Sarawak timber firms hit by higher premium and payments for cess
The Star Online (29/04/2019) - KUCHING: Sarawak timber companies have to pay an additional 800% in rehabilitation and development cess, which has been raised to RM5 from 60 sen per cu m imposed by the state Forest Department in January this year.
Apart from the rehabilitation and development cess, timber players in the state were also slapped with higher premium for hill timber at RM50 per cu m or up by over 6,000% in July 1, 2017 from a mere 80 sen previously.
Sarawak Timber Association (STA), the umbrella body for upstream and downstream timber players, said that the increase in hill timber premium and rehabilitation and development cess has amounted to RM55 per cu m.
The higher premium and cess have raised the costs of logs and timber products by RM110 per cu m, assuming the recovery rate of 50%.
STA said its members have voiced their concerns on the state’s proposed new timber policies aimed at transforming the forestry sector.
In defending the department’s revised timber premium and rehabilitation and development cess,state forest director Hamden Mohammad said the proposed forest policies were aimed at strengthening the state’s sustainable forest management and the needs for environmental protection,economic development and social well-being of the local people
He said the current policies,including the review of timber rates,had reflected the actual situation of the industries and were supported by feasibility studies.
The charges on certain amount of forest produce,he pointed out, has not been revised in the past 20 to 30 years eventhough the rates were no longer relevant under the current situation.
“The revenue from hill timber and rehabilitation and development cess are mainly for financing education and welfare of the people of Sarawak,” Hamden said in a press statement last week (April 10) in response to the association’s concerns on the proposed new forest policies.
He asked planted forest and forest timber licensees to surrender their licences if they are unable to operate due to changes to current forestry policies.
They could,said Hamden,surrender their licensed areas as the government has other interested parties ready and willing to take over.
The association has claimed that some timber processing mills are facing severe hardship or forced to slow down or shut down their operations.
According to Hamden,the cultivation rate of forest plantation in the past 20 years had not been encouraging although the government had provided incentives to licensees by allowing some parts of the licensed areas to be planted with one cycle of oil palm.
He said oil palm trees cultivated in such licensed areas had been successful and did not face issues,like manpower shortage,land-related problems or research and development, as raised by the association.
The government’s target of achieving one million hectares of planted forest by next year has fallen short as to-date only about 421,000 ha statewide has been planted with fast growing commercial tree species.
Johari has recently announced extending by five years till 2025 to achieve the one million ha industrial forests’ target.
Meanwhile,in responding to Sarawak government’s increased timber harvest tax and implementation of higher minimum wages from Jan 1,2019,the Japan Lumber Reports (JLR) said the double increase has sent export log prices from Sarawak soaring.
“(At) Present, meranti regular log prices in Sarawak soared to nearly US$320 per cu m FOB (free on board),which is almost (an) unacceptable level for users in Japan,” JLR said in a recent bulletin,which is reproduced by the International Tropical Timber Organisation (ITTO) tropical timber market report.
The JLR is a trade journal on the Japanese lumber market and published every two weeks.
“Supply source of South Sea (tropical) logs for Japan has shifted to PNG (Papua New Guinea ) as PNG log prices are lower than Sarawak as a result of slowdown of Chinese log purchase by economic recession of Chinese economy.
The JLR said as plywood production cost would go up by US$15 per cu m,it expects Sarawak manufacturers to further push up the export prices of their panel products.
Before the anticipated further hike,the 3x6 JAS uncoated concrete forming panel from Sarawak is priced between US$580-590 per cu m while it is US$680-690 per cu m on concrete forming panel for coating.
The JLR expects Japan to import less plywood from Malaysia this year due to increasing prices. In 2018,Malaysia exported 1.06 million cu m of plywood to Japan,which was a decline of 10.8% from 2017. Malaysia is the single largest export of panel products to Japan,which has increased its plywood imports from Indonesia by 11.4% to 977,500 cu m in 2018 over 2017.