STIA: Reduce export of logs

The Sabah government's policies are killing off the timber industry in the state, says Sabah Timber Industries Association president James Hwong.

KOTA KINABALU: The Sabah government must immediately formulate and implement policies to assist the timber industry which is in the throes of death.

According to Sabah Timber Industries Association president James Hwong the first step is to reduce export of logs.

He said the problem of inadequate raw material supply is still the major obstacle faced by the timber industrialists in the state.

“One of the practical immediate solutions that STIA would like to suggest is to reduce the volume of logs being exported and, at the same time, encourage importation of raw materials to offset the shortage domestically.

“Importation procedures should be simplified and free from all charges including the current RM10 per cubic metre Forestry Department’s inspection fee,” he said in a statement.

Hwong pointed out that the downstream valued-added wood-based industry continues to be “static” due to the inconsistent policies and lack of support from the state government.

He said there is no assistance from the government in terms of assisting the industry to develop new products, new markets and promoting and marketing of timber products, provision of training centres for skilled workers and many others.

“The industry was left to fend for its own survival. Numerous requests for assistance received no response at all from the government.

“Problems of human resources availability, raw materials, rising cost, lack of infrastructure supports, etc has resulted in the industry originally promoted as an ‘infant industry’ remains an infant.

“It is not that the industry refuses to grow up, but policies of the state government in handling the wood-based industry is basically forcing the industry to stay ‘static’, producing primary based products and trying very hard to go further downstream but faced many obstacles.

“Our members who ventured into processing of value added products are crying for help,” lamented Hwong.

‘Royalty is not a subsidy’

Hwong also responded to a recent statement from state forestry director Sam Mannan on the issue of log export in order to clear the public’s perception of the local timber processing industry.

“First and foremost, we would like to clarify that the disparity of royalty is not a subsidy to the industry.
“In fact this disparity was introduced to induce development of the downstream timber industry locally and a common trade practice whereby certain sizes and species of logs in a parcel that are not of export quality are left behind for local processing.

“This is to offset high cost of exporting these logs which normally do not fetch extremely high prices due to its inferior quality,” he said.

STIA, he said, fully supports this policy and considered it as an incentive for going downstream and actively encourage each member to participate in this programme.

“Bearing in mind that this policy is also being implemented to attract local and foreign investment into Sabah as part of the Sabah Industry Master Plan.

“This move has widened the base of Sabah’s timber product to overseas market from single item of round logs to all wood products such as sawn timber, mouldings, plywood, veneer and other panel products, furniture and other finished products.

“The policy of further value added downstream processing development cannot achieve its desired target is mainly due to the inconsistent implementation of government’s policy and insufficient administrative and infrastructure support to the industry,” he said.

Half-hearted policies

According to Hwong, the government has over the years introduced so many policies that had attracted investors from all over the world.

He said it was recorded that for the year 2009, the total foreign investment in the wood based industry in Sabah amounted to RM1.014 billion.

He pointed out that these investments cannot be taken as a private decision, but as a genuine commitment by the private sector in response to the government’s industrialization programme.
“The government therefore does have a responsibility as an initiator of this policy and takes its rightful role and continue to support implementation effort of these policies.

“Lack of infrastructure support, logistics and transportation facilities such as ports and shipping are the major contributing factor to the high cost of production and the failure of these gigantically ambitious yet half-hearted government investment policies.

Despite all these setbacks, the investors who have committed themselves persevere to safeguard their investment with a hope of getting the much needed backup and support from the state government,” Hwong added.

He said up to the year 2009, total investment in the timber industry was about RM4.815 billion and had achieved an export value of RM4.33 billion at its peak in the year 2006.

These figures signified the important of the wood based industry, said Hwong, adding that STIA strongly feels that the government should continue to support the development of this industry.

By Michael Kaung