Business

Monday July 16, 2012

Need to rely on planted forests log supply

By JACK WONG
jackwong@thestar.com.my


Annual log production from natural forests and agro conversion areas declining

KUCHING: Plywood and other timber processing mills in Sarawak need to rely more on planted forests for their supply of raw materials following declining annual log production from natural forests and agro conversion areas.

The state authorities projected log production to fall to about 7.6 million cu m this year, down by over 20% from 9.61 million cu m last year.

Last year's production dipped to below 10 million cu m for the first time in more than 20 years. The 2010 and 2009 production figures were 10.37 million and 10.15 million cu m, respectively. At the peak in the early 1990s, Sarawak harvested some 19 million cu m a year.

Currently, Sarawak allows up to 40% of the logs harvested for export, while 60% are reserved for timber mills to be processed into value-added products such as plywood, sawntimber and veneer, mainly for export markets.

Sarawak Timber Association general manager Dr Peter Kho said that as annual log production was expected to continue to fall, timber processing mills would have to rely more on planted forests for their log supply.

“A lot of hope is placed on tree plantations which are maturing progressively. The private and public sectors have established about 280,000ha of tree plantations statewide,” he told StarBiz.

Most of the planted forests are in Bintulu and Kapit divisions. The total planted area, however, has fallen short of the target set by the Sarawak government, which is to have one million hectares of tree plantations by 2020.

According to Dr Kho, four companies have started harvesting tree plantations although the production volume was still small.

Ta Ann Holdings Bhd, a pioneer in reforestation, is increasing the harvest of plantation logs to produce hybrid plywood.

Major timber firms, Shin Yang and KTS, are the earlier investors in tree plantations. Daiken Sarawak, which produces medium-density fibre panel, also owns mature tree plantations.

Under Sarawak's sustainable forest management system, selective logging is practised to harvest only between five and seven mature commercially traded trees per hectare in a single harvesting operation.

Logging companies are assigned annual log production quota by the authorities.

To accelerate the development of planted forests, Dr Kho said the association had sought more tax incentives from the Federal Government for investors.

It has also asked the Government to grant income tax exemption incentives to companies undertaking planted forest projects, and income tax deduction incentives for qualifying companies in investment in the expansion of such projects.

The association has urged the authorities to extend the new tax incentives provided under the Income Tax (Deduction for investment in an approved forest plantation) Rules 2009, and the Income Tax (Exemption) (No 10) Order 2009. The two Orders, which were backdated to May 21, 2003, expired on Dec 31, 2011.

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