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Joint Technical Evaluation of Malaysian Timber Legal i ty Assurance

System, (TLAS)

Independent Report by

Kuala Lumpur February 3, 2009

Jussi Lounasvuori Hugh Blackett Andreas Knoell

Baharuddin Haji Ghazali Sheikh Ibrahim Sheikh Ali Elbson Marajan Anak Pengeran

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 i

TABLE OF CONTENTS

EXECUTIVE SUMMARY IV

1. INTRODUCTION 1

1.1 Status of TLAS 1

1.2 Generic expectations of EU 1

2. OBJECTIVES 2

3. METHODOLOGY 2

4. EVALUATION RESULTS 3

4.1 Overall coverage of the Malaysian TLAS 3

4.2 Sabah 5

4.2.1 Context 5

4.2.2 Institutional aspects 5

4.2.3 Assurance of legality in the forest 6

4.2.4 Control of timber movement 9

4.2.5 Control of timber imports 14

4.3 Sarawak 15

4.3.1 Context 15





4.4 Peninsular Malaysia TLAS 25

4.4.1 Context 25





4.5 Verification and issuance of export licenses 33

4.6 Re-export of timber 36

4.6.1 Timber in transit and trans-shipment of timber from non-Malaysian origin 36

4.6.2 Trans-shipment of Timber from Sabah & Sarawak through Peninsular Malaysia 37

4.7 Capacity building needs 37

4.7.1 Human resources 37

4.7.2 Additional measures 40

4.8 Workability and verifiability of control procedures 40

4.9 Independent monitoring 41

5. CONCLUSIONS 44

5.1 Coverage 44

5.2 Specific observations 44

5.2.1 Social and environmental issues 44

5.2.2 Verification of log origin 44

5.2.3 Control of log transport 45

5.2.4 Timber processing and export licences 45

5.3 Capacity building 46

5.4 Workability and verifiability of control procedures 46

5.5 Independent monitoring 47

5.6 Overall conclusions 47

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 ii

ANNEX 1 MALAYSIA TIMBER LEGALITY ASSURANCE SYSTEM (TLAS) 48

ANNEX 2 TERMS OF REFERENCE 89

ANNEX 3 PROGRAMME OF WORK & PEOPLE MET 94

ANNEX 4 STAKEHOLDER FEEDBACK 97

List of Boxes

Box 1 Key findings on control of legality in the forest (Sabah) 8

Box 2 Key findings on control of timber movement (Sabah) 14

Box 3 Key findings on control of timber imports (Sabah) 15

Box 4 Key findings on control of legality in the forest (Sarawak) 19

Box 5 Key findings on control of timber movement (Sarawak) 23

Box 6 Key findings on control of timber imports (Sarawak) 24

Box 7 Conclusions concerning legality in forest (Peninsular Malaysia) 30

Box 8 Key findings on control of timber movement (Peninsular Malaysia) 32

Box 9 Key findings on control of timber imports (Peninsular Malaysia) 33

Box 10 Key findings on the adequacy of verification and licensing functions for Sabah 34

Box 11 Key findings on the adequacy of verification and licensing functions for Sarawak 35

Box 12 Key findings on the adequacy of verification and licensing functions for Peninsular Malaysia 36

Box 13 Key findings on control of re-exports 37

Box 14 Key findings on workability and verifiability of TLAS control procedures 41

Box 15 Findings on the adequacy of arrangements related to the independent monitoring 42

List of Figures

Figure 1 Key elements of National LAS 2

Figure 2 Quantitative control of supply chain 4

Figure 3 Stages in timber licensing process 40

List of Tables

Table 1 Enforcement resources of MCEE 6

Table 2 Control of log movement from forest to stumping (Sabah) 10

Table 3 Control of sales (Sabah) 11

Table 4 Control of movement by truck (Sabah) 12

Table 5 Variations for movement by barge (Sabah) 12

Table 6 Control of exports (Sabah) 13

Table 7 Procedures from stump to Forest Checking Station (Sarawak) 20

Table 8 Procedures for movement to mill or export point (Sarawak) 21

Table 9 Procedures on arrival at mill or export point (Sarawak) 22

Table 10 Procedures on arrival at mill or export point (Sarawak) 22

Table 11 Enforcement resources and activities (Peninsular Malaysia) 27

Table 12 Export procedures (Peninsular Malaysia) 31

Table 13 Ratio of staff to timber production by region 38

Table 14 Ratio of staff to timber licences by region 38

Table 15 Ratio of staff to import/export licences by region 39

Table 16 Estimated costs of an IM mission 43

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 iii

Abbreviations

AAC Annual Allowable Cut C1 to 3 Customs Declaration Forms 1 to 3 CCM Companies Commission of Malaysia CHP Comprehensive Harvest Plan CS Check Scaling Form A DFO District Forest Office DOSH Department of Occupational Safety & Health ECC Endorsement Clearance Certificate EIA Environmental Impact Assessment EID Enforcement & Investigation Division EPDS Environment Protection Department, Sabah ExCC Export Clearance Certificate FDPM Forestry Department of Peninsular Malaysia FDS Forest Department Sarawak FLEGT Forest Law Enforcement, Governance & Trade HENDIS Harwood Endorsement Information System IO Investigation Officer ITP Industrial Tree Plantation LAS Legality Assurance System LPI Log Production Identity LSS Large Squares & Scantlings MCEE Monitoring, Controlling, Enforcement & Evaluation MTIB Malaysian Timber Industry Board OHS Occupational Health & Safety PEC Permit to Enter Coupe PF Permanent Forest PFE Permanent Forest Estate RQ Reservation Quota RMC Royal Malaysian Customs RP Removal Pass RP(R) Removal Pass (Royalty) RP(T) Removal Pass (Transit) SAPU Security & Asset Protection Unit SFC Sarawak Forestry Corporation SFCU Sustainable Forestry & Compliance Unit SFD Sabah Forestry Department SFM Sustainable Forest Management SFMLA Sustainable Forest Management License Agreement SO Scaling Order STIDC Sarawak Timber Industry Development Corporation TDP Timber Disposal Permit TLAS Timber Legality Assurance System TPM Third Party Monitor VPA Voluntary Partnership Agreement

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 iv

Executive summary

The independent technical evaluation of the Timber Legality Assurance System (TLAS) aimed to assess whether the control procedures of the TLAS (i) are easily verifiable and auditable and (ii) provide assurances that all timber products licensed for export under the VPA have been produced in accordance with the system requirements and that all other timber products are ex-cluded. In addition, the evaluation was expected to (iii) identify the capacity building needs, in-cluding financial implications, to implement the control procedures of the TLAS; and (iv) to as-sess the effectiveness of the proposed independent monitoring procedures and determine the likely cost of their implementation. Field work including preliminary reporting was conducted from 2 September to 9 October 2008 by a team of three Malaysian and three international consultants. Visits were made to TLAS agencies, forest operations, timber industries and export points in all three regions of Malaysia, namely Peninsular Malaysia, Sabah and Sarawak. Coverage The Malaysian TLAS describes control procedures that have a standard structure consisting of (a) criteria, (b) indicators, (c) responsibilities, (d) procedures, (e) outputs, (f) ISO references and (c) verification. The procedures aim to ensure that all timber sector companies operate under li-cence and are in compliance with relevant legislation and that no export trade in timber is al-lowed without appropriate registration and issuance of export licenses by the MTIB or STIDC. Products covered are round logs, sawn timber, veneer and plywood. Rubberwood, palms and possibly other non-forest species are not covered as they are not subject to control by forest au-thorities. Secondary products such as mouldings, flooring and furniture are also outside the scope of the TLAS. The TLAS does not include control of illegal exploitation of forest resources, processing or trad-ing in timber products, including import and export activities, but the agencies responsible for implementation have enforcement units to combat illicit activities. Nor at present does the TLAS make any provision for disposal of illicit timber seized during enforcement operations. Social and environmental issues The quality of control procedures and implementation is generally of a relatively good standard, but observations were made that there are a number of specific areas where the TLAS could be strengthened. With regard to social and environmental issues the TLAS gives uncertain guid-ance, or guidance is absent. These are:

• Reference to native customary rights only addresses the right to collect forest produce and gives no clear guidance on issues of land occupation rights, where further guid-ance would be useful, particularly as forest licensing procedures do take into account the presence of existing settlements.

• Worker safety and health is referenced, but there is no clear indication of how compli-ance is determined, and there is no requirement that links compliance with export li-censing.

• Environmental legislation is included and requires companies to prepare EIAs, or take actions that mitigate against environmental degradation, but it is unclear in what cir-cumstances required practices are followed and clear guidance would useful.

Despite relevant legislation covering the above three areas being included in the TLAS, the re-quirement for legal compliance is not taken into account in issuing export licences and further consideration needs to be given of how export procedures can ensure compliance with all legis-lation cited.

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 v

Control of harvesting and log transport There is considerable variation in controls by region and by forest type. The highest levels of quantitative control between pre-felling inventory, licensed harvest volume and actual produc-tion are implemented in PFE in Peninsular Malaysia and in areas in Sabah managed under CHP, where logs can be traced back to stump. In Sarawak, and for non-PFE areas in Peninsu-lar Malaysia controls are based on mass-balance methods. There is limited systematic control in Sabah for areas not managed under CHP. The point at which logs leave the forest is a critical point in the supply chain and effective means of control from this point onwards would enhance overall supply chain security. At pre-sent there are inconsistencies in the level of control exercised with the best control being im-plemented in areas, i.e. Sabah and PFE in Peninsular Malaysia. Elsewhere controls are limited. Where monitoring in the forest is not efficiently conducted it will be difficult to substantiate claims that all logs are legally harvested. Timber processing and export licences In all regions logs are inspected on arrival at processing mills and records are maintained of in-put volumes, although in the case of Sarawak the TLAS does not identify the control books in use. It is also a requirement that mill operators submit mill input/output returns, but this is only mentioned in the TLAS for Peninsular Malaysia. Clarity is lacking on the purpose or possible utilization of this data, which could be used to strengthen considerably the effectiveness of the TLAS. It would be logical to analyze mill input/output returns to calculate mass-balances, which could provide objective verification that log volumes being processed are consistent with the officially permitted harvest volumes. The required data already exists and it would seem to be straight-forward to develop a data management system that reconciles figures that potentially alert the authorities to any inflows and utilization of unrecorded log production. Data on mill input/output could be incorporated in the process of issuing export licences. It is not a requirement of either MTIB or STIDC that the issuance of export licences makes any refer-ence to these returns and export licences are currently issued without any procedure to verify that a mill is processing only legally supplied logs. This aspect of the TLAS could be easily strengthened by extending the use of data that is currently collected and expanding the proce-dure for issuing export licences to include the use of mill input/output data to verify that only offi-cially log supplies are used in production. Capacity building Effective implementation of the TLAS will require adequate human resources and equipment. Available human resources vary greatly by region with the indications being that Sarawak is the least resourced. However, a detailed analysis of manpower requirements would be necessary to quantify precise needs but the duration and principle focus of this technical evaluation did not permit the level of analysis required to make concrete recommendations. It is important that staff are adequately trained to ensure that implementation provides an ac-ceptable level of confidence in the TLAS controls. Although isolated incidences were observed where staff were not properly performing their duties specific training needs cannot be deter-mined without a great deal more observation and it should be the role of internal audit units to identify weaknesses and determine appropriate corrective actions, including training, that might be required to resolve problems. It is also essential that systems and procedures provide comprehensive control of the supply chain and preliminary recommendations on capacity building are:

• data collection and management procedures should be reviewed with recommenda-tions to be made on requirements and options for developing systems that allow recon-

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 vi

ciliation of production volumes throughout the supply chain to provide objective means to verify that only officially harvested log volumes are being processed.

• the current status of timber tracking and data management systems should be reviewed to determine to what extent they are able to support the various control procedures and what actions might be required to address any weaknesses.

• internal audit procedures should be reviewed to determine to what extent they are ef-fective in identifying procedural problems, staff training needs and additional human re-source requirements.

If the above reviews are conducted it should possible to deliver more precise recommendations on required capacity building measures. Workability and verifiability of control procedures The control procedures described in the TLAS demonstrate useful progress, but it would be still important to conduct a further review and systematically assess their adequacy for operational control and verification tasks by relevant government agencies and an independent monitor. The objective of a revision would be to produce concise but accurately described procedures that enable verification of the legal compliance rather than incorporate the whole control system of ISO standards and other reference material into the TLAS. Several control procedures, especially those related to the right to harvest and forest opera-tions, provide inadequate clarity in terms of their objectives, implementation, responsibility, tim-ing and frequency of checks and other tasks. General observations of areas were the TLAS could be strengthened are:

• Procedures included could be expanded as actual controls exercised sometimes ex-ceed the controls described

• Procedures do not always follow a logical sequence that conforms with actual working practices

• Descriptions of procedures are sometimes lacking in clarity and it is not always obvious, which agency has responsibility, how a procedure is implemented and what are the linkages with other procedures

• The use of much of the data currently collected is not clearly described and often there is no indication of whether or how data is used effectively for monitoring and control.

The current TLAS does not include practical means for managing quantitative data throughout the supply chain that makes it possible to reconcile data between the different stages of the supply chain. Therefore, verification of the supply chain will be challenging. Independent monitoring The future of the independent monitoring function is not clear after the key procedures of the TLAS are ISO certified. It was concluded that the ISO certified agencies are considered to be capable of ensuring legal compliance as defined by the TLAS and therefore the role of the TPM can be decreased. Further information would be needed to assess the efficiency of the long term IM arrangements. Conclusions In visiting the various TLAS agencies or the private sector companies, the evaluation team dis-covered no systematic TLAS related non-compliances that were not agreed upon with the au-thorities and that controls and procedures largely exist and are being implemented. However, some working practices are not included in the TLAS and linkages between procedures are not always established or clear. A great deal of useful data collected is underutilized and its incor-poration could considerably strengthen the effectiveness of the TLAS to ensure legal timber production and trade in timber products.

© EFI FLEGT FACILITY, Joint Technical Evaluation of MY TLAS, February 3, 2009 vii

While the proposed TLAS is a useful basis for developing licensing procedures it is concluded that (i) the control procedures of the TLAS should be revised to facilitate straightforward verifica-tion without extensive consultation of reference documents, (ii) environmental management of forest conversion and other users’ rights will be better integrated in the forestry planning sys-tem, (ii) control between licensed and actually harvested timber and inputs and outputs at proc-essing mills and other management of quantitative data will be intensified and (iv) unambiguous means will be developed to demonstrate how individual legality criteria affect the decision on is-suance of export licenses.

© EFI Support Team for the EU FLEGT Action Plan, Joint Technical Evaluation of MY TLAS, February 3, 2009 1

1. INTRODUCTION

1.1 Status of TLAS

Malaysia and the EU are currently negotiating to conclude a Voluntary Partnership Agreement (VPA) to ensure that only legally verified timber from Malaysia may be im-ported into the EU. Central to the VPA is a Timber Legality Assurance System (TLAS). This comprises:

a) a definition of legal timber based on an agreed set of Principles and Criteria that refer to Malaysia’s relevant laws, regulations and operating procedures;

b) control procedures for verifying compliance with the definition of legal timber, covering forest harvesting, transportation, processing, import and export; and

c) independent monitoring to assure that the whole system is working as planned.

The full text of the Malaysian TLAS is included in Annex 1, which includes Malaysian TLAS Annexes: A describing the Principles and Criteria defining legal timber; B de-scribing the control procedures; C describing applicable timber sources; and D de-scribing the independent monitoring system. The TLAS should provide assurance that all timber products included in the VPA and exported by Malaysia to the EU have been produced in compliance with the definition of legal timber as defined under the TLAS and that all other timber products, or prod-uct components, are excluded. In principle, the TLAS should be based on existing li-censing systems being implemented by government agencies for forest harvesting, processing, import and export. In addition the TLAS must be pragmatic and imple-mentable throughout the production chain and include timber imported into Malaysia as well as domestically-harvested timber. Before concluding the VPA it will be necessary to evaluate control procedures of the TLAS to ensure that they are auditable and effective and to identify areas where ca-pacity building might be needed.

1.2 Generic expectations of EU

Within the framework of the FLEGT (Forest Law Enforcement, Governance and Trade) Action Plan the EU aims to establish VPAs with timber producing countries to eliminate trade in illegal forest products. The VPAs are binding agreements under which the partner country’s administrative structures and technical systems are devel-oped to achieve verifiable improvements in law enforcement. Each VPA shall include a Legality Assurance System (LAS) to ensure that only timber harvested and processed in accordance with the legislation in force is exported to the EU market. The LAS has five key elements as described below:

• Definition for legality: A standard to set out the legal requirements to be met in forest management and timber transportation, processing and trading

• Definition for controlling the supply chain: Timber tracking and/or chain of custody systems to demonstrate that the timber originates from legal sources

• Verification: To ensure that timber is produced in compliance with the legality definition and the timber supply chain is properly controlled

• Issuance of FLEGT licenses on the basis of verification results

• Independent monitoring by a third-party: To check that the whole LAS works as intended


Figure 1 Key elements of National LAS

Forest

Processing unit

Point of export

Define legality (e.g. Legality standard)

Define control of supply chain (e.g. national tracking system)

verific

atio

n

Independent monitoring

Export consignment

Issuance of FLEGT licenses

2. OBJECTIVES

In line with the Terms of Reference provided, the objectives of the independent tech-nical evaluation of TLAS are

a) Assess whether the Control Procedures contained in Malaysian TLAS Annex B (particularly on the “Outputs” and “Verification”), are easily verifiable and auditable without ambiguity in an objective manner by the responsible Malay-sian authorities and the independent monitor;

b) Assess whether the control procedures as set out in Malaysian TLAS Annex B provide assurance that all timber products licensed for export under the VPA have been produced in accordance with the requirements of Malaysian TLAS Annex A and that all other timber products are excluded;

c) Identify the capacity building needs, including financial implications, to imple-ment the control procedures in Malaysian TLAS Annex B; and

d) Assess the effectiveness of the proposed independent monitoring procedures set out in Malaysian TLAS Annex D and determine the likely cost of their im-plementation.

3. METHODOLOGY

In line with the TOR for the technical evaluation of the TLAS, auditing practices were applied for the assessment. The application of auditing practices was interpreted as collection of objective evidence to assess (i) degree compliance and (ii) indicate pos-sible inadequacies in the system. No concrete suggestions or technical solutions were provided to improve the system.


The methodology included a review of the procedures of TLAS agencies, observation of how procedures are implemented in practice and interviews with people in charge of control activities. Further, observations were collected from private sector compa-nies that will be subject to the TLAS control procedures and from environmental and social interest groups that are not directly involved in the implementation of the TLAS. With regard to the capacity of TLAS to assure legality of exported timber, data collec-tion and analysis were carried out in three steps:

1. Review of the current legal requirements and control practices 2. Evaluation on the adequacy of current practices to assure legality 3. Checking whether the key control practices are addressed in the TLAS

With regard to the auditability and verifiability of TLAS control procedures, the aim was to determine the consistency of generic definitions of operational procedures. While assessing the quality of procedures, special attention was paid to the following fea-tures:

• Objective

• Implementation responsibility

• When and where to implement including frequency of checks and sampling rules

• Whether the key tasks are adequately described

• References to more detailed instructions

• Outputs and recordkeeping

• Linkages between the procedures With regard to the capacity building needs, the focus was on the quantity and quality of human resources of TLAS agencies. Staffing levels were compared to the scale of control activities (e.g. number of timber licenses, volume of timber production and number of export/import licenses issued). With regard to the effectiveness of proposed independent monitoring procedures, the assessment covered arrangement related to Third Party Monitor (TMP) that will be appointed until the key TLAS procedures are ISO certified. The assessment focused on the organizational and technical requirements set out for the independent monitor, and how the reporting of the monitoring results will be organized.

4. EVALUATION RESULTS

4.1 Overall coverage of the Malaysian TLAS

The Malaysian TLAS covers export licensing of (i) round logs, (ii) sawn timber, (iii) ve-neer and (iv) plywood. The respective HS customs codes are 4403, 4407, 4408 and 4412. The above products are considered legal if the timber is harvested by licensed persons from approved areas and timber and timber products are exported in accor-dance with the laws, regulations and procedures pertaining to forestry, timber industry and trade of Malaysia. The TLAS defines legality based on compliance with six principles and 16 to 18 crite-ria for each of the three regions of Malaysia. The principles, all common to Peninsular Malaysia, Sarawak and Sabah, are

1. Right to harvest 2. Forest operations 3. Statutory charges 4. Other users’ rights 5. Mill operation


6. Trade and customs The existing system developed for collecting pertinent forest exploitation related royal-ties and other charges is the foundation for the TLAS, which draws on procedures in which the legality of logs and timber products is cleared or controlled progressively at critical points of the supply chain: Forest Checking Stations, points where the means of transport change, arrival of logs at mill, and export and import points of logs and processed products. Regarding the quantitative control of the supply chain from the forest to the point of export, the regional applications of TLAS do not always demonstrate consistency be-tween the licensed and actual harvesting volume or movement of logs within process-ing mills, raw material inputs to and outputs from processing, or deliveries of proc-essed products from mills (Figure 2). Figure 2 Quantitative control of supply chain

The issuance of FLEGT licenses is not specifically addressed in the TLAS, but it is as-sumed that the existing system for licensing exports of logs and processed timber products will be applied. Current export licensing is based on ensuring that:

• logs originate from licensed forest operations, are exported by a licensed op-erator, and royalties and other charges are paid; and

• processed products are exported by a licensed operator and all the relevant charges are paid.

Licensed harvesting volume

Actual harvesting volume

Log yard

Warehouse

Procesing lin

e

Point of exports

Inputs

Outputs

Forest

Mill


The TLAS does not explicitly describe how the verification results related to individual legality criteria affect decision-making on export licenses. Region-specific assessment on the issuance of export licenses are given in Sections 4.2 to 4.4.

4.2 Sabah

4.2.1 Context

The total volume of timber harvested in Sabah during 2007 was 6.6 million m3 of

which production from natural forests accounted for almost 90%. Timber was derived mainly from areas under Sustainable Forest Management License Agreements (SFMLA), of which there are 17 although not all are in production, and three SFM ar-eas managed by SFD. Additionally there are some short-term licenses on forest re-serves, state land and alienated lands, which in 2007 included 255 licences in the last of these categories, although these are understood to be small areas contributing only small volumes to overall production. Imports to Sabah from Indonesia have declined from an officially recorded figure of 440,000m

3 in 2001 to about 50,000m

3 in 2007 and are reported now to be only sawn-

timber. Imports from elsewhere are reported to be minimal. There are apparently very few registered importers. Figures reconciling volumes produced, exported, imported and processed are avail-able but not all components to compute wood-balance are collected. The absence of complete statistics means that there is no means to verify if legal timber production and use are in balance. In 2007, the SFD law enforcement units detected 29 cases of illegal felling, of which 11 were in forest reserves and 18 on state lands. In addition, 60 cases were reported of unauthorized possession of timber. The total volume of timber seized was slightly less than 34 900 m

3. Seized timber is disposed of by auction and purchased by the

domestic industry for processing purposes or for exports. 4.2.2 Institutional aspects

Forest operations The SFD and its District Forestry Offices (DFO) are in charge of issuing timber li-censes, planning of forestry operations and control of companies harvesting and transporting timber to the mills or export points. Licensed forest harvesting may take place on SFMLA areas, state lands, alienated lands and in Industrial Tree Plantations (ITP). The bulk of Sabah’s forests are concentrated in the SFMLA, which are normally areas of about 100 000ha for which 100 year concessions are granted. Royalties are not payable on timber harvested from rubber plantations and SFD there-fore exercises no control. Monitoring of workers’ safety during the planning and conduct of forest operations is the responsibility of the Department of Occupational Safety and Health (DOSH). The Environment Protection Department, Sabah (EPDS) is empowered to monitor the en-vironmental impacts of harvesting operations. The SFD’s Monitoring, Controlling, Evaluation and Enforcement unit (MCEE), Sus-tainable Forest Management (SFM) Division, Enforcement and Investigation Division (EID), enforcement officers of DFOs and the Anti-illegal Logging Unit of the Chief Min-ister’s Department are the key units monitoring the forestry sector to ensure legal compliance. Principal activities are as follows:

• The MCEE inspects the control operations of DFOs, and the operations of timber licensees and processors through unannounced checks in forest and at


mills. The MCEE reports directly to the SFD’s Director of Forestry. When se-vere non-compliances are detected, Investigation Officers (IO) will be ap-pointed to prepare investigation papers and to determine action to be taken (e.g. bringing cases to court or imposing fines). MCEE staff resources are de-tailed in Table 1.

• In the Permanent Forest Estates (PFE), the implementation of Forest Man-agement Plans and Annual Work Plans is systematically audited to verify sat-isfactory performance by licensees. This work is done by the SFM Division (SFM Audits) or sometimes 3rd party auditors are appointed. The annual re-ports of the SFM Division rates performance and issue certificates of compli-ance to licensees meeting the required standard. Control will be intensified where licensees are not in full compliance. Prolonged poor performance can result in the cancellation of timber licenses.

• The EID, often in collaboration with the MCEE and the DFOs, regularly carries out surprise field checks and conducts investigations of suspected forest of-fences, particularly in “hot spot” areas.

Table 1 Enforcement resources of MCEE

District No of persons

Total Forest rangers Forest guards Others

Keningau 3 4 7 14

Kota Kinabalu 3 1 14 18

Kudat 1 2 3 6

Sandakan 3 3 7 13

Tawau 5 2 11 18

Total 15 12 42 69

In addition, the DFOs are subject to independent financial audits by the State and Federal level Audit Department that focus on adherence to financial procedures while private sector companies (in particular timber processing industries) are subjected to audits verifying compliance with licence conditions. Controlling the exports of logs and timber products is the shared responsibility of the SFD and Malaysia Timber Industry Board (MTIB). Further, the MTIB controls the im-ports of logs and Large Squares and Scantlings (LSS) in cooperation with the De-partment of Agriculture and the Royal Malaysian Customs (RMC). Final approval to ship either to export destinations or to destinations within Malaysia, and for clearance of maritime timber shipments either from abroad or from within Malaysia, is the re-sponsibility of RMC. The MTIB has its headquarters in Kuala Lumpur and three regional offices in Sabah: Kota Kinabalu, Sandakan and Tawau. The MTIB operations at the export and import points are internally controlled by its Enforcement Team, which is tasked to carry out monitoring on a monthly basis. The MTIB’s ISO 9001 certified quality management system also entails biannual internal audits of its checking stations. More about the in-ternal controls of the MTIB is found in section 4.4.2. Import of sawn timber and other processed products is controlled by RMC. SFD is-sues removal passes after RMC has cleared imported sawn timber to monitor move-ment of logs and timber products to mills where further processing will take place. 4.2.3 Assurance of legality in the forest

The SFD issues harvesting licenses on the basis of applications approved by the Chief Minister’s Department. The prerequisites to obtain a harvesting license vary ac-cording to the land category.


For the SFMLA areas there are two discrete stages in the process of securing the right to harvest. The first stage concerns the award of the overall agreement. The second stage concerns determination of coupe for harvest operations, normally for one year. In non-SFMLA areas, annual licenses to harvest are issued in a single process. Con-trol of logging in forests on state and alienated land is less comprehensive than in the SFMLA, but the SFD intend that licensed logging on state land will be phased out by 2010. The procedures are summarized as follows:

• PFE/SFMLA o Forest inventory to be conducted of the entire SFMLA area at 10%

sampling intensity to determine the Annual Allowable Cut (AAC), which is an input to the Forest Management Plan

o Forest Management Plan to be prepared and approved. Approval re-quires that the boundary must be demarcated, and the area zoned according to planned use (e.g. log production, conservation, use by communities under native customary rights or industrial tree planta-tions)

o Environmental Impact Assessment (EIA) to be prepared and Agree-ment of Environmental Condition issued by the EPDS

o Assessment (as per Director’s Circular 3/87) to be conducted of ex-ternal impacts, customary rights, economic efficiency, distribution of costs and benefits, feasibility and recommendations by the DFO

o Performance bond of RM 5 million to be paid to validate the agree-ment

o Comprehensive Harvest Plan (CHP) to be prepared for each com-partment in the annual logging coupe (One logging coupe is approxi-mately 3,000ha subdivided into smaller compartment areas). The CHP includes the requirement that the compartment boundaries within the block are demarcated, and trees to be felled are tagged and mapped.

• State lands o Boundary of the license area to be demarcated o Ocular estimate to be made of commercial timber available for logging

(as of Director’s Circular 3/87) o The EIA to be prepared for areas of 500ha and more or Proposal for

Mitigation Measures to be provided for smaller areas. These then re-quire respectively, an Agreement of Environmental Condition or Miti-gation Declaration to be obtained from the EPDS. The EIA is also obligatory if natural forests of 100ha or more are to be converted to agricultural plantations. For wetland forests the EIA is required if the area to be converted exceeds 20ha

o Assessment (as per Director’s Circular 3/87) to be conducted of ex-ternal impacts, customary rights, economic efficiency, distribution of costs and benefits, feasibility and recommendations by the DFO

o Temporary Occupation Permit to be issued by Lands & Survey De-partment

o License fee to be paid.

• Alienated lands o Land title to be submitted by the applicant o Ground verification/assessment of available timber to be conducted by

the DFO o Environmental safeguards to be implemented as described above un-

der state lands o Royalty is paid upon 100% scaling and prior to removal of timber. In

the case of logs from alienated land, a Form IIB License is only issued upon full payment of royalty and payment of license fees.


Within an SFMLA area the licensee is allowed to fell and remove all commercial tree species having a diameter in the range of 60 to 120cm, excluding trees of protected species or trees growing in buffer zones intended to protect permanent water courses (30m either side). On state or alienated land logging is normally preliminary to agricul-tural development and, as the requirement is to clear the land, the only restriction is that logging is confined to the demarcated license area and conforms to any restric-tions stipulated by EPDS. Monitoring of logging by SFD commences at harvesting block log-landings and con-tinues until arrival of logs at a mill or point of export. The licensee is required to main-tain a tree felling record which allows checking against either the record of tagged trees or the predicted production determined by a pre-harvest inventory or ocular as-sessment. Details of procedures observed in controlling movement of logs are dis-cussed further in Section 4.2.4. Licensees or contractors have a legal obligation to ensure the safety of workers, which includes provision of personal protective equipment and, as stipulated by legislation, must report accidents and maintain relevant records. Box 1 Key findings on control of legality in the forest (Sabah)

1. As no information was provided on the accuracy of pre-harvest ocular estima-tions of commercial timber available for logging, it is impossible to evaluate the reliability of this method for quantitative control of production. The method is deployed in designated logging sites on state and alienated lands and in com-partments in Yayasan Sabah areas, with the exception of one area where a CHP has been introduced on a trial basis. The concept of ocular estimation is not included in the Sabah TLAS, but instead it indicates a requirement for forest inventory.

2. The current Sabah TLAS does not detail procedures for systematic reconcilia-tion between volumes estimated to be available for logging and actual volumes of logs extracted and transported from the license area. Improved controls (based on mass-balance methods or physical tracking) are needed to provide confidence in the system’s ability to demonstrate that logs originate from au-thorized sources

3. Procedures for granting the Right to Harvest (TLAS Annex B, Part 3, Tables 1 to 3) require a number of activities to be undertaken that will lead to approval of a CHP before a Coupe Permit is issued, but the logic of this process is not re-flected in these tables, with many of the actual requirements listed under forest operations in TLAS Annex B, Part 3, Tables 4 to 7.

4. TLAS does not specifically address the need for EIA on watershed manage-ment areas, areas adjacent to natural parks or when natural forests of 50ha or more are to be converted.

5. SFD Director’s Circular 3/87 addresses zoning of license areas for various categories of use, including by communities. However, Criterion 12 does not discuss identification and recording of areas important to native and other communities.

Field observations The SFD is in the process of introducing more intensive planning and control of log-ging operations in all SFMLA areas, excluding industrial tree plantations, and intends that full compliance will be achieved by 2010. In controlling harvesting under the SFMLA, the SFD requires that logging companies prepare CHPs, which include maps showing the location of all trees identified and tagged for harvesting. Tree tagging with


uniquely numbered tags allows complete auditing of log origin to the stump. However, the procedure is complied with only in one area on a trial basis by Yayasan Sabah, the largest concessionaire in Sabah. It is understood to be observed by other companies logging in SFMLA areas. The SFD intend that all logging operations in the SFMLA ar-eas comply with the procedure and will be certified by 2015. Yayasan Sabah has been developing tracking procedures using Radio Frequency Identification (RFID) Tags for the last two years, but the system is not yet functional. Under the Occupational Safety and Health Act 1994, DOSH are empowered to ensure that employers comply with legislation. This is referred to in Malaysian TLAS Annex B, Part 3, Table 10. Some mill operators advised that DOSH conduct factory inspections approximately annually, mainly to inspect the safety of boilers, for which a safety cer-tificate is issued, and other machinery. Other mill operators advised that they were not inspected by DOSH and inspection of logging operations is infrequent or does not happen. There is no indication in the TLAS of how often DOSH should conduct in-spections and no link is made in the TLAS between DOSH inspections and any licens-ing procedures. 4.2.4 Control of timber movement

The general flow of logs is as follows:

• From forest harvesting block to log-landing

• Log landing to stumping (or pangong)

• Stumping to main-stumping (or pangkalan)

• Main-stumping to processing mill or export point. Collection of royalties and fees is required before sales, which take place either at stumping or main-stumping, or before transfer from main-stumping to a logger’s own processing facilities. Exact procedures governing movement from stumping depend on whether logs are being sold or are being transferred to main-stumping. The complete process is summarized in Table 2 to Table 6.


Table 2 Control of log movement from forest to stumping (Sabah)

Location Responsibility Actions Comments

Forest log-landing

Company Logs measured, chis-elled with log serial number, hammered with company property mark & tags attached. Details entered in log-gers records

Tags identify block from which log origi-nated, species & di-mensions & also tree stump if pre-harvest tagging implemented

SFD Details checked of 10% of company record, logs hammered with SFD mark & Check Scaling Form A (CS) prepared

CS is record of log species, dimensions & area of origin

SFD Transit Pass issued for bulk movement of logs with specifications of logs loaded on individ-ual trucks highlighted on copy of CS

Logs can be moved to stumping

At stumping SFD Logs checked on arrival

Company Logs unloaded & sorted with logs separated by coupe, species & qual-ity then delivery order prepared for individual loads to be dispatched by truck to the main-stumping

Logs may sold from stumping or trans-ported to main-stumping

SFD Transit Pass issued allowing movement of logs to main-stumping

For sales from stump-ing procedure is as shown in Table 3

Where pre-harvest tagging has been done, logs can be traced to stump. Elsewhere monitoring of log movement commences at the block log-landing and there can be reasonable confidence that logs were legally harvested from the correct location. However, it is not clearly stated in the Sabah TLAS whether or how any monitoring or reconciliation is done and how this process might be linked to authorization of log movement. Checks conducted at the harvest block, at intermediate stumping points, at checking stations and at the main-stumping point are comprehensively documented and largely covered in TLAS Annex B, Part 3, Tables 8 and 9, but detail is lacking on how pro-gress reports and other monitoring processes are linked to procedures allowing timber movement, such as the issue of Removal Passes, which requires no reference to other control documents such as the Log Register or Tree Felling Record.


Table 3 Control of sales (Sabah)


Stumping or main-stumping

Company Application submitted to the SFD for Scaling Or-der (SO)

SFD 10% check of log details & SFD Accounts advised if everything in order

SFD Accounts Royalty calculated, pre-payment collected & SO approved

Prepayment includes royalty, fees & 2% insurance against er-ror

SFD 100% scaling & Timber Disposal Permit (TDP) prepared & forwarded to SFD Accounts

SFD Accounts Payment assessed, addi-tional amount collected if necessary & TDP ap-proved allowing move-ment & disposal of logs

The procedures detailed in Table 3 are covered in TLAS Annex B, Part 3, Table 9 and 11. In addition to the above procedures, if logs are for export, there will be checks by SFD against permitted export quota. SFD will issue Log Shipping Clearance and a Customs Export Declaration (C2) will be endorsed & forwarded to the company. From point of sale, either at stumping or main-stumping, or transfer to a licensee’s own processing facilities log movement may be by truck or barge. Controls are de-scribed in Table 4 and Table 5.


Table 4 Control of movement by truck (Sabah)


Stumping or main-stumping to local desti-nation

SFD Removal Pass (RP) is-sued covering single truck & logs can be transported with ap-proved TDP

Checks will be con-ducted in transit at SFD checking stations

SFD Dispatching DFO notifies receiving DFO of logs in transit & details of desti-nation, On arrival at des-tination log tally & meas-urements 100% checked by SFD & RP cancelled. Log details entered in SFD arrival records

Company On arrival at destination RP & TDP submitted to DFO for log registration

SFD Instruction issued to unload & inspect, 100% tally conducted & 10% of measurements checked. If there is no problem logs released for proc-essing & RP cancelled

SFD staff are perma-nently present at mills, on 24 hour basis if required, but night operations are only allowed with prior permission

SFD/Company Log details entered in SFD & company arrival records

Table 5 Variations for movement by barge (Sabah)


Main-stumping to local desti-nation or for export

SFD Procedures are the same as transport by truck, but differ as follows: - a Night Towing Pass is issued to allow transport by scows at night - payments of royalty & other fees are not col-lected if consignment is for export & the buyer issues a Letter of Credit for purchase of logs. In-stead a Letter of Under-taking from a commercial bank in lieu of royalty payment must be re-ceived with royalty pay-ment to be made by the bank on maturity of the Letter of Credit

The destination re-corded on the TDP will be either a local mill or ‘Midstream’ if the consignment is for export Maritime shipments from outside the re-ceiving district (e.g. Lahad Datu or Tawau to Sandakan) also involve RMC controls & are accompanied by Customs Declaration Form 3 (C3)

As indicated in Table 4 above, on arrival at the mill, logs are inspected again by the SFD staff and details are recorded in the Log Arrival Book. The TLAS Annex B, Part 3, Table 9 refers to this. Mill operators are also required to submit monthly input/output reports to SFD for analysis, but there is no mention in the TLAS of this requirement.


Accurate statistics reconciling log production and input to mills would considerably en-hance the TLAS. The Sabah TLAS should be expanded to include procedures for pro-duction monitoring and clearly identify which documents are used in reconciling log supply and production. After arrival at a local mill and cancellation of the RP logs may be processed. Alterna-tively they may be exported in accordance with the procedures detailed in Table 6 with the first stage being that the MTIB has to confirm that the applicant is an MTIB regis-tered exporter. Table 6 Control of exports (Sabah)


At export point

Company Customs Declaration Form 2 (C2) submitted to SFD with supporting documentation. Inspec-tion is conducted at log yard & detailed log list issued. Documents are then submitted to MTIB

Includes invoice, packing list and con-firmation of order

MTIB The MTIB verifies ex-porter is registered, conducts a 10% check at port based on the log list, checks documents en-dorses C2 & issues ex-port license

Under control of sales SFD will have already checked against ex-port quota, issued Log Shipping Clearance & endorsed C2 For export of product, the SFD will also charge any cess due before C2 endorse-ment

Company C2, related documents & shipping manifest regis-tered with RMC

Customs Documents are checked & returned to the SFD with RMC clearance to ship

SFD Staff are instructed to attend loading to moni-toring that all is in order

Consignment is re-leased for shipment

The above procedures are covered by TLAS Annex B, Part 3, Table 16, but details of SFD and MTIB responsibilities are not fully described as there is no mention of inspec-tions, Log Shipping Clearance issued by SFD, clearance by RMC or SFD attendance at loading. It is also stated that SFD issues the export licence and not MTIB. Further detail should be provided in the TLAS to clarify procedures and responsibilities and the linkages in the process between the SFD and the MTIB. No reference is made in the Sabah TLAS to movement of timber or timber products shipped within Malaysia. The procedure is largely similar to exporting and TLAS An-nex B, Part 3, Table 16 should be expanded to include intra-Malaysia movement.


Box 2 Key findings on control of timber movement (Sabah)

1. There is no indication in the Sabah TLAS of a link between reconciliation of es-timated and actual harvest volumes and authorization of timber transport. If the reconciliation is made it would be expected that it is of useful importance in verifying that logs have been legally harvested and can therefore be trans-ported.

2. There is no mention in the TLAS of mill/input output records and links with sales and export documents that might be used to verify that only legally sourced timber has been processed.

3. Export procedures are not described in the TLAS with sufficient clarity to un-derstand the specific roles of the SFD, the MTIB and customs or what are the important documentary requirements that can be used in auditing.

4. TLAS Annex B, Part 3, Tables 8, 9, 11, 15 and 16 cover the main elements for controlling timber movement, but the detail is inadequate to provide a clear de-scription of roles and documentation that will be useful for independent monitor-

ing.

4.2.5 Control of timber imports

Procedures for import and onward transport are covered by the TLAS Annex B, Part 3, Tables 17 and 18. Responsibility at point of clearance is shared principally between the MTIB, which is responsible for inspection and issuing an import license for logs and LSSs, and Royal Malaysia Customs. The SFD is then responsible for imported goods, collecting any fees due, issuing transport documents permitting movement to mill and recording logs on arrival at mill. Controls described in the TLAS Annex B, Part 3, Tables 17 and 18 are clear, but do not mention whether SFD responsibilities cover LSS as well as logs. Imported logs are recorded in the SFD and company Log Arrival Book and this infor-mation is assumed to be reflected in mill input/output records, but, as previously stated, no use of this information is recorded in the Sabah TLAS to monitor raw mate-rial input and product output. Smaller dimension sawn-timber, veneer and plywood can be freely imported provided that the general import regulations are met. The TLAS Annex B, Part 3, Table 18 re-fers exclusively to the SFD control of log movement and not Larges Squares and Scantlings (LSS) or other timber. Clarification is required on this point as observations indicate a greater level of control in practice than is apparent from TLAS.


Box 3 Key findings on control of timber imports (Sabah)

1. Legality of imported logs and LSSs from tropical countries is controlled by cer-tificates of origin or other appropriate documentation.

2. No certificate of origin is required for small dimensioned sawn timber and other processed products to demonstrate that the imported product is legally sourced in the country of export. The MTIB states that practice is in line with the gov-ernment’s aspiration of liberalizing imports.

3. The TLAS does not describe how the MTIB, RMC, SFD and/or Department of Agriculture inspect the imported logs, LSSs and processed timber products.

4. The link between import data recorded by Customs, the MTIB and the SFD is not described and working practices indicate that this will result in statistical discrepancies. This practice undermines the utility of import statistics for control of wood movement and a review of practices would be recommended to ensure that statistics can be used for effective monitoring.

Field observations During discussions with RMC and SFD in Tawau it was learned that there are incon-sistencies between import data recorded by Customs on form C2 and the SFD RP data. It was explained by importers that over-declaration is normal to ensure that vol-umes measured by SFD will not exceed rough estimates of import volumes, which would prevent issue of the RP. The DFO in Sandakan advised that most mills have their own jetties and logs are dis-charged directly without any requirement for a Removal Pass to be issued. Although SFD are reported to conduct inspections it is not stated in the TLAS that this is done or whether there are any procedures to be observed in absence of a requirement for a Removal Pass.

4.3 Sarawak

4.3.1 Context

The total volume of timber harvested in Sarawak in 2007 was 11.9 million m3, mainly

derived from the hill dipterocarp forests (93%). The balance of 7% was extracted from swamp forests. There were 597 valid timber licenses (long-term 226, short-term 58, Occupational Ticket 137, Mangrove/Belian 126 and Plantations 50) in May 2008. Accurate figures reconciling volumes harvested, processed, exported and imported would be useful to demonstrate that mill output reconciles with mill input. The reliability or completeness of statistics does not permit accurate reconciliation at present. STIDC statistics reveal 22 detected cases in 2007 of sawn-timber crossing the border into Malaysia from Indonesia at unauthorized entry points or imported sawn-timber that has contravened the Removal Pass conditions. Seized timber from Indonesia is handled by STIDC, who will call for tenders and the timber will be released to the suc-cessful bidder on payment of necessary fees in accordance with laws and regulations. The money paid by the bidder is considered as government revenue or in the case of pending court decision the money is kept temporarily in STIDC account. 4.3.2 Institutional aspects

The forest resources of Sarawak are administrated by two government agencies, namely Forest Department Sarawak (FDS) and Sarawak Forestry Corporation (SFC).


FDS handles statutory functions whereas the SFC is responsible for control and moni-toring of operational functions. Licensed forest harvesting is permitted through the granting of concessions in Perma-nent Forest (PF) and also on state lands and alienated lands where harvesting is nor-mally a preliminary activity before conversion to other land use. Licenses are granted for variable terms, but in PF the norm is 25 years. Within degraded forest areas there is increasing development of ITP and the developers are granted 60 year tenure. Har-vesting of rubberwood is not controlled by the forestry authorities, but the volume of timber derived from these areas is minimal. The license for forest areas is approved by the Ministry of Planning and Resource Management. Approval does not constitute a right to harvest and before harvesting can commence the FDS must issue a license. Then a number of prescribed prepara-tory activities must be undertaken by the licensee. The SFC is responsible for assess-ing compliance with prescribed activities and issuing Permits to Enter Coupe (PEC). The endorsement for felling operations in the PEC allows the licensee to start harvest-ing. The SFC has two business units, Sustainable Forestry & Compliance Unit (SFCU) and Security and Asset Protection Unit (SAPU) that are involved in implementation of Sa-rawak TLAS:

• The SFCU controls and monitors harvesting operations, collects revenues and implements forest conservation and rehabilitation activities (e.g. regeneration). It has four regional offices with 16 Customer Service Centres throughout Sa-rawak.

• The SAPU is tasked with protecting the State’s forest assets. It carries out in-vestigations of alleged forest crimes, detention and seizure of offenders, forest produce, equipment use in the commission of the offence and patrols forested areas. The SAPU runs a Helpline enabling citizens to provide information on forestry-related offences.

The SFC’s Internal Audit Department conducts audits of SFC’s Quality and Environ-mental Management Systems. The Department currently has three employees, who are Manager, Executive and Supervisor. Two additional posts are proposed. The audit plan requires assessment of each SFC location at least once a year. If non-conformances are detected, the auditors will report observations or issue requests for corrective actions. Non-compliances must be responded to and closed within 30 days. In addition, the SFC is subject to random audits by the FDS and the Audit Unit of the Chief Minister’s Office. The outcome of FDS audits can be, for example, suggestions on improved practices. The Chief Minister’s Office focuses on the collection of royal-ties. Third party audits of SFC’s ISO management systems are done by Moody Inter-national. The scope of ISO 9001 certification covers the following:

• Security and Assets Protection

• Compliance and Regulation of Sustainable Forest Management (covered also by 14001 certification)

• Management and conservation of totally protected Area and Biodiversity

• Human Resource Management

• Forest Resource Management and Product Development for Biodiversity Conservation

• Financial Management and Control Operations

• Strategic Planning and Management Shortcomings or weaknesses detected in the SFC procedures and their implementa-tion are discussed in review meetings, and decisions are taken on the need for any changes in procedures. In cases of severe failure by any employees, the Human Re-


source Department is responsible for further investigation and decisions on appropri-ate disciplinary actions. Movements of timber The SFC and Harwood Timber (an STIDC owned subsidiary) are responsible for con-trolling movement of domestically produced logs to processing mills or export points. Responsibility is shared between SFC and STIDC for controlling import of logs and sawn-timber. SFC, STIDC and Harwood are all involved in some capacity for control-ling export of logs and timber products. Logging companies and importers also have some obligatory responsibilities. RMC is responsible for final approval to ship, either to export destinations or to destinations within Malaysia, and for clearance of maritime timber shipments, either from abroad or from within Malaysia. The STIDC has an Internal Audit Section that carries out predominantly financial au-dits in the STIDC regional and divisional offices and the subsidiary companies (e.g. Harwood). All the offices and subsidiary offices are audited by eight auditors once a year. The internal auditors report to the general manager of the STIDC and are re-quired to follow-up on corrective action requests that they issue. The STIDC has a quality management system that is developed to comply with the ISO 9001 standard. Under this system, the Administration Division organizes annual audits with the help of four trained auditors. The STIDC has a documented procedure for conducting the audits, handling non-conformances and audit observations (areas identified requiring improvements) and preparing audit reports. The auditors are tasked to monitor the implementation of corrective actions requested for non-conformances within an agreed time frame. The quality management system of STIDC is certified by the Moody International. The certification scope currently covers the registration functions only. However, the STIDC has already taken actions to amend the scope to include all the export and im-port activities by the end of 2008. In addition, the STIDC is externally audited by the Federal Audit Department that focuses on the financial procedures. Harwood is ISO 9001 certified by SIRIM QAS International. The certification scope covers log endorsement, shipping administration activities and inspection of export logs:

• Registration of licensee and processors

• Updating of reservation quota log figures into Harwood Endorsement Informa-tion System (HENDIS)

• Endorsement of reservation quota logs

• Inspection of reservation quota logs at mill

• Registration of vessels

• Issuance of shipping passes

• Issuance of Export Clearance Certificate at export point. In line with requirements of ISO 9001, Harwood has set up organizational structures for internal audits and assessing the effectiveness of the quality management system. In addition, a task force unit has been established to carry out operational audits re-lated to endorsement and shipping and inspection of export logs activities. All Har-wood sites are audited once a year by SIRIM QAS International. Corrective actions are required for any detected non-conformances and audit results are reported to the Management Review Committee. Besides the internal audits, information on non-conformances can be reported by staff members at any time.


4.3.3 Assurance of legality in the forest

On PF and state land, timber licenses and licenses for planted forests are issued by the Forest Department on the basis of approval from Ministry of Planning and Re-source Management. On alienated lands, no approval by the Ministry is required and only approval from the Director of Forests is necessary before issuing timber licenses. In PF, the planning of forest operations is carried out in two phases:

• Preparation of a general harvesting plan for the whole licensed area, including a map delineating the gross area sub-divided into operational area (net area for logging, mapping of coupes) and non-operational area (protective forests, ad-verse terrain conditions, local community use areas, water catchments etc.)

• Preparation of a detailed harvesting plan for individual coupes o Hill Forests: boundary demarcation of coupe and blocks (harvesting

units), preparation of topographical work map, alignment and ground survey of proposed roads, road construction and tree enumeration for a 10% sample of the area from which the licensed harvest volume is estimated. The Forestry Department is tasked to check 10% of the area enumerated by the licensee.

o Swamp & Mangrove Forests: boundary demarcation of annual coupe and blocks, 100% tree enumeration in the annual coupe and construc-tion of rail lines.

SFC issues a PEC on the basis of approved general and detailed harvesting plans and EIA must be conducted where applicable, which is if (i) the extraction area ex-ceeds 500ha and has been previously logged, or (ii) the felling takes place in a water catchment area. On state and alienated land, the boundaries of the annual coupe and harvesting blocks need to be demarcated. In addition, tree enumeration of 10% of the area is re-quired on state lands, although apparently this is only done where conversion is not planned and this is not stated in the TLAS. In alienated land, where an Occupational Ticket License is issued, 100% tree enumeration is required except for lands being converted to agriculture use, which will be cleared and no tree enumeration is done, but again this point is not stated in the TLAS. Enumeration results provide an estimate of licensed harvest volume. EIA has to be carried out for conversion of primary or sec-ondary forests exceeding 500 ha to agricultural use, and in mangrove forests if the conversion area exceeds 50ha. Under licenses in permanent forest areas or other areas being harvested but not cleared, the licensee is allowed to fell and remove Dipterocarp species with a diameter of 60cm or greater and non-Dipterocarp species with a diameter of 45cm or greater. The harvesting of trees of protected species may be allowed under the Wildlife Protec-tion Ordinance 1998 with the permission of the Wildlife Conservator, Forest Depart-ment. The harvesting of trees growing in buffer zones intended to protect permanent water courses (20m either side) are prohibited. On state or alienated land being logged prior to agricultural development the requirement is to clear the land and the only restriction is that logging is confined to the demarcated license area and complies with any environmental requirements. The licensee is required to keep records of log production (Log Specification Form), which contains the following information: license number, coupe/block numbers, log number, log dimensions and species. The logs must also be hammer marked with the licensee’s property mark. In Sibu Region the logs are marked with serially numbered Log Production Identity (LPI) tags, which the licensee obtains on application from the SFC, and are used in computerized records of log production. Elsewhere the LPI sys-tem has not yet been implemented, but it is intended to extend implementation of the LPI system. Where the LPI system is not yet implemented licensees attach their own


tags to logs, on which coupe and block numbers, log number, species and log dimen-sions are written. The SFC controls log production by comparing estimated harvest volumes with actual production volumes measured at Forest Checking Stations. Field inspections are re-quired if there is a deviation of more than 10%. The SFC is responsible for regular control of harvesting progress and produces monthly progress reports. In addition, a post-felling inspection is carried out to:

• ensure that the trees which have been felled are properly utilized, including con-trol of high stumps, remnants and logs left in the forest

• assess damages to the residual trees and ponding caused by poor road con-struction or drainage

• determine whether any protected trees are felled without permission

• check that the licensee has not felled trees outside the authorized area.

After the post-felling inspection, the coupe and blocks will be closed and a Coupe Clearance Certificate issued. Thereafter the licensee is not allowed to re-enter the coupe, unless a new PEC is issued. These controls apply to all areas of forest, includ-ing state land and alienated land which are not earmarked for development. No post felling inspection is required for areas which are to be developed for agricultural or other purposes. Box 4 Key findings on control of legality in the forest (Sarawak)

1. The SFC monitors production to ensure that the actual harvest volume does not exceed the license volume determined on the basis of the pre-felling inventory in areas not planned to be converted to other land uses. Control is based on volume reconciliation, but there is no physical tracking of logs back to stump. The procedure requires documented field inspections, which are not included in the Sarawak TLAS.

2. Field controls by SFC do not specifically focus on estimating volumes extracted from the coupe and comparing them to the declared harvesting volume by the licensee. The Post-felling Inspection (closing of coupe) can take place several months after harvesting operations, which means that any observed non-conformity that constitutes illegal practice may not be available at the time when legality of an export consignment is determined.

3. TLAS does not specify the EIA requirements when forests of 500 ha (or as low as 50 ha for other forest types such as Mangrove) or more are to be converted.

4. TLAS Annex B, Part 2, Table 10 covers legislation safeguarding the rights of Natives and reconciling these with timber production. The exclusion of areas and rights specified in the Forests Ordinance are stated in the license condi-tions and, under the Second Schedule of the license document, it is also stated that the license does not include alienated land, gazetted communal reserves, land held under valid Temporary Occupation License and land subject to Native Customary Rights. In addition, practice is that if areas used by local communi-ties are identified during pre-harvest checking, these will also be excluded from felling. How the issue of user rights are incorporated during the planning stages is not clearly stated in the Sarawak TLAS.

4.3.4 Control of timber movement

The general flow of logs is as follows:

• From forest harvesting block to the Forest Checking Station by truck

• Forest Checking Station to processing mill or export point by trucks, barges or small vessels.


Forest Checking Station is a term synonymous with main transit point applied to an area where official checks of logs are conducted and is normally a location under management of a licensee, which is the final point to which logs are delivered by truck before being transferred to barges for shipment to mills or export points. At log landings the licensee’s property mark is embossed on logs and tags are at-tached showing coupe and block numbers. Routine official monitoring of log produc-tion by the SFC commences at the Forest Checking Station, which can be several hundred kilometres from the logging site. Due to the long distances the adequacy of government control system has often been questioned as this practice allows offload-ing and reloading of logs at a number of intermediate transit camps without systematic control by the SFC. Periodic checking, however, is conducted at unknown frequency by the SFC at the logging site or during movement to the Forest Checking Station. Comments on control of timber movement and the effectiveness of TLAS are given below with full descriptions of procedures detailed in Table 7 to Table 10. Table 7 Procedures from stump to Forest Checking Station (Sarawak)


Forest log-landing

Company Logs tagged & ham-mered with company property mark

Tags identify coupe & block from which logs originate, species & dimensions

Delivery note prepared & logs trucked to Forest Checking Station

Delivery note is a company document listing logs conveyed

Forest Checking Station

Company Logs sorted by license area, species, quality & destination

Logs may arrive from multiple license areas & Forest Checking Station can be as far as 400km from har-vest block

There is no routine involvement, prior to the Forest Checking Station, of any govern-ment agency. Verification that logs are derived from legal harvesting operations is provided by the licensee’s tags and reconciliation of production predicted by a 10% pre-harvest inventory with actual production. Post harvest checking of the logging area by the SFC aims to verify that operations have been correctly executed and that there have been no infringements of forest regulations. Relevant controls are defined in the TLAS Annex B, Part 2, Tables 5 and 6 and are:

• Pre-felling Inspection Report

• Production Monitoring Form The accuracy of inventory as the basis of the Pre-felling Inspection Report is critical and verification depends on pre-felling inventory data, inspection report and log pro-duction records. The Production Monitoring Form is also used to further monitor pro-duction and ensure that it does not exceed 10% of inventory estimates. This is a very critical point in the supply chain and therefore the Sarawak TLAS could be enhanced with a more detailed description of the process linking inventory data and the Produc-tion Monitoring Form.


Table 8 Procedures for movement to mill or export point (Sarawak)


Forest Checking Stations

Company Application submitted to SFC for royalty assess-ment

SFC/Harwood Jointly or separately in-spect logs to verify measurements, species, grades & log serial num-bers

On large operations SFC & Harwood have inspection staff per-manently stationed

SFC If there are no arrears in royalty payments logs are marked with a royalty hammer-mark & Re-moval Pass (Royalty) [RP(R)] is issued to the licensee

For large operations royalty accounts are settled monthly, while smaller operations pay before any log movement

Harwood Endorsement Clearance Certificate (ECC) issued & log volume details en-tered in records

SFC Removal Pass (Transit) [RP(T)] issued to licen-see on confirmation of validity of ECC

RP(T) permits move-ment to a specified destination, gives de-tails of log serial num-bers, volume, destina-tion & is cross refer-enced to the RP(R) showing license area of origin

Harwood Shipping Pass issued to the vessel captain

Authorizes transport of specified log batch by approved vessels to defined destination

Company Logs transported to des-tination

Destination may be a mill, or export point

From the Forest Checking Station onwards checking is frequent and involves monitor-ing of log movement to the processing mill or point of export by both SFC and Har-wood. Random checks are conducted during transit by the Security and Asset Protec-tion Unit of SFC. Relevant controls are defined in the TLAS Annex B, Part 2, Table 7 in which all docu-ments required by the SFC and Harwood are listed. Control appears to be rigorous and provides confidence that this section of the supply chain is effectively regulated. The Sarawak TLAS does not mention if there is a link between the process of issuing transport documents and the Production Monitoring Form verifying that allowable pro-duction limits have not been exceeded. Nor is there any mention of the monthly Licen-see Report prepared by Harwood, which gives details of log volumes inspected, which would provide further verification. If this link is possible it would further strengthen the TLAS.


Table 9 Procedures on arrival at mill or export point (Sarawak)


Processing mill or ex-port point

Company Application submitted to SFC for inspection of logs at mill or export point

SFC/Harwood Joint inspection con-ducted & RP(T) can-celled. If logs are to be exported, Export Clear-ance Certificate (ExCC) & further RP(T) issued showing name of vessel as destination

Checks made of tally (100%) & species (10%). Measurements may be checked if considered necessary

Company Logs can be processed or application submitted to STIDC for export per-mit

Reference to this procedure is made in TLAS Annex B, Part 2, Table 7, but the re-quirement for RP(T) cancellation before logs can be processed is not mentioned. Ref-erence to this procedure should be expanded accordingly. The second RP(T) issued at the export point is again cross referenced to the RP(R), which provides details of the coupe and block from which logs originated. It is not clear how this link is maintained if there has been any sorting and consolidation of log ex-port parcels. It may be that all log sales are conducted at the main transit point, but, if this is not the case, details of origin are lost and untraceable. Table 10 Procedures on arrival at mill or export point (Sarawak)


Mill Company For export of sawn-timber application to STIDC for grading

Grading not required for products other than sawn-timber

STIDC Grading conducted & grading certificate issued

Grading done by reg-istered timber graders

Mill or ex-port point

Company On-line application to STIDC for Export Li-cense & hard-copy of C2 & supporting documents

Supporting docu-ments: invoice, pack-ing list & contract & RP(T) & ExCC for logs

STIDC Application registered on-line with customs, documents checked & container inspection

Break bulk shipments are not inspected

STIDC C2 endorsed for Japa-nese market only

If shipping to China STIDC issues Ad-vance Notification of Shipment

Company Documents submitted to Customs

Customs All documents checked & consignment released

STIDC has responsibility to issue export permits for logs and processed product, and the TLAS would be strengthened by a clearer description of the mechanism verifying that production output is consistent with log input. Procedures exist for this as mills are


required to submit monthly input/output returns to STIDC. Harwood also prepare monthly Mill Reports indicating volume of logs inspected. These various sources of data can easily be reconciled, but are not mentioned as part of any procedure or re-quirement in the Sarawak TLAS. Ensuring that log production, log processing and product output can be reconciled would considerably enhance the Sarawak TLAS. Given that procedures exist for col-lecting the necessary data there should be no problem developing suitable analytical procedures and inter-agency cooperation to be included in the TLAS. The export procedure is covered in the TLAS Annex B, Part 2, Table 14, which pro-vides a list of documents required. The procedure for control of log or timber products sent to ports in Peninsular Malaysia for onward trans-shipment is identical. Consign-ments will normally be shipped to Johore or Klang ports with a customs C2 and a ‘Through Bill of Lading’, which identifies final destination. However, no reference is made in the Sarawak TLAS to movement of timber or timber products shipped within Malaysia. The procedure is largely similar to exporting except that customs C3 is re-quired. TLAS Annex B, Part 2, Table 14 should be expanded to include intra-Malaysia movement. Box 5 Key findings on control of timber movement (Sarawak)

1. Controls ensuring that all logging operations are legally conducted within the permitted boundary may depend on some subjective assessment and reliance on information provided by the licensee. Back-to-stump log tracking would be the most secure solution, but, at a minimum, the TLAS should provided more detail on how harvest volumes are reconciled with estimates and whether cur-rent levels of monitoring are able to provide real confidence that there are effec-tive controls to prevent illegal logging.

2. Post-harvest inspection is not mentioned in the Sarawak TLAS, but the Post-harvest Inspection Report could be an additional document that would support verification by an independent monitor. Part of the requirement of post-harvest inspection is to establish that all harvesting has been properly conducted and all logging has occurred within permitted boundaries. However, a drawback is that this inspection would only determine retrospectively if logs have been ille-gally harvested, by which time they will have moved through the supply chain as ostensibly legal logs.

3. There is no indication in the TLAS that the reconciliation of estimated and ac-tual harvested volumes is linked to authorization of timber transport. If the rec-onciliation and link is made it would provide further assurance that logs have been legally harvested and transported.

4. The effectiveness of this part of the TLAS is uncertain and would be strength-ened by the inclusion of further detail on the actual procedures, linkages, re-sponsibilities and requirements for internal audit. Greater supply chain security would be possible if Sarawak was to require pre-harvest tagging in all license areas to allow logs to be traced back to stump.

5. The TLAS does not clearly address Harwood’s control of Reservation Quota (RQ) logs. Tracking information on RQ, Non-Quota and export logs is managed in HENDIS.

6. There is no mention in the TLAS of mill/input output records and links with in-spection, sales and export documents that might be used to verify that only le-gally sourced timber has been processed.


Field observations Inspection at the export point is carried out independently by SFC and Harwood. There is an exchange of data and information to reconcile discrepancies, but observa-tions at the Tanjung Manis export point indicate that exchange of data and information may not always be effective and SFC and Harwood staff did not know which logs had been checked by the other and there were also inconsistencies in the numbers of log ponds that each organization was checking. 4.3.5 Control of timber imports

To import logs or timber products importers must first be registered with STIDC to carry out activities of importing logs and timber products, and to import logs, importers must also obtained prior approval from the Ministry of Planning and Resource Man-agement. Approved importers must complete a Customs Declaration Form (C1) and apply to STIDC for inspection. The consignment will be inspected by the STIDC and also the Department of Agriculture (Plant Quarantine Division) to verify that phytosani-tary treatment is in accordance with requirements. After inspection the STIDC will is-sue a removal pass and the consignment will be released by RMC. The Sarawak Government permits importation of sawn timber from Kalimantan through timber depots operated by Harwood at five entry points, namely Sematan, Biawak, Tebedu, Batu Lintang and Lubok Antu. Harwood’s role in operating the timber depots is to facilitate handling, sorting, bundling and measurement of the timber. These entry points are also manned by STIDC (being the authority responsible for control on import of timber) which undertakes physical inspection of sawn timber im-ported from Kalimantan. Sawn timber consignments are only permitted to be removed from the timber depots after a Removal Pass has been issued by STIDC. STIDC also undertakes random inspection of imported sawn timber consignments on arrival at destination mills and cancels removal passes. The details are recorded in mill input/output returns. The procedure is similar to the control of logs arriving at mills from within Sarawak, but this is managed by the SFC and Harwood. Box 6 Key findings on control of timber imports (Sarawak)

1. It is not made clear in the Sarawak TLAS whether imported logs, LSS, sawn-timber, plywood and veneer need to be furnished with certificates of origin. However, with reference to imports from Indonesia PEB and SKSHH are re-quired to demonstrate legal origin of sawn timber, plywood and veneer.

2. Harwood is specifically mandated to manage timber depots at five official entry points from Kalimantan, namely Sematan, Biawak, Tebedu, Batu Lintang and Lubok Antu, but the Sarawak TLAS is not clear on the role of Harwood in man-agement of imports from Indonesia.

3. The link between import data recorded by Customs, Harwood and the STIDC is not clear and working practices may result in statistical discrepancies. This practice undermines the utility of import statistics and a review of practices would be recommended to ensure that statistics can be used for effective moni-toring.

4. It was observed that controls of timber imports, particularly at border crossings from Indonesia, were not always effective or properly implemented. The proce-dures could be reviewed to ensure effective coordination between RMC and Harwood, and that staff have the mandate and capacity to take action in event

that irregular timber movement is detected.


Field observations Discrepancies were noted in data recorded by RMC and Harwood for the entry of tim-ber from Indonesia it is recommended that the reason for such discrepancies should be further investigated and if procedural problems are identified steps should be taken to revise procedures to ensure as far as possible the consistency of data. Reliable data that correctly documents entry of timber from Indonesia will strengthen claims that illegal timber is excluded from the supply chain in Sarawak.

4.4 Peninsular Malaysia TLAS

4.4.1 Context

In 2007, a total of 4.2 million m3 of timber was harvested in Peninsular Malaysia. The

total harvested volume was derived from over 800 timber licenses, of which 44% were in permanent forest reserves, 42% on state lands and 14% on alienated lands. Records of volumes harvested, exported, imported and processed are available, but incomplete and it is not currently possible to reconcile this data. The existence of reli-able statistics would provide the means to verify that legal timber production and use are in balance and would considerably enhance the TLAS. Records were not provided on law enforcement activities, but it is advised that seized timber is disposed of by auction. This process should be considered in the TLAS to re-flect an acceptable approach such as agreement on permitted thresholds. 4.4.2 Institutional aspects

Forest operations Forestry in Peninsular Malaysia is the concern of the individual states. The Forestry Department of Peninsular Malaysia (FDPM) has an overall policy setting, advisory and regulatory function and is responsible for staffing the State Forestry Departments, while the State Governments have overall control of the resource. However, by adop-tion of the 1984 Forestry Act and by observing decisions of the National Forestry Council, on which all States are represented, there is general uniformity throughout Peninsular Malaysia. Licensed forest harvesting is permitted in PFE, state land and alienated land. There are also limited areas of industrial tree plantations in Peninsular Malaysia, but the ma-jor part of the forest resource is in the PFE. The general process is that annual li-censes are granted for small areas of about 100ha. The exceptions to this are three forest areas in Kelantan, Perak and Terengganu states, which are managed as long-term concessions. Royalties are not payable on timber harvested from rubber plantations and rubber-wood is therefore not controlled by the forest authorities. License applications are approved by the individual State Governments. These do not constitute a right to harvest, which is conferred only after a number of preparatory ac-tivities prescribed by the State Forestry Departments are satisfactorily completed and the harvesting license is issued. The State Forestry Departments are responsible for monitoring and ensuring compliance with license conditions, and FDPM conducts au-dits of the State Forestry Departments to monitor the standard of operations in the states. The implementation of control procedures by FDPM is the responsibility of the En-forcement Unit at the FDPM Headquarters in Kuala Lumpur, headed by a director-level senior officer. It supports the enforcement teams of the State Forestry Depart-ments, led by senior officers of equivalent rank to District Forest Officers. The En-


forcement Unit at FDPM is responsible for the MS ISO 9002:1994 Internal Quality Au-diting as well as monitoring the implementation of criteria and indicators for forest management certification, office inspection and monitoring of forest enforcement work in the states. The tasks of the enforcement team, whether it operates alone from FDPM or jointly with its State Forest Office counterparts, are essentially field auditing. The National Forestry Act 1984 (the Act) provides for the State Authority (State Gov-ernment) to determine the duties and responsibilities of the appointed forest officers, with wide-ranging but specific powers to ensure proper administration of the forest. Particularly relevant are the provisions in Part II of the Act, pertaining to “Administra-tion”, Part IV, “Forest Management and Development”, and Part VIII, “Enforcement”. It is a legal requirement that State Forestry Departments prepare and submit annual reports of activities to the State Authority and the Director General of FDPM, and it is incumbent upon the latter to assist the State Forestry Departments in ensuring ade-quate quality of performance in the field. The FDPM enforcement team works jointly with its state counterparts, in seeing that there is compliance with regulations on forest harvesting operations; payment of forest charges (royalty, premium, silvicultural cess etc.). The enforcement job also includes monitoring the performance of forest officers in carrying out the duties and responsibilities vested upon them to arrest, search, seize and investigate, as determined by the Act. It is an offence under Section 107 of the Act, for abuse of power, subjecting the officer upon conviction, to a fine, imprison-ment, or both. In normal practice, minor forest offences or errors in performance of official duties are rectified on the spot and reported to the State Director of Forests for guidance. For the more serious forest offences especially those related to illegal felling, evading pay-ment of forest charges, or dereliction of public duties, a detailed report is prepared for submission to the Director General of Forests (if they are detected by the Kuala Lum-pur Enforcement Unit), to be processed and transmitted to the State Director for ap-propriate action, in accordance with the law, or procedures in the Public Service Gen-eral Orders. Offences, if detected by the State’s own enforcement team, will be re-ported in detail directly to the State Director for similar action. Table 11 below indicates the strength of the enforcement units at FDPM and the State Forestry Departments (December, 2007). Personnel totalling 159 cover 4.738 million hectares of PFE giving a figure of more than 30,500 hectares per person. This does not include state land areas extending to over 473,500 hectares (December, 2006). In addition, there are 491 primary processing mills in operation that have to be checked on.


Table 11 Enforcement resources and activities (Peninsular Malaysia)

Forestry Office Staff Vehicles PFE1 Mills

FDPM 4 1 0 0

Johore 11 2 392 56

Kedah 4 1 343 23

Kelantan 32 4 630 54

Melaka 5 1 5 20

Negri Sembilan 23 1 158 31

Pahang 31 5 1 519 92

Perak 10 2 884 75

Perlis 9 1 11 0

Pulau Pinang 5 1 5 31

Selangor 5 1 245 31

Terengganu 20 3 546 76

TOTAL 159 23 4 738 489 1 PFE area (ha x 1 000) Of about 5 500 forestry staff in Peninsular Malaysia only 159 people or 2.8% of the to-tal are engaged in enforcement work. The Enforcement Unit at FDPM is in the process of reorganization to increase its capacity and approval has been granted recently to set up a section dealing with Law and Prosecution. From the extent of forests to be covered and the percentage of the total human re-sources vested with the tasks of carrying out enforcement duties, one can conclude that the strength of the enforcement teams is disproportionately small. The effective-ness of enforcement would be enhanced with more personnel and vehicles. How many staff are required is uncertain, but an increase to 250 officers would mean that an area of around 20,000 hectares of forest (including state land) is covered per per-son, compared to approximately 33,000 hectares, today. A positive development is the Department’s current plan to introduce RFID technology in tree marking and log labelling. This will facilitate timber tracking and expedite chain of custody work, while greatly enhancing effectiveness in the control of operations up-stream, payment of government dues and monitoring of timber movement. Movements of timber The State Forestry Departments have responsibility for controlling movement of do-mestic logs to processing mills. MTIB is responsible for control of exports of sawn tim-ber and plywood. Control of imports of logs and LSS and movement to processing mills is jointly controlled by the State Forestry Departments and MTIB. Import of smaller dimension sawn-timber is not regulated except by standard import controls exercised by RMC, which is also responsible for final approval of export shipments, ei-ther to export destinations or to destinations within Malaysia, and for clearance of maritime timber shipments, either from abroad or from within Malaysia. The Registration, Licensing and Enforcement Division of the MTIB is a key entity in implementation of the Peninsular Malaysia TLAS in terms of registering the companies involved in the international trade of logs and timber products and issuing export and import licenses. The MTIB has seven licensing offices in Peninsular Malaysia with en-forcement units responsible for running eight checking stations in the vicinity of exit and entry points used for exporting and importing timber. The MTIB also operates con-trols outside the defined checking stations by physical inspection of export goods at mill sites. Physical inspection by the enforcement units is conducted before an export license is issued and is required before RMC will issue a release order.


The MTIB enforcement team in Kuala Lumpur regularly monitors operations at check-ing stations and at exit and entry points. The monitoring activities of the enforcement team are conducted according to a monthly schedule and by unannounced checks. If serious offences are detected, an officer will be appointed to investigate. Export con-signments under investigation are not allowed to exit Malaysia. If a company has more than two registered offences, depending on their seriousness, registration as an ex-porter/importer can be revoked or the case can be brought to court. Legislation is cur-rently being amended and will allow MTIB to impose fines of up to RM50 000 or for more serious offences courts will be able to impose fines of up to RM200 000 and jail sentences. The MTIB has a certified quality management system covering (i) registration activi-ties, (ii) issuance of export licenses and (iii) physical inspection of exported timber. The certification scope will be extended to cover the import of timber to Peninsular Malaysia (audited in August 2008). The MTIB has 19 internal auditors based in head-quarters and the regional offices. The internal audits are conducted at a frequency of about six months and cover all functions of each office of the MTIB. The assessment findings are collated in audit reports and corrective actions are taken where deemed necessary to improve procedures. Any corrective actions are evaluated in the follow-ing round of internal audits. The MTIB reviews the quality management system, espe-cially the findings of internal audits, and respective corrective actions once a year. SIRIM QAS International, which is accredited by the UKAS, is contracted as an exter-nal auditor to certify the quality management system of the MTIB. The whole system, including supportive activities, such as IT administration, is assessed once a year by three auditors in a two day session. In general, it can be concluded that the division of responsibilities by the TLAS agen-cies is clear in Peninsular Malaysia and the inter-organizational cooperation seems to work well. Some additional procedures and formalized coordination would strengthen the TLAS in areas where effective control is not exercised and might undermine confi-dence in the security that will be provided by TLAS. Understanding of control processes was largely good, but some cases were noted where field staff responsible for critical checks were not fully aware of the procedures and the purpose. These might have been isolated cases, but internal audit procedures should identify problems and adequate training needs to be provided to ensure that staff are fully capable of executing their responsibilities. 4.4.3 Assurance of legality in the forest

Harvesting rights are issued in a two stage process. In the first stage, the applicants are approved by the state governments and are allocated harvesting areas. In the second stage, preparatory activities are undertaken by the applicant in collaboration with the State Forestry Department. The following actions need to be taken and out-puts incorporated into the harvesting license before any harvesting operations may commence:

• PFE o Environmental Impact Assessment, if the harvesting area is 500 ha or

more o Boundary demarcation of the license area o Pre-felling inventory to determine the minimum diameter of trees that

can be harvested in different species group, which are Dipterocarps, non-Dipterocarps and Chengal. The estimated allowable cut for the li-cense area is derived from the inventory

o Tree marking using numbered tags of harvestable trees, seed trees and protection trees

o Road plan o Harvesting plan


o Registration of property mark

• State lands and alienated lands o Environmental Impact Assessment

� If the harvesting area is 500ha or more or for any area in a water catchment or on land adjacent to national parks

� In case of conversion, the EIA is required, if the area is 50ha or more, but this is interpreted by FDPM to be an EIA of the end use and not of the forest harvesting operations

o Boundary demarcation of the license area o Pre-felling assessment to estimate the harvesting volume based on

ocular estimate - inventory is not required o Registration of property mark

The State Forestry Departments monitor and control the production from all license areas by requiring that logs are delivered for inspection to a forestry checking station designated in the license. With respect to harvesting from PFE, production is recon-ciled at checking stations with volume permitted to be extracted under the license and the record of tagged trees contained in the Tree Tagging and Timber Production Con-trol Book. With respect to logs from state land and alienated land, the accumulated volume of logs passing the forestry checking station is monitored against the licensed harvest volume. For all license areas, if the accumulated volume exceeds the licensed volume, the issuance of removal passes is suspended until field inspections have been carried out. The Forestry Department prepares monthly reports on the progress of harvesting op-erations in license areas in PFE and on state and alienated lands. The report includes details of the area, trees and volume harvested, a map showing the harvested areas, workers employed, vehicles operated and general observations on the logging opera-tions and the quality of work. After the licensee has finalized the harvesting opera-tions, the Forestry Department conducts a closing inspection of the license area. A closing report quantifies the trees allocated for log production, total volume harvested and royalties and fees paid, and contains observations on the condition of regenera-tion and a map of the area harvested. Licensees and contractors have a legal obligation to ensure the safety of workers. This includes provision of personal protective equipment and recording and reporting of accidents. Monitoring of workers’ safety during the planning and conduct of forest operations is the responsibility of DOSH. Information from field visits indicated that there is some inconsistency in whether monitoring is actually conducted. Meeting obli-gations for worker safety and health is not linked to the process of issuing harvest li-censes.


Box 7 Conclusions concerning legality in forest (Peninsular Malaysia)

1. The system for controlling the legality of timber extraction from licenses in PFE using pre-harvest tree tagging is robust and, where necessary, makes it possi-ble to trace logs back to stump.

2. Procedures are less robust on state and alienated lands. The source of har-vested logs is controlled by reconciling the licensed volume determined by pre-felling assessment and actual volume measured at Forestry Checking Stations.

3. Regular field inspections by the FDPM staff aim to control volumes extracted from the logging sites on state and alienated lands through visual observation. The efficiency of this method of estimating the consistency between licensed and declared volumes could not be assessed by the evaluation team.

4. EIA requirements or objectives are unclear under the FDPM interpretation, but are included in the TLAS. EIA would seem to be required by current legislation for forest conversion, but one area of forest visited was state land being cleared for establishment of oil palm without an EIA. Clarification on this point would usefully strengthen the TLAS. Specifically, TLAS does not address the need for controlling environmental impacts and carrying out EIA when forest areas of 50 ha or more are to be converted to other land use forms.

5. TLAS Annex B, Part 1, Table 10 addresses the use rights of aborigines by pro-viding royalty exemptions on forest products they collect for specified purposes. The TLAS, however, does not describe how the use rights of Aborigines are

taken into consideration while planning and carrying out harvesting operations.

4.4.4 Control of timber movement

With log exports not permitted from Peninsular Malaysia the general flow of logs is straightforward and is as follows:

• From forest harvesting block to log-landing

• Log landing to main log-yard

• Log-yard via Forestry Checking Station to industry. On issue of a license a deposit is lodged for payment of royalties and fees and this is progressively drawn on according to production recorded at Forestry Checking Sta-tions. Procedures in forest In license areas in PFE, trees are always tagged in advance of harvesting and proce-dures allow logs to be traced if necessary to stump. Timber movement therefore is well controlled. An additional requirement providing extra security is the need for logs to be hammer-marked with both the owner’s registered property mark and the Forestry Department’s mark, which identifies the license. Hammer-marks are required before logs leave the licensee’s log-yard. Tagging is not done in forests on state land or alienated land and the hammer-marks carry extra significance as they are the sole means of identifying the origin of a log, al-though this will only be to the license area. To ensure that hammer-marking is done routinely and movement of logs is not delayed, Forestry Department staff would need to be present at log-yards continuously or at least regularly. The large number of small licenses that may be active in a single Forest District might make this difficult and it is not clear if attendance is always possible, although it is mandatory.


Procedures at Forestry Checking Stations Checking station staff are required to check all logs for markings, and to confirm measurements and species identification. Details are reconciled with the Tree Tagging and Timber Production Control Book for the relevant harvesting license. The royalty payable and the volume are checked against records of royalty deposit and accumu-lated production and total permitted production. No further log movement is permitted if the deposit is exhausted or, as previously mentioned, accumulated production reaches the limit set by the terms of the license. Subject to all checks being in order at the Forestry Checking Station an official removal pass is issued, which provides au-thorization for the load to proceed to destination. Procedures at processing mill On arrival all logs must be entered by the company in the Mill Log Book. Periodically Forestry Staff will visit the mill and examine logs in the mill log-yard, removal passes and the Mill Log Book. If everything is in order Removal Passes are cancelled, which provides an indication that the check has been conducted. The company must submit a monthly return to FDPM containing details of log stocks, log deliveries, logs processed and production. This is used by FDPM for statistical purposes and not at present as a control measure. Procedures for export The MTIB controls cover exports of logs, sawn-timber, veneer and plywood. On re-ceipt of an application the MTIB will first confirm that the applicant is an MTIB regis-tered exporter. Export procedures are detailed in Table 12. Table 12 Export procedures (Peninsular Malaysia)


At mill or export point

Company Sawn-timber grading inspection done by MTIB registered graders & grading summary issued

Grading not required for plywood

Company Application to MTIB for Export Permit with Cus-toms C2 & supporting documents, which are packing list, invoice & grading summary (for sawn-timber only)

On-line application is done by some com-panies but hard copy documents still re-quired

At export point or mill

MTIB Check documents & in-spect consignment to confirm that species, sizes, pieces, volumes & grade tally. C2 is en-dorsed to confirm inspec-tion in order & will issue Export Permit

Inspection is on 10% sample for both con-tainerized & break-bulk shipments

At export point

Customs Documents are checked & consignment is re-leased for shipment

Random inspection may be conducted

There is no link between the State Forestry Departments or FDPM and MTIB in the export procedures and there is no validation that production is consistent with officially registered log supply. Information on log supply is available in the form of monthly mill returns to FDPM. Reconciliation of log supply and volume of product manufactured


would strengthen claims that exported products are derived from legally sourced tim-ber. Given the existence of a great deal of data, the development of such a procedure would seem to be straightforward and would considerably strengthen the TLAS. Box 8 Key findings on control of timber movement (Peninsular Malaysia)

1. Procedures are generally good, but poor working practices, possibly in the for-est, and observed at a Forest Checking Station indicate that training and review of working practices might be required. Without action there is a procedural weakness that could allow illegally harvested logs to be processed through checking stations as legal.

2. The TLAS does not address export restrictions of round logs

3. Forestry Department records of raw material supply, processing and production are not linked to the MTIB procedures for issuance of export permits, a proce-dure which could strengthen claims that mill production is derived from legally sourced logs.

Field observations Observations at a Forest Checking Station in Kuala Kangsar district indicate that logs are not always properly hammer-marked and two loads examined contained logs with no markings, logs with only the owner’s mark and logs with only the Forestry Depart-ment license mark. In such a case there is no means to confirm that logs derived from state land or alienated license areas are from the license area declared on the licen-see’s transport documents. While this might be the result of negligent working prac-tices it also creates an opportunity for logs to be illegally harvested from outside a li-cense area and to be legally processed at a Forestry Checking Station. While the procedures controlling log movement in Peninsular Malaysia are good, par-ticularly for logs from PFE, it is important that staff understand how procedures should be implemented. In the case mentioned above, the lack of Forestry Department ham-mer-marks could indicate negligence by field staff. The alternative possibility is that logs could be from elsewhere and it therefore becomes critically important that staff at checking stations examine logs to make sure that hammer-marks are in order before further processing of logs. It appeared, from the fact that improperly marked logs were being measured without this examination, that no attention was being given to the markings. Internal audit needs to be vigilant in this respect and identify where training is required to ensure that a good system is achieving its intended objectives. 4.4.5 Control of timber imports

Procedures for import and onward transport are covered by TLAS Annex B, Part 1, Tables 17 and 18. Responsibility at point of clearance is shared principally between MTIB, which is responsible for inspection and issuing an import license, and RMC. State Forestry Departments are then responsible for checking logs, collecting any fees due, and issuing Removal Passes permitting movement to mill. The mill owner is re-sponsible for recording logs on arrival in the Mill Log Book, which is periodically checked by Forestry Department staff. Controls described in TLAS Annex B, Part 1, Tables 17 and 18 are clear, except that they do not give any details of information exchange between MTIB and State For-estry Departments, which would be assumed necessary so that the Forestry Depart-ments are alerted to the fact that an import consignment requires inspection. TLAS Annex B, Part 1, Table 17 only refers to MTIB’s role in inspection of logs and LSS and only Customs control is exercised over smaller dimensional timber. While this is understood to correctly describe actual procedures it means that supply to mills


of sawn-timber is uncontrolled and may be unrecorded. Although the MTIB has gross figures for this trade, volumes and details of such trade are not available at present. A large part of the trade could be rubberwood from Thailand and the importance of in-cluding this in the TLAS in order to strengthen the system needs to be considered. The link between import data recorded by Customs, the MTIB and the State Forestry Departments is not described and working practices indicate that this will result in sta-tistical discrepancies. This practice undermines the utility of import statistics for control of wood movement and a review of practices would be recommended to ensure that statistics are accurate. In TLAS Annex B, Part 1, Table 18, control is only mentioned for logs. LSS should presumably be included and, as above, the issue of uncontrolled delivery of smaller dimension sawn-timber should be considered. Box 9 Key findings on control of timber imports (Peninsular Malaysia)

1. Legality of imported logs and LSSs from tropical countries is controlled by cer-tificates of origin.

2. No certificate of origin is required for small dimension sawn timber and other processed products to demonstrate that the imported product is legally sourced in the country of export. The MTIB states that practice is in line with the gov-ernment’s aspiration of liberalizing the imports.

3. Control of transport to the processing mills excludes mention of LSS.

4. Imports of rubberwood require a permit from Department of Agriculture and a phytosanitary certificate from the country of origin, which is not addressed in the TLAS. MTIB also collects import figures of rubberwood sawn timber and monitors the supply-demand situation of rubberwood.

5. The TLAS does not describe how the MTIB, RMC, State Forestry Departments and/or Department of Agriculture inspect the imported logs, LSSs and proc-

essed timber products.

4.5 Verification and issuance of export licenses

The MTIB and STIDC issue export licenses to legal entities that (i) are registered by Companies Commission of Malaysia (CCM) as an exporter, supplier, processor and/or jetty operator, (ii) possess valid timber and/or mill license and (iii) are registered with the licensing authority. With regard to the legality verification of export consignments, the licensing process is directly linked to three criteria in the case of Sarawak and Peninsular Malaysia and four in the case of Sabah. Up to ten other criteria are indi-rectly taken into account, but for as many as five criteria there is no observable link with the licensing process (see Box 10, Box 11 and Box 12). The physical inspection of products for export is based on random checks by the TLAS agencies. Typically logs are inspected at the point of export whereas processed products are inspected either at the mill, container yard or mill.


Box 10 Key findings on the adequacy of verification and licensing functions for Sabah

1. Under current practice, the MTIB verifies directly the compliance of export con-signments to four criteria of the legality standard:

- Criterion 11: Royalty and fees (if logs are exported) - Criterion 13: Issuance of mill license - Criterion 15: Registration of companies - Criterion 16: Export regulation. 2. Indirectly, 10 other criteria are taken into account while issuing export licenses, since they are either a requirement for obtaining a timber license or for issuance of Timber Disposal Permits or Removal Passes:

- Criterion 1: License to harvest - Criterion 2: Environmental management (as regard to EIA process only) - Criterion 3: Plan preparation - Criterion 4: Area demarcation - Criterion 5: Forest inventory (PF) - Criterion 6: Forest Inventory (SL, AL) - Criterion 7: Tree marking - Criterion 8: Control of timber production (to a great extent) - Criterion 9: Log transportation - Criterion 11: Royalty and fees. Systemwise, the compliance to the above 10 criteria is checked by the Sabah For-estry Department prior to allowing the licensee to commence harvesting operations or dispatch timber from the forest (Forestry Checking Station).

3. No observable links between verification and license issuance are found for the rest of the criteria relevant to the exports:

- Criterion 2: Environmental management (compliance to Agreement of Envi-ronmental Condition/Mitigation Declaration)

- Criterion 8: Control of timber production (as regard to monitoring of harvesting operations)

- Criterion 10: Worker safety and health (Forest) - Criterion 12: User rights by Natives - Criterion 14: Worker safety and health (Mill). 4. Communication between MTIB and Sabah Forestry Department, Land and Sur-vey Department, Environmental Protection Department and Department of Occupa-tional Safety and Health on the compliance with legality criteria is not described.

5. It should be pointed out that each consignment of export licensed timber is not necessarily subject to physical inspection prior to its shipment.

6. The TLAS for Sabah does not define the verification bodies.


Box 11 Key findings on the adequacy of verification and licensing functions for Sarawak

1. Under current practice, the STIDC verifies directly the compliance of export con-signments against three criteria of the legality standard:

- Criterion 13: Issuance of mill license - Criterion 15: Registration of companies - Criterion 16: Export regulation.

2. Indirectly, eight other criteria are taken into account while issuing export licenses, since they are either requirement for obtaining a timber license or for issuance of Royalty Removal Passes, Transit Removal Passes or Export Clearance Certifi-cates:

- Criterion 1: License to harvest - Criterion 2: Environmental management (as regard to EIA process only) - Criterion 3: Plan preparation - Criterion 4: Boundary demarcation - Criterion 5: Tree enumeration - Criterion 6: Control of timber production - Criterion 7: Log transportation - Criterion 9: Royalty and fees.

Systemwise, compliance with the above nine criteria is checked by the Ministry of Planning and Resource Management, FDS and SFC prior to allowing the licensee to commence harvesting operations or dispatch timber from the Forest Checking Station.

3 No observable links between the verification and license issuance are found for the rest of the criteria relevant to the exports:

- Criterion 2: Environmental management (as regard to conditions for environ-mental management)

- Criterion 8: Worker safety and health (Forest) - Criterion 10: User rights by Natives - Criterion 12: Worker safety and health (Mill).

4. Communication between STIDC and Ministry of Planning and Resource Man-agement, FDS, SFC, Harwood, Natural Resources and Environment Board and DOSH on the compliance to the legality criteria is not described.


6. The TLAS for Sarawak does not define the verification bodies.


Box 12 Key findings on the adequacy of verification and licensing functions for Peninsular Malaysia

1. Under current practice, MTIB verifies directly the compliance of export consign-ments against four criteria of the legality standard:

- Criterion 13: Issuance of mill license - Criterion 15: Registration of companies - Criterion 16: Export regulation.

2. Indirectly, 10 other criteria are taken into account while issuing export licenses, since they are either a requirement for obtaining a timber license or for issuance of Removal Passes:

- Criterion 1: Approval by state authority - Criterion 2: Environmental management (as regard to EIA process only) - Criterion 3: Plan preparation - Criterion 4: Area demarcation - Criterion 5: Pre-F inventory - Criterion 6: Pre-F assessment - Criterion 7: Tree marking - Criterion 8: Control of timber production (to a great extent) - Criterion 9: Log transportation - Criterion 11: Royalty and fees.

Systemwise, compliance with the above 10 criteria is checked by the State Forestry Departments prior to allowing the licensee to commence harvesting operations or dispatch timber from the forest.

3. No observable links between the verification and license issuance are found for the rest of the criteria relevant to the exports:

- Criterion 2: Environmental management (compliance to conditions brought about in the EIA process)

- Criterion 8: Control of timber production (as regard to monitoring of harvesting operations)

- Criterion 10: Worker safety and health (Forest) - Criterion 12: User rights by Aboriginates - Criterion 14: Worker safety and health (Mill).

4. Communication between MTIB, FDPM, State Forestry Departments, Department of Environment and DOSH on compliance with the legality criteria is not described.


6. The TLAS for Peninsular Malaysia does not define the verification bodies.

4.6 Re-export of timber

4.6.1 Timber in transit and trans-shipment of timber from non-Malaysian origin

Timber moving through Malaysia from other nations is either in transit or is a trans-shipment. Goods may be handled within a Free Commercial Zone (FCZ) controlled by the relevant port authority or outside this zone (the Principal Customs Area). RMC does not have any control over the FCZs apart from entry and exit from or to the Prin-cipal Customs Area. The FCZs are under control of the relevant port authority. Timber in transit must be accompanied by an RMC declaration form (C8) and may be subject to customs examination on entry. If being transported overland, goods must be transferred to Malaysian transport, which has to be an ISO compliant container or bonded vehicle (registered with customs and sealable). The destination on the C8 will


be either bonded premises (where storage, consolidation and re-bundling is permitted) or a port. A general bond must be provided as security and on arrival the RMC dispatch station sends electronic notification to the receiving station. If goods fail to arrive the bond will be forfeited. If the destination is a port, goods can be directly loaded using the C8 as the export document. For movement from bonded premises to port a second C8 is re-quired for export. If goods are for local use an import declaration (C1) must be com-pleted. Timber exported on a C8 is notified to the Statistics Department but is not re-corded as an export. Timber passing through an FCZ must be covered by RMC form ZB1, which covers import, export or trans-shipment. If the load is for direct trans-shipment it must be ac-companied by a ‘Through Bill of Lading’, which gives details, for example, of cargo, place of shipment, vessel on which the goods are loaded and destination. Alternatively where timber is temporarily stored and consolidated the movement is recorded on the ZB1 as an import and later on a second ZB1 as an export, but this is not recorded as an export by the Statistics Department. 4.6.2 Trans-shipment of Timber from Sabah & Sarawak through Peninsular

Malaysia

Timber being exported through an FCZ in Peninsular Malaysia from Sabah or Sara-wak requires an RMC export declaration (C2) as well as a ZB1. The RMC also re-quires a general bond as guarantee that the timber will be exported. This will be re-corded in statistics as an export. Box 13 Key findings on control of re-exports

1. Timber in transit and trans-shipment timber of non-Malaysian origin are not re-corded as exports from Malaysia.

2. The MTIB or STIDC do not control the exports of timber in transit and trans-shipment timber of non-Malaysian origin or issue export licenses for such timber

products.

4.7 Capacity building needs

Capacity building needs can only be evaluated in very general terms without a de-tailed analysis of strengths and weaknesses, but will relate to available manpower and equipment, the intensity with which control procedures are implemented and the effi-ciency of inter agency cooperation. Quantifying the efficiency of overall implementation and the level of resources required would require a far more intensive review of both procedures and working practices, but general comments and observations on capacity building needs are made in sec-tions 4.7.1 and 5.3. 4.7.1 Human resources

The adequacy of existing staff for implementing control procedures of TLAS Annex B is reflected in Table 13, Table 14 and Table 15. As the TLAS relies on current control practices and does not aim to introduce new systems and technologies, there are no immediately identifiable needs for providing the staff of the key TLAS agencies with training. The cost implications or quality and quantity of other resources such as sup-portive staff, vehicles and equipment were not assessed in this study.


Regarding the human resources deployed in each region the relative strength can be compared by taking total staff numbers for the main TLAS agencies and determining the staff ratio per cubic meter of log production as shown in Table 13. Table 13 Ratio of staff to timber production by region

Region Organization Staff Production

(m3/yr x 1000)

Staff ratio (m

3/person)

Sarawak Harwood 399 STIDC 387 SFC 684

Total 1 470 11 890 8 088

Sabah SFD 1 142 MTIB 48

Total 1 190 6 635 5 576

Peninsular Malaysia

FDPM 5 500

MTIB 386

Total 5 886 4 220 717

Some figures for staff numbers are approximate estimates or may not be up to date, and there is no separation of staff directly involved directly in TLAS control activities from other staff involved in supporting activities that may only be indirectly related to TLAS controls. There will also be regional factors, such as number of licenses, which influence operational efficiency. However, it can be clearly seen that Peninsular Ma-laysia, with a much lower volume produced per employee, has far greater human re-sources available than either Sabah or Sarawak. The control of forest operations, including initial transportation of timber to the forest checking station and measurement of timber, has been identified a critical stage in the supply chain. The approach of allocating human resources for this purpose differs by the three Malaysian regions (Table 14). Table 14 Ratio of staff to timber licences by region

Region Organization Staff No of timber licenses

Staff ratio (licenses/person)

Sarawak

SFC 21a 597

b 28,4

Harwood 218 597 2,7

Average 205 597 2,9

Sabah SFD 430c 284 1.5

Peninsular Malaysia

FDPM n/a 811

a including district managers, does not include SAPU staff at export points

b excluding Bakau and Belian licences c Forest rangers and guards for controlling the forest operations and the mills As can been seen in Table 14 the SFC is heavily understaffed, which has resulted in limited monitoring during the harvesting operations. The company currently has eight open posts for district managers and plans to employ 36 new persons for executing field work. If recruitment is successful, the human resources at the district level will in-crease to 65 persons. Harwood has proposed an increase of 35 persons to its manpower in anticipation of additional roles, including implementation of the TLAS. Harwood staffing needs con-sist mainly of log graders for the Sibu/Kapit, Bintulu and Miri regions. The SFD seems to have a reasonable quantity of field staff. The number of rangers and forest guards covering the SFMLAs is likely to be adequate. Obviously the same level of control is not possible for harvesting on state and alienated lands. Provided


that plans to decrease the annual harvesting volumes and timber processing capaci-ties will be implemented there are not necessarily significant needs for increasing the number of SFD staff. In the short term, however, the SFD may suffer from lack of manpower. Wider application of the RIL methods in the permanent forests will require extensive training of the SFD field staff. In Peninsular Malaysia, the high number of timber licenses and relatively small har-vesting volumes per license are a challenge to effective control by the State Forestry Departments. The field staff are probably inadequate for intensive control of all license areas. In addition to the obvious manpower shortages, incidents observed indicate that procedures are not always effectively followed. An example of this was the obser-vation at a checking station in Perak that no checks of log markings were made on two loads of logs, which were both incorrectly marked, thus creating the possibility of ille-gal logs being processed as legal by a checking station. The occurrence of errors of this nature need to be identified by internal audit so that appropriate training is pro-vided and corrective actions can be taken. The FDPM has not provided plans for development of human resources. Depending on the desired level of control, the evaluation team estimates the need for additional personnel be about 20 to 60 persons. The technical evaluation of TLAS did not reveal any severe deficits in the manpower of the MTIB and the STIDC. The MTIB and STIDC staff responsible for issuing export and import licenses, carrying out physical inspections of products and controlling the trade in timber products are summarized in Table 15. Table 15 Ratio of staff to import/export licences by region

Location No. of persons Issuance of

licencesa

(No./month)

Staff ratio (Licences/technician) Managers Technicians

MTIB Sabah

- Kota Kinabalu 2 6 350 58

- Sandakan 1 5 230 46

- Tawau 1 8 440 55

STIDC Sarawak

- Kuching 3 3 120 40

- Sibu 2 400 200

- Tg Manis 3 400 133

- Bintulu 1 5 900 180

- Miri 4 600 150

- Limbang 1 10 10

MTIB Peninsular Malaysia

- Kuala Lumpur 4 12 1080 90

- Port Klang 1 12 940 78

- Johor 1 20 1400 70

- Pahang 1 8 440 55

- East coast 2 8 250 31

- Northern region 1 19 420 22 a estimate based on number of licences issued by MTIB regional offices in 2007 and district level data provided by STIDC The staff ratio expresses the work load of technicians (mainly persons holding Malay-sian Certificate of Education). Table 15 demonstrates that the divisional staff of STIDC have three to four times more licences to be handled than the MTIB staff. STIDC has assessed that it would need four additional technicians, two each in Sibu and Bintulu districts, which seems to be a conservative estimate.


4.7.2 Additional measures

It is unrealistic to expect that the manpower situation of the TLAS agencies will change remarkably in the short term. Therefore, it is important that procedures are sufficiently robust and able to generate an acceptable level of confidence in the TLAS controls. Areas, other than increasing human resources, where capacity building could usefully support the immediate objective of ensuring that the proposed TLAS controls are fully effective include:

• Review of data collection and management procedures to develop systems that allow reconciliation of production volumes throughout the supply chain, covering standing timber, movement of logs and mill inputs and outputs. Ap-propriate quantitative reconciliation would provide indication that controls are working effectively.

• Adoption of tree tagging and electronic data management allowing back to stump traceability. This would improve verification means by the TLAS agen-cies and reduce the levels of staff engaged in monitoring log movement, pos-sibly allowing effective redeployment on more direct control activities such as monitoring harvesting activities.

• Appraisal of internal audit procedures to determine their effectiveness and ca-pacity to identify operating practices that undermine intended levels of control. Good procedures that identify problems would also be important to determine system weaknesses that require strengthening or training needs of the staff.

These three activities would all help to strengthen the credentials of the proposed TLAS. The third activity in particular would help to determine eventually further capac-ity building needs that may include training, staff strengthening in activities where shortages are resulting in crucial weaknesses, or deficient procedures where modifica-tions might be desirable.

4.8 Workability and verifiability of control procedures

The TLAS of Sabah, Sarawak and Peninsular Malaysia include control procedures to ensure legality in the forest, at timber processing plants and while exporting and im-porting timber products. In addition, TLAS includes procedures related to the control of timber movement. The control procedures have a standard structure consisting of (a) criteria, (b) indicators, (c) responsibilities, (d) procedures, (e) outputs, (f) ISO refer-ences and (c) verification. The forest related control procedures address (i) application for harvesting areas, (ii) preconditions to get the license to harvest and (iii) conduct of the harvesting opera-tions (Figure 3). The control procedures associated with these three stages need to be met in a prescribed sequence. Fulfilment of a set of requirements is often a precondi-tion to progress to the following stage in the licensing process. Figure 3 Stages in timber licensing process

Application for harvesting area

Preconditions for harvesting

Harvesting operations

Approval: allocation of harvesting area

License to harvest

Control of operations

Criteria

Criteria

Criteria

Applicant / licensee TLAS agencies


The TLAS aims to summarize the control procedures and related responsibilities and outputs by Principles and Criteria for Legal Timber. Specifications and more detailed instructions for the verification tasks are available in the indicated reference material (e.g. laws, ordinances, other regulations and ISO standards prepared for the key ac-tivities of the TLAS agencies). Box 14 Key findings on workability and verifiability of TLAS control proce-

dures

General

There are no objectives or indicators for the control procedures, which would be useful to specify the purpose and prevent misunderstandings while carrying out au-diting and verification tasks.

References to laws and other regulations are titled as indicators, and it can be in-terpreted that everything covered by the reference documents needs to be included in the control procedure.

TLAS agencies implementing the control procedures are identified. However, the procedures include also tasks the applicant/licensee is responsible for.

Several control procedures, particularly those that are forest related, are not precise in terms of:

- implementation responsibility (e.g. wording in passive form) - timing, including frequency of checks or other activities - location (e.g. whole license area, annual coupe or harvesting block) - legality basis for the requirement (e.g. application of RIL).

Many errors are found in the indicators, responsibilities, procedures and outputs.

Forest related control procedures

The criteria are not properly linked to the timber licensing process. For instance, the output of TLAS Annex B, Table 1 in all the regions is a license to harvest, even if authority to harvest is issued to the applicant only if set preconditions defined by several following Tables are fulfilled.

Control of supply chain from forest to point of exports

The timber supply from the forest to the point of export cannot be easily verified, as the described control procedures have no linkages or are only weakly linked:

- licensed harvesting volume and actual production - arrival of timber at mill, raw material inputs to the processing lines, outputs of

processing lines and deliveries of processed products.

4.9 Independent monitoring

Malaysian TLAS Annex D defines the objectives of independent monitoring for the Third Party Monitor (TPM) that will be appointed to assess the degree to which the TLAS is implemented in practice, and how the results of monitoring will be communi-cated to relevant parties. The TPM monitoring methodology is designed to be evi-dence-based and the audit is intended to be carried out at intervals of approximately 12 months until the key procedures of the key TLAS are ISO certified. The requirements of TPM draw on the accreditation documents applied to certification bodies registering quality management systems (ISO 9001), environmental manage-ment systems (ISO 14001) or conducting product certification. Eligible TPMs must be accredited by the Department of Standards Malaysia and are required to have a proven track record in assessment of the forestry sector (forest management and chain of custody systems) in Malaysia or in other countries with comparable condi-tions.


The complaint mechanisms related to the conduct of independent monitoring are planned to be included in the tasks of the reporting body under the control of the Joint Implementation Committee. The reporting body is also said to function as a focal point for inputs from interested parties. Box 15 Findings on the adequacy of arrangements related to the independ-

ent monitoring

1. The compliance with the accreditation criteria (MS ISO/IEC Guides 62, 65, 66, the ISO/IEC 17021) denotes that the TPM must have a management system that defines, among other things, its impartiality and independence, compe-tence of its assessors, audit and certification procedures, suspension and with-drawal of certificates and complaint mechanisms.

2. It should be noted that seeking of audit inputs from all relevant stakeholder groups or conduct of unannounced audits are not specifically required by the above accreditation criteria.

3. The TLAS requirements for independent monitoring reports (full report and pub-lic summary report) are likely to exceed the standard applied in the context of ISO management systems.

4. Availability of documented regulations for appointing the TPM would improve the credibility and transparency of the TLAS.

5. With respect to the proposed procedures for receiving and approving the inde-pendent monitoring reports by the Reporting Body, only vague safeguards have been provided to ensure that the approval process does not jeopardize the sovereignty of the TPM.

6. The exclusive accreditation right by the Department of Standards Malaysia is likely to restrict the number of TPMs qualified to provide the monitoring ser-vices.

7. No concrete plans have been presented on how the TPM will act after the key procedures of the TLAS are ISO certified. The terms of reference for the TMP were said to be subject to review once key procedures are certified.

8. At present the following TLAS agencies are ISO 9001 certified: MTIB (scope: registration, issuance of export licenses and conduct of physical inspections), STIDC (scope: registration), Harwood (scope: log endorsement and shipping activities) and SFC (scope: regulation of sustainable forest management). In addition, SFC possesses ISO 14001 certificate covering regulations of sustain-able forest management.

The monitoring costs of a mission of nine weeks (three weeks per region) are esti-mated at the level of EUR 190 000. The cost estimate covers the fees of an assess-ment team of four persons and direct expenses of the team members (Table 16).


Table 16 Estimated costs of an IM mission

Cost factors Persons Unit cost Days Total

no EUR no EUR

Fees

- Intl. monitors 2 800 45 72 000

- Malaysian monitors 2 500 45 45 000

Travel expenses

- Intl. travel 2 4000 8 000

- Domestic travel 4 300 45 54 000

- Per diems 4 50 45 9 000

Other expenses 2 000

Total 190 000

Assuming, as per Malaysia TLAS Annex D, that the system will be externally evalu-ated once a year, the total costs of the first four years will be EUR 760 000.


5. CONCLUSIONS

5.1 Coverage

The Malaysian TLAS aims to ensure that all companies issued with licenses to oper-ate (forest, mill, export and import) are in compliance with relevant legislation. No ex-port trade in timber is allowed without appropriate registration with the TLAS agencies and issuance of export licenses by the MTIB or STIDC. Products covered by the TLAS are round logs, sawn timber, veneer and plywood. The above products are considered legal if the timber is harvested under license from ap-proved areas and timber and timber products are exported in accordance with Malay-sian laws, regulations and procedures pertaining to forestry, timber industry and trade. The TLAS entails control procedures for all key stages of the supply chain with the ex-ception of selection criteria for companies that have applied for harvesting rights. Rubberwood, palms and possibly other non-forest species are not covered as they are not subject to control by forest authorities. Secondary products such as mouldings, flooring and furniture are also outside the scope of the TLAS. The TLAS does not include components to curb unauthorized activities of companies or individuals not registered under the system (i.e. entities operating in the grey or in-formal market). However, even though not included in the TLAS description, the agen-cies responsible for implementation have enforcement units to combat illicit activities in the utilization of forest resources and trading in timber products, including import and export activities. The sale by auction of logs or sawn-timber seized through enforcement activities is not addressed in the TLAS. Since seized timber is legally used by the industry, it would be important to integrate this source of timber in the control procedures of TLAS.

5.2 Specific observations

5.2.1 Social and environmental issues

In three areas the TLAS gives uncertain guidance, or guidance is absent. These are:

• Native customary rights, to which the TLAS only clearly addresses the rights of users to collect forest produce and gives no clear guidance on issues of land occupation rights

• Worker safety and health is referenced, but there is no clear indication of how compliance is determined, and there is no requirement that links compliance with export licensing

• Environmental legislation is included and requires companies to prepare EIAs, or take actions that mitigate against environmental degradation, but it is un-clear in what circumstances required practices are followed.

None of the TLAS criteria concerning the above are taken into account in issuing ex-port licences and further consideration needs to be given of how export procedures ensure compliance with relevant legislation. 5.2.2 Verification of log origin

There is considerable variation in controls by region and by forest type and the highest levels of control between pre-felling inventory, licensed harvest volume and actual production are implemented in PFE in Peninsular Malaysia and in areas in Sabah managed under CHP, where logs can be traced back to stump. In Sarawak, and for non-PFE areas in Peninsular Malaysia controls are based on mass-balance methods. There is limited systematic control in Sabah for areas not managed under CHP.


Where the control of timber origin draws exclusively on reconciliation between li-censed volume and actual volumes harvested and transported to forest checking sta-tions, increased confidence in the TLAS could be achieved, for instance, through in-troduction of (i) CHP or equivalent system, (ii) quantitative control of species or spe-cies groups and qualities extracted from forest and (iii) intensified presence of forest department staff in the field. Successful implementation of suitable systems or exten-sion of existing systems would be a very positive enhancement of the TLAS especially in permanent forest areas. The ability to trace production back to stump would increase the overall level of confi-dence, particularly with an effective electronic timber tracking and data management systems. In Peninsular Malaysia and in Sabah where CHP has been adopted, the use of electronic tracking systems are currently under development.

5.2.3 Control of log transport

The point at which logs leave the forest is a critical point in the supply chain and effec-tive means to determine origin from this point onwards would enhance overall supply chain security. There is a high level of control of transport of logs from logging areas to checking stations from all forest areas in Sabah and from PFE in Peninsular Malaysia, but limited systematic control in Sarawak or for other areas in Peninsular Malaysia. In Sarawak the LPI system currently applied only in Sibu region allows traceability back to block under operational control of the licensee. There are plans to extend the use of LPI system also to other regions of Sarawak. The means to verify objectively log origin and legality are weak where logs are trans-ported for considerable distances before there is any log inspection, or where inspec-tion may only be conducted on a random basis as is the case in Sarawak. Also, from licence areas in state land and alienated land the basis of controls can be weak as there are no physical means to verify origin, and there may either be no estimates, or only very rough estimates, of expected harvest volumes against which to monitor log production. Where monitoring in the forest is not conducted it will be difficult to substantiate claims that all logs are legally harvested. Logs observed at a Checking Station in Peninsular Malaysia without proper hammer-marks indicate that either Forestry Department staff were not conducting inspection in the forest or proper working practices were not be-ing followed. Appropriate levels of monitoring are important that staff ensure proper controls are implemented and can be properly verified to support claims that no illegal logs are entering the supply chain. 5.2.4 Timber processing and export licences

In all regions logs are inspected on arrival at processing mills and records are main-tained of input volumes, although in the case of Sarawak the TLAS does not identify the control books in use. It is also a requirement that mill operators submit mill in-put/output returns, but this is not mentioned for any of the regions and so clarity is lacking on the purpose or possible utilization of this data that could be used to strengthen considerably the effectiveness of the TLAS. It would be logical if mill input/output returns were analyzed and used for control pur-poses. Figures calculating mass-balances could provide objective verification that log volumes being processed are consistent with the officially permitted harvest volumes. As the required data already exists it would appear to be straightforward to review whether the data is accurate and adequate and then to develop a data management system that reconciles figures and can potentially alert the authorities to any inflows and utilization of unrecorded log production. Such a system is understood to be under development or in use, for instance, in Brazil to provide evidence that only legally har-vested timber is being processed by industries.


The further logic of mill input/output returns would be that they are used in the process of issuing export licences. However, there is no requirement by either MTIB or STIDC that the issuance of export licences makes any reference to these returns and be-cause such a procedure is lacking, export licences are currently issued without any systems to verify that a mill is processing only legally supplied logs. This is a weak link in the proposed TLAS, but one that could be easily strengthened by extending the use of data that is currently collected and expanding the procedure for issuing export li-cences to require that mills can demonstrate that only officially log supplies are used in production.

5.3 Capacity building

Effective implementation of the TLAS will require adequate human resources and equipment. It is also essential that systems and procedures provide comprehensive control of the supply chain. Regarding staff and equipment, a detailed analysis of strengths and weaknesses would be necessary to quantify precise needs, but it is noted that the available human resources vary greatly by region with the indications being that Sarawak is the least resourced. Various TLAS agencies, notably SFC, Harwood and STIDC, are intending to recruit staff and increase the operational capability (see section 4.7). As well as increased levels of human resources it is important that staff are ade-quately trained to ensure that implementation provides an acceptable level of confi-dence in the TLAS controls. Specific training needs cannot be determined at this stage, but it is important that internal audit units are able to identify weaknesses and determine appropriate corrective actions that might be required to resolve problems. Preliminary recommendations on capacity building are:

• data collection and management procedures should be reviewed with recom-mendations to be made on requirements and options for developing systems that allow reconciliation of production volumes throughout the supply chain to provide objective means to verify that only officially harvested log volumes are being processed.

• the current status of timber tracking and data management systems should be reviewed to determine to what extent they are able to support the various con-trol procedures and what actions might be required to address any weak-nesses.

• internal audit procedures should be reviewed to determine to what extent they are effective in identifying procedural problems, staff training needs and addi-tional human resource requirements.

5.4 Workability and verifiability of control procedures

It would be useful to review the control procedures as described in the TLAS and sys-tematically assess their adequacy for operational control and verification tasks by relevant government agencies and the independent monitor. The objective of a revi-sion would be to produce concise but accurately described procedures that enable verification of the legal compliance rather than incorporate the whole control system of ISO standards and other reference material into the TLAS. In a number of areas there is potential to improve the proposed TLAS. Issues that merit further attention are:

• Procedures included in the TLAS could be expanded as actual controls exer-cised sometimes exceed the controls described


• Procedures do not always follow a logical sequence that conforms with actual working practices

• Descriptions of procedures are sometimes lacking in clarity and it is not al-ways obvious, which agency has responsibility, how a procedure is imple-mented and what are the linkages with other procedures

• The use of much of the data currently collected is not clearly described and of-ten there is no indication of whether or how data is used effectively for moni-toring and control.

As indicated in the previous report sections, the current TLAS does not include practi-cal means for managing quantitative data throughout the supply chain that makes it possible to reconcile data between the different stages of the supply chain. Therefore, verification of the supply chain will be challenging.

5.5 Independent monitoring

The future of the independent monitoring function is not clear after the key procedures of the TLAS are ISO certified. It was concluded that the ISO certified agencies are considered to be capable of ensuring legal compliance as defined by the TLAS and therefore the role of the TPM can be decreased. Further information would be needed to assess the efficiency of the long term IM arrangements.

5.6 Overall conclusions

In visiting the various TLAS agencies or the private sector companies, the evaluation team discovered no systematic TLAS related non-compliances that were not agreed upon with the authorities and that controls and procedures largely exist and are being implemented. However, some working practices are not included in the TLAS and linkages between procedures are not always established or clear. A great deal of use-ful data collected is underutilized and its incorporation could considerably strengthen the effectiveness of the TLAS to ensure legal timber production and trade in timber products. While the proposed TLAS is a useful basis for developing licensing procedures it is concluded that (i) the control procedures of the TLAS should be revised to facilitate straightforward verification without extensive consultation of reference documents, (ii) environmental management of forest conversion and other users’ rights will be better integrated in the forestry planning system, (ii) control between licensed and actually harvested timber and inputs and outputs at processing mills and other management of quantitative data will be intensified and (iv) unambiguous means will be developed to demonstrate how individual legality criteria affect the decision on issuance of export li-censes.

48

Annex 1 Malaysia Timber Legality Assurance System (TLAS)

Malaysia-EU FLEGT VPA

TIMBER LEGALITY ASSURANCE SYSTEM

1. Introduction

1.1 Under the FLEGT Voluntary Partnership Agreement (VPA) between the European Union and

Malaysia, assurance of legal timber exported to the EU can be provided using licences issued

by Malaysia. These licences will be underpinned by a Timber Legality Assurance System

(TLAS) agreed upon under the VPA.

1.2 Key components of the TLAS are:

(i) definition of legal timber

(ii) principles and criteria of legal timber

(iii) control procedures

2. Product coverage

(iv) logs

(v) sawntimber

(vi) veneer

(vii) plywood

(viii)

3. Definition of Legal Timber

Under the VPA, the definition of legal timber is as follows:

’Timber harvested by licensed person from approved areas and timber and timber prod-

ucts exported in accordance with the laws, regulations and procedures pertaining to for-

estry, timber industry and trade of Malaysia’

4. Principles and Criteria of Legal Timber

4.1 Annex A provides detailed information regarding the principles and criteria of the above defini-

tion which is consistent with those identified by the EU under the VPA.

4.2 Due to differences in legislations between Peninsular Malaysia, Sarawak and Sabah, Annex A

is prepared separately for each region.

5. Control Procedures

5.1 To ensure the supply and export of legal timber to the EU market as defined under paragraph 3,

it is proposed that the TLAS under the VPA will be the existing system of issuance of export li-

49

cences for timber and timber products from the three regions of Malaysia, as implemented by

the Malaysian Timber Industry Board (MTIB) in Sabah and Peninsular Malaysia, and the Sara-

wak Timber Industry Development Corporation (STIDC) in Sarawak. The control procedures

and documents involved in the process of issuing the export licences for timber products by

MTIB and STIDC will ensure that the laws, regulations and procedures dealing with forest har-

vest licensing, mill licensing, export and import licensing have been complied with.

5.2 A detailed description of the control procedures is given in Annex B. As procedures differ be-

tween Peninsular Malaysia, Sarawak and Sabah, Annex B is prepared separately for each re-

gion.

5.3 The control procedures when implemented will be subject to an independent monitoring process

by a third-party monitor (TPM). The functions of the TPM is detailed in Annex D.

6. Sources of timber

6.1 Malaysia’s domestic timber is sourced from the following categories of forested land which are

Permanent Forest, State Land and Alienated Land established under different legislation in

Peninsular Malaysia, Sarawak and Sabah as defined in Annex C.

6.2 The forested land can be natural or planted forests. Currently most of the timbers are harvested

from natural forests, while some are from planted forests which can be established on Perma-

nent Forest, State Land and Alienated Land. Where control procedures between natural forest

and planted forest/industrial tree plantations (ITP) differ significantly, these are indicated in the

relevant tables in Annex B.

6.3 Some timbers are also imported to supplement domestic sources of timber. Such imports are

well regulated as described under Principle 6 of Annexes A and B.

50

Malasyia TLAS Annex A: Principles and Criteria of Legal Tim

ber

Part 1: Peninsular M

alaysia

Principle

Criteria

Related Legislations / Reference

Source of Tim

ber

PF

SL

AL

Imp

1.R

ight to

harv

est

Appro

val by th

e Sta

te Auth

or-

ity

National Fore

stry A

ct 1984 [Sections 1

4 &

19]

X

X

X

Environm

enta

l m

anagem

ent

Environm

enta

l Quality

Act 1974 [Section 3

4A]

Environm

enta

l Quality

(Pre

scribed A

ctivities) (E

nvironm

enta

l Im

pact Assessm

ent) O

rder

1987

X

X

X

X

X

X

Plan p

repara

tion

National Fore

stry A

ct 1984 [Section 2

0]

X

X

X

2.F

ore

st opera

tions

Are

a d

em

arc

ation

National Fore

stry A

ct 1984 [Section 2

0]

X

X

X

Pre

-F invento

ry/ assessm

ent

Malaysian Fore

st Manual

X

X

X

Tre

e m

ark

ing

Malaysian Fore

st Manual

X

Control of tim

ber pro

duction

Malaysian Fore

st Manual

X

X

X

Log tra

nsportation

National Fore

stry A

ct 1984 [Section 6

8 (1)]

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5]

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

3.S

tatu

tory

charg

es

Royalty a

nd fees

National Fore

stry A

ct 1984 [Sections 6

0, 61 &

73]

X

X

X

4.O

ther users

’ rights

User rights

by A

borigin

es

National Fore

stry A

ct 1984 [Section 6

2]

Aborigin

al Peoples A

ct 1954 [Sections 6

,7 &

8]

X

X

X

X

5.M

ill opera

tion

Issuance o

f licence

Wood B

ased Industries E

nactm

ent 1985 [Section 3

] X

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5]

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

X

X

6.T

rade a

nd C

us-

tom

s

Registration o

f com

panies

Malaysian T

imber In

dustry B

oard

(In

corp

ora

tion) Act 1973

Tim

ber In

dustry (Registration) Rules 1

991

X

X

X

X

X

X

Export regulations

Custo

ms A

ct 1967, Custo

ms (Pro

hibition o

f Export) Ord

er 1998

Malaysian T

imber In

dustry B

oard

(In

corp

ora

tion) Act 1973

X

X

X

X

X

X

X

X

Im

port regulations

Malaysian T

imber In

dustry B

oard

(In

corp

ora

tion) Act 1973

Custo

ms A

ct 1967, Custo

ms (Pro

hibition o

f Im

ports) Ord

er 2006

Plant Quara

ntine A

ct 1976

X

X

X

Tra

nsportation

of

imported

logs

National Fore

stry A

ct 1984 [Section 6

8 (1)]

X

Sourc

e o

f Tim

ber: P

F =

Perm

anent Fore

sts

; SL =

Sta

te Land; AL =

Alienate

d Land; Im

p =

Im

port

51

Part 2: Sarawak

Principle

Criteria


Source of Tim

ber

PF

SL

AL

Imp

1.R

ight to

harv

est

Licence to h

arv

est

Fore

sts

Ord

inance (Cap 1

26) [S

ections 4

9 (1)(

a), 5

0, 55, 58, 59 &

65B]

X

X

X

Environm

enta

l m

anagem

ent

The N

atu

ral Resourc

es a

nd E

nvironm

ent Ord

inance (Cap 8

4)

The N

atu

ral Resourc

es a

nd E

nvironm

ent (P

rescribed A

ctivities) Ord

er 1994, Item

2 o

f First

Schedule

X

X

X

X

X

X

Plan p

repara

tion

Fore

sts

Ord

inance (Cap 1

26) [S

ection 9

5 (1)(

a)(

b)(

f)(i)(

q)]

X

2.F

ore

st opera

tions

Boundary

dem

arc

ation

Fore

st Rules 1

962, Rules 1

0 &

19

X

X

X

Tre

e e

num

era

tion

Field Instructions for 10%

Sam

pling (Enum

era

tion)

X

X

Control of tim

ber pro

duction

Fore

st Rules 1

962, Rule 2

2(1

)

Fore

sts

Ord

inance (Cap 1

26) [S

ection 6

7A (a)]

Fore

sts

Ord

inance (Cap 1

26) [S

ection 5

9]

X

X

X

X

X

Log tra

nsportation

Fore

st Rules 1

962, Rule 2

2(5

)

Fore

sts

Ord

inance (Cap 1

26) [S

ection 6

7,6

7A (7)(

a)(b)(c)]

X

X

X

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5 ]

Fore

sts

Ord

inance (Cap 1

26) [S

ection 5

4A &

54B]

Labour Ord

inance (Sara

wak) (C

ap 7

6)

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

X

X

X

X

X

X

3.S

tatu

tory

charg

es

Royalty a

nd fees

Fore

sts

Ord

inance (Cap 1

26) [S

ection 5

2(2

)]

X

X

X

4.O

ther users

’

rights

User rights

by N

atives

Fore

sts

Ord

inance (Cap 1

26) [S

ections 1

4, 33, 45 a

nd 6

5]

X

X

5.M

ill opera

tion

Issuance o

f licence

Fore

sts

Ord

inance (Cap 1

26) [S

ection 6

6]

Sara

wak T

imber In

dustry (Registration) Regulations 1

999

The S

ara

wak T

imber In

dustry D

evelopm

ent Corp

ora

tion O

rdinance 1

973

X

X

X

X

X

X

X

X

X

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5]

Fore

sts

Ord

inance (Cap 1

26) [S

ection 5

4A &

54B ]

Labour Ord

inance (Sara

wak) (C

ap 7

6)

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5]

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

X

X

52

Principle

Criteria


Source of Tim

ber

PF

SL

AL

Imp

6.T

rade a

nd C

us-

tom

s

Registration o

f com

panies

The S

ara

wak T

imber In

dustry D

evelopm

ent Corp

ora

tion O

rdinance 1

973

The S

ara

wak T

imber In

dustry (Registration) Regulations 1

999

X

X

X

X

X

X

X

X

Export regulations

The S

ara

wak T

imber In

dustry D

evelopm

ent Corp

ora

tion O

rdinance 1

973

The T

imber Gra

ding R

egulations 1

975

Custo

ms A

ct 1967 [Section 1

0]

Custo

ms A

ct 1967, Custo

ms (Pro

hibition o

f Export) Ord

er 1998

Custo

ms D

uties (Exem

ption) Ord

er 1988

Fore

sts

Ord

inance (Cap 1

26), T

he R

am

in Logs (Pro

hibitions o

f Export) Ord

er 1980

Wildlife

Pro

tection O

rdinance 1

998

Fore

sts

Ord

inance (Cap 1

26), T

he R

am

in S

horts a

nd S

quare

s (Pro

hibition o

f Export) Ord

er

1991

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Im

port regulations

The S

ara

wak T

imber In

dustry D

evelopm

ent Corp

ora

tion O

rdinance 1

973

Custo

ms A

ct 1967 [Section 1

0]

Custo

ms A

ct 1967, Custo

ms (Pro

hibition o

f Im

ports) Ord

er 2006

Plant Quara

ntine A

ct 1976

X

X

X

X

Tra

nsportation o

f im

ported

logs

The S

ara

wak T

imber In

dustry D

evelopm

ent Corp

ora

tion O

rdinance 1

973

X

Sourc

e o

f Tim

ber: P

F =

Perm

anent Fore

sts

; SL =

Sta

te Land; AL =

Alienate

d Land; Im

p =

Im

port

53

Part 3: Sabah

Principle

Criteria


Source of Tim

ber

PF

SL

AL

Imp

1.R

ight to

harv

est

Licence to h

arv

est

Fore

st Enactm

ent 1968 [Sections 1

5 &

24]

X

X

X

Environm

enta

l m

anagem

ent

Environm

ent Pro

tection E

nactm


2, 20 &

37]

Environm

ent Pro

tection (Pre

scribed A

ctivities) (E

nvironm

enta

l Im

pact Assessm

ent) O

rder 2005

X

X

X

X

X

X

Plan p

repara

tion

Fore

st Enactm

ent 1968 [Section 2

8A]

X

2.F

ore

st opera

-

tions

Are

a d

em

arc

ation

Land O

rdinance (Cap 6

8) 1958, Part III

X

X

X

Fore

st invento

ry

Mediu

m T

erm

Fore

st In

vento

ry M

anual

Directo

r of Fore

stry C

ircular No.3

/87

X

X

X

Tre

e m

ark

ing

Reduced Im

pact Loggin

g G

uidelines 2

002

X

Control of tim

ber pro

duction

Reduced Im

pact Loggin

g G

uidelines 2

002

Fore

st Rules 1

969, Rule 1

5

X

X

X

X

Log tra

nsportation

Fore

st Rules 1

969, Rule 1

5(1

)

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5]

Sabah Labour Ord

inance 1

967

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

X

X

X

3.S

tatu

tory

charg

es

Royalty a

nd fees

Fore

st Enactm


4C, 42(d

),(e

)]

Fore

st Rules 1

969, Rule 1

2(1

)

Fees E

nactm

ent 1981

X

X

X

X

X

X

X

4.O

ther users

’ rights

User rights

by N

atives

Fore

st Enactm

ent 1968 [Section 4

1]

Fore

st Rules 1

969

Land O

rdinance 1

958 (Sabah C

ap 6

8)

X

X

X

X

X

X

X

5.M

ill opera

tion

Issuance o

f licence

Fore

st Enactm

ent 1968 [Section 4

2]

Fore

st Rules 1

969, Rule 1

9(1

)

X

X

X

X

X

X

X

X

W

ork

er safe

ty a

nd h

ealth

Occupational Safe

ty a

nd H

ealth A

ct 1994 [Section 1

5]

Sabah Labour Ord

inance 1

967

Work

men’s C

om

pensation A

ct 1952 (Act 273)

X

X

X

X

X

X

X

X

X

X

X

X

54

Principle

Criteria


Source of Tim

ber

PF

SL

AL

Imp

6.T

rade &

custo

ms

Registration o

f com

panies

Malaysian T

imber In

dustry B

oard

(In

corp

ora

tion) Act 1973

Tim

ber In

dustry (Registration) Rules 1

991

X

X

X

X

X

X

Export regulations

Malaysian T

imber In

dustry B

oard

(In

corp

ora

tion) Act 1973

Fore

st Enactm

ent 1968 [Section 4

2(b

), 4

2(c

)(i)]

Fore

st Rules 1

969, Rules 1

7(1

) & 1

7A(1

)

Custo

ms A

ct 1967, Custo

ms (Pro

hibition o

f Export) Ord

er 1998

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Im

port regulations

Custo

ms A

ct 1967, Custo

ms (Pro

hibition o

f Im

port) Ord

er 2006

Malaysian T

imber In

dustry B

oard

(In

corp

ora

tion) Act 1973

Plant Quara

ntine A

ct 1976

X

X

X

Tra

nsportation o

f im

ported

logs

Directo

r’s C

ircular on Im

port

The Fees E

nactm

ent 1981 [The F

ees (Fore

stry D

epartm

ent) S

erv

ice o

f In

spection a

nd C

ertifica-

tion O

rder 1999]

X

X

Sourc

e o

f Tim

ber: P

F =

Perm

anent Fore

sts

; SL =

Sta

te Land; AL =

Alienate

d Land; Im

p =

Im

port

55

Malasyia TLAS Annex B

Details of Control Procedures for TLAS

Part 1 – Peninsular Malaysia

1.

2.

Region PENINSULAR MALAYSIA Sources of timber PF, SL & AL

Principle 1 Right to Harvest

Criterion Approval by State Authority

Indicator National Forestry Act 1984 [Sections 14 & 19]

Responsibility State Authority – approval (PF & SL)

State Forestry Department – issuance of licence

Procedure Approval by State Authority

Payment of premium

Issuance of licence conditional upon compliance:

• National Forestry Act 1984 [Section 20]

• Environmental Quality Act 1974 [Section 34A]

Outputs Licence to harvest

ISO Reference -

Verification Valid licence



Criterion Environmental management

Indicator • Environment Quality Act 1974 [Section 34A]

• Environment Quality (Prescribed Activities) (Environmental Impact Assessment)

Order 1987, Item 6 of Schedule

Responsibility Department of Environment (DoE)

Procedure • Determine if timber harvesting in the approved area constitutes a prescribed ac-tivity

• If required, licensee undertakes an Environmental Impact Assessment with pro-posed mitigation measures

• Approval and specified mitigation measures

Outputs DoE approval

ISO Reference -

Verification Letter of Approval

56

3.

4.

5.



Criterion Plan preparation

Indicator National Forestry Act 1984 [Section 20]

Responsibility State Forestry Department

Procedure Licensee is required to:

• Demarcate license area

• Prepare harvesting plan (PF)

• Register property mark

to be submitted to the State Director of Forestry for approval

Outputs Area demarcation, harvesting plan and registration of property mark

ISO Reference MS ISO 9001: 2000

Verification Approved harvesting plan / boundary marking


Principle 2 Forest operations

Criterion Area demarcation

Indicator National Forestry Act 1984 [Section 20 (a)]


Procedure • Under-brushing of boundary

• Marking of selected trees along boundary

Outputs Licence area mapped and clearly demarcated

ISO Reference MS ISO 9001: 2000 PK(P)-HUTAN-O2-SEMPADAN (PF)

Verification Boundary trees marked



Criterion Pre-F Inventory

Indicator Forest stand data collected; Malaysian Forest Manual


Procedure Conduct forest inventory based on Malaysian Forest Manual

* The above procedures are not applicable for ITP

Outputs Cutting limit determined and allowable harvest volume computed

ISO Reference MS ISO 9001: 2000 PK(P)-HUTAN-03-PREF(J)

Verification Inventory report

57

6.

7.

Region PENINSULAR MALAYSIA Sources of timber SL & AL


Criterion Pre-F Assessment

Indicator Data collected to estimate harvest volume; Malaysian Forest Manual


Procedure Conduct assessment to estimate harvest volume based on Malaysian Forest Manual

Outputs Estimated harvest volume

ISO Reference -

Verification Assessment report



Criterion Tree Marking

Indicator Tree marking in accordance with Malaysian Forest Manual


Procedure Trees marked for:

• Retention for seed sources

• Retention for protection

• Felling

• Felling for Road construction


Outputs Trees to be felled and retained for various purposes numbered and recorded

ISO Reference MS ISO 9001:2001 PK(P)-HUTAN-05-TANDAPOKOK(J)

Verification Trees marked with tags of different colours

58

8.

9.



Criterion Control of timber production

Indicator Inspection of logs and production records in licensed area / Forest Checking Station; Malaysian Forest Manual


Procedure The following key procedures and documents are used to control timber production :

• The number of logs and volume recorded by species in the ‘Tree Tagging and Timber Production Control Book’ (PF)

• Trees felled recorded in the ‘Tree Felling Control Form’ (PF, SL)

• Tagging on stumps (PF)

• Monitoring of harvesting operations (PF, SL)

• Records of logs extracted from the forest at the Forest Checking Station

The above procedures are not applicable for ITP

Outputs • Tree Tagging and Timber Production Control Book

• Tree Felling Control Form

• Harvesting Monitoring Report

ISO Reference MS ISO 9001:2000 PK(P)-HUTAN-08-USAHAKAWAL (PF)

Verification Records indicated in the “Outputs” in the Forest Checking Station



Criterion Log transportation

Indicator National Forestry Act 1984 [Section 68 (1)]

• Movement of log from forest to designated Forest Checking Station

• Movement of log from Forest Checking Station to mill. Act 313, National Forestry

Act 1984, Section 68 (1)


Procedure • License area to checking station: Inspection of logs at the Forest Checking Station verified by Tree Tagging and Timber Production Control Book

• Issuance of Removal Pass

• Checking station to mills: Movement of logs from Forest Checking Station accom-panied by Removal Pass with detail of log in consignment

• Upon arrival at mills, details of logs are entered in Mill Log Book

• Removal Passes are cancelled by Forest Officer in the mill, after due inspection to ensure that the logs have been received by the mill and their details have been recorded in Mill Log Book

Outputs • Removal Pass

• Details of logs recorded in Mill Log Book

ISO Reference MS ISO 9001:2000 PK(P)-HUTAN-08-USAHAKAWAL (PF)

Verification Records indicated in the “Outputs” at the Forest Checking Station and the mill involved

59

10.

11.



Criterion Worker safety and health

Indicator • Occupational Safety and Health Act 1994 [Section 15]

• Workmen’s Compensation Act 1952 (Act 273)

Responsibility Department of Occupational Safety and Health (DOSH)/Department of Labour

Procedure • Ensure that company maintains records of worker’s training on safety and health showing what training was conducted, who attended and any certificates awarded

• Ensure the adequacy of safety equipment provided to workers and briefing mate-rials or posters used to maintain awareness in the workplace

• Ensure adequate precautions to provide worker’s safety in the event of fire or other accidents

• Ensure that workers are insured

Outputs Work instructions, training, insurance and incident records

ISO Reference -

Verification Work instructions, training, insurance and incident records


Principle 3 Statutory Charges

Criterion Royalty and fees

Indicator National Forestry Act 1984 [Sections 60, 61 & 73]; Malaysian Forest Manual


Procedure • Assessment of royalty and cess made at Forest Checking Station

• Removal Pass issued and logs hammer-marked to indicate payment made


• Revenue hammer-mark on logs

ISO Reference -

Verification • Monthly Removal Pass Summary at Forest Checking Station/State Forestry De-partment

• Copies of Removal Pass at Forest Checking Station

• Logs with revenue hammer-marks at Forest Checking Station

60

12.

13.


Principle 4 Other users’ rights

Criterion User rights by Aborigines

Indicator • National Forestry Act 1984 [Section 62(2)(b)]

• Aboriginal Peoples Act 1954 [Sections 6, 7 & 8]


Procedure Royalty exempted on any forest produce taken by Aborigines for ;

• Construction and repair of temporary huts on land lawfully occupied by such Abo-rigines

• Maintenance of fishing stakes and landing places

• Fuel wood or other domestic purposes

• The construction or maintenance of any work for the common benefit of the Abo-rigines


Outputs Letter of approval by State Forestry Department

ISO Reference -

Verification Letter of approval

Region PENINSULAR MALAYSIA Sources of timber PF, SL, AL & Imp

Principle 5 Mill operation

Criterion Issuance of mill licence

Indicator Wood Based Industries Enactment 1985


Procedure The licensee is required to :

• submit an application form

• comply with the terms and conditions of the licence including the submission of Shuttle Return

• pay necessary fees

Outputs Licence for mill to operate

ISO Reference -

Verification Valid mill licence

61

14.

15.






Responsibility Department of Occupational Safety and Health (DOSH)/Department of Labour



• Ensure the adequacy of safety equipments provided to workers and briefing mate-rials or posters to ensure awareness in the workplace

• Ensure adequate precautions in place to provide worker’s safety in the event of fire or other accidents


ISO Reference -


Region PENINSULAR MALAYSIA Sources of timber PF, SL, & AL

Principle 6 Trade and Customs

Criterion Registration of companies

Indicator • Malaysian Timber Industry Board (Incorporation) Act 1973

• Timber Industry (Registration) Rules 1991

Responsibility Malaysian Timber Industry Board

Procedure • Ensure that the applicant for registration as an exporter, supplier, processor, and

jetty operator has been registered with Companies Commission of Malaysia (CCM)

• Supplier must possess mill licence from State Forestry Department

• Payment of registration fee

• Other conditions as specified under Registration Guidelines

Outputs Registration certificate

ISO Reference MS ISO 9001 : 2000 PK(P)-MTIB-PENDAFTARAN-01

MS ISO 9001 : 2000 PK(P)-MTIB-PEMBAHARUAN-02

Verification List of registered companies/valid registration certificate

62

16.



Criterion Export regulations

Indicator • Malaysian Timber Industry Board (Incorporation) Act 1973 [Section 13]

• Customs Act 1967, Customs (Prohibition of Export) Order 1998

• Timber Cess Order 2000

Responsibility Malaysian Timber Industry Board

Procedure • Ensure applicant for export licence is a registered exporter

• Ensure timber supplied and processed is obtained from registered supplier and processor.

• Submission of Customs Export Declaration Form (CD2) and other supporting documents

• Payment of export cess as prescribed in the prevailing Timber Cess Order 2000

• Issuance of export licence

Outputs Export licence

ISO Reference MS ISO 9001 : 2000 –PK(P)-MTIB-PROSES LESEN-03

MS ISO 9001 : 2000 –PK(P)-MTIB-PENAMBAHAN SES-04

MS ISO 9001 : 2000 – PK(P)-MTIB- FIZIKAL -06

Verification Valid export licence

63

17.

18.

Region PENINSULAR MALAYSIA Sources of timber PF, SL, & AL


Criterion Import regulations

Indicator • Customs Act 1967, Customs (Prohibition of Import) Order 2006

• Malaysian Timber Industry Board (Incorporation) Act 1973

• Plant Quarantine Act 1976

Responsibility Malaysian Timber Industry Board (MTIB)/ Royal Malaysian Customs / Department of

Agriculture

Procedure For logs and Large Scantlings and Squares (LSS)

• Company or person to register with Companies Commission of Malaysia

• Company/person to obtain import approval from the MTIB. Documents required to be submitted:

- Application letter on species to import, quantity and sources of logs and LSS - Copy of business registration/M&A/Form 24 and 49 - Contract/ Sales and Purchase Agreement verified by the Malaysian Embassy or

trade office in the country of export or other recognized body (For supply of timber from tropical region only)

• Importer to furnish the Certificate of Origin, issued by an authority in the country of export or a supporting document by a relevant authority, and an application for import licence (JK69 Pin. 1/2000)

• MTIB to inspect timber consignment at legal landing points

• Verification of import permit by Department of Agriculture, where applicable

• MTIB to issue import license upon complying all the above procedures

• Importer to submit Import Licence and Customs Import Declaration Form No. 1 (CD 1) for approval by Royal Malaysian Customs

For sawntimber, plywood, veneer

• Submission of CD 1 to Royal Malaysian Customs at entry point for approval

Outputs Import licence (logs and LSS) / CD1 (sawntimber, plywood, veneer)

ISO Reference -

Verification Valid Import licence (logs and LSS) / CD1 (sawntimber, plywood, veneer)

Region PENINSULAR MALAYSIA Sources of timber Imp


Criterion Transportation of Imported Logs

Indicator National Forestry Act [Section 68(1)]


Procedure • Verification of log import documents from MTIB and Royal Malaysian Customs

• Issuance of Exchange Removal Pass

• Stamping revenue hammer mark on both log ends

Outputs • Revenue hammer mark

• Exchange Removal Pass

ISO Reference -

Verification Monthly Removal Pass Summary, copies of Exchange Removal Pass at Forest Checking Station, logs with revenue hammer-marks

64

Part 2 – Sarawak

1.

2.

Region SARAWAK Sources of timber PF, SL & AL


Criterion Licence to harvest

Indicator Forests Ordinance (Cap 126) [Sections 49(1)(a), 50, 55, 58, 59 dan 65B]

Responsibility • Ministry of Planning and Resource Management – approval

• Forest Department Sarawak – issuance of licence

Procedure • Approval from Ministry of Planning and Resource Management (PF, SL)

• Issuance of Forest Timber Licence/Licence for planted forest by Forest Depart-ment Sarawak

Outputs • Forest Timber Licence (PF,SL)

• Licence for planted forest

• Occupational Ticket (OT) Licence (AL)

ISO Reference -

Verification Valid Forest Timber Licence, valid licence for planted forest, valid OT licence




Indicator • The Natural Resources and Environment Ordinance (Cap 84)

• The Natural Resources and Environment (Prescribed activities) Order 1994, Item 2 of First Schedule

Responsibility The Natural Resources and Environment Board (NREB)

Procedure • Licensee to submit an Environmental Impact Assessment Report with proposed mitigation measures to Natural Resources and Environment Board (NREB) as per Item 2 of First Schedule to the said Order

Outputs NREB’s approved conditions for environmental management

ISO Reference MS ISO 9002:1994 – NREB: Environmental Impact Assessment

Verification Letter of Approval

65

3.

4.

Region SARAWAK Sources of timber PF


Criterion Plan Preparation

Indicator • Forests Ordinance (Cap 126) [Section 95 (1)(a)(b)(f)(i)(q)]

• General Harvesting Plan

• Detailed Harvesting Plan

Responsibility Sarawak Forestry Corporation (SFC) / Forest Department Sarawak

Procedure • Check General Harvesting Plan submitted by licensee

• Check Detailed Harvesting Plan submitted by licensee

• Issuance of Permit to Enter Coupe (PEC) to commence prescribed pre-felling ac-tivities

Outputs • Approved General Harvesting Plan

• Approved Detailed Harvesting Plan

• Permit to Enter Coupe (PEC)

ISO Reference MS ISO 9001:2000 (Procedure No SFC-PR-SF&C-010:Processing general harvesting plan), Procedure No SFC-PR-SF&C-011: Processing detailed harvesting plan ) and (Procedure No: SFC- PR-SF&C-013:Processing, endorsing, issuing and monitoring of

the PEC application)

Verification Approved General Harvesting Plan, approved Detailed Harvesting Plan and PEC



Criterion Boundary Demarcation

Indicator Forest Rules 1962, Rule 10 and 19

Responsibility Sarawak Forestry Corporation / Forest Department Sarawak

Procedure Boundary demarcation by licensee and checked by SFC as follows:-

• Under-brushing of boundary

• Marking of selected trees along boundary

Outputs Pre-felling Inspection Report

ISO Reference MS ISO 9001:2000 (Procedure No SFC-PR-SF&C-014:Pre-harvesting inspection)

Verification Pre-felling Inspection Report

66

5.

6.

Region SARAWAK Sources of timber PF & SL


Criterion Tree Enumeration

Indicator Field Instruction for 10% Sampling (Enumeration)


Procedure • Enumeration is done by licensee and checked by Sarawak Forestry Corporation

• For certified area, a 100% tree tagging for trees to be harvested is carried out (PF)

• For non certified area, the standard 10% enumeration is carried out

* Not applicable to planted forest

Outputs • Enumeration Data

• Pre-Felling Inspection Report

ISO Reference MS ISO 9001:2000 (Procedure No SFC-PR-SF&C-014:Pre-harvesting inspection)

Verification Pre-felling Inspection Report


Principle 2 Forest Operations


Indicator • Forest Rules 1962, Rule 22(1) (PF, SL)

• Forests Ordinance (Cap 126) [Section 67A(a)] (PF, SL)

• Forests Ordinance (Cap 126) [Section 59] (AL)


Procedure The following key procedures and documents are used to control timber production :

• Enumeration data (PF,SL)

• Log production record

• Logs are hammer marked with licensee property mark

Outputs Production Monitoring Form and production record

ISO Reference MS ISO 9001:2000 (Procedure No SFC-PR-SF&C-016:Monitoring of harvesting pro-gress and block closing)

Verification Records indicated in the “Outputs”

67

7.




Indicator • Forest Rules 1962, Rule 22(5)

• Forests Ordinance (Cap 126) [Sections 67,67A(7)(a)(b)(c)]

Responsibility Sarawak Forestry Corporation / Harwood Timber Sdn Bhd / Forest Department Sara-wak

Procedure Licensed area to designated Forest Checking Station:

• Licensee prepare Log Specification Form detailing licence number, block number,

coupe number, log number, log dimension and species for royalty assessment

• Logs are checked and royalty hammer marked by SFC

• Issuance of Removal Pass (Royalty)

Forest Checking Station to processing mills:

• Inspection of logs at the Forest Checking Station by Harwood Timber Sdn Bhd

• Issuance of Endorsement Clearance Certificate (ECC) by Harwood Timber Sdn Bhd confirming logs for local processing to be delivered to local mills

• Issuance of Transit Removal Pass (TRP) by SFC

• Upon arrival at mills, logs are inspected by both SFC and Harwood Timber Sdn Bhd and reconciled with ECC and TRP

Checking Station to export point:

• At Forest Checking Station, issuance of Transit Removal Pass (TRP) by SFC

• At the export point, inspection of logs for issuance of Export Clearance Certificate (ExCC) by Harwood Timber Sdn Bhd (as authorized under Section 67A (7)(a) of

Forests Ordinance (Cap 126)

• Issuance of TRP by SFC at export point

Outputs • Removal Pass (Royalty)

• Endorsement Clearance Certificate (ECC)

• Transit Removal Pass (TRP)

• Export Clearance Certificate (ExCC)

ISO Reference MS ISO 9001:2000 (Procedure No SFC-PR-SF&C-006:Issuance of Removal Pass Tran-sit)

MS ISO 9001:2000 -Harwood Timber Sdn.Bhd – Log endorsement, Shipping admini-stration & Inspection of export Logs)


68

8.

9.


Principle 2 Forest Operations



• Forests Ordinance (Cap 126) [Sections 54 A & 54 B]

• Labour Ordinance (Sarawak) (Cap 76)


Responsibility Department of Occupational Safety and Health (DOSH)/Forest Department Sara-wak/Sarawak Forestry Corporation/ Labour Department


• Ensure that the workers are insured




ISO Reference MS ISO 9001:2000 - DOSH – Enforcement Standard Setting and Provision of Advisory Services with Regards to The Occupational Safety and Health Acts and Regulations



Principle 3 Statutory Charges


Indicator Forests Ordinance (Cap 126) [Section 52(2)]


Procedure • Bills issued by Sarawak Forestry Corporation

• Royalty and premium paid to State Treasury Department

Outputs • Royalty and Premium Bills

• State Treasury Receipts

ISO Reference MS ISO 9001:2000 (Procedure No SFC-PR-SF&C-001:Royalty assessment), (Procedure No SFC-PR-SF&C-002:Royalty billing) and (Procedure No SFC-PR-SF&C-003:Recovery of outstanding bills)

Verification State Treasury Receipts against bills issued

69

10.

11.

Region SARAWAK Sources of timber PF & SL


Criterion User rights by Natives

Indicator • Forests Ordinance (Cap 126) [Sections 14, 33, 45 and 65]

Responsibility Forest Department Sarawak / Sarawak Forestry Corporation

Procedure • Determination of rights as per recognition given in the Second Schedule to Ga-zette Notifications constituting Protected Forests, Forest Reserves and Communal Forests (PF)

• Issuance of Permits, License or Authorization by Director of Forests to take forest produce for domestic use and not sale or barter (PF, SL)

Outputs • Gazette notification

• Permits/Licence/Authorization issued

ISO Reference -

Verification Gazette notification, Permit/Licence/Authorisation issued

Region SARAWAK Sources of timber PF, SL, AL & Imp

Principle 5 Mill Operation

Criterion Issuance of licence

Indicator • Forests Ordinance (Cap 126) [Section 66]

• Sarawak Timber Industry (Registration) Regulations 1999

• The Sarawak Timber Industry Development Corporation Ordinance 1973

Responsibility Forest Department Sarawak/STIDC

Procedure • Manufacturing company obtains mill licence from Forest Department

• Company involved in manufacturing and processing of timber must be registered with STIDC

• Comply with terms and conditions of licence/registration

• Payment of necessary fees

Outputs Mill licence and registration certificate

ISO Reference ISO 9001: 2000 – STIDC: Registration of companies

Verification Valid mill licence and registration certificate

70

12.


Principle 5 Mill Operation



• Forests Ordinance (Cap 126) [Section 54A & 54B]

• Labour Ordinance (Sarawak) (Cap 76)


Responsibility Department of Occupational Safety and Health (DOSH)/Forest Department Sarawak

Procedure • Ensure that company maintains records of worker’s training on safety and health showing what training was conducted, or attended and any certificates awarded

• Ensure that the workers are insured


• Ensure the adequacy of safety equipment provided to workers and briefing mate-

rials or posters used to maintain awareness in the workplace


ISO Reference MS ISO 9001: 2000 - DOSH: Enforcement Standard Setting and Provision of Advisory Services with regards to the OSHA Act and Regulations


71

13.




Indicator • The Sarawak Timber Industry Development Corporation Ordinance 1973

• The Sarawak Timber Industry (Registration) Regulations 1999

Responsibility Sarawak Timber Industry Development Corporation (STIDC)

Procedure (A) Application for Registration

Any person who desires to be engaged in or associated with:

(i) the manufacture of timber; or

(ii) the sale, distribution or marketing, of timber

may apply to the STIDC for registration

(B) Registration Requirements:

(i) Registration with the Registrar of Business (for sole proprietor or partnership)

To submit supporting documents as follows:

• Certificate of Registration of Business;

• Valid (timber related) Trade Licence

• Extract of Registration of Business Names

(ii) Registration with the Companies Commission of Malaysia (for private Sdn. Bhd) / public (Bhd.)

To submit supporting documents as follows:

• Certificate of incorporation of Private/Public Companies;

• Valid (timber related) Trade Licence

• Form 24 – Return of Allotment of shares

• Form 49 – Return of Giving Particulars in Register of Directors, Managers and Secretaries and changes of particulars

• Memorandum and Articles of Associations

(iii) To submit additional supporting documents;

• For log exporters

Forest timber licence for forest area licensee/Logging contract for logging con-tractor/Sale and Purchase Agreement/Supporting letter from log suppliers

• For manufacturer

ICC Approval Letter from Ministry of Industrial Development Sarawak or ICA Approval Letter from Ministry of International Trade and Industry, and

Sawmill/veneer/plywood licence from Forest Department

(iv) Payment of registration fees (as per Third Schedule)

Outputs List of registered companies / valid registration certificate

ISO Reference MS ISO 9001: 2000 –STIDC: Registration of companies

Verification List of registered companies / valid registration certificate

72

14.



Criterion Export regulations


• The Timber Grading Regulations 1975

• Customs Act 1967 [Section 10]


• Customs Duties (Exemption) Order 1988

• Forests Ordinance (Cap 126), The Ramin Logs (Prohibitions of Export) Order 1980

• Forests Ordinance (Cap 126), The Ramin Shorts and Squares (Prohibition of Ex-port) Order 1991

• Wildlife Protection Ordinance 1998

Responsibility Sarawak Timber Industry Development Corporation (STIDC) / Forest Department Sa-rawak/ SFC / Royal Malaysian Customs

Procedure • Confirm company registered as a timber exporter with the STIDC

• Submission of Declaration of Goods to be Exported (Customs No.2 Rev.8/89) to-

gether with supporting documents by company

• CITES documentation where necessary

• Verification of documents by STIDC

• Physical inspection of logs by SFC and Harwood Timber Sdn. Bhd.

• Physical inspection of timber products, where applicable, by STIDC

• Issuance of Export Licence by STIDC

• Customs clearance

Outputs Export licence

ISO Reference MS ISO 9001: 2000 – STIDC: Registration of companies

Verification Valid export licence

73

15.

Region SARAWAK Sources of timber Imp


Criterion Import regulations


• Customs Act 1967 [Section 10]

• Customs Act 1967, Customs (Prohibition of Import) Order 2006


Responsibility Sarawak Timber Industry Development Corporation (STIDC) / Royal Malaysian Cus-toms / Department of Agriculture (DOA)

Procedure (i) Logs

• Approval from the Ministry of Planning and Resource Management, Sarawak

• Register with STIDC as importer

• Notification to STIDC at least 48 hrs before arrival of logs and verification by STIDC

• Submission of Application for Import Licence/Import Licence (CD69 Rev.1/2000) together with supporting documents to STIDC

• Verification of the documents and physical inspection of consignment by STIDC and DOA

• Import licence issued by STIDC


• All logs in consignment tagged and hammer marked by STIDC

• Removal Pass issued by STIDC

(ii) Sawn timber, plywood and veneer

• Register with STIDC as importer

• Submission of Declaration of Goods Imported (Customs No.1 Rev.9/2002) to-

gether with supporting documents to STIDC by company

• Inspection by STIDC


• Additional requirements for import from Indonesia includes:-

Importation only through authorized entry points (Sematan, Lubok Antu, Tebedu, Biawak, and Batu Lintang)

Physical inspection of shipment by STIDC and verification of supporting docu-ments (PEB, SKSHH)

Customs clearance

Timber consignment transported to Harwood Timber Depot for joint inspection with STIDC to ascertain timber volume and species

Issuance of Receipt Note by Harwood Timber Sdn. Bhd. and submitted to STIDC

Timber in each consignment is tagged and hammer marked by STIDC

Issuance of Removal Pass by STIDC

Outputs Import licence/ Customs No.1 Rev.9/2002

ISO Reference MS ISO 9001: 2000 – STIDC: Registration of companies

Verification Valid import licence / Customs No.1 Rev.9/2002

74

16.

Region SARAWAK Sources of timber Imp


Criterion Transportation of imported logs


Responsibility Sarawak Timber Industry Development Corporation (STIDC) / Royal Malaysian Customs

Procedure • Customs clearance at legal landing point

• All logs in consignment tagged and hammer marked by STIDC

• Issuance of Removal Pass by STIDC

• Upon arrival at mill, logs are inspected by STIDC to verify against the accompany-ing Removal Pass

• Removal Pass surrendered to STIDC

• Mill prepares input and output reports and submits Monthly Industrial Production

Returns to STIDC

Outputs Removal Pass and Industrial Production Returns

ISO Reference -

Verification Removal Pass and Industrial Production Returns

75

Part 3 – Sabah

1.

2.

Region SABAH Sources of timber PF, SL & AL

Principle 1 Right to harvest

Criterion Licence to harvest

Indicator Forest Enactment 1968 [Sections 15 & 24]

Responsibility Sabah Forestry Department (SFD) / State Minister Responsible for Natural Resources

Procedure • Application for forest concession approved by the Responsible Minister (PF,SL)

• Licence to harvest issued by Director of Forest

• Issuance of licence conditional upon compliance of:

Payment of fees

Area demarcation

Environmental Impact Assessment

Temporary Occupation Licence (TOL) (SL)

Outputs Licence to harvest

ISO Reference -

Verification Valid licence




Indicator • Environment Protection Enactment 2002 [Sections 12, 20 & 37]

• Environment Protection (Prescribed Activities) (Environmental Impact Assess-ment) Order 2005

Responsibility Environment Protection Department (EPD)

Procedure Procedures involve:

• Project screening to determine the category of the impact assessment study

• Preparation of Scoping Note to determine the focus, scope and content of impact assessment report

• Preparation of EIA Study

• Approval of report and signing of Agreement of Environmental Condi-tions/Mitigation Declaration

Outputs Agreement of Environmental Condition/ Mitigation Declaration

ISO Reference MS ISO 9001:2000 (Determination of Terms-Of-Reference for Environmental Impact Assessment (EIA) studies and the assessment of the EIA Reports)

Verification Documents indicated in “Outputs”

76

3.

4.

5.

Region SABAH Sources of timber PF


Criterion Plan preparation

Indicator Forest Enactment 1968 [Section 28A]

Responsibility Sabah Forestry Department (SFD)

Procedure Licensee prepares Forest Management Plan (FMP)/ Plantation Development Plan (PDP)/ Comprehensive Harvesting Plan (CHP) and submit to SFD for approval

Outputs Approved FMP, PDP and CHP

ISO Reference MS ISO 9001:2000 – Preparation and approval of Comprehensive Harvesting Plan (CHP)

Verification Approved FMP/PDP/CHP



Criterion Area demarcation

Indicator • Land Ordinance (Cap 68) 1958, Part III

Responsibility Sabah Forestry Department / Lands and Survey Department

Procedure • Issuance of Registered Survey Permit (RSP) by Lands and Survey Department (PF,SL)

• Issuance of approval to carry out survey by Sabah Forestry Department (PF)

• Appoint registered private surveyor-by Licensee (PF,SL)

• Survey demarcation on the ground (PF,SL)

• Sabah Forestry Department issues licence (PF,SL)

• Submission of copy of land title to Sabah Forestry Department (AL)

Outputs • Approved Survey Plan (map) (PF,SL)

• Temporary Occupation Licence (TOL) (SL)

• Land Title (AL)

ISO Reference

Verification Boundary trees marked, boundary markers



Criterion Forest inventory

Indicator Medium Term Inventory Manual

Responsibility Sabah Forestry Department

Procedure Follow Medium Term Inventory Manual

Outputs Forest inventory data, Annual Allowable Cut (AAC)

ISO Reference

Verification Forest inventory data

77

6.

7.

Region SABAH Sources of timber SL & AL


Criterion Forest inventory

Indicator Director of Forestry Circular No.3/87


Procedure Follow inventory guidelines as per Director of Forestry Circular No.3/87


Outputs Forest inventory data

ISO Reference

Verification Forest inventory data



Criterion Tree marking

Indicator Reduced Impact Logging (RIL) Guidelines 2002


Procedure Trees marked for:

• Retention for seed sources

• Retention for protection

• Retention for potential crop trees

• Felling

• Felling for road construction


Outputs Trees to be felled and retained for various purposes are numbered and recorded

ISO Reference MS ISO 9001:2000 – Preparation and approval of Comprehensive Harvesting Plan (CHP)

Verification Trees marked with different tags

78

8.

9.




Indicator • Reduced Impact Logging (RIL) Guidelines 2002 (PF)

• Quarterly Progress Report


Procedure The Licencees are required to keep/maintain the following:

• Record of trees marked for felling * (PF)

• Log Register (PF,SL)

• Tagging of stumps (PF)*

• Monitoring of harvesting operations

• Tree felling record *

Sabah Forestry Department:

• Monitor of harvesting operations

• Issue Timber Disposal Permit (TDP) **

* Not applicable for ITP

** Not applicable to ITP (AL)

Outputs • Record of trees marked for felling

• Log Register

• Tree felling record

• Timber Disposal Permit (TDP)

ISO Reference -





Indicator Forest Rules 1969 Rule 15(1)


Procedure Logs transported from harvest area to mill/export point

• Incision of property mark

• All logs numbered, scaled and recorded

• Royalty assessed and royalty mark hammered

• Issuance of Timber Disposal Permit (TDP) and Removal Pass

• Removal Passes are cancelled by District Forestry Officer after due inspection and recorded in Log Arrival Book at mill


• Timber Disposal Permit

• Log Arrival Book

ISO Reference -

Verification Records as indicated in the “Outputs”

79

10.

11.





• Sabah Labour Ordinance 1967


Responsibility Department of Occupational Safety and Health (DOSH)






ISO Reference -


Region SABAH Sources of timber PF, SL, AL & Imp

Principle 3 Statutory charges


Indicator • Forest Enactment 1968 [Sections 24C & 42(d),(e)]

• Forest Rules 1969, Rule 12(1)

• Fees Enactment 1981 (Imp)


Procedure The following procedures and documents are used:

• Log scaling summary

• 100% check

• Royalty assessment*

• Timber Disposal Permit*

• Royalty hammer-mark hammered*

• Official receipts issued*

• Inspection fees paid (Imp)

* Not applicable for ITP – AL

Outputs • Receipt of payment


ISO Reference -

Verification • Receipt of payment


80

12.

13.



Criterion User rights by Natives

Indicator • Forest Enactment 1968 [Section 41] (SL, AL)

• Forest Rules 1969, Rule 8 (SL, AL)

• Forest Rules 1969, Rule 20(a) (PF, SL)

• Land Ordinance 1958 (Cap 68) (SL, AL)

Responsibility Sabah Forestry Department/ Lands and Survey Department

Procedure • Application to extract forest produce for own use received

• Issuance of Form IIA licence to extract forest produce for own use (SL, AL)

• Issuance of Occupation Permit (OP) (PF)

Outputs • Community development projects

• Licence / permit issued

ISO Reference

Verification Valid licence and permit



Criterion Issuance of licence

Indicator • Forest Enactment 1968 [Section 42]

• Forest Rules 1969, Rule 19(1)


Procedure The licensee is required to:

• Submit an application form

• Comply with the terms and conditions of the licence

• Pay necessary fees

Outputs Mill licence

ISO Reference

Verification Valid mill licence

81

14.

15.





• Sabah Labour Ordinance 1967


Responsibility Department of Occupational Safety and Health (DOSH)

Procedure • Ensure that company maintains records of worker’s training on safety and health, showing what training was conducted, who attended and any certificates awarded


• Ensure the adequacy of safety equipments provided to workers and briefing mate-rials or posters to ensure awareness in the workplace


Outputs Work instruction, training, insurance and incident records

ISO Reference MS ISO 9001:2000 – DOSH: Enforcement Standard Setting and Provision of Advisory Services with regards to the OSHA and Regulations






• Timber Industry (Registration) Rules 1991

Responsibility Malaysian Timber Industry Board (MTIB)

Procedure • Ensuring that the applicant for registration as an exporter, supplier, processor, and jetty operator has been registered with Companies Commission of Malaysia (CCM)

• Supplier must possess mill licence from Sabah Forestry Department

• Payment of Registration fee

• Other conditions as specified under MTIB Registration Guidelines

Outputs Registration certificate

ISO Reference MS ISO 9001 : 2000 PK(P)-MTIB-PENDAFTARAN-01

MS ISO 9001 : 2000 PK(P)-MTIB-PEMBAHARUAN-02

Verification List of registered companies / valid registration certificate

82

16.



Criterion Export regulation



• Forest Enactment 1968 [Section 42]

• Forest Rules 1969, Rule 17(1) & 17A (1)

Responsibility Malaysian Timber Industry Board / Sabah Forestry Department

Procedure • Ensuring that the company is a registered exporter

• Ensuring that timber supplied is obtained from registered supplier and processor

• Submission of Customs Export Declaration form (CD2) and other supporting documents

• Exporter in possession of an export licence from Sabah Forestry Department

• Submission of records of payment of royalty or letter of undertaking

• Other conditions as specified by Sabah Forestry Department

Outputs Export Licence

ISO Reference • MS ISO 9001 : 2000 – PK(P)-MTIB-PROSES LESEN PRODUK KAYU (SABAH)-09

• MS ISO 9001 : 2000 – PK(P)-MTIB-PROSES LESEN BALAK (SABAH)-010

Verification Valid export license

83

17.

Region SABAH Sources of timber Imp


Criterion ImportrRegulations

Indicator • Customs Act 1967, Customs (Prohibition of Import) Order 2006

• Malaysian Timber Industry Board (Incorporation) Act 1973


Responsibility Malaysian Timber Industry Board / Royal Malaysian Customs / Department of Agricul-

ture

Procedure For logs and Large Scantlings and Squares (LSS)

• Company or person to register with Companies Commission of Malaysia

• Company /person to obtain import approval from the Malaysian Timber Industry Board. Documents required to be submitted :

- Application letter on species to import, quantity and sources of logs and LSS

- Copy of business registration/M&A/Form 24 & 49

- Contract/ Sales and Purchase Agreement verified by the Malaysian Embassy or trade office in the country of export or other recognized body (For supply of tim-

ber from tropical region only)

• Importer to furnish the Certificate of Origin, issued by an authority in the country of export or a supporting document by a relevant authority, and an application for import licence (JK69 Pin. 1/2000)

• MTIB to inspect timber consignment at legal landing points

• Verification of import permit by Department of Agriculture, where applicable

• MTIB to issue import license upon complying all the above procedures

• Importer to submit Import Licence and Customs Import Declaration Form No. 1 (CD 1) for approval by Royal Malaysian Customs

For sawntimber, plywood, veneer

• Submission of CD 1 to Royal Malaysian Customs at entry point for approval

Outputs Import licence (logs and LSS) / CD1 (sawntimber, plywood, veneer)

ISO Reference

Verification Valid Import licence (logs and LSS) / CD1 (sawntimber, plywood, veneer)

84

18.

Region SABAH Sources of timber Imp


Criterion Transportation of imported logs

Indicator • The Fees Enactment, 1981 [ The Fees (Forestry Department) Service of Inspec-tion and Certification Order 1999]

• Director’s Circular on Import


Procedure • Sabah Forestry Department inspects imported log after clearance by the Royal Malaysian Customs

• Collects inspection fees and issues receipt

• Stamping of Revenue Hammer Mark on the log

• Issue Removal Pass from the legal landing point to licensed mill

• Sabah Forestry Department records logs at the receiving mill

• Removal Pass cancelled by Sabah Forestry Department at the mill

Outputs • Receipt of payment of imported log inspection fees

• Removal Pass

• Records of log arrival at the mill

ISO Reference -

Verification Records as indicated in “Outputs”

85

Malasyia TLAS Annex C

Sources of Timber

1. Introduction

This Annex provides information on the sources of timber in Malaysia for the purpose of the

Timber Legality Assurance System (TLAS).

Malaysia’s domestic timber is harvested from three categories of land namely Permanent Forest

(PF), State Land (SL), and Alienated Land (AL). PF and SL are state-owned whilst AL is mainly

privately owned. Due to differences in terms used in the regions, these categories are defined

on a regional basis.

Planted forest or Industrial Tree Plantation (ITP) may be established in any of these categories

of land. Procedures for the management of planted forest may differ from natural forest and sig-

nificant differences are indicated in the relevant sections of Annex B.

2. Peninsular Malaysia

(i) Permanent Forest (PF) refers to Permanent Reserved Forest as defined under the Na-

tional Forestry Act 1984 which means “any land constituted or deemed to have been

constituted a Permanent Reserved Forest under this Act”.

(ii) State Land (SL) – The National Land Code 1965 (S5) defines SL as “all land in the State

other than –

a) alienated land

b) reserved land;

c) mining land;

d) any land which under the provision of any law relating to forests (whether passed be-

fore or after the commencement of this Act) is for the time being reserved forest”.

(iii) Alienated Land (AL) as defined under the National Land Code, 1965, means “any land

(including any parcel of a sub-divided building) in respect of which a registered title for the

time being subsists, whether final or qualified, whether in perpetuity or for a term of years,

and whether granted by the State Authority under this Act or in the exercise of powers

conferred by any previous land law, but does not include mining land.”

3. Sarawak

For the purpose of the Timber Legality Assurance System (TLAS) –

(i) Permanent Forest (PF) refers to forest reserves, protected forests and communal forests*

constituted under Sections 14, 33 and 40 respectively of the Forests Ordinance (Cap.

126) and planted forests established or maintained under a licence issued pursuant to

86

Section 65B of the Forests Ordinance (Cap. 126). Planted Forests means a crop of trees

planted or maintained either on State Land or Alienated Land in the State.

*Timber from communal forests is not for batter trade, sale and export. It is for domestic

use only.

(ii) State Land (SL) refers to all forest lands in the State other than a forest reserve, pro-

tected forest, communal forest, Government reserve and planted forest as constituted,

established or defined in the Forests Ordinance (Cap. 126).

(iii) Alienated Land (AL) refers to any land held under a ‘document title” as defined in Section

2 of the Land Code (Cap. 81).

4. Sabah

(i) Permanent Forest (PF) refers to Forest Reserves declared under Section 12 of the Forest

Enactment, 1968.

(ii) State Land (SL) means “all land in the State other than Forest Reserves or alienated

land” as defined in the Forest Enactment, 1968.

(iii) Alienated Land (AL) means “any land in respect of which a registered title for the time

being subsists under any written law relating to land title registration, land tenure or mining, or

which has become in any manner vested in any person or authority other than the State” as de-

fined in the Forest Enactment, 1968.

87

Malasyia TLAS Annex D

Independent Monitoring for the TLAS

1. Introduction

1.1 Independent Monitoring is one of the requirements for a FLEGT Voluntary Partnership Agree-

ment. Referring to the FLEGT Briefing Note No. 7 (BN 7), it was mentioned that a Legality As-

surance System will include the component of an `Independent monitoring to provide assurance

to all interested parties that the system is working as planned and maintain its credibility’;

1.2 At the Malaysia-EC TWG, 3-4 December 2007, Malaysia expressed its intention to develop a

proposal on `Independent Monitoring’ based on existing certified ISO systems. The EU empha-

sized that ISO systems provide a good basis but that it would expect a number of additional

elements to be part of the Independent Monitoring procedure; and

1.3 Taking into consideration of the above comments and the requirements as stated in BN 7, Ma-

laysia is proposing the Independent Monitoring System for the Timber Legality Assurance Sys-

tem (TLAS) as described below.

2. Objectives of Independent Monitoring

The main objective of implementing an independent monitoring of the TLAS by a Third Party

Monitor (TPM) is to provide assurance to all interested parties, including the Joint Implementa-

tion Committee (JIC), that the TLAS is functioning as described, particularly the control proce-

dures and the verifiers, so as to ensure the credibility of the licences issued under the Malaysia

- EU FLEGT VPA.

3. Terms of Reference (TOR) of TPM

The TOR of the TPM to be appointed to conduct the independent monitoring of the TLAS are as

follows:

(i) audit the compliance with all the control procedures as per Annex B of the TLAS using

the best auditing practice;

(ii) identify and document non-compliances and system failures;

(iii) assess corrective actions taken to address non-compliances and/or system failures as di-

rected by the Reporting Body (RB); and

(iv) report its findings to the RB.

4. Requirements for TPM

4.1 The TPM is an organisation that is independent of the other components of the TLAS;

4.2 It operates in accordance with a documented management structure, policies and procedures

that meet internationally-accepted best practice;

4.3 It is accredited by the Department of Standards Malaysia (Standards Malaysia) to the require-

ments of MS ISO/IEC Guides 62,65, 66, the ISO/IEC 17021 or equivalent and is qualified to of-

fer assessment services covering the forest sector and forest products supply chains; and

88

4.4 It has at least five years experience of assessing forest management and chain of custody veri-

fication in Malaysia [or in countries with comparable local conditions]. It should declare any

commercial relationship to the parties to be audited for the past three (3) years.

5. Monitoring Methodology of the TPM

5.1 The TPM’s monitoring methodology is evidence-based and the audit is carried out at intervals of

approximately 12 months until the key procedures of the TLAS are ISO certified;

5.2 The TPM has a documented monitoring methodology which includes adequate checks of rele-

vant documentation, operating records and operations of relevant parties in the TLAS;

5.3 Monitoring activities including interviews with personnel from the licensing and the enforcement

authorities identified in the TLAS, examination of documented procedures and records; check-

ing on Verifiers during visits to offices, forest areas, log yards/log ponds, forest checking sta-

tions, mill sites and export and import points. As the TLAS is structured on a regional basis, the

TPM’s report should reflect the monitoring of the TLAS in Peninsular Malaysia, Sabah and Sa-

rawak;

5.4 The Ministry of Plantation Industries and Commodities (MPIC) will assist in making arrangement

to facilitate the work of the TPM;

5.5 Each report of the TPM shall comprise: (i) a full report for consideration by the Reporting Body,

containing all relevant information on the monitoring programme and findings; and (ii) a public

summary report based on the full report and covering a summary of key findings and non-

compliances identified;

5.6 The full report shall be received and approved by the Reporting Body. The public summary re-

port shall also be reviewed and approved by the Reporting Body prior to release into the public

domain; and

5.7 The TPM will be required to provide information should further clarification be required by the

Reporting Body.

6. Confidentiality

The TPM shall be required to sign a non disclosure agreement that restricts communication of

the team’s finding, or of other material not in the public domain which is disclosed to TPM in car-

rying out the independent monitoring.

7. Appointment of the TPM

The TPM will be appointed by Malaysia, based on competitive bids which are considered and

decided by the JIC. The contracting agency within the Malaysian Government is the

………………………………

8. Financing of the TPM

The appointment of the Third Party Monitor may be financed by ……………………

89

Annex 2 Terms of reference

TERMS OF REFERENCE FOR A JOINT INDEPENDENT TECHNICAL EVALUATION OF THE

MALAYSIA - EU TIMBER LEGALITY ASSURANCE SYSTEM

A. Introduction

1. Malaysia and the EU are currently negotiating to conclude a Voluntary Partnership Agreement

(VPA) to ensure that only legally verified timber from Malaysia may be imported into the EU.

Central to the VPA is a Timber Legality Assurance System (TLAS). This comprises:

(a) a definition of legal timber based on an agreed set of Principles and Criteria that refer to

Malaysia’s relevant laws, regulations and operating procedures;

(b) control procedures for verifying compliance with the definition of legal timber, covering

forest harvesting, transportation, processing, import and export; and

(c) independent monitoring to assure that system is working as planned.

The Principles and Criteria defining legal timber are described in detail in Annex A, the control

procedures in Annex B and the independent monitoring system in Annex “D”. Annex C de-

scribes the different timber sources that the TLAS needs to cover.

2. The TLAS provides assurance that all timber products included in the VPA and exported by

Malaysia to the EU have been produced in compliance with the definition of legal timber as

defined under the TLAS and that all other timber products, or product components, are ex-

cluded. In principle, the TLAS should be based on existing licensing systems for forest har-

vesting, processing, import and export being implemented by the Malaysian administration. In

addition the TLAS must be pragmatic and implementable throughout the production chain and

include timber imported into Malaysia as well as domestically-harvested timber.

3. Before concluding the VPA, it will be necessary to evaluate control procedures of the TLAS to

ensure that they are auditable and effective, and to identify areas where capacity building

might be needed.

B. Terms of Reference

4. Taking into account the objective of the TLAS and the general principles in its development

and implementation, the ToR of the independent technical evaluation of the Control Proce-

dures of the TLAS are as follows:

(a) Assess whether the Control Procedures contained in Annex B of the TLAS (particularly

on the “Outputs” and “Verification”), are easily verifiable and auditable without ambiguity

in an objective manner by the responsible Malaysian authorities, and the independent

monitor;

(b) Assess whether the control procedures as set out in Annex B of the TLAS provide as-

surance that all timber products licensed for export under the VPA have been produced

in accordance with the requirements of Annex A and that all other timber products are

excluded;

90

(c) Identify the capacity building needs, including financial implications, to implement the

control procedures in Annex B of the TLAS; and

(d) Assess the effectiveness of the proposed independent monitoring procedures [set out in

Annex “D”] and determine the likely cost of their implementation.

C. Scope of Work

5. The Consultants will use generally accepted best auditing practices. This will include inter-

views with personnel from the licensing authorities and the enforcement agencies as stated in

the TLAS, examination of documented procedures, records and checks made during visits to

forest areas, log yards, log ponds, checking stations, mill sites and export and import points.

Findings and conclusions will be supported by objective evidence and expert judgement will

be applied as necessary. As the TLAS is structured on a regional basis, the Consultants’ re-

port will reflect the different procedures of the systems used in Peninsular Malaysia, Sabah

and Sarawak.

6. The Consultants will satisfy themselves that the TLAS meets its overall aims in ensuring that

FLEGT licenses are only issued to timber products that have been produced in accordance

with the definition in Annex A. In particular they will examine:

(a) the institutional aspects of implementation described in the TLAS (organisational as-

pects, definition of roles and responsibilities, and training of personnel);

(b) the procedural aspects of implementation described in the TLAS. (frequency and types

of checks, recording of information, and treatment of non-compliances as documented

in the ISO-certified management systems.);

(c) the auditability of the control procedures specified in Annex B for all sources of timber

covered in Annex C; and

(d) assess effectiveness of the TLAS.

D. Schedule of Evaluation Activities

7. A preparation phase will comprise the following activities:

a) a document review, in which documents relevant to the evaluation of the Malaysian

TLAS will be examined to gain a detailed understanding of the system. Where applica-

ble, the Evaluation Team will make use of ISO-certified documented management sys-

tems employed by various agencies participating in the TLAS, as well as other applica-

ble manuals and operational procedures; and

b) preparation of a detailed plan of activities, and presentation to and approval by the

Evaluation Steering Committee.

8. On approval of the evaluation plan, a field phase will be undertaken as follows:

Interviews with key persons at the Federal level;

Interviews with Stakeholder groups;

91

Visits, in parallel, to at least two Peninsular Malaysia states, plus Sabah and Sarawak, during

which the following activities will be carried out:

• In Peninsular Malaysia: interviews with key persons in regulatory agencies; and

field visit to a number of licence areas, including different timber sources State

Land (SL) and Alienated Land (AL), checking stations, mill sites and export/import

points;

• In Sabah: interviews with key persons in regulatory agencies; field visits to at

least two Sustainable Forest Management Licence Agreement (SFMLA) areas,

including one held by Yayasan Sabah; and field visits to other licence areas (SL,

AL), checking stations, mill sites and export/import points; and

• In Sarawak: interviews with key persons in regulatory agencies; field visits to at

least two concession areas, including their log ponds; field visits to other licence

areas (SL, AL), checking stations, mill sites and export/import points.

At the conclusion of each set of field visits, a wrap-up meeting will be held with the agencies

involved. The Evaluation Team’s findings will be presented verbally with assistance as needed

through visual presentation material, but no formal written report will be submitted. The agen-

cies concerned may use this opportunity to clarify any issue identified in the Evaluation

Team’s findings.

On completion of field visits, the Evaluation Team will prepare a Draft Report of findings. This

will be submitted to the Evaluation Steering Committee no less than 15 working days before

making a formal presentation. The Evaluation Steering Committee may circulate the Draft Re-

port to concerned agencies in Malaysia and EU for their comments, which should be submit-

ted back to the Evaluation Steering Committee. All such comments should be compiled by the

Evaluation Steering Committee and communicated to the Evaluation Team not more than 15

working days after the formal presentation.

The Evaluation Team will take into account and prepare written responses to all comments re-

ceived from the Evaluation Steering Committee. Where such comments are material to the

Team’s findings and justified, the Team should incorporate them into a Final Report. The

Team will explain in writing the reasons why any comment has not been incorporated in the

Final Report.

E. Timing

The Evaluation Team will be recruited not later than [30 May 2008]. Members will assemble in

Kuala Lumpur for an initial briefing with the Evaluation Steering Committee on or around [9

June], before developing a detailed plan of activities. The Team will submit its plan to the

Evaluation Steering Committee by [13 June].

The Evaluation Team will start field work immediately after the plan has been approved, ex-

pected latest [20 June 2008] and will complete these activities not later than [18 July], includ-

ing the various regional meetings to present and discuss results of their findings with the rele-

vant agencies.

92

The draft Evaluation Report will be submitted to the Evaluation Steering Committee on or be-

fore [25 July 2008] and a formal presentation to the Evaluation Steering Committee will be

made on or around [1 August 2008]. The Evaluation Team will submit responses to all com-

ments received together with the Final Evaluation Report not later than [10 working days] after

receiving comments from the Evaluation Steering Committee. This is expected to be around

[29 August 2008].

Notes on administrative aspects for the technical evaluation of the TLAS.

Engagement of Evaluation Team

At a Technical Working Group meeting between Malaysia and the EU, 10-11 April, 2008, the

sides agreed that a joint Evaluation Team should be engaged as soon as possible and the

evaluation completed by July 2008.

The EU has agreed to provide funding for the evaluation through its agreement with the Euro-

pean Forestry Institute (EFI).

The Evaluation Team will comprise three experts engaged as follows:

EFI will engage three international experts with qualifications and experience in management

system auditing and forest and timber control systems

Malaysia will nominate two or more experts with corresponding experience and particular

knowledge of the forest and timber control systems in each of its three regions.

The Evaluation Steering Committee will approve the selection of the Evaluation Team.

Implementation considerations

The Ministry of Plantation Industries and Commodities (MPIC) will take overall responsibility

on behalf of the Government of Malaysia for implementing the Evaluation. It will facilitate the

work of the Evaluation Team by the various government authorities at Federal and State levels

as may be necessary for the Team to carry out its work in accordance with these Terms of

Reference, including,:

Access to regulations, operating procedures, management systems manuals, documents and

records;

Facilitation of access to observe the activities of license holders, operators, and regulatory

agencies in licenced areas, and at forest checking stations, mill sites and export points.

Members of the Evaluation Team will be required to sign individual non-disclosure agreements

that restricts communication of the Evaluation’s findings, or of other material not in the public

domain which is disclosed to Team members in the course of the Evaluation, to the presenta-

tions to the agencies concerned at the conclusion of field visits, and to the Evaluation Steering

Committee.

Evaluation Team composition

The Evaluation Team will include:

93

Three international specialists combining proven expertise in auditing of formal management

systems (e.g. ISO 9001 or ISO 14001) and forest sector control systems, including regulatory

compliance and timber chain of custody systems. One specialist will have the additional role of

Team Leader with responsibility for co-ordinating activities and ensuring that outputs are de-

livered on schedule.

Three Malaysian nationals with similar backgrounds and, in addition, combining a detailed

knowledge of regulatory control systems in each region of Malaysia’s three regions.

94

Annex 3 Programme of Work & People Met

Day Group Location Activity Contact

02.09. All Kuala Lumpur Opening Meeting at PKKP Mr Wan Mazlan Wan Mohmood, Ms Sugumari A/P S. Shanmugam

Evaluation program / itinerary

03.09. All Kuala Lumpur MTIB Ms Norchahaya Hashim

04.09. All Sandakan Sabah opening Meeting at SFD Mr Frederick Kugan Mr Andurus Abi

AK Kota Kinabalu NGO meeting WWF Sabah

05.09. All Tongod/FMU 20 Yayasan Sabah (YS) Mr Gregory Mosigil

06.09. All Tongod/FMU 20 Control by DFO Tongod Mr James Catherinus

All Tongod Saw Mill Kilang Papan Sinora

All Tongod Karamuak community development project Mr Barnabas Gait

All Tongod RFID-Gantry of YS, Tangkulap Dr Esther Li

All Sapi YS log landing (river) Mr Andrew Garcia

07.09. AA Tawau MTIB Mr HJ Mahpar Atan

AA Tawau Sawmill Selera Indah Mr Hakim Jalie

AA Tawau Midstream loading Hj Ambran Kassim

AA Tawau Customs

AA Tawau DFO Mr Miskon Simin

AA Tawau MCEE Mr Juliafli Swara

BB Sandakan DFO Hj Fadzil bin Hj Yahya

BB Sandakan Saw Mill Cymao Plywood Mr Hamid Wong

BB Sandakan Plywood Mill Sinora Ms Fonny Tsen

08.09. AA Tawau MTIB Mr Maphar Atan

AA Tawau Barter Trade Center, Customs Mr Miskon Simin

AA Tawau Mukim Sebatik Forest Checking Station Mr Miskon Simin

AA Tawau DFO Mr Miskon Simin

AA Tawau Tawau Kilning & Moulding Mr Lee Tze Chan

BB FMU 19 B KTS Plantation Mr David Chieng

BB FMU 19 B Active harvesting activity Mr Ting

BB FMU 19 B Stumping yard Mr Ting

09.09. All Sandakan Wrap-up meeting at SFD Mr Frederick Kugan Mr Andurus Abi

10.09. All Kuching Opening meeting at STIDC Hj Ali Yusop Ms Fatimawati Abang Abdul Latif


All Kuching Sarawak Timber Association Dr Lee Hua Seng

A Kuching Transfer to Sibu Ms Fatimawati Abang Abdul Latif Mr Khalid HT. Zaini

C Kuching Transfer to Miri Ms Fatimawati Abang Abdul Latif

11.09. A Sibu Jaya Tiasa Plywood Mr Hii S.Y. Mr Ha K.S.

A Sibu Customs Mr Ismail

A Sibu STIDC Mr Saili Haji Lam Mr Khalid HT. Zaini

A Sibu Harwood Mr Dennis Lau Mr Wong Siilail

B Transfer to Bintulu

B Bintulu ManuPly Wood Industries Mr Richard Chua

B Bintulu STIDC Mr Lucas Druce

B Kidurong Customs Mr Akthar

B Kidurong Port Mr Lucas Druce

C Miri Shin Yang Plywood Sdn bhd Mr Alvin Yii Heng Kee

C Miri STIDC (Miri) Mr Jerry Mawan Lading

C Miri Harwood (Miri) Mr Busairi Hj. Rasit

C Miri Kuala Baram (Miri) (Customs) Mr Alibaba

12.09. A Song Forest operations of Ta Ann Group Pasin Sdn Bhd in Katibas-Bangkit WP

Mr Ling Tiing Tchin

A Song Controls of SFC Mr Hj Madhan Bin Kiflie

B Bintulu Grand Perfect Plantation Mr Christopher Garside

B Tatau SFC customer service center Mr John Juni

B Tatau ForesCom log pond Mr John Juni

B Kelawit Camp B ForesCom log yard Mr Tang

B Kelawit Camp D ForesCom checking station Mr John Juni

C Miri Syarikat Samling Timber Sdn Bhd Logging Camp – Selaan Linau

Mr Henry C.P. Kong

13.09. A Song Log pond of Ta Ann Group Mr Ling Tiing Tchin

95

A Sibu IDEAL Mr Meng Chuo Wong

B Bintulu E. S. Ng Pembinaan Perniagaan Mr Ng Choon

C Miri Syarikat Samling Timber Sdn Bhd – visit Block 07 Selaan Linau MTCC certified FMU

Mr Henry C.P. Kong

14.09. All Transfer to Kuching

15.09. A Kuching SFC (regional office) Lawrence Blon

Kuching STIDC (registration and licensing, Industrial planning and enforcement and preventive divi-sions)

Mr Gary Gerisah Bagong Mr Nicolas Andrew Lis-sem Mr Hinri Abdullah

B Tanjung Manis Export point, Harwood, SFC, STIDC Mr Paul Lau

B Tanjung Manis Log pond A, RH, Subur Tiasa Mr Kiu

B Tanjung Manis Log pond WTK, Song logging

C Kuching Meeting with NGOs Ms Wendy Terang

C Kuching Harwood Timber Sdn Bhd Hj Abd. Hadi Dtk Hj Abd. Kadir

16.09. A Semantan STIDC Checking Station Ms Fatimawati Abang Abdul Latif Mr Minsel Mahli

A Semantan Harwood timber depot Mr Adenau Abu Kasim

A Semantan Customs

B Tebedu Harwood depot Mr Julius Scott

B Tebedu Customs Mr Bong

C Lubok Antu Harwood Mr Ahmad Bujang

C Lubok Antu STIDC Mr Malek Jaimi

C Lubok Antu Customs Mr Jong Fatt Chong

17.09. All Kuching Wrap-up meeting at STIDC Hj Ali Yusop Ms Fatimawati Abang Abul Latif

18.09. All Kuala Lumpur Opening meeting, FD PEN Dato Razani Ujang


A Transfer to Muar Mr Zulkepli Abd Rani

B Kuala Lumpur Work on TLAS annexes

C Transfer to Butterworth Mr Mohd Yusof

19.09. A Muar/Batu Pahat MTIB Mr Azmi Hj Yaha

A Batu Pahat IPP Wood Industries Mr Tan Chin Lim

A Batu Pahat Syarikat Amin (Agent) Mr Jamsari Jamil

A Batu Pahat Customs Mr Mohd Fadzil bin Hasir

A Batu Pahat Teck Heng Timber Mr Muhamad Isa

B Klang Gunung Seraya Wood Products Mr Yen Chin

B Klang MTIB office Mr Malik

B Klang Westport customs Mr Isnan

B Klang Plywood insp., SL Freight Systems Mr Wong L.M.

B Kuala Lumpur NGO meeting SAM

C Butterworth MTIB Office MrAhmad Ridzuan Bin Darus

C Butterworth Customs Mr Zamri

C Butterworth Penang Port Sdn Bhd Mr Obaid Hj Mansor

C Bukit Kayu Hitam Malaysian Agriculture Quarantine Station Mr Mohd Azam

20.09. A Sungai Rambai Jety Barter Trade Melaka Mr Salleh Mohd Shah

B Kuala Linggi Customs, barter trade center Mr Azman Yacoob

B Kuala Linggi Agent, barter trade center Mr Anwar Derus

AA Kuala Lumpur WWF, Traffic Ms. Ivy Wong Abdullah Ms Tong Pei Sin

C Kuala Kangsar District Forest Office Hj Salim Ali

C Kuala Kangsar Compartments 41A, 41B & 41C, Bubu Forest Reserve

Hj Salim Ali

C Kuala Kangsar Ikatan Chun Lee Sawmill Sdn bhd Dato’ Chan Fook

21.09. A Transfer to Kuala Terengganu

A Kuala Terengganu Bakti Malaysia Sawmill Mr Goh Chee Yew

A Kuala Terengganu Forest Department Mr Jamal Shulaigl Sha-han

B Kuala Lumpur Working on TLAS annexes

C Kuala Kangsar Checking of data collection & report preparation

22.09. A Bukit Kesing Forest operations of Ainiraz Corporation in Bukit Kesing Forest Reserve

Mr Lau Kong Mr Lee Hoi Fatt

A Tong BPH Sg Tong Forest Checking Station Mr. Kadri Shadri

A Transfer to Kota Bharu, Kelantan

B Raub District Forest Office Mr Othman Dris

B Gunung Benum FR Compartment 60A Mr Harry Yong

B Gunung Benum FR Kongsi Mr Jumat Ahmad

96

B Ulu Dong Temporary Checking Station Mr Zaidul Aziz

C Kuala Kangsar Compartments 1 & 2, Kledang Saiong Forest Reserve

Hj Salim Ali

Salak Utara Kilang Papan Salamah Sdn Bhd Mr David Tan

23.09 A Tanah Merah District Forest Office Mr Ysup Abd Rahman

A Tanah Merah Forest operations of Usaha Perkayuan Jeli SDN Bhd in Gunung Basor Forest Reserve

. A Tanah Merah Syarikat Kilang Papan Bumi Sdn Bhd (sawmill) Mr Shum Meng Sang

B Muadzam Shah Site Forest Office Mr Nor Zaidi Jusoh

B Ibam FR, Rompin Compartment 271 A, Mohd Nor

B Kongsi Mr Nor Zaidi Jusoh

B SL Matau RT 38/2008 (KP) Mr Nor Zaidi Jusoh

B Muadzam Shah Checking Station Mr Saadon Abdul Rahman

B Gambang Saw Mill Leong Seng Mr Chan Wey Seng

B Gambang Saw Mill Global Triangle Ms Lee

C Kuala Kangsar Mukim Pulau Kamiri licence area PPNPK47/2007(B)TK/KK

Hj Salim Ali

24.09. A Rantau Panjang MTIB Checking Station and Customs Mr Saharmi Yasim Mr Mohd Hlajri Ismail

A Rantau Panjang DOE Logistics (agent) Mr Azlan bin Abdullah

A Peng. Kubor Pemgkalan Kubor exit point Mr Saharmi Yasim

A Kota Bharu MTIB Office Mr Saharmi Yasim

B Kuantan State Forestry Department Pahang Mr Mohd Paiz Kamaruzaman

B Kuanan Special Function Unit SFD Mr Azni Rahman A Wahid

B Pasir Kemudi Forest Checking Station Mr Adnan bin Mustaffa

B Port Kuantan MTIB Mr Rosley

B Port Kuantan Customs Mr Muzlan

B Port Kuantan Port Authority Mr Hamizad Ismail

B Port Kuantan Shipping agent SSC Mr Kamaluddin

B Gambang Saw Mill Mid Ocean Holiday Resort Mr Choi

B Gambang Densetrade Timber Exporter Mr Anson Loo

C Kuala Kangsar DFO’s Office, Hj Salim Ali

C Sungai Siput Perak Industry Corporation Sdn bhd

C Ipoh State Forest Office Hj Kamal & Mr. Yap Yee Hwai

25.09. All Kuala Lumpur Team meetings

26.09. All Kuala Lumpur Wrap-up meeting at FDPM Dato Razani Ujang

CC Kuala Lumpur MTIB- Independent Monitoring Ms Loke Sim Wah

27.09. All Kuala Lumpur Hari Raya break28.09-05.10.

06.10. All Kuala Lumpur Work on draft report



09.10. All Kuala Lumpur Closing Meeting at PKKP Mr Wan Mazlan Wan Mohmood, Ms Sugumari A/P S. Shanmugam

AA Jussi Lounasvuori, Baharuddin Haji Ghazali, Andreas Knoell BB Hugh Blackett, Sheikh Ibrahim Sheikh Ali, Elbson Marajan Pengeran CC Jussi Lounasvuori, Hugh Blackett, Andreas Knoell A Jussi Lounasvuori, Baharuddin Haji Ghazali B Andreas Knoell, Elbson Marajan Pengeran C Hugh Blackett, Sheikh Ibrahim Sheikh Ali AK Andreas Knoell

97

Annex 4 Stakeholder feedback

Sarawak Timber Industry Development Corporation (STIDC):

NO

Comments

1

Item: 4.3.5 Control of timber imports Box 6

1. Sarawak requires Certificate of Origin for import of logs and LSS

2. STIDC is the authority which controls the import of timber and timber products. As such, Harwood Timber’s role is confined to operating the depots at the authorized entry points.

3. & 4 The procedural problem which resulted to the discrepancy on the import data

between Customs and Harwood Timber has been rectified as soon as the matter was highlighted in the preliminary report of the Technical Evaluation Team.

2 Item: 4.7.1 Human Resources Page 38 second para last line should read ……log graders for the Kuching, Sibu/Kapit, Bin-tulu and subregions. 4.9 Independent monitoring Box 15 Page 42 Item 8 should read ………(scope: log endorsement, shipping administration and inspection of export logs)

--------------------------------------------------------------------------------------------------

All Malayan Estates Staff Union: I refer to the briefing on the above Report on TLAS at meeting held on 31

st October 2008.

At the meeting some questions were raised and replied then and there. I thank you for inviting us to send in our comments on the Report. But like to draw your kind attention to the Executive Summary (Page IV) under the heading, Social and Environmental Issues. Here I am referring to the second bullet item on worker safety and health. This comes under the social issues and it must be clearly indicated of the compliance of the occupational Safety & Health Act 1994 (Act 514) This Act is administered by the Occupational Safety & Health De-partment and applies throughout Malaysia. This act imposes duties on an employer and employee to secure workplace health and safety for all employers and others who may be affected by the activities at the workplace. Of course worker safety and health is not a requirement to secure export license. But the export of legal timber to EU certainly involves great measure of social impact where employees and employers are engaged in harvesting and exporting of legal timber. So both the employer and employee have to be protected by the rule of law on the basis of fundamen-tal rights of human beings such as freedom of expression Freedom of assembly and the freedom of association.

98

The most important is the Freedom of Association as a convention of the International Labour Organi-sation (ILO) and as endorsed by the United Nation Charter of Human Rights. The EU is concerned in this area of social aspect and application of the rights. Malaysia has adopted two ILO conventions No. 87 and 98 regarding freedom of association and the protection of the right to organize and collective bargaining. So it is very important to include as another bullet item under the sub heading:- Social coverage in-cludes fundamental principles and the rights at work. ---------------------------------------------------------------------------------------------------------------------------------------- Ray S. Sundram: I congratulate the Malaysian Timber Industry Board in undertaking and promoting our timber industry within the parameters of conservation. We share a common ground in the striking a balance between environmental issues and commerce and industry. Even though we as NGOs press on environmental issues, we on the other hand will have to educate the industrial player across the board ranging from the forest to the retail of the timber industrial players. We have to impress upon the main players how pertinent it is to perform proper au-dits of their immediate and surrounding areas of fauna, flora and wildlife. Further, to the aforesaid, proper management will have to be put in place. This will include care management in conservation and preservation of the ecosystem. This important factor will have a direct impact in the sustenance and survival of the ecosystem thus providing long term benefit for the business and the environment. The key issue of the Logging industry is the social contribution for sustainable social contract. This will ensure that the lifestyle, tradition and livelihood of the natives will not be compromised. Currently we observe that the rivers are polluted by storm waters, road and infrastructure into the sites which in turn has a dramatic effect on the water source damaging the delicate ecosystem which will have direct re-tribution to the wildlife, fisheries, plants and humans. In association with the Government, relevant industry player and the NGOs should be able to provide the needed solutions to the timber downstream industry to address the pollution impact on the envi-ronment. They will have to collectively seek green technologies to effectively put in place comprehen-sive waste management system. ---------------------------------------------------------------------------------------------------------------------------------------- TRAFFFIC Southeast Asia: General

• How to verify night operations are legitimate?

• Key findings on control of timber movement in Peninsular Malaysia, Sabah and Sarawak are probably similar, but not necessarily have been reflected across the three regions. Are they suggesting priorities to work on?

• Information on procedures on some areas such as labour and forest coverage are not consis-tently applied across in 3 regions

• The role of certain agencies in regulating environment, how can they work better with TLAS agency, e.g. Department of Environment (DOE). How EIA has been successfully enforced?

• What is the latest round log export policy from Sarawak and Sabah? And how those will be monitored in real time and linked to the TLAS?

• Results of TWG discussion on the TLAS technical review should be shared with stakeholders Specific

• Page iv – Why the present TLAS does not control import and export activities?

• Page vi - There is still a need for TPM with a full role and responsibility instead of a decreased role of TPM even if ISO is used as a basis. In general ISO9000 is used and not 14000 on en-vironmental management systems.

• Page v – what is mass-balance method? What does it mean by elsewhere controls are li-mited?

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• Page 7 – what are the actual procedures company has to comply with for EIA?

• Page 10 – What does it mean by elsewhere?

• Page 15 – Box 3, who issues the certificate of origin, names of the certificate and other appro-priate documents?

• Page 16 – what are the prescribed preparatory activities?

• Page 21 – Table 8, no mention of Customs procedures

• Page 22 – Table 9, No mention of Customs procedures

• Page 33 – Box 9, names of the certificates of origin; size of small dimension --------------------------------------------------------------------------------------------------------------------------------------- WWF-Malaysia: The technical evaluation of the TLAS by the independent consultants is commendable and highlights some of the important gaps in the current ongoing EU FLEGT processes. Improvements on the usage of positive language is encouraged in particular, page vi, the 1

st sentence of the conclusion section

(no.. non… not…) It adds to the confusion of reading. The evaluation clearly identified much work is needed to improve the reporting ability of the control procedures as well as the traceability of the timber from the forest floor to the exporting countries for Malaysia. It should be noted that lack of traceability does not necessary constitutes illegal logging nor laundering activity but a more efficient system to improve the control procedure is much needed. However it should be noted that the technical evaluation team discovered a glaring problem in the sys-tem that was missed in the creation of the TLAS. This is in regards to disposal of seized timber, as this could be seen as a route to “legalize” timber and could potentially grow into a contentious issue. The agencies involved should developed a mechanism to ensure that illegal timber does not enter the sys-tem, possibly donating the proceeds to joint program between Government and Non-Governmental Organization working resolving these issues. The evaluation has identified gaps in the system and it clearly indicates where in the chain the gaps occur and how it can be addressed to provide more clarity to the issue. The roles or lack of it and the overlapping roles and responsibilities of the agencies clearly needs to be sorted and communicated across. The scope of the timber sizes entering the country needs to be looked into i.e. smaller dimen-sions of sawn timber and other processed products as this could be a loophole to bring in illegal tim-ber. The third party monitoring (TPM) component of the TLAS needs to be clearly looked into with regards to conformity with ISO management systems requirement. The lack of documents on appointment procedures for the TPM clearly does not improve the credibility or transparency of the TLAS. This component of the TLAS needs to be seriously looked into. It will be the role of the government in addressing the gaps identified and for that, it is hoped that the government will be more open to environmental and social NGO’s participating in the joint committee soon to be set up when the Voluntary Partnership Agreement is signed between Malaysia and Euro-pean Union. Overall the technical evaluation’s findings indicate that Malaysia is on the right path, the TLAS that was developed was a first step and continuous improvement to the system would streng-then it further. Clearly current implementation of the control procedures needs to be strengthened. Due to the current findings of the technical evaluation team on the TLAS, it is hoped that the Malay-sian government addresses the gaps identified and delay the signing of the VPA until a more robust system is in place. It is hopeful that in addressing the gaps in the TLAS, a credible and transparent system would be established and the participation of social and environmental NGO in the process.

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---------------------------------------------------------------------------------------------------------------------------------------- Jaringan Orang Asal dan NGO Tentang Isu-Isu Hutan (JOANGOHutan) and Jaringan Orang Asal SeMalaysia (JOAS): I.INTRODUCTION This submission is intended for the EFI Support Team for the EU FLEGT Action Plan and copied to both the Malaysian Ministry of Plantation Industries and Commodities. They contain comments on the Independent Report prepared by the consultants on the proposed Timber Legality Assurance System (TLAS)of the EU-Malaysia FLEGT VPA. They are also made without detailed knowledge on the Terms of Reference (TOR) of the consultants and as such will specify on issues based on the concerns of both coalitions that have since left the consultation process. II. COMMENTS We note the limited objectives of the TOR of the report that is restricted to mainly evaluating the Con-trol Procedures of TLAS for its verifiability and auditability alongside capacity-building needs and the effectiveness of its proposed independent monitoring procedures. However we would like to raise the following issues with the evaluation team: A. Native / Aboriginal Customary Rights (NCR)

We greatly appreciate the evaluation that the reference to Native Customary Rights only addresses the right to collect forest produce and gives no clear guidance on issues of land occupation rights, where further guidance would be useful, particularly as forest licensing procedures do take into ac-count the presence of existing settlements. However, the following are some of our concerns related to the matter:

(i) It must be reinforced that the control procedures of the TLAS’ Definition of Legality will remain contentious as long as the legal rights of indigenous communities to their territorial boundaries are not resolved before harvesting rights are licensed out. It must be stressed that the issue at hand extends beyond the scope of Users’ Rights and is in fact an issue of the natural rights and privileges of indigenous communities to their traditional territories.

(ii) It must also be pointed out that quality of the definition of timber legality must sufficiently cor-

respond with the law. No definition of legal timber can be adequate if it ignores the indigenous peoples’ territorial claims and rights within ‘approved areas’ of timber licences. The law in-cludes the Federal and State Constitutions and the common law (which extends to court deci-sions). A failure to understand the implications of our court decisions on the full nature, stature and extent of indigenous peoples’ customary law renders that the scope of rights given to the people as highly flawed and subsequently the Definition of Legality invalid. We find no refer-ences in the report that emphasis on this point. The report JOANGOHUTAN & JOAS: Com-ments: TLAS Independent Report on Joint Technical Evaluation 2 only evaluates the commu-nity rights in terms of procedural clearance and clarity.

(iii) Little attention has been given to the lack of standardisation on the control procedures for Principle 4 across different regions. Despite the different legislation and statutes binding over the NCR in Peninsular Malaysia, Sabah and Sarawak, the principles of native /aboriginal rights remain as a coherent concept of rights. With the exception of the Aboriginal Peoples’ Act 1954, the land and forest laws of Sabah and Sarawak each has corresponding value in governing indigenous peoples’ land rights. The report does not appear to detect inconsisten-cies on the different legislative indicators and outputs proposed across the different regions

(iv) A key component in determining aboriginal / native territorial boundaries is to establish a parti-cipatory joint-boundary demarcation with affected communities and the establishment of the free, prior and informed process. We feel the report should have made it clear the procedures that it highlights as lacking in describing the extent of Other Users Rights.

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B. Development of the TLAS

The report does not identify the progression and/or regression of the TLAS from their earlier to the final drafts. As the scope of analysis is limited to the final version, there is no clear evaluation as to whether or not improvements have been made where they should and subsequently, if any dilutions have occurred in any parts of the TLAS from its earlier stage to the final draft. If any of this has oc-curred, then such a report has the responsibility to point out the instances where these have occurred. C. Process: Consultations Although we assume that the TOR of the report does not extend into assessing the consultation process, we find it nevertheless pertinent for the consultants to have looked into the consultation process and in particular to have assessed consultation reports and minutes in order to establish whether there are erroneous legal interpretations being bound to the proposed TLAS. This becomes imperative in the light that some legal interpretations of native / aboriginal rights by the Malaysian Government are in direct contradiction with our highest court. Such legal assumptions not only directly jeopardise the quality of the TLAS but renders that the entire Definition of Legality as highly inade-quate. D. Process: - Comparative analysis with other FLEGT VPA countries Likewise in (C), the limitations of the TOR notwithstanding, we also view that there should have been a more comprehensive analysis with the TLAS of different FLEGT VPA countries. The quality of the TLAS must not JOANGOHUTAN & JOAS: Comments: TLAS Independent Report on Joint Technical Evaluation 3 only be matched against standards of its verifiability and auditability and an assessment of the national system requirements and so forth, but attention must also be given as to how the Ma-laysian TLAS fares in comparison to other FLEGT VPA countries. E. Process – future developments Likewise in (C) and (D), the limitations of the TOR notwithstanding; it is of great importance to assess the quality of the current TLAS draft in terms of its future directions. There is no indication whether or not the evaluators have looked into the future directions both the Malaysia and the European Union wish to take in improving the current draft in the future. As has been greatly stressed during the con-sultations, the VPA process is said to harbour intentions to improve its content in the future. As such, it is only rational to analyse whether or not such a plan has been concretised. III. CONCLUSION We thank the evaluators for their insight and hope that our comments will be given their due consider-ation. ---------------------------------------------------------------------------------------------------------------------------------------- Profesor Madya Dr. Ramy Bulan, Faculty of Law, University of Malaya: 1. Introduction One of the specific observations of the Joint Technical Evaluation Report relating to social environ-mental issues is that the “TLAS gives uncertain or guidance is absent“ on native customary rights. The Report states:

Native customary rights, to which the TLAS only clearly addresses the rights of users to collect forest produce and gives no clear guidance on issues of land occupation.

This is clearly the case. Furthermore, the TLAS as attached to the Report does not adequately reflect the existing laws that are relevant to native rights which have been raised by various parties as a cru-cial part of the consultation.

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2.1 Absence of any reference to the Land Code in the TLAS 2.1.1 No reference to the Sarawak Land Code It is to be noted that there is no reference whatsoever to the Sarawak Land Code in the final TLAS document. In so doing, the authorities responsible for the final TLAS have omitted a very important component of the whole process. 2.1.2 Annex B, Part 2 .10 Principle 4: Rights and Privileges of Natives At the second, third and fourth stakeholders consultations, and up to the 27 January 2008, under An-nex B Part 2.10 Principle 4, under ‘other user rights, the criterion was – “Rights and privileges of na-tives” with the Land Code 1958 (Cap 81) Section 2,5,6 being included as an indicator. However, the reference to the Land Code has all but disappeared in the final document as of the 1 July as well as the 8 September 2008 TLAS document. Note that the Land Ordinance (Sabah Cap 68) and the Aboriginal Peoples Act 1954 were included after suggestions were made by various stakeholders. The exclusion of the Sarawak Land Code is inconsistent. Mere reference to the Sarawak Forest Ordinance and the practice of the department does not capture the full process governing the determination of NCR rights on the lands on which concessions are giv-en. This does not take into account, the licensing process which involves the Land and Survey De-partment in determining NCR rights. References must therefore be made to the relevant provisions of the Sarawak Land Code, particularly, sections 2, 5, 6 and 15. 2.1.3 Annex B Part 2.1 - Principle 1 (Right to harvest) – Verification The explanation in the Report of Fifth Multistakeholder Consultation refers to procedures that should be taken by the Forest Department in the issuance of licences and the reference to Lands and Sur-veys Department to check on the status of NCR. It must be noted that most timber licences are issued “subject to NCR”. To reflect the responsibility of the licencees in relation to NCR, under the verification column, there should be inserted and new line - “Licence subject to NCR or to exclude NCR”. 3. Annex B, Part 2:10 - Principle 4 – Procedure To protect the rights of the native users, it has previously been suggested by representatives of the ethnic associations that following should be inserted under the Procedure column: “Notification of concession boundary to the communities residing within the concession area” This should be considered because that notification will provide an opportunity to adjudicate and iden-tify native claims within the concession area. 4. Definition of Legal Timber The definition of legal timber is stated to be based on “existing legislation and adats which are codi-fied”. The latter has been hotly contested. Native groups and NGOs have maintained that this is in-adequate because the relevant existing laws on native land rights are not just written law but includes native law and customs - and not all are codified. Even the codified customary laws provide for the recognition and enforcement of uncodified adat or customs that may not be included in the codes as provided under section 198 of the Adat Iban 1993. Similar saving provisions exist in all the other cus-tomary codes of the other native groups. There is really no vagueness on what constitutes NCR lands. And even where interpretations differ, it does not justify its exclusion. Whilst the definition in section 5 of the Land Code is limited, judicial deci-sions have already affirmed the existence of some of the customs and they are “customs and usages having the force of law” as defined in Art 160 (2) of the Federal Constitution. This constitutional provi-sion cannot be ousted in such an important document which will affect the rights of natives on the land. Principle 4 therefore should have as indicators: Sarawak Land Code section 2, 5, 6, 15 and Federal Constitution Art 160 (2)

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4.1 Legal timber must be harvested from areas where there is no dispute on relating to NCR The rationale given for rejecting the suggestion that timber “harvested from areas that are being claimed by natives or in dispute should be considered illegal” is stipulated under in the Report of the Fifth Stakeholder Consultation, Part C – Issues and Comment , paragraph 3 (a). The rationale is inappropriate and cannot be implemented or is too onerous on na-tive claimants. 4.1.1 No injunction against the government To put the burden on an aggrieved party to take the government to court is a farce because the law does not allow for injunctions to be brought against the government – and so, that avenue is not avail-able to the natives. 4.1.2 Onerous burden placed on natives An injunction might be taken against a licencee but in all probability, it would be rejected because the NCR claimants do not have the documentary evidence to support the interlocutory application, as against a licencee who has a valid “legal” documentary evidence. The reality of the situation is that a claimant has to wait for the conclusion of the trial which might take many years by which time the cha-racter of the land has completely changed and perhaps completely destroyed. 4.1.3 Compensation The suggestion in the report above that “in the event that the aggrieved party’s claim is justified by the court of law then the claimant will be compensated for the loss of their timber from the area” is detri-mental to native interests. It is tantamount to legalising what was illegal timber in the first place. 4.1.4 Balance of convenience in favour of natives Native groups maintain that once a case has been filed, the timber taken from that area must be deemed illegal until that dispute is settled. This would not cripple the industry as claimed, because, the NCR lands constitute only a small fraction in relation to the large concession areas. This would help towards early settlement of disputes. The balance of convenience must be in favour of the natives who are in a weaker bargaining position. 5. The Consultative Process It is regrettable that voices of the ethnic associations do not appear to have been fully considered or reflected in the final TLAS document. Apart from the government bodies and agencies, there appears to have been no representation from the non-governmental organizations or the ethnic groups in the discussion of the formative process. There could have been a more inclusive representation at least at the level of the working groups. The process would no doubt have been greatly enriched with a great-er involvement of representative of these groups in looking at the details in the process (es. 6. VPA – An Appropriate Forum for Discussion of NCR? The update on the Fifth Stakeholders Consultation referred to NCR issues as “being outside the scope of the VPA but awareness created” and that NCR issues “to be taken up in appropriate fora”. If the purpose of this exercise is to ensure legal timber, NCR cannot be detached from these discus-sions. It cannot be overstated that native rights to land are inextricably linked with the timber industry. It affects the rights of people who inhabit those areas. After all, if “forestry is not about trees but about people” then the rights of the affected indigenous people must be part of the discussions. ---------------------------------------------------------------------------------------------------------------------------------------- Sarawak Timber Association (STA): A. Background In May 2003, the European Commission published its Action Plan on Forest Law Enforcement, Go-vernance and Trade (FLEGT) with the aim of reducing the extent of illegal logging through the use of the power of timber-consuming countries. The said Plan was approved by the Council of EU in Octo-ber 2003. One of the proposals is the negotiation of bilateral FLEGT voluntary partnership agreement (VPA) with the producing countries as one of the initiatives to combat illegal logging and to promote trade in legal timber. Malaysia has commenced formal negotiations with EU on 25 September 2006 and talk with EU still continues.

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EU and Government of Malaysia had decided before concluding the VPA, it is necessary to have the control procedures contained in the Malaysian Timber Legality Assurance System (“TLAS”) be eva-luated by an independent Joint Technical Evaluation Team (“The Team”) to ensure that they are au-ditable and effective and to identify areas where capacity building are needed and to provide institu-tional, financial and technical support to improve governance. The Team has carried out the task, con-cluded the evaluation and presented their findings including comments in the report (“The Report”) for stakeholders to comment. Sarawak Timber Association (“The Association”) had examined, studied the findings in respect to Sa-rawak in the report and has the following to comment. B. General comments (1) Terms of Reference of the Team (TOR) The Association understands that The Team’s task is to evaluate control procedures of TLAS to en-sure that they are auditable and effective and the technical evaluation of the control procedures is guided by the TOR and the brief TOR are as below:-

(a) Assess whether the control procedures contained in Annex B of the TLAS are easily veri-fiable and auditable without ambiguity in an objective manner by the responsible Malay-sian authorities, and the independent monitor;

(b) Assess whether the control procedures as set out in Annex B of the TLAS provide assur-

ance that all timbers products licensed for export under the VPA have been produced in accordance with the requirements of Annex A and all other timber products are excluded;

(c) Identify the capacity building needs etc;

(d) Assess the effectiveness of the proposed independent monitoring procedures and deter-

mine the likely cost of their implementation. (i) The TOR assigned to The Team seems to have gone beyond the understanding recorded in TLAS The Association feels that the TOR assigned to The Team had gone beyond the understanding rec-orded in TLAS (Annex 1) (refer to page 48 of the Report for detail). It is plain and clear that TLAS (An-nex 1) under the VPA shall be the existing system of issuance of export licences for timber and tim-ber products from the three regions of Malaysia. Hence, TLAS should confine to the understanding arrived and recorded in Annex 1 which forms and shapes the very basis of the FLEGT VPA negotia-tion that draw our attention. Under the circumstance, our Association opined that taking into consideration of our joint effort to combat illegal logging, The Team should be tasked to uncover firstly, the existence of a control proce-dure employed in Sarawak to prevent illegal logging. Secondly, if such control procedure exists, our Association concurs with the TOR that it is necessary to assess whether the prevailing control procedure is easily verifiable and auditable by the responsible Malaysian authorities. But only by the Malaysian authorities and not the independent monitor as verifi-cation of the control procedure by the independent monitor was never part of the “existing system” as far as the Association understands. As such, our Association feels that it should not feature in The Team’s TOR. (ii) Evaluation exercise seems to stray outside the scope of The Team’s TOR Notwithstanding our Association’s above stated view that the TOR assigned to The Team is “errone-ous”, the Association feels that even when The Team conducting the evaluation exercise had also strayed outside the “erroneous TOR” assigned to them and a number of the findings recorded in the Report have gone beyond its TOR. For instance, the existing practice/regulation only requires relevant implementing government agency to trace/track logs back to the logging block(s). The Team’s evalua-tion should therefore be confined to the parameter of verifiability and auditability on such tracking re-

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quirement rather than making implication that the prevailing control procedure, i.e. tracking require-ment is insufficient and inadequate to determine the origins of the logs and the procedure should be changed (refer to box 4, para 1, page 19 and box 5, para 1 of the Report which stated “back-to-stump log tracking would be the most secure solution”). In addition to the above, our Association has reservations on The Team’s suggestion of “physical tracking back to stump” as a better solution to prevent illegal logging as we feel that such solution is formulated during the short visit of The Team while conducting their evaluation, whether it is indeed a pragmatic process that could guarantee legal timber in the context of logging operations in Sarawak is uncertain. Under the circumstance, our Association opined that The Team should strictly adhere and confine to the cold letters of TOR to evaluate based on evidence whether the control procedures contained in Annex B of the TLAS are verifiable and auditable by the responsible Malaysian authorities and wheth-er the control procedures provide assurance that all timber licensed for export under the VPA have been produced in accordance with the requirements of Annex A. C. Specific comments The followings are the key findings in the Joint Independent Technical Evaluation Report:- 1. Key findings on control of legality in the forest (Box 4, page 19) a) Para 1

Finding The SFC monitors production to ensure that the actual harvest volume does not exceed the license volume determined on the basis of the pre-felling inventory in areas not planned to be converted to other land uses. Control is based on volume reconciliation, but there is no physical tracking of logs back to stump. The procedure requires documented field inspections, which are not included in the Sarawak TLAS.

Comment The Association is confused as to the time to carry out the “documented field inspections” as sug-gested by The Team. Is The team referring to the early stage of collating “pre-felling inventory” data OR during the stage of reconciliation, there must be physical tracking of logs back to stump? (i) Infrastructure is destroyed after coupe is closed

If the Team is referring to tracking back to stump at the point of reconciliation, then it is the Associa-tion’s humble view that such suggested process is not viable because more often than not the coupe will be closed by then and what follows thereafter is the destruction or demolition of the infrastructure as required by the relevant authority as a measure to prevent the timber operator from further felling trees in the coupe. Hence, entry to the coupe to physically reconcile the harvesting volume with the license volume is therefore not possible. (ii) The purpose of the pre-felling inventory

It has always been the Association’s understanding that the pre-felling inventory was formulated as a basis for renewal of forest timber licence that has expired and justification for re-entry in the licence area where the licence is still subsisting and it was never devised for the purpose of volume reconcilia-tion as perceived in the finding. Therefore, the pre-felling inventory is not an indicator or a yardstick to ensure that the actual harvest volume does not exceed the licence volume and this is particularly true in the licence area categorized as Felling Plan. The Association understands that the prevailing requirement for collecting pre-felling inventory data is that trees of 45 cm at breast height are enumerated. As such, in actuality, the ultimate production from a Felling Plan licence area is always higher than the estimated volume collated in the pre-felling inven-tory data. It is therefore erroneous or imprecise to equate extra production with illegality. (iii) More than the existing practice

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Under the current forestry practice in the State, it is not a procedural requirement that logs produced are or be traced back to the stump. The Association wishes to highlight that in addition to the above reason, tracking of logs back to stump is certainly not feasible and not practical because the process is equivalent to the full chain-of-custody in timber certification which may require 100% tree enumeration. Given the unique forest structures, peculiar and adverse terrain condition and topography of Sarawak and the different practices in Sarawak, for example, tree tagging are done by the concessionaires ra-ther than by the relevant implementing agency as the case in Penisular Malaysia, 100% tree enumera-tion is virtually impossible. (vi) Additional reconciliation procedure not an impermeable procedure The Association is of the view that the tracking back to stump as suggested by The Team is theoreti-cally an ideal procedure if workable. However, it may not be an impermeable or a full proof procedure for achieving our joint noble objective of VPA of curbing illegal logging instead it may become an extra burden imposed on the Sarawak forestry industry and the relevant agencies. (v) Outside the scope of The Team’s TOR In addition to the above, our Association feels that The Team has acted outside the purview of the TOR (refer to 3

rd paragraph of Section B above).

b) Para 2

Finding Fields controls by SFC do not specifically focus on estimating volumes extracted from the coupe and comparing them to the declared harvesting volume by the licensee. The Post-felling Inspection (closing of coupe) can take place several months after harvesting operations, which means that any observed non-conformity that constitutes illegal practice may not be available at the time when legality of an export consignment is determined.

Comment (i) Incorrect finding The Association expresses doubts as to the correctness on the finding that Sarawak Forestry Corpora-tion (“SFC”) do not specifically focus on estimating volumes extracted from the coupe and comparing them to the declared harvesting volume by the licensee. At all material times SFC is monitoring the production by the licensee by various means. (ii) Operational issue Notwithstanding the above, the Association wishes to reiterate that Post-felling Inspection which is to be administered by SFC is an operational issue and is not related to the definition of legality at all and hence should not feature in TLAS. c) Para 3

Finding TLAS does not specify the EIA requirements when forests of 500 ha (or as low as 50ha for other forest types such as Mangrove) or more are to be converted

Comment (i) Outside the scope of The Team’s TOR The Association has to reiterate that The Team’s evaluation seems once again strayed from its TOR which only requires them to assess and verify whether the control procedures in Annex B provide as-surance that all timber licensed for export under the VPA have been produced in accordance with the requirements of Annex A (Principles and Criteria of Legal Timber).

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The criterion for Principle 1 (Right to harvest) as provided in Annex A is “environmental management” and the law governing this criterion to be followed in Sarawak is the Natural Resources and Environ-ment Ordinance (Cap 84) (“NREO”). The Association is of the view that the Team’s evaluation should confine to the assessment and verifi-cation whether the control procedures in Annex B could guarantee that timber licensed for exports un-der VPA operator have been produced are in accordance with the provisions of NREO. d) Para 4

TLAS Annex B, Part 2, Table 10 covers legislation safeguarding the rights of Natives and recon-ciling these with timber production. The exclusion of areas and rights specified in the Forests Or-dinance are stated in the license conditions and, under the Second Schedule of the license doc-ument, it is also stated that the license does not include alienated land, gazetted communal re-serves, land held under valid Temporary Occupation License and land subject to Native Custo-mary Rights. In addition, practice is that if areas used by local communities are identified during pre-harvest checking, these will also be excluded from felling. How the issue of user rights are incorporated during the planning stages is not clearly stated in the Sarawak TLAS.

Comment (i) Not part of TLAS The Association wishes to reiterate that the abovementioned finding is completely outside the purview of TOR. The issue of user rights which the Team specifically refers to as Native Customary Rights was and has never been part of TLAS. It is the Association’s considered opinion that Native Customary Rights claims should not feature in the TLAS at all and if there is such claims arising or purportedly arising, the same should be settled in the court of competent jurisdiction in the State. In practice, the issue of user rights during the planning stages have always been taken into considera-tion, for example, the parcel of land designated as water catchment area, gazetted and managed by Jabatan Kerja Raya or the Water Board is also excluded from the licence area and SFC has also ex-tended the exclusion to area where gravity pipe system built by Medical Department for the benefit of the kampung or longhouse inhabitants. 2. Key findings on control of timber movement (Box 5, page 23) a) Para 1

Controls ensuring that all logging operations are legally conducted within the permitted boundary may depend on some subjective assessment and reliance on information provided by the licen-see. Back-to-stump log tracking would be the most secure solution, but, at a minimum, the TLAS should provided more detail on how harvest volumes are reconciled with estimates and whether current levels of monitoring are able to provide real confidence that there are effective controls to prevent illegal logging.

Comment (i) Inaccurate statement The Association feels that the first statement made by The Team in this finding is a reflection of The Team’s non confidence and bias toward the Sarawak licensees’ conduct in the harvesting endeavours and it is absolutely inaccurate as the relevant agencies have always administering the logging opera-tions carried out by the licensee in various means. For example, the SFC has always carried out the licensed boundary survey jointly with the licensee, SFC also verified boundary demarcation for coupe and block carried out by the licensee, etc. Besides, in practice, the information, data and maps provided by the licensee to the relevant agencies for verification in Sarawak are diligently prepared by professionals duly trained in forestry and they are reliable to be relied upon.

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(ii) Back to stump process is a predetermined procedure and will not guarantee “zero” illegal log-ging The Association feels that the suggestion of tracking logs back to stump is a predetermined procedure and it is suggested during the short visit of The Team while conducting the evaluation. As such, the Association has doubt whether such process will indeed be a better solution in achieving our joint ob-jective of curbing illegal logging. The Association is of the view that theoretically “physical tracking back to stump” seems to be a good solution to curb illegal logging but in reality it is not necessary an effective solution to curb illegal logging. b) Para 2

Post-harvest inspection is not mentioned in the Sarawak TLAS, but the Post-harvest Inspection Report could be an additional document that would support verification by an Independent moni-tor. Part of the requirement of post-harvest inspection is to establish that all harvesting has been properly concluded and all logging has occurred within permitted boundaries. However, a draw-back is that this inspection would only determine retrospectively if logs have been illegally har-vested by which time they will have moved through the supply chain as ostensibly legal logs.

Comment (i) Post-felling inspection is applied in the existing system The Association expresses doubt as to the correctness of this key finding. At paragraph 2 page 19 of the TLAS, the Team did mention about the post-felling inspection which is analogous to the Post-harvest inspection adopted in Penisular Malaysia. The post-felling inspection is for the purpose to es-tablish that all harvesting has been properly concluded and all logging has occurred within permitted boundaries. The post-felling inspection report is prepared by SFC and is readily available for inspec-tion by any interested party having rights to inspect. (ii) Contradictory suggestion The Association is perplexed by the Team’s suggestion that the Post-harvest Inspection Report could be an additional document that would support verification but further down the finding the Team con-tradicts its own earlier suggestion and casts a serious doubt as to the usefulness of the inspection as the inspection would only determine retrospectively on the status of the logs by which time the logs could have moved through the supply chain. The Association wishes to point out in the current practice, the licensee is penalized under the 5

th

Schedule of the Licence condition should any non-compliance or infraction is detected and any non compliance or infraction such as “high-stumps” or “ponding” does not tantamount to illegality, the most it insinuates is that it is not a sound harvesting practice. c) Para 3

There is no indication in the TLAS that the reconciliation of estimated and actual harvested vo-lumes is linked to authorization of timber transport. If the reconciliation and the link is made it would provide further assurance that logs have been legally harvested and transported.

Comment (i) Additional reconciliation procedure not a guarantee to illegal logging The Association is of the view that linking the reconciliation of estimated and actual harvested volumes to authorization of timber transport as suggested by The Team is theoretically an ideal procedure if workable. However, the Association is of the view that such reconciliation procedure not only is not pragmatic for reasons we highlighted in replying to your suggestion of “physical tacking back to stump”, it may not give an assurance that all logs that are harvested, transported and exported are legal. As such, The Team should refrain from making query, short of collateral attack, on these proce-dures and system that have been accepted as pragmatic for application by the State government.

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d) Para 4

The effectiveness of this part of the TLAS is uncertain and would be strengthened by the inclu-sion of further detail on the actual procedures, linkages, responsibilities and requirements for in-ternal audit. Greater supply chain security would be possible if Sarawak was to require pre-harvest tagging in all license areas to allow logs to be traced back to stump.

Comment (i) Not a finding but an opinion The Association is of the view that this is not a finding but the opinions of the Team not supported by substantive evidence. Again, The Team is advocating back-to-stump tracking contrary to the forestry practices and operations currently in force. Please refer to the earlier comment on the back-to-stump remark. The Team’s assessment should focus and concentrate on the verifiability of the existing con-trol procedures and system rather than making query on the procedures and system that have been accepted as pragmatic for application by the State government. e) Para 5

The TLAS does not clearly address Harwood’s control of Reservation Quota (RO) logs. Tracking information on RQ, Non-Quota and export logs is managed in HENDIS.

Comment (i) Outside the scope of The Team’s TOR The Association is of the view that the assessment should concentrate on the verifiability of the exist-ing control procedures and system rather than making query on these procedures and system that have been accepted as pragmatic for application by the State government. f) Para 6

There is no mention in the TLAS of mill/input output records and links with inspection, sales and export documents that might be used to verify that only legally sourced timber has been processed.

Comment (i) Outside the scope of The Team’s TOR The Association is of the view that the assessment should concentrate on the verifiability of the exist-ing control procedures rather than making query on the procedures that have been accepted as prag-matic for practice by the State government. 3. Key findings on control of timber imports (Box 6, page 24) a) Para 1

It is not made clear in the Sarawak TLAS whether imported logs, LSS, sawn-timber, plywood and veneer need to be furnished with certificates of origin. However, with reference to imports from Indonesia PEB and SKSHH are required to demonstrate legal origin of sawn timber, plywood and veneer.

Comment (i) Certificate of Origin is not an assurance of legality of timber It is The Association’s understanding that notwithstanding there is a control procedure for the importa-tion of logs, the State has banned all logs import from Indonesia from other sources. Certificate of Ori-gin is required for import of logs and Large Squares & Scantlings (“LSS”). The Association is of the

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view that the Certificate of Origin is not an assurance of legality of timber. The Association feels that the forestry practices in other countries should not feature in Sarawak TLAS to ensure a system of legality of that country. . b) Para 2

Harwood is specifically mandated to manage timber depots at five official entry points from Kali-mantan, namely Sematan, Biawak, Tebedu, Batu Lintang and Lubok Antu, but the Sarawak TLAS is not clear on the role of Harwood in management of imports from Indonesia

Comment (i) Sovereign right of the State Government to prescribe the role of the relevant agencies The Association expresses the view that the role of Sarawak Timber Industry Development Corpora-tion (STIDC) and Harwood Timber Sdn Bhd is well defined. STIDC is the authority which controls the import of timber whereas Harwood Timber, being an incorporated company, is to manage and operate the depots at the five designated entry points. The Team’s assessment should concentrate and focus on the verifiability of the existing control procedures and system rather than scrutinizing the role of the relevant implementing agency. All these agencies are appropriately set up according to the relevant laws and they are accountable to the relevant Ministry and the State Government. They are also sub-ject to their respective internal and external audits as required by our State government. The Associa-tion feels that it is the prerogative and sovereign right of the State government to prescribe the role of these agencies. c) Para 3

The link between import data recorded by Customs, Harwood and the STIDC is not clear and working practices may result in statistical discrepancies. This practice undermines the utility of import statistics and a review of practices would be recommended to ensure that statistics can be used for effective monitoring.

Comment (i) Working practices of the agencies have no nexus to legality The Association takes notes of the Team’s finding that the poor linkage between the three agencies and work practices may result in statistical discrepancies. The Association stresses data discrepancies between agencies may due to data entry errors, format and/or classification and such discrepancies , if any, are not reliable indicators of illegal activity as discrepancies occur commonly in legal trade flows or transactions. The Association is of the view that the working practices by the three agencies have no nexus to legality assurance system and any possibilities of data discrepancies between the three agencies can be resolved by cross reference and consultation. d) Para 4

It was observed that controls of timber imports, particularly at border crossings from Indonesia, were not always effective or properly implemented. The procedures could be reviewed to ensure effective coordination between RMC and Harwood, and that staff have the mandate and capacity to take action in event that irregular timber movement is detected.

Comment (i) Hearsay The Association is of the view that the observation is a conjecture based on hearsay. The procedure in respect of timber imports has been in place and properly implemented by the authorities. There is coordination between the authorities responsible for the timber imports.

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4. Key findings on the adequacy of verification and licensing functions for Sarawak (Box 11, page 35) a) Para 1, 2 and 3

1. Under current practice, the STIDC verifies directly the compliance of export consignments against three criteria of the legality standard:

• Criterion 13: Issuance of mill license

• Criterion 15: Registration of companies

• Criterion 16: Export regulation 2. Indirectly, eight other criteria are taken into account while issuing export licenses, since they are either requirement for obtaining a timber license or for issuance of Royalty Removal Passes, Transit Removal Passes or Export Clearance Certificates:

• Criterion 1: License to harvest

• Criterion 2: Environmental management (as regard to EIA process only)

• Criterion 3: Plan preparation

• Criterion 4: Boundary demarcation

• Criterion 5: Tree enumeration

• Criterion 6: Control of timber production

• Criterion 7: Log transportation

• Criterion 9: Royalty and fees Systemwise, compliance with the above nine criteria is checked by the Ministry of Planning and Resource Management, FDS and SFC prior to allowing the licensee to commence harvesting operations or dispatch timber from the Forest Checking Station. 3. No observable links between the verification and license issuance are found for the rest of the criteria relevant to the exports:

• Criterion 2: Environmental management (as regard to conditions for environment man-agement)

• Criterion 8: Worker safety and health (Forest)

• Criterion 10: User rights by Natives

• Criterion 12: Worker safety and health (Mill)

Comment (i) Current system is feasible and adequate for forest operations The Association feels that the current practices approved by the State Government and implemented by the relevant authorities have been proven to be feasible and adequate for the forest operations in the State and any suggestion of inadequacy should be supported by evidence. (ii) Outside the definition of legal timber As for the finding made in para 3 above, The Association’s stand is that the four (4) criteria highlighted by The Team in the TLAS are outside the definition of the legal timber as provided in Clause 3 of the Malaysia-EU FLEGT VPA (refer to page 48). For brevity, the said definition is reproduced below:- “Timber harvested by licensed person from approved areas and timber and timber products exported in accordance with the laws, regulations and procedures pertaining to forestry, tim-ber industry and trade of Malaysia” b) Para 4

Communication between STIDC and Ministry of Planning and Resource Management, FDS, SFC, Harwood, Natural Resources and Environment Board and DOSH on the compliance to the legality criteria is not described

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Comment (i) Not relevant to legality The Association is of the view this finding is irrelevant in terms of legality. c) Para 5

It should be pointed out that each consignment of export licensed timber is not necessarily sub-ject to physical inspection prior to its shipment.

Comment (i) Physical inspection is carried out in practice The Association expresses doubt as to the correctness of the finding. The Custom Officers and staff members of MTIB who are sharing the same office are under a duty to carry out physical inspection prior to its shipment. d) Para 6

The TLAS for Sarawak does not define the verification bodies.

Comment (i) The verification bodies are clear in the current system The Association says the agencies who issue the document and the agency who receive are/is the verification bodies. For instance, for the removal of round logs for export at the export point, the SAPU of SFC issues the Removal Pass (Transit) [RPT] upon the issuance of Export Clearance Certificate [ECC] by Harwood Timber Sdn Bhd after individual or joint inspection and thereafter the licen-see/exporter apply for export licence from STIDC and also prepared a custom declaration form for submission to Royal Custom Department. In this situation, all the three agencies are verification bo-dies. 5. Key findings on control of re-exports (Box 13, page 37) a) Para 1

Timber in transit and trans-shipment timber of non-Malaysian origin are not recorded as exports from Malaysia

Comment (i) Common occurrence in Penisular Malaysia The Association reserves comments on the finding as such occurrence is common in Penisular Ma-laysia. b) Para 2

The MTIB or STIDC do not control the exports of timber in transit and trans-shipment timber of non-Malaysian origin or issue export licenses for such timber products

Comment (i) Statutory functions of the agency The Association reserves comments as it touches on the agency’s statutory functions.

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6. Key findings on workability and verifiability of TLAS control procedures (Box 14, page 41) General There are no objectives or indicators for the control procedures, which would be useful to specify the purpose and prevent misunderstandings while carrying out auditing and verification tasks. References to laws and other regulations are titled as indicators, and it can be interpreted that every-thing covered by the reference documents needs to be included in the control procedure. TLAS agencies implementing the control procedures are identified. However, the procedures include also tasks the applicant/licensee is responsible for. Several control procedures, particularly those that are forest related, are not precise in terms of:

o implementation responsibility (e.g. wording in passive form) o timing, including frequency of checks or other activities o location (e.g. whole license area, annual coupe or harvesting block) o legality basis for the requirement (e.g. application of RIL).

Many errors are found in the indicators, responsibilities, procedures and outputs. Forest related control procedures The criteria are not properly linked to the timber licensing process. For instance, the output of TLAS Annex B, Table 1 in all the regions is a license to harvest, even if authority to harvest is issued to the applicant only if set preconditions defined by several following Tables are fulfilled. Control of supply chain from forest to point of exports The timber supply from the forest to the point of export cannot be easily verified, as the described con-trol procedures have no linkages or are only weakly linked:

o licensed harvesting volume and actual production o arrival of timber at mill, raw material inputs to the processing lines, outputs of

processing lines and deliveries of processed products Comment (i) The procedure had been tested to be satisfactory The Association asserts that the finding that the timber supply from the forest to the point of export cannot be easily verified is erroneous. It is the understanding and knowledge of the Association that the procedure formulated by Sarawak Forest Department in all the export points dealing with export logs and the documentation of the same had been tested and found to be satisfactory before imple-mentation. The present Security of Assets Protection Unit (SAPU) of SFC continues with the system. The origin of the logs can be traced to the block or coupe of a forest timber licence unless it is The Team’s meaning “from the forest” referring to “the stump”. 7. Findings on the adequacy of arrangements related to the independent monitoring(Box 15, page 42)

1. The compliance with the accreditation criteria (MS ISO/IEC Guides 62, 65, 66, the ISO/IEC 17021) denotes that the TPM must have a management system that defines, among other things, its impartiality and independence, competence of its assessors, audit and certifica-tion procedures, suspension and withdrawal of certificates and complaint mechanisms.

2. It should be noted that seeking of audit inputs from all relevant stakeholder groups or con-duct of unannounced audits are not specifically required by the above accreditation criteria.

3. The TLAS requirements for independent monitoring reports (full report and public summary report) are likely to exceed the standard applied in the context of ISO management sys-tems.

4. Availability of documented regulations for appointing the TPM would improve the credibility and transparency of the TLAS.

5. With respect to the proposed procedures for receiving and approving the independent mon-itoring reports by the Reporting Body, only vague safeguards have been provided to ensure that the approval process does not jeopardize the sovereignty of the TPM.

6. The exclusive accreditation right by the Department of Standards Malaysia is likely to re-strict the number of TPMs qualified to provide the monitoring services.

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7. No concrete plans have been presented on how the TPM will act after the key procedures of the TLAS are ISO certified. The terms of reference for the TMP were said to be subject to review once key procedures are certified.

8. At present the following TLAS agencies are ISO 9001 certified: MTIB (scope: registration, issuance of export licenses and conduct of physical inspections), STIDC (scope: registra-tion), Harwood (scope: log endorsement and shipping activities) and SFC (scope: regula-tion of sustainable forest management). In addition, SFC possesses ISO 14001 certificate covering regulations of sustainable forest management.

Comment (i) Outside the purview of the Association The Association has no input on this finding for the time being. Conclusion The Association is of the view that some of the findings of the Team particularly “no systematic TLAS related non-compliance … and that controls and procedures largely existed and are being imple-mented” is a basis for EU to continue to assist producer countries like Sarawak in enhancing the exist-ing practices in accordance with the existing laws in force to ensure legal compliance but not to intro-duce additional procedures which may result in the procedural changes and documentation. The Association envisages in some extreme cases the changes may force upon the change in the local law which is affecting the prerogative and sovereign right of the State. The change in practices, documentation and requirement may not be suitable in the peculiar environment of the producer coun-tries like Sarawak. Going by the agreed definition of legality, native customary rights and environmental issues should not be the parameters to ensure legality in TLAS. Labour rights and reconciliation of data should not be a requirement for the exporters to secure the export licence. ---------------------------------------------------------------------------------------------------------------------------------------- Representatives of various native communities: Sarawak Dayak Iban Association (SADIA), Sara-wak National Dayak Union (SDNU), Orang Ulu National Association Sarawak, Kayan Association of Sarawak, Kenyah National Association Sarawak, Bisaya Association Sarawak, Lun Bawang Associa-tion Sarawak, Kelabit Association of Sarawak, Representative from Penan Community, Representa-tive from other social NGO’s 1. Introduction One of the specific observations of the Joint Technical Evaluation Report relating to social environ-mental issues is that the ‘TLAS gives uncertainty or guidance is absent ‘on native customary rights. The report states: Native customary rights, to which the TLAS only clearly addresses the rights of users to collect forest produce and gives no clear guidance on issues of land occupation. This is clearly the case. Furthermore, the TLAS as attached to the Report does not adequately reflect the existing laws that are relevant to native rights which have been raised by various parties as a cru-cial part of the consultation. 2.1 Absence of any reference to the Land Code in the TLAS 2.1.1 No reference to the Sarawak Land Code It is to be noted that there is no reference whatsoever to the Sarawak Land Code in the final TLAS document. By so doing, the authorities responsible for the final TLAS have omitted a very important component of the whole process. 2.1.2 Annex B, Part 2 .10 Principle 4: Rights and Privileges of Natives At the second, third and fourth stakeholders consultations, and up to the 27 January 2008, under An-nex B Part 2.10 Principle 4, under ‘other user rights, the criterion was – “Rights and privileges of na-tives” with the Land Code 1958 (Cap 81) Section 2, 5, 6 being included as an indicator. However, the

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reference to the Land Code has all but disappeared in the final document as of the 1 July as well as 8 September 2008 TLAS document. Note that the Land Ordinance (Sabah Cap 68) and the Aboriginal Peoples Act 1954 were included after suggestions were made by various stakeholders. The exclusion of the Sarawak Land Code is inconsistent. Mere reference to the Sarawak Forest Ordinance and the practice of the department does not capture the full process governing the determination of NCR rights on the lands on which concessions are giv-en. This does not take into account, the licensing process which involves the Land and Survey De-partment in determining NCR rights. References must therefore be made to the relevant provisions of the Land Code, particularly, sections 2. 5. 6 and 15. 2.1.2 Annex B Part 2.1 - Principle 1 (Right to harvest) –Verification The explanation in the Fifth Multistakeholder Consultation refers to procedures that should be taken by the Forest Department in the issuance of licences and the reference to Lands and Surveys Depart-ment to check on the status of NCR. It must be noted that in any most licences that are issued “subject to NCR”. To reflect the responsibility of the authorities in relation to NCR, under the verification column there should be inserted a new line - “Licence subject to NCR or to exclude NCR”. 3. Annex B, Part 2:10 - Principle 4 – Procedure To protect the rights of the native users, it has previously been suggested by representatives of the ethnic associations that there should be inserted the following: “Notification of concession boundary to the communities residing within the concession area” This should be considered because that notification will provide an opportunity to adjudicate and iden-tify native claims within the concession area. 4. Definition of Legal Timber The definition of legal timber is stated to be based on “existing legislation and adats which are codi-fied”. The latter had been contested and native groups and NGOs have maintained that this is inade-quate because the relevant existing law on native land is not just written law but includes native law and customs and not all are codified. Even the codified customary laws provide for the enforcement and recognition of uncodified adat or customs that may not be included in the codes as seen under section 198 of the Adat Iban 1993. This saving provision exists in all the other customary codes. There is really no vagueness on what constitutes NCR lands. And even where interpretations differ, it does not mean it should be excluded. Whilst the definition in section 5 of the Land Code is limited, and judicial decisions have already affirmed the existence of some of the customs such that these are “customs and usages having the force of law” as defined in Art 160 (2) of the Federal Constitution. This constitutional provision cannot be ousted in such an important document which will affect the rights of natives on the land. Principle 4 therefore should have as indicators: Sarawak Land Code section 2, 5, 6, 15 and Federal Constitution Art 160 (2) 4.1 Legal timber must be harvested from areas where there is no dispute on relating to NCR The rationale given for rejecting the suggestion that timber “harvested from areas that are being claimed by natives or in dispute should be considered illegal” is stipulated under in the Report of the Fifth Stakeholder Consultation, Part C – Issues and Comment para 3 (a) is inappropriate and cannot be implemented. 4.1.1 No injunction against the government To put the burden on an aggrieved party to take the government to court is a farce because the law does not allow for injunctions to be brought against the government – and so, that avenue is not avail-able to the natives.

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4.1.2 Onerous burden placed on natives An injunction might be taken against a licencee but in all probability, it would be rejected because the NCR claims do not have the documentary evidence to support the interlocutory application, as against a licencee who has valid “legal” documentary evidence. The reality of the situation is that a claimant has to wait for the conclusion of the trial which might take many years after by which time the land would be destroyed. 4.1.3 Compensation The suggestion in the report above that “in the event that the aggrieved party’s claim is justified by the court of law then the will be compensated for the loss of their timber from the area” is legalising what was illegal in the first place. 4.1.4 Balance of convenience in favour of natives It is still maintained that once a case has been filed, the timber taken from that area must be deemed illegal until that dispute is settled. In relation to the concession areas, the NCR lands are only a small fraction. The balance of convenience must be in favour of the natives who are in a weaker bargaining position. 5. The Consultative Process It is regrettable that voices of the ethnic associations were not really taken into account in the consul-tation process or reflected in the TLAS. Apart from the government bodies and agencies, there ap-pears to have been no representation from the non-governmental organizations or the ethnic groups to discuss the details in the working groups. The process would no doubt have been greatly enriched and more balance had there been more involvement of representative of these groups in looking at the detailed processes. It appears that much of the proposal voiced by the stakeholders have not been reflected in the TLAS. 6. VPA – the right or appropriate forum for discussion of NCR? The update on the Fifth Stakeholders Consultation referred to NCR issues as “being outside the scope of the VPA but awareness created” and that NCR issues “to be taken up in appropriate fora”. If the purpose of this exercise is to ensure legal timber, NCR cannot be detached from these discus-sions. It cannot be overstated that native rights to land are inextricably linked with the timber industry because it affects the rights of people who inhabit those areas. After all, if “forestry is not about trees but about people” then the rights of the affected indigenous people must be part of the discussions.