The Step By Step Approach In Attaining The Declared Goals – Certification, The Final Frontier 9

The Step By Step Approach In Attaining The Declared Goals –

Certification, The Final Frontier- By Datuk Sam Mannan, Director of Forestry

In my contribution to last year’s (2009) annual report, entitled “What are we doing?”, one of the goals desired as mentioned,

is the mandatory decree that all long term Licensees in Sabah, must attain “Full Certification” by 2014, under any credible system which is recognized internationally. A 5-year notice had earlier been issued. The Forestry Department however, does not specify the system that should be pursued, so long as it has international credibility and is accepted as such. Nevertheless, for any management area under its direct supervision, the Forestry Department, as a matter of policy, has opted for the “FSC” (Forest Stewardship Council) brand, as it is accepted as the “gold standard”, that opens markets without questions asked. At the same time, given that the process of certification is expensive and may be comparable with all the different systems available, it is only proper that the department opts for a brand that consumers most desire. It is only logical.

Why Go For Certification ? One needs to be careful with its meaning as a “certified person”, can also be a person who is officially declared insane. What we are after on the contrary, is an official recognition of having met certain standards – be it the FSC standard or some other. The reasons for having our forests certified on its management include the following, amongst others:

• It is a declaration of credibility, a believable management system of the standard chosen. With credibility, comes reputation, a virtue that is not easily obtained but once lost, near impossible to regain.• It brings continuous improvement

to management. It improves governance. At each audit surveillance, usually twice a year, short comings if any, are independently identified and requests made for improvements and “closing” before the next audit – the “CARS” (Corrective Action Requests), either major or minor. The “CARS” once issued, are serious matters that must be closed within the specific time frame, lest one risks of having the certification suspended or eventually cancelled.

• It may bring about a “ green dividend ” in terms of prices for goods or services sold, be they be: certified timber, carbon credits, institutional funding (including loans), philanthropy financing etc. Certification may not necessarily translate into huge price gains. But none the less, in our experience with Deramakot Forest Reserve, there definitely have been some “price premiums” but more importantly, we do not lack buyers for our timber.

Third Party Auditing

A Good Regenerating Forest At Danum - Ulu Segama Forest Reserve.

Annual Report 201010

Sabah Forestry Department

low direct income to the Sabah Government for a good 20 years (the famine period), whilst the resources are being rebuilt again. To thwart allegations that we are depriving the State from earning potential higher income through alternative land uses (e.g. conversion to agriculture), one strategy is to prove credibility of the highest standard in managing the forests in the long term interest of the state. This is where certification comes in because, once certified under “SFM” (Sustainable Forest Management), the social, economic and environmental needs of society are all addressed in one swop. The credibility also provides “protection” from those who may have an inkling to turn back the clock and re-introduce the “Tragedy of The Commons” in managing the forest resources. As certification can translate into an institutionalized arrangement, it follows on that, a certified forest means large stakeholder participation and the certified organization actually reflects the wider interest of society and not merely its own self-interest. Some say, there is strength in numbers. Is politics not a “numbers” game?

Where Do We Now Stand? In July 1997, Deramakot Forest Reserve (55,000 ha. approx.) received the gold standard of the FSC certification, a first for any tropical rainforest in the whole world. It remains today as the oldest and longest FSC certified tropical rainforest in the world. It has always been the determination of the department that this model be expanded to cover all forest areas in Sabah in a step by step and systematic approach.

• Your market horizon will be much broader. This is the case again for Sabah, with international, national and local buyers. China, a huge market for timber products, has now come into the foray and bided for Deramakot timber in our auctions. This brings a huge market potential for certified timber.

• It builds up credibility with policy makers. This is a vital point. The land area set aside for forestry and conservation purposes in Sabah is huge – over 53% of the total land area or over 3.9 million hectares. The conservation measures that are in place and the sheer force of depletion, means a relatively

Log Production & Log Auction Price Green Premium At Deramakot.

Forest Stewardship Certification.

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The Step By Step Approach In Attaining The Declared Goals – Certification, The Final Frontier

Sabah Forestry Department

11

Any New Development On Certification And Progress ?Two important biologically rich forested areas, FMU 17(A) covering some 50,070 hectares in the Tangkulap/Sungai Pinangah Forest Reserves, directly managed by the Forestry Department, and Ulu Segama-Malua Forest Reserves of some 241,098 hectares, jointly managed by the department and the Sabah Foundation, have been fully assessed by an independent auditor, SCS (Scientific Certification Systems), recently for FSC certification and we are positively optimistic that both areas will meet the gold standard of management. If this comes about as planned, this will boost the area of totally certified forest by 200% (431,498 hectares ) and fully and partially certified forest by over 53% (840,018 hectares). These are important developments that we hope for in 2011. Better still, if the certification can come in to coincide with the FSC General Assembly, to be held in Kota Kinabalu at the end of June 2011.

What Can Impede Full Certification For Sabah ?Let us assume that each licensee will put in their full commitment at its highest level of management to ensure that the certification programme goes as planned. Let us further assume that the financial resources are available and made available, to attain certification. Let us make one more assumption that if the capacity, technical expertise and knowledge are lacking amongst some of the licensees, assistance will be provided either by NGOs, or the department itself, to push along the process. All these things being available, what then is the obstacle to full certification ? My thesis follows: as a matter of principle, any area directly managed by the Forestry Department will remain under NFM (Natural Forest Management) and there shall be no conversion.

It follows through that it may even entail no harvesting whatsoever if that is what the FMP (Forest Management Plan) requires. This means the biggest current source of income (timber) will not be available. The foolhardy bad

Fully And Partially Certified Forest Areas In Sabah – As Of 31 Dec 2010

LocalitySize (Ha.)

Certification System Validity

Deramakot Forest Reserve

55,083 Full Certification Under The FSC (Natural Forest)

Apr 2008 – Apr 2013(re-certified twice since 1997)

Sungai Pinangah Forest Reserve (FMUs 15 & 16) (Sabah Foundation Licensee)

188,520 VLC (verified legal compliance) of the FSC system under Smartwood (Natural Forest)

May 2010 – May 2013

Sipitang / Ulu Padas Forest Reserves (Sabah Forest Industries Sdn Bhd Licensee)

220,000 Controlled Wood Forest Management Certificate (Natural Forest) (FSC)

Nov 2010 – Nov 2015

Sabah Softwoods Sdn Bhd (Privateland )

28,000 Full Certification Under The FSC(Tree Plantation)

Sept 2007 – Sept 2012

KTS Plantation Sdn.Bhd. (Segaliud Lokan Forest Reserve)

57,247 Full Certification Under The MTCS (Malaysian Timber Certification Scheme) (Natural Forest )

Dec 2009 – Dec 2012

In summary, Sabah has 140,370 hectares of fully certified forests and 436,520 hectares of partially certified forests, some 550,000 hectares (approx.) in total. The lion share is for the natural forest that represents the richest biological system in the world. As the target for certification is the Class II (Commercial) Forest Reserve of some 2.55 million hectares, most under long time licensees, it is glaring that we still have a long way to go. The fully certified forests is less than 5% of the target – a long climb yet. But if partially certified forests are included, the figure jumps to over 20%. That is the positive side since with improvements, the partially certified areas can migrate to be fully certified.

FSC & Non-FSC.

Annual Report 201012

Sabah Forestry Department

logging practices of the past, degradation by fires etc, mean the thrust of management is on forest restoration, the core business of the Forestry Department, at least, for the next 20 years. This is what the FMPs dictate for Ulu Segama-Malua and Tangkulap-Pinangah (FMU 17A) for instance. At present, there are no alternative big ticket incomes that can match timber from rainforests – carbon money is an illusion at present, REDD-plus is neither here nor there, direct income from tourism is minimal, environmental services do not pay at present and the unfulfilled promised list goes on.

However, as a government agency, the Forestry Department has a morale obligation to set things right again, regardless of no returns in the short term. After all, we had reaped benefits earlier on. The future generations will nevertheless, enjoy the returns from our efforts today and hopefully, not repeat the mistakes we made. So we proceed regardless of no substantial income, with funding primarily from the Government of Sabah, the Federal Government of Malaysia, NGOs, philanthropists and other friends.

But the private sector licensees cannot manage their respective Forest Management Units (FMUs) in a similar fashion.

Private enterprise means there must be a return on investments within a reasonable time frame – for argument’s sake, a respectable income flow within 10 years from start up, even if capital can only be replenished within 20 years.

The fact is, Deramakot is an exceptionally good logged-over rainforest in terms of stocking of residual trees and the FMP allows a sustainable yield of about 20,000m3 per annum, enough to give a surplus of about RM5 million each year, and all the investments have been re-couped in a 20-year period, with virtually all income from timber harvesting alone, on a sustainable basis.

On the contrary, almost all the FMPs of the private long term licensees do not allow any natural forest harvesting due to poor stocking and the degraded nature of their forests – albeit biologically rich by and large, but devoid of big trees of commercial size and still in the early stage of succession from secondary or logged-over forests.

To overcome this glaring problem of no income from harvesting if the Deramakot model was to be followed strictly, the Forestry Department has allowed some flexibility in that a certain percentage of the private sector FMU area be set aside for growing short rotation forest trees, for timber or other produce (e.g. latex timber clone rubber) as a byproduct. Preferably, high value species are chosen. We call this the ITPs (Industrial Tree Plantation ) zoned as such in the FMPs. The trees planted include indigenous and exotic species found adaptable to growing conditions in Sabah. At the same time, non – ITP zones in each FMU, the major share, will be managed at the same time for other purposes: e.g. conservation zones for protection, wildlife corridors, nature based tourism, NFM through silviculture and long rotation felling cycles ( 40 years later or so ), enrichment planting with indigenous species etc.

Forest Restoration, Our Core Business For The Next 20 Years.

Tree Plantations, Forest Restoration and Silviculture Tending In Sabah (2002-2010).

These ITP zones cover about 400,000 hectares of the gross area over the total 2.550 million hectares of production forests in Sabah, i.e. about 15% and this will be less in terms of net area (actual usage) once sensitive zones within the ITPs are excised – e.g. riparian reserves, steep areas above 25°slopes, wildlife corridors, gullies etc. In the end, the available net area will probably be no more than 300,000 hectares (12% of the production forest). Taken over the 53% set aside for forestry and conservation usage, this translates into no more than 10% as a maximum.

Unfortunately, forest certification regardless of the system, is basically hostile of natural forest conversion or ITPs – even disproportionately so, regardless of the financial and economic implications.

This may then derail the Sabah initiative to have all the FMUs certified come 2014. We believe it is unrealistic to expect the

1,759 2,294

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The Step By Step Approach In Attaining The Declared Goals – Certification, The Final Frontier

Sabah Forestry Department

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Deramakot Forest Reserve - A Good Logged Over Forest.

private sector to manage its FMUs in the same manner as a government department. What investor can wait for 40 years for a return and just invest in the meantime with no income at all whatsoever?

We believe, in the case of Sabah, certification bodies must assess the whole “big picture”. If there was an alternative, we would have taken the option. Unfortunately, there is none and we must ensure that the FMU system works. The alternative ( lost to agriculture usage and outright excision ) will be dire and the biggest loss to our conservation efforts. ITPs are still forests and they serve the same basic functions as NFMs, albeit, not in the same bio-diversity league. But 10% overall, is a relatively small coverage. If it saves the 90% of biologically rich rainforests, why not ?

Our basic tenet, vis-à-vis, the private sector’s involvement in forest management is this: green solutions in the end must be financially and economically viable. The bottom line is vital – money does talk!!

ConclusionsMuch progress has been achieved in reversing the previous trends of forest degradation and poor governance of the past. The acid test will be certification – an independent stamp of approval or otherwise. We are optimistic that come 2014, most if not all of the production forests will be certified as well managed in Sabah. The momentum has started and it must not stop. Just do it!!

Land preparation and retention of sensitive riparian reserves, within ITPS (above) and after planting 3 years later (below), Compartment 55, Sg. Pinangah Forest Reserve.

Rhododendron longiflorum var. subcordatum (Ericaceae) is a common variety found at the heath forest in Nabawan with generally straight yellow corolla tubes and orange corolla lobes.

Ubaldus M

ajawal