STA: Industry facing severe hardship, shutdowns
KUCHING: The recent ly proposed forestry policies aimed at transforming Sarawak’s forestry sector was at the very heart of the present concerns raised by Sarawak Timber Association( STA) members during its annual general meeting ( AGM) held yesterday.
STA, in a statement issued after the meeting, is of the opinion that the review of the forestry policies must be grounded on accurate and updated baseline data reflecting on the actual situation of the industry and supported by feasibility studies, in order for comprehensive policies to be drawn up for effective development of the forestry and timber industry in Sarawak.
“This very fact was obvious in the dialogue session held right after the AGM, where even though members acknowledged the importance of shaping the industry to have the capacity to innovate and upgrade, it is quite impossible for such positive change to be justifiable or take place if the challenges faced by the industry are not well understood and rightfully identified.
“Indeed, members are more aware of the current situation as they are struggling hard to deal with these complex challenges on a daily basis in order to keep their operations afloat,” said the statement.
STA chairman Pemanca Datuk Wong Kie Yik presided over the AGM, which was attended by council members and members of STA, in the presence of STA advisor, Forest Department director Hamden Mohammad.
The association said the biggest obstacle the industry is facing presently is the significant increase in cost arising from policy and administrative requirements, such as increase in premium and cess as well as labour cost, on top of existing high production cost due to reduced log production from the implementation of forest management certification.
It cited that for example, the increases in Hill Timber Premium and Rehabilitation and Development Cess, amounting to RM55 per cubic metre, have increased the logs cost as well as products costs by RM110 per cubic metre, assuming a recovery rate of 50 per cent.
“Both upstream and downstream members are very concerned on the Sarawak government’ s intention to increase its revenue through the proposed forestry policies.
“Members stressed that any further increase in royalty, introduction of new fees and sales tax on petroleum products will surely see an increase in prices of logs and timbers and further erode the industry’s competitiveness in the global market.
“This will definitely aggravate the situation where many mills have already faced severe hardship and were forced to scale down or shut down their operations. Countries such as China, Indonesia and Vietnam have competitive edge over Sarawak because of favourable policies, strong government support and abundant manpower ,” it explained.
On top of that, STA said the industry is going through a transformation period with the change of raw material supply from natural forests to planted forests.
It added STA members have answered the Sarawak government’s call to re- align their forestry activities to those of planted ones with promises of positive results.
“Yet, the initiative seems to have lost its gainful effect as the change has plagued the industry with various challenges which hinders the ability of the current plantation resource to meet the supply volume needed for downstream processing.
“Furthermore, the bulk of the planted logs are not suitable for utilisation by the downstream sector as the existing machineries cannot efficiently process planted logs ,” it said.
As such, it said STA members are very encouraged to know the planting target for one million hectares of industrial t ree plantation has been shifted from 2020 to 2025.
However, STA is concerned that shifting the planting target year, without addressing the main challenges such as land issue, shortage of manpower and lack of coordinated research and development (R& D ), will not help the industry to achieve the desired planting target.
“Therefore, STA urges the Sarawak government to address these issues urgently as well as carry out R& D efforts to not only achieve the desired planting target, but also to develop the downstream industry as it has been proven to be extremely tough for the mills to survive in the current operating environment.
“STA urges the Sarawak government to work on advancing the insights obtained from communicating with stakeholders, namely the industry players and other forestry agencies, instead of focusing on a major and hasty policy change.”
It stressed that the key to favourable policies is for the Sarawak government to step in and work on an equal resolution acceptable by all parties involved, so that the benefits earned from the contributions of the industry will remain intact, and continue to fuel the economy and development of the state as well as the many jobs created, improved road accessibility, education for Sarawak children and, ultimately, safeguarding the future of Sarawakians.