that all SMUs within provincial Malaysia arecertified to, and an increasing number of concessionswithin Sabah and Sarawak are hoping to obtain it in thecoming years.There are a small number of concessions and plantedforest areas certified to the FSC Standard, but these arefew and far betweenpwc