Concession for multiple-use in the DeramakotForest Reserve, Sabah, Malaysia

Prepared by:Sabah Forestry Department

What Future For Forest Concessions and Alternative AllocationModels For Managing Public Forests Workshop

Porto Velho, State of Rondonia, Brazil13th – 16th September 2016

Sabah“Land Below The Wind”Land area: 7,362,010 ha

consists of 13 states and the consists of 13 states and the Federal Territory of Kuala Federal Territory of Kuala Lumpur.Lumpur.

2 east Malaysian state 2 east Malaysian state located on Borneo Island.located on Borneo Island.

forestry is a state matter forestry is a state matter under the jurisdiction of each under the jurisdiction of each

The Federation of Malaysia

SABAH,MALAYSIA

South East Asia

“…The island of Borneo, on which Sabah is situated, has been listed as a key area for conservation. What is lost here is lost to the whole world. Conversely, however, what is achieved in Sabah enhances the health and wealth of global biological diversity…”(Secretariat of the Convention on Biological Diversity, United Nations Environment Programme: 15.11.2007)

under the jurisdiction of each under the jurisdiction of each of the (13) states.of the (13) states.

7,362,010 ha – land area 60% - 4,446,000 ha under

forest cover.

53% - 3,889,195.15 ha -permanent forest reserves and parks.

24% - 1,779,030.32 ha of Sabah’s total area are totally protected areas

1,750,521 ha – commercial / production forest

70’s – 80’s – Golden time of

Forestry In SabahForestry In Sabah

Forest Revenue Over Sabah State Revenue Forest Revenue Over Sabah State Revenue 70’s – 80’s – Golden time of timber exploitation (50%-90% of State’s Revenue)

90’s onward – famine period of timber industry (40%-4% of State’s Revenue)

Conventional timber harvesting -Short term licence, immediate economic return, non sustainable practice, neglecting HCVF or environmental condition of residual forest

SFM – the only solution for the continuance Sabah’s forest resources

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

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500,000,000.00

1,000,000,000.00

1,500,000,000.00

2,000,000,000.00

2,500,000,000.00

3,000,000,000.00

3,500,000,000.00

4,000,000,000.00

4,500,000,000.00

5,000,000,000.00

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96

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97

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98

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99

20

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20

01

20

02

20

03

20

04

20

05

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20

07

20

08

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20

10

20

11

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12

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13

20

14

Forest Revenue Over Sabah State Revenue Forest Revenue Over Sabah State Revenue ((19951995--2014)2014)

FOREST REVENUE (RM) STATE REVENUE (RM) PERCENTAGE (%)

• Sabah’s SFM Project – to address depleting forest resources issues and integrity of forest management.

• 1989 - Deramakot Forest Reserve (DFR) developed as a SFM model.

• SFD-GTZ : long term Malaysian - German Sustainable Forest Management Project.

• Technical and financial support

SFM in Sabah – How it Started?

• Technical and financial support

• 4 phasesi. Phase I (1989-1992) - strong research emphasis with a component of

management plan.

ii. Phase II (1992-1994) - management planning, training and consolidation.

iii. Phase III (1995-1998) - institution building, human resource and development, Implementation and extension.

iv. Phase IV (1999-2000) - consolidation, planning and human resource development.

BACKGROUNDBACKGROUND

Area: 55,507 ha, gazetted as PFR since 1960 (Commercial Forest).

Rainfall: 1,700 mm – 5,700 mm Lowland Dipterocarp Mixed Forest

type. Conventional selective timber

harvesting: 1956 to 1989. Timber production (1958-1975) -

3,161,348 m³ or 110 m³/ha3,161,348 m³ or 110 m³/ha 18% well stock with commercial

timber species. 52% lower growing stock. 30% covered by very poor forest with

virtually no mature growing stock left.

FSC Certified – well managed forest (1997-now).

The longest tropical forest certified in the region.

FOREST MANAGEMENT PLANFOREST MANAGEMENT PLAN

Medium term management plan – 10 years. Provide fundamental guidance to plan ahead and operationalize the

annual work plan. Objective: to sustain the production of high value timber and to

improve the growing stock by means of natural forest management while maintaining a high degree of species and structural diversity.

SFM+27 years: 3 FMPs. Multiple use approach of natural forest management.

ForestForest Timber Timber Timber StandTimber Stand

ForestForestManagementManagement

PlanPlan

ForestForestRestorationRestoration

Timber Timber HarvestingHarvesting

EcoEco--TourismTourismCommunityCommunity

ForestryForestry

ResourceResourceProtectionProtection

Research & Research & DevelopmentDevelopment

InfrastructureInfrastructureDev. & main.Dev. & main.

Timber StandTimber StandImprovementImprovement

FOREST MANAGEMENT PLANFOREST MANAGEMENT PLAN

Prescribed Activity1st FMP 2nd FMP 3rd FMP

(1995-2004) (2005-2014) (2015-2024)

Managed Area 55,083 ha 55,139 ha 55,507 ha

No of compartments 134 135 136

Annual Allowable Cut 20,000 m³ 17,600 m³ 17,600 m³

Forest Zoning

Production 51,478 ha 51,592 ha 49,942 ha

Conservation 3,605 ha 3,473 ha 5,547 haConservation 3,605 ha 3,473 ha 5,547 ha

Community Forestry 0 ha 18 ha 18 ha

Net harvesting area 6,465 ha 11,026 ha 10,581 ha

Timber stand improvement 4,387 ha 10,222 ha 11,037 ha

Forest Restoration 3,057 ha 2,000 ha 563 ha

TIMBER HARVESTINGTIMBER HARVESTING

Harvestable area: 49,942 ha or 90 % of DFR Reserve growing stock: 155 m³ to 220 m³ AAC: 15,000 m³ to 20,000 m³ (average: 17,500 m³) AAC based on DIPSIM (Dipterocarp Forest Growth Simulation Model).

Initially 20,000 m³, then revised to 15,000 m³ Cutting cycle: 30 years (economic viability, self sufficient and

profitable returns) Eco-friendly harvesting – 100% RIL (Reduced Impact Logging) Eco-friendly harvesting – 100% RIL (Reduced Impact Logging) Activity involved:-

Opening (Comprehensive Harvesting Plan - CHP) preparation Monitoring (harvesting) Closing (mitigation)

CHP prepared by SFD staff Harvesting done by qualified logging contractor Harvesting method: crawler tractor, skyline and log-fisher Contract rate:RM180.00/m³

RIL HARVESTINGRIL HARVESTING

Pre-harvest planning. Tree marking

Road alignment

CHP document

Harvesting.

Post-harvest planning. Mitigate soil

erosion by constructing cross drains and water

Harvesting. Monitoring

Directional felling

Daily felling record

Grading & measurement

Auction

drains and water bumps.

Removal of culverts that may impede flow of water.

Actual Production versus Annual Allowable Cut (AAC)Actual Production versus Annual Allowable Cut (AAC)

10-yr planning Period Year Compartment AAC (m3)Actual Volume

Harvested (M3)

FMP1

1995 59,54 20,000 188.61

1996 59,54,50,51 20,000 15,463.40

1997 59,54,50,51,61 20,000 13,794.16

1998 59,38 20,000 12,235.95

1999 38,53 20,000 914.8

2000 38,29,35,53 15,000 12,928.43

2001 35,31,30 15,000 10,741.83

2002 22,30,32 15,000 17,196.44

2003 18,34 15,000 14,554.78

2004 34,55 15,000 19,821.38

Total 10-yr allowable harvest 175,000 117,839.78Total 10-yr allowable harvest 175,000 117,839.78

FMP2

2005 85,33 17,600 11,425.08

2006 85,33,57,56 17,600 16,129.14

2007 56,57,58 17,600 13,662.78

2008 58,83,62 17,600 5,816.27

2009 62,58,83,49 17,600 11,636.23

2010 49,74 17,600 16,528.66

2011 49,42 17,600 9,185.61

2012 42,49,48,63A 17,600 12,546.75

2013 48,63 17,600 11,562.91

2014 76 & 77 17,600 18,084.03

Total 10-yr allowable harvest 176,000 126,577.46

FMP32015 76 &77 17,600 20,677.71

2016 72 17,600 8,112.86

Total 2-yr allowable harvest 35,200 28,790.57

Grand Total 386,200 273,207.81

HARVESTED VOLUME BY CRAWLER TRACTOR, SKYLINE/LOG FISHERHARVESTED VOLUME BY CRAWLER TRACTOR, SKYLINE/LOG FISHER

Year Crawler Tractor

(m3) Skyline (m3)

Combine system (m3)

Salvage Harvest Residue (m3)

Total Volume (m3)

1995 0 188.61 0 0 188.61

96 - 97 28,386.56 871 0 0 29,257.56

1998 12,204.56 31.39 0 0 12,235.95

1999 914.8 0 0 0 914.8

2000 8,144.85 569.15 4,214.43 0 12,928.43

2001 11,978.50 157.07 539.64 124.35 12,799.56

2002 16,882.43 0 0 0 16,882.43

2003 14,554.78 0 0 822.44 15,377.22

2004 19,821.38 0 0 1,808.85 21,630.23

2005 11,259.50 128.75 36.83 483.47 11,908.55

2006 16,129.14 0 0 1,869.15 17,998.29

2007 13,362.78 0 0 705.3 14,068.08

2008 8,678.06 0 0 1,375.60 10,053.66

2009 8,599.70 3,036.53 0 941.62 12,577.85

2010 16,528.66 0 0 1,307.66 17,836.32

2011 10,132.47 0 0 942.03 11,074.50

2012 12,546.75 0.00 0 822.32 13,369.07

2013 9,754.11 1,808.80 0 0 11,562.91

2014 18,084.03 0 0 0 18,084.03

2015 20,677.61 0 0 0 20,677.61

TOTAL 258,640.67 6,791.30 4,790.90 11,202.79 281,425.66

TIMBER HARVESTING COST AND PROFITTIMBER HARVESTING COST AND PROFIT

YEARPRODUCTION

(m3)

HARVESTING FEE CONTRACTOR

(RM)

SFD INDIRECT COST (RM)

TOTAL COST (RM)

TIMBER SALES (RM)

PROFIT / LOSSAVG PRICE (RM/M3)

1995 188.61 23,576.25 1,386,900.00 1,410,476.25 50,924.70 -1,359,551.55 270

1996 15,463.40 1,659,632.50 1,590,000.00 3,249,632.50 3,468,392.40 218,759.90 267

1997 13,794.16 1,558,740.00 1,560,000.00 3,118,740.00 3,385,354.58 266,614.58 245

1998 12,235.95 1,357,701.01 1,980,000.00 3,337,701.01 4,841,866.97 1,504,165.96 396

1999 914.8 101,506.21 1,508,991.00 1,610,497.21 918,459.20 -692,038.01 1,004

2000 12,928.43 1,434,538.60 2,518,148.50 2,857,595.79 5,820,059.73 2,962,463.94 468

2001 10,741.83 1,191,913.46 1,730,430.00 2,922,343.46 3,610,665.03 688,321.57 339

2002 17,196.44 1,908,116.98 1,534,500.00 3,442,616.98 7,910,208.28 4,467,591.30 468

2003 14,554.78 1,614,998.39 129,040.00 2,643,294.29 8,034,006.94 5,390,712.65 5522003 14,554.78 1,614,998.39 129,040.00 2,643,294.29 8,034,006.94 5,390,712.65 552

2004 19,821.38 2,199,380.33 173,160.00 3,274,647.33 10,987,950.04 7,713,302.71 554

2005 11,425.08 1,485,260.40 221,931.00 2,530,244.99 7,011,212.93 4,480,967.94 614

2006 16,129.14 2,096,788.20 250,137.00 3,227,061.49 11,531,808.47 8,304,746.98 705

2007 13,662.78 1,776,161.40 397,799.00 2,796,047.21 11,135,748.86 8,339,701.65 809

2008 5,816.27 872,440.50 252,436.00 1,822,883.97 5,469,865.00 3,646,981.03 940

2009 11,636.23 1,745,434.50 522,723.40 2,866,947.45 6,634,296.42 3,767,348.97 771

2010 16,528.66 2,479,299.00 598,329.89 3,488,880.61 9,892,842.74 6,403,962.13 599

2011 9,185.61 1,470,102.60 423,414.40 2,239,608.05 5,999,223.53 3,759,615.48 592

2012 12,546.75 2,258,415.00 608,890.72 3,365,141.34 6,877,173.10 3,512,031.76 548

2013 11,562.91 2,081,323.80 553,185.95 3,335,630.77 5,470,703.53 2,135,072.76 473

2014 18,084.03 3,570,460.50 886,786.34 4,457,246.84 9,214,173.01 4,756,926.17 510

2015 20,677.61 3,729,213.00 708,691.39 4,437,904.39 15,487,507.15 11,049,602.76 744

TOTAL 273,207.71 37,176,284.03 19,535,494.59 62,435,141.93 143,752,442.61 81,317,300.68 539

with sound forest management and with sound forest management and certification, the ecocertification, the eco--dividends may dividends may have finally arrived.have finally arrived.

good prices (average 30% higher good prices (average 30% higher than unthan un--certified timber).certified timber).

MerbauMerbau logs from logs from DeramakotDeramakot sold sold at RM 1,390 / mat RM 1,390 / m33 (USD 460 / m(USD 460 / m33), ), a record price.a record price.

Vietnam Vietnam –– irony.irony.

Green Premium for Certified Timber?

SALES OF LOGS BY AUCTION (1995 to 2015)SALES OF LOGS BY AUCTION (1995 to 2015)before before && after after certificationcertification

TIMBER STAND IMPROVEMENT OR SILVICULTURE

Objective: to improve the growth & survival of commercial species, ensure adequate stocking of PCT.

Selective removal of competing vegetation competing vegetation (e.g. woody vines and climbing bamboo).

30% of DFR required TSI Implementation:

contracted out to local entrepreneur and provide employment for community.

Contract rate: RM350/ha.

The cost and achievementThe cost and achievement NOTENOTE Bad Logging Practices Bad Logging Practices = =

Have to plant = 10 Have to plant = 10 times times more expensive more expensive than than silviculturesilviculture (TSI).(TSI).

The future picks up the The future picks up the bill.bill.

Planting with fast growing Planting with fast growing species.species.

REHABILITATION PLANTING AND MAINTENANCEREHABILITATION PLANTING AND MAINTENANCE

species.species. Average contract rate: Average contract rate:

RM4,000/ha.RM4,000/ha. Site specific approach.Site specific approach.

FOREST PROTECTIONActivities:-

Boundary demarcation.

Aerial surveillance.

River patrols.

Guard posts.

SMART patrol

Threats:-

ILLEGAL FELLING, 1995 – 2015

Year Volume (m3)

1995 – 1999 4,353

2000 3,027

2001 214

2002 14.7

2003 - 2015 0

TOTAL 7,594Threats:-

Poaching.

Cultural harvesting.

Illegal cultivation

Forest fires.

TOTAL 7,594

FIRE

Year Area Burnt (ha)

1997 250

Wildlife MonitoringWildlife Monitoring

Rich in biodiversity.Rich in biodiversity. 85% of mammals in 85% of mammals in

Sabah, recorded in DFR.Sabah, recorded in DFR. RIL is compatible with RIL is compatible with

wildlife conservation.wildlife conservation. Activities: Activities:

i.i. opportunistic sightingopportunistic sightingi.i. opportunistic sightingopportunistic sightingii.ii. camera trapscamera trapsiii.iii. saltlicks monitoringsaltlicks monitoringiv.iv. orang orang utanutan nest countingnest counting

Engagement with Local CommunitiesEngagement with Local Communities

consultation

employment

contracts

No indigenous people lived within the area.

5 villages on the fringe of forest About 82 households. Engagement:-

water supply

training

Socio economic benefits to the local communitySocio economic benefits to the local community

Year Type of contractNo. of people

involved

Sum of Contract (RM)

Average income earned (RM)

2008-2010 Forest Restoration 15 220,000.00 14,667.00

2011-2013 Forest Restoration 25 63,000.00 2,520.00

2014-2016 Forest Restoration 40 199,392.00 4,984.00

2008-2016Forest Reserve Boundary Clearance

20 267,187.00 13,359.00

TOTAL 749,579.00

FOREST CERTIFICATIONFOREST CERTIFICATION

Certification for builds credibility, continuous improvement and higher standard of responsible forestry.

Standard: FSC Certifying body: SGS (since 1997). FSC Certification obtained for BMP for the

period 1997 – 2002. RM105,000 (USD34,000).

Re-certified: 2003 – 2008.RM207,704 (USD68,000). RM207,704 (USD68,000).

Re-certified: 2008 – 2013. RM210,000 (USD69,000).

Re-certified: 2014 – 2019 RM120,370 (USD29,648) as of year 2016.

Attain good forest management. Quality management under real world

conditions. Certification – logical conclusion.

Annual Expenditure & RevenueAnnual Expenditure & RevenueAnnual Expenditure & RevenueAnnual Expenditure & Revenue

Year Expenditure (RM)Income From Log

Auction (RM)

Income From Logging Residue

(RM)

Income From Eco-tourism

(RM)

Total Income (RM)

Profit(+/-)

1993 2,150,385.57 - - - - (2,150,385.57)

1994 3,988,835.77 - - - - (3,988,835.77)

1995 4,623,000.00 50,924.70 - - 50,924.70 (4,572,075.30)

1996 5,300,000.00 3,468,392.40 - - 3,468,392.40 (1,831,607.60)

1997 5,200,000.00 3,385,354.58 - - 3,385,354.58 (1,814,645.42)

1998 6,600,000.00 4,841,866.97 - - 4,841,866.97 (1,758,133.03)

1999 5,029,970.00 918,459.20 - - 918,459.20 (4,111,510.80)

2000 8,393,828.32 5,820,059.73 - - 5,820,059.73 (2,573,768.59)

2001 5,768,100.00 3,610,665.03 4,115.72 - 3,614,780.75 (2,153,319.25)

2002 5,115,000.00 7,730,603.04 - 1,440.00 7,732,043.04 2,617,043.04

2003 5,916,040.00 8,034,006.94 50,986.62 7,350.00 8,092,343.56 2,176,303.56

2004 4,937,733.54 10,987,950.04 121,696.98 14,295.00 11,123,942.02 6,186,208.48

-

5,000,000.00

10,000,000.00

15,000,000.00

20,000,000.00

Expenditure vs RevenueExpenditure vs Revenue

Expenditure (RM) Total Income (RM)

* Revenue exceeded expenditure for the 1st time in 2002 and this is forecasted to continue for the years ahead.

2004 4,937,733.54 10,987,950.04 121,696.98 14,295.00 11,123,942.02 6,186,208.48

2005 4,506,733.75 7,011,212.93 34,653.19 5,640.00 7,051,506.12 2,544,772.37

2006 6,526,150.00 11,531,808.47 153,434.31 13,630.00 11,698,872.78 5,172,722.78

2007 6,673,315.68 11,135,748.86 65,446.17 10,400.00 11,211,595.03 4,538,279.35

2008 5,303,510.00 5,469,865.00 128,107.20 20,519.00 5,618,491.20 314,981.20

2009 4,495,368.50 6,941,162.72 74,964.98 5,129.70 7,021,257.40 2,525,888.90

2010 5,199,593.33 8,566,652.76 98,765.46 3,731.00 8,669,149.22 3,469,555.89

2011 3,999,908.91 5,999,223.53 81,367.26 9,024.00 6,089,614.79 2,089,705.88

2012 5,700,000.00 6,837,648.85 65,483.25 16,594.00 6,919,726.10 1,219,726.10

2013 4,500,000.00 5,470,703.53 - 39,219.00 5,509,922.53 1,009,922.53

2014 5,500,000.00 9,227,274.58 13,101.57 38,331.00 9,278,707.15 3,778,707.15

2015 7,222,006.89 15,487,507.15 - 75,484.00 15,562,991.15 8,340,984.26

2016(*) 4,140,328.13 5,020,948.27 - 40,880.00 5,061,828.27 921,500.14

TOTAL 126,789,808.39 147,548,039.28 892,122.71 301,666.70 148,741,828.69 21,952,020.30

Major Challenges

Long process of learning and capacity building. Required massive training programme – all aspect of forest

management for ‘knowledge workers’. High turnover workers. Lack of managerial skills in running an enterprise. The acceptance of lower profit margin – to convince the

funders for financing the project.Lower revenue with longer investment period. Lower revenue with longer investment period.

Consistency in maintaining the quality under international forest certification standards.

Over the time, forest certification is more ‘academic approach’ rather operational compliance.

Less demand for ‘green timber’ by local buyers and manufacturers to pay premium prices.

Key success factors in Deramakot over the last 27 years(1989 – 2016)

Willingness to change. Political support and endorsement. Technical support. Continuous capacity building. Financial support – government

project. Continuous stakeholders

consultation.consultation. Multiple use forest approach. Forest certification – lead to

responsible forestry. Incentives – price premium (30%).

Lessons Learned

Short term management practice does not guarantee for responsible forest management.

Changing mindsets is required at all level of management and decision making.

‘Smart partnership’ with credible entities will increase the value of sustainability.

Forest certification can improve good governance, enhance performance and bring credibility.performance and bring credibility.

Good marketing team to aggressively promoting green timber.

Diversify revenue by exploring non timber forest produces, ecosystem services and innovative ideas, i.e. carbon sequestration and biodiversity offset mechanism.

Continuous capacity building programme to maintain the productivity and management effectiveness.

Do not working in isolation, engage with the world.

THANK YOUMUITO OBRIGADO