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Malaysian Timber Industry Refutes ‘Timber Laundering’By Julian Matthews
Q: The Indonesian government and some NGOs have accused Malaysia, Singapore and China of accepting illegal timber from Indonesia and thereby ruining the timber exports of the country. What is your response? ISMAIL: The situation in Indonesia is very ambiguous. As a result of decentralization of the post-Suharto government, each province has its own "autonomous powers" on the management of resources. The central government may say it is not right, but the provincial governments say they are operating within the ambit of the law. The situation is ambiguous and the determination on who is right is not clear to the outside world. For our part, we have been enforcing the spirit of ASEAN strongly. Since Indonesia suggests they are not capable of managing this problem from the view point of institutional capacity and enforcement, Malaysia has responded positively. Whatever timber exports Indonesia has deemed illegal and banned, Malaysia has reciprocated by banning those imports. Indonesia institutes the law, and Malaysia enforces it. In the spirit of regional cooperation, Malaysia has taken a unilateral stand to help Indonesia. But we cannot enter another country and stop the illegal logging. Indonesia cannot just institute a law. It has to implement the regulations and procedures and put checks and balances into place. If Indonesia believes it cannot control its illegal logging because of the vastness of the country, and the numerous forest areas and exit points, Indonesia must determine who is eligible, stipulate the governing rules and identify which ports Malaysia should deal with. Q: Are you saying there is no illegal timber coming into Malaysia from Indonesia? ISMAIL: On June 25, 2002, Malaysia banned the import of Indonesian round logs, and on June 1, 2003, Malaysia banned the import of squared logs (large scantlings and squares or LSS). We have also enhanced and stepped up enforcement, especially on the west coast of Peninsular Malaysia, which has the most common landing points. It is important to understand that the illegal logs are NOT brought in by timber companies, but by small local traders who have been barter trading with Sumatra and Malaysia for centuries. Historically, these traders have been bringing in goods such as rice and sugar on their barges and rice and sugar on their barges and trading in very small quantities. In the past, Malaysian customs enforcement imposed fines and allowed them to land, perhaps, for compassionate reasons. Nevertheless, when supply is brought in this way, agents contact downstream and upstream timber merchants, who purchase these products because they are cheap, without bothering to ask any more questions. But these are very small quantities of low quality timber. Today, these traders are turned back and not allowed to land. We do not want to be accused of "laundering" these logs as it is far too damaging for our timber industry. The majority of our timber exports are of high quality, so the allegations are exaggerated and ridiculous. The Malaysian Timber Industry wants to retain its reputation for quality and delivery and has no intention of tainting that reputation from the mix of such timber. "On June 25, 2002, Malaysia banned the import of Indonesian round logs, and on June 1, 2003, Malaysia banned the import of square logs" Q: How can this problem be solved? ISMAIL: Indonesia has to tackle the problem at the source. It is a domestic problem for Indonesia. It is beyond our sovereignty to interfere. Q: The Indonesian Wood Panel Association (Apkindo) also claimed that Malaysia and China have flooded the plywood market with cheaper products, resulting in a 15% drop in plywood exports from Indonesia in Q1 2003. Is this true? ISMAIL: This is another baseless allegation. The drop in Indonesian plywood exports could very well be attributed to a change in Indonesia’s own policies. Even Apkindo had reported that Indonesia’s exports of wood products could fall by about 50% in 2003 because of various restrictions imposed by Indonesia, including restricting trade to only registered exporters. Volume-wise, we also know that Indonesia has reduced concession volume allocations, from 12 million m3 in 2001 to under 6.9 million m3 in 2002. Let’s also not forget that the world plywood market has been depressed for the past few years, and the SARS and the Middle East situation early this year, added to the slump. Malaysia’s plywood production has also never been able to match Indonesia’s, which is almost double Malaysia’s volume. Statistics from the FAO on plywood exporters shows that Malaysia’s plywood exports in 2002 was around 3.58 million m3 compared to Indonesia’s 6.3 million m3. Moreover, a comparison of Malaysian plywood exports in Q1 and Q2 of 2002 versus 2003 only showed a 0.6% increase in export volume. (See table below). In addition, Malaysia banned the import of round logs (from which plywood is processed) from Indonesia, and stepped up enforcement to stamp out log smuggling into Malaysia. Price-wise, Malaysian and Indonesian plywood have operated within narrow bands of each other because in February 1995 both countries agreed to cooperate to stabilize plywood prices. Prices for Malaysian 2.7mm plywood has consistently been higher than Indonesian plywood, and prices for Malaysian 3mm ply, has generally not fallen below Indonesian plywood. The International Tropical Timber Organization also reported that plywood prices from all countries (Indonesia, Malaysia and Brazil) have been "declining since 1996", and attributed the decline to "depressed construction sectors in major importing markets and growing substitution by softwood plywood and other panels". "The Malaysian Timber Industry is comparatively well developed and structured in that we have documentation and systems in place whereby each log is tagged and can be traced to its original stump" Q: How successful has Malaysia been with its timber certification program? ISMAIL: With timber certification, we have legality and acceptability that the product comes from a sustainable forest. There is a big difference between how the timber industry is managed in Malaysia and Indonesia. The Malaysian Timber Industry is comparatively well developed and structured in that we have documentation and systems in place whereby each log is tagged and can be traced to its original stump. These systems of checking and double-checking, export licensing and control are already in place. So we are surprised when some of the antitropical timber lobbies question the credibility of our certification. We recognize that every party has its own agenda. Nevertheless, we objectively evaluate all criticism and take action according to the merits of each case. There are a lot of variables in the timber certification scheme. We have been trying to meet the demands while balancing economic viability, environmental responsibility and social conditions. These standards cannot be developed overnight. It can only be phased-in over time. Basically, our certification principles are based on internationally agreed principles and criteria of producers and consumers. The NGOs support the Forest Stewardship Council criteria and we are aiming to make the Malaysian certification scheme compatible. But it takes time. We have brought in buyers, media, trade and international experts to view our efforts, and to recognize that we are earnest in our endeavors. The timber industry is an important export earner for Malaysia**, and if Malaysia cannot make certification work, it will be difficult for any tropical timber producing country to do so. Malaysia is well ahead of others in tropical forestry management.We are moving towards sustainable forestry management. The awareness is only now making an impact, and in the end, we know our efforts will be borne out. Q: Why does the anti-tropical hardwood lobby continue to run down Malaysia’s efforts? ISMAIL: It is difficult to convert the antitropical timber champions to your cause. We want to work with NGOs to understand their issues and thinking. Our London office, to its credit, has done a marvelous job.We reach out to NGOs, and seek to correct perceptions and establish a more balanced view through regular dialogue and information exchange. We have made great progress in increasing their understanding of our forestry management efforts.
Malaysia’s Plywood Exports Q1-Q2 2002 vs 2003
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Recent
media reports suggest Malaysia is "laundering" illegal timber obtained
from Indonesia and also flooding the plywood market with cheaper products to the
detriment of Indonesian exports. eBridgeMalaysia sought the views of the
Malaysian Timber Council CEO, Dato’ Ismail Awang to shed light on this
contentious issue.
MTC’s
