INDONESIAN TIMBER PASSING THROUGH MALAYSIA’S FREE TRADE ZONE (FTZ)

The Press Release dated 13 May 2004 (Malaysia Still Laundering Illegal Timber) issued by the Environmental Protection Agency (EIA) refers to "fresh shipments of illegal logs" coming out from a customs-free port in Malaysia. We feel obliged to correct this misinformation.

Ramin timber has since August 2001 been listed under Appendix III of the Convention on International Trade in Endangered Species of Wild Fauna & Flora (CITES). It is allowed to be traded but with Export Permits/Certificates of Origin. In February 2004, EIA had pointed out to a cargo of Indonesian Ramin sawntimber being transhiped through the FTZ of Pasir Gudang. The Malaysian Timber Industry Board (MTIB), as the CITES Management Authority (MA) for timber species ascertained that they were not accompanied by Indonesian Export Permits.

Having considered the matter thoroughly, the authorities came to a conclusion in March 2004 that Johor Port Berhad (JPB), the company that had been appointed to run the privatised port, had not committed any offence as far as the FTZ Act 1990 and 1991 were concerned, with regard to this transhipment of Indonesian Ramin. JPB is governed by the FTZ Act and the restrictions imposed as per Schedule I in the Custom's Order : Provision on Imports 1998, currently outlines prohibited items that cannot be traded or stored in a FTZ. These items are mainly firearms, pornographic material etc. Ramin is at present not on this list of prohibited items.

Malaysia’s current national legislations covering the FTZ area do not allow the confiscation and disposal of cargoes that are not in the prohibitive list of the FTZ area In the various exchanges between EIA and government officials on the Ramin issue in early February this year when EIA released its report "Profiting from Plunder : How Malaysia Smuggles Endangered Wood", the matter of this legal loophole had been pointed out to the EIA.

As such, Malaysian port authorities are legally bound to provide unperturbed transit and passage through FTZ’s. The Malaysian Timber Industry Board (MTIB), under delegated powers through the Customs Act, and as the appointed "regulator" of imported timber, is not, at present enabled to fully regulate timber movement within the FTZ, which is legally considered an area outside Malaysia. Therefore Ramin and other timbers that transit through the FTZ area are technically not in Malaysian territory – they have not crossed the Malaysian border, but are in transshipment for other destinations and were never destined for the Malaysian market. Current rules dictate that the Ramin cargoes in question are the legal property, in this case and under present circumstances, either to the consignor or consignee of the shipment in question.

The Malaysian CITES Management Authority (MA) then offered the Indonesian MA the return of the timber. The Indonesian MA in turn asked the Malaysian MA to dispose of the timber as they saw fit.

EIA had pointed out on 18 February 2004, to CITES Conference Resolution 9.7. The text of the Conference Resolution recommends that:

Faced with a situation where there was a legal requirement for due process and for prior notice to be given to the affected parties, and in a legal lacuna (MTIB has no jurisdiction in the FTZ), the MTIB referred to CITES Conf. Res. 9.7 and duly carried out her CITES commitment by informing the MA of the country of final destination.

Contrary to EIA allegations, the Ramin cargoes were not released (into the Malaysian market) and sold off.

Bangkirai in FTZ, Pasir Gudang Port, pointed out by EIA in March 2004

The MTIB acted on this information and informed the EIA that the Bangkirai flitches (squared logs) was part of old timber stocks that had been kept in the FTZ since November 2003. Unlike Ramin, which has been listed on CITES Appendix III, Bangkirai is not listed as a threatened or endangered specie. It is a commercially tradeable and available specie. Malaysia had in June 2003 imposed a ban on import of Indonesian flitches of more than 60 square inches. About 40% of the Bangkirai flitches were more than 60 squares inches. Again, this consignment was in transit through the Free Trade Zone (FTZ) area.

To streamline the effective date of implementation (as had been given for the Ramin cargoes), the appropriate action was taken to inform the port authority to comply with the same cut-off date of 8 April 2004 for the Bangkirai.

There was no breaking of any Malaysian laws, as alleged by Telapak, the Indonesian NGO.

The shipping company involved in the Bangkirai consignment is not the same company that EIA claims was responsible for handling the illegal Ramin.

Malaysian Timber Council
14 May 2004