Let timber industry workers resume work – STIA

KOTA KINABALU: Sabah Timber Industries Association (STIA) president Chua Yeong Perng applauds the State Government for the decisive move to protect the citizens of Sabah from the Coronavirus (Covid-19) pandemic.

“The STIA supports the government in the difficult task of finding the right balance between ensuring the survival of industry and ensuring the safety of the population during such an unprecedented crisis,” Chua said.

He also took the opportunity to thank all the frontliners who had sacrificed so much for the State.

Chua emphasized that there were several looming issues that would further weaken the timber industry’s ability to pay workers’ wages for the coming months.

“If remedial action is not taken during and after the Movement Control Order (MCO), the repercussions would be irreversible. The association would like to present suggestions to the Government that would increase employers’ ability to cover wages for the upcoming critical months.

“The timber sector currently has approximately 30,000 fulltime employees and between 5,000 and 10,000 piecemeal or part-time workers. Liquidity within the forest and timber industry is of the utmost concern for the next few months.

“Majority of the players in the industry would struggle to sustain existing payroll commitments. At least 50 percent of the workforce in the upstream and downstream sector will be facing job security risks,” Chua said.

He said due to the inherent remote location of timber factories and logging camps, most companies have 30-40 percent their workforce residing in living quarters within factory premises or logging camps.

“By default, workers’ quarters act as a quarantine area since entry and exit is restricted and controlled by security personnel.

“Since implementation of the MCO, companies have proven to have successfully controlled and monitored the welfare conditions of workers staying in company quarters.

“With companies executing additional safety measures (PPE distribution, temperature check and personnel medical monitoring) the risk of infection for this segment of the workforce is extremely low. Consideration should be given for these workers to be allowed to commence work immediately.

“Social distancing within tight confines of worker quarters has no additional advantage over factory or camp operational areas.

“The economic impact of losing four weeks (and potentially more if MCO is extended) of productivity however in March - April will have far reaching consequences on the forest and timber industry. STIA has serious concerns on industry’s capacity to cover wages in May, June and July,” Chua said.

He said shipment of ready goods, controlled movement of perishable raw material (felled logs) and systematic re-starting of manufacturing would go a long way in improving the industry’s ability to maintain and pay its workforce.

“STIA estimates that there are approximately 120 containers, worth RM9-10 million of products at Port and at various factory locations that that have been held back.

“There are approximately 100,000 -120,000 m3 of felled logs, valued between RM35-45 million, currently sitting idle due to the MCO. The value and quality of the logs continue to deteriorate each week. We expect, overall, these felled logs would have lost at least 15-20 percent of their inherent value.

“Certain non-durable species have lost nearly all its commercial value by now. In addition to this, downstream mills are now faced with the critical problem of wood adhesives expiring.

“If partial production is not permitted over the next few days, it is estimated 964 MT (963,000 kgs) of plywood and woodworking adhesives will need to be disposed of. The value of adhesives and the disposal cost will come to between RM5 milion and M8 million.

“There is the concern also that Sabah may not have the facilities to dispose of such quantities in such a short time frame. STIA is extremely concerned that the combination of the above factors will ultimately impact the industry’s short term ability to cover employee wages for April and the months after.”

As such, Chua said the STIA appealed to the government to grant special permission during the current MCO period for ready shipments to be exported.

“To avoid massive adhesive disposal problems, selected factories with expiring adhesives to be also given restricted production days in order to utilize their adhesive stock.

“In event the MCO is extended beyond April 14, STIA suggests the government allow for certain upstream and downstream activities to commence operation.

“It is recommended that authorities take reference to other states in Malaysia like Sarawak and Johor which have permitted scaled down manufacturing operations to commence.

“It is understood that manufacturing in these states are limited within specific timber industrial clusters and a cap has been placed on the number of workers allowed to return to work.

“The authorities could take the initiative to allow movement of raw material and manufacturing to progressively startup within timber clusters (Keningau, KKIP, Ladalam, Kimanis) that are not deemed a high risk area (hot/red zone).

As highlighted by various other SME associations, Chua said STIA was also of the opinion that the recently announced Federal Government Stimulus Package lacks focus on SMEs.

He said it was apparent that majority of the SMEs felt that the recent wage subsidy would fall short in its desired intent of saving jobs. "As such, any quick action in the coming days to mitigate the impending short term cash flow problems will go far in reducing any large scale worker redundancy.

“STIA feels that it is necessary for the State Government to consider making minor changes to the current MCO. This will at least allow the industry to help itself in the interim,” Chua concluded.