Chain of CustodyforTimber Products Exported from
Sarawak
Presented by:

Mr. MOHD HINRI ABDULLAHAssistant General Manager, Preventive & Enforcement,
Sarawak Timber Industry Development Corporation
3rd December 2007
Yokohama, Japan1

ScopeSarawak Timber Industry Development
Corporation (STIDC)
Timber industry in Sarawak
Chain of Custody
Illegal Timber

2Sarawak Timber Industry Development
Corporation (STIDC)

3

Ministry ofPlanning &Resource
Management,
SarawakLand Custody&
Development
Authority

Sarawak
TimberIndustry
Development
Corporation(STIDC)Land & Survey
Department

Sarawak
Biodiversity
CentreForestDepartment

NaturalResources&
Environment
Board

Sarawak
Forestry
Corporation
(SFC)

4

CORPORATE BACKGROUNDSARAWAK TIMBER INDUSTRY DEVELOPMENT CORPORATION (STIDC)
Established in June 1973 following therecommendation of the FAO, UN which
conducted a comprehensive forest
inventory in 1968-1972
STIDC is a State Government agency
formed to stimulate by all possiblemeans the planned expansion of woodbased industries in Sarawak at a rateconsistent with the overall interest of
the economy, the availability of capitaland technical expertise and effective
management of the forest resource

5Timber Industry in Sarawak

6

SARAWAK: MAJOR EXPORT COMMODITIES 2005 - 2006

25,000

2005
2006

20,00015,00010,000
5,000
0
LNG

YEAR
2005

2006

PETROLEUM&
PETROLEUM
PRODUCTS

TIMBER &TIMBERPRODUCTSAGRIC.
PRODUCTS

UREA &AMMONIAOTHER
PRODUCTSLNG(RM
MILLION)CRUDE
PETROLEUM &PET. PRODUCTS(RM MILLION)

TIMBER &TIMBERPRODUCTS(RM MILLION)AGRIC.
PRODUCTS(RM MILLION)(RM MILLION)PRODUCTS(RM MILLION)

20,79015,094

7,234

2,301

497

5,547

51,464

40%

29%

14%

4%

1%

10%

100%

23,285

20,497

8,773

2,979

486

5,921

61,940

38%

33%

14%

5%

1%

9%

100%

UREA &AMMONIA

OTHER

TOTAL
(RM MILLION)FOREST RESOURCE BASE
TOTAL LAND AREA

: 12.3 MILLION HA.

PERMANENT FOREST ESTATE (PFE) : 6.0 MILLION HA. (70%)
TOTALLY PROTECTED AREA (TPA): 1.0 MILLION HA. (12%)

STATE LAND

: 1.5 MILLION HA. (18%)

TOTAL FOREST AREA

: 8.5 MILLION HA. (69%)

SARAWAK: LOG PRODUCTION TREND1991 - 19.41 Million m3
2005 - 12.04 Million m3
2006 - 11.86 Million m3
20

Swamp

Hill

Total

18
14
12
10
8
6
4
2

20
06

20
04

20
02

20
00

19
98

19
96

19
94

19
92

19
90

19
88

19
86

19
84

19
82

0
19
80

Volume (million m3)

16

NUMBER OF WOOD-BASED INDUSTRY IN SARAWAKMILL TYPE

2004

2005

2006

PLYWOOD

32

34

31

SAWMILL

217

213

193

VENEER

23

18

17

MDF/FIBREBOARD

3

3

3

LAMINATED BOARD

13

12

12

MOULDINGS/DOWELS

26

27

27

PARTICLE BOARD

1

1

1

WOODCHIPS

2

5

5

FURNITURE

365

389

397

CHARCOAL BRIQUETTE

5

7

7

SARAWAK: INSTALLED & UTILISED CAPACITY OF MILLS - 2006

MILL TYPEINSTALLED CAPACITYUTILISED CAPACITY(MILLION M3/YEAR)( MILLION M3/YEAR) *(8 HRS/SHIFTPER DAY)

SAWMILL

5.45

2.58

PLYWOOD

3.66

5.61

VENEER

0.78

0.57* 1 shift 8 hour/day

SARAWAK: MAJOR EXPORT COMMODITIES 2005 - 2006

25,000

2005
2006

20,00015,00010,000
5,000
0
LNG

YEAR
2005

2006

PETROLEUM&
PETROLEUM
PRODUCTS

TIMBER &TIMBERPRODUCTSAGRIC.
PRODUCTS

UREA &AMMONIAOTHER
PRODUCTSLNG(RM
MILLION)CRUDE
PETROLEUM &PET. PRODUCTS(RM MILLION)

TIMBER &TIMBERPRODUCTS(RM MILLION)AGRIC.
PRODUCTS(RM MILLION)(RM MILLION)PRODUCTS(RM MILLION)

20,79015,094

7,234

2,301

497

5,547

51,464

40%

29%

14%

4%

1%

10%

100%

23,285

20,497

8,773

2,979

486

5,921

61,940

38%

33%

14%

5%

1%

9%

100%

UREA &AMMONIA

OTHER

TOTAL
(RM MILLION)

SARAWAK: EXPORT OF MAJOR TIMBER PRODUCTS
PRODUCTS

2005

2006

M3

RM (‘000)

M3

RM (‘000)PLYWOOD

2,933,151

3,601,594

3,488,665

5,173,410

LOGS

4,200,609

1,779,884

3,456,661

1,641,371

SAWN TIMBER

1,112,429

961,348

1,070,756

967,465

VENEER

360,263

321,155

322,454339,572

MDF/FIBREBOARD

173,541

165,881

207,086

224,519LAMINATED BOARD

22,25352,355

19,13675,136

MOULDINGS

26,31958,33029,32665,070DOWELS

7,256

16,825

6,150

14,698PARTICLEBOARD

111,805

41,715

122,785

53,915LAM.VENEER LUMBER

78,475

114,472

95,643

132,998

WOODCHIPS (TONNE)

292,603

31,582

193,800

25,351OTHER PRODUCTS

TOTAL% EARNINGS OF TIMBERPRODUCTS OVER SARAWAK
EXTERNAL EARNINGS

89,31259,1507,234,453

8,772,655

14

14

EXPORT TREND OF MAJOR TIMBER PRODUCTS
EXPORT TREND
MAJOR TIMBER PRODUCTS FROMFROM OFSARAWAKSARAWAK

VolumeM3

8,800,000

LOGS

SAWN TIMBER

8,000,000

PLYWOODDOWELS/MOULDINGSVENEERLAMINATED BOARD

7,200,000

PARTICLEBOARD

MDF

6,400,000
5,600,000
4,800,000
4,000,000
3,200,000
2,400,000
1,600,000
800,000
0
1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

SARAWAK: EXPORT OF LOGS BY DESTINATIONVOLUMEMILLION M3

65
4
OTHERS
VIETNAM

3

KOREA
HONG KONG

2

TAIWAN
CHINA

1

JAPAN
0.98

0

0.98

2001 2002

1.28

2003

1.21

1.41

2004

2005

1.25

2006

INDIA

SARAWAK: EXPORT OF SAWNTIMBER BY DESTINATIONVOLUME
M3
1,200,000
1,000,000
OT HERS

800, 000SINGAPORE
EU

600, 000

KOREA
CHINA

400,000

MIDDLE EASTT AIWAN200,000

PHILIPPINEST HAILAND

02001 2002

2003

2004

2005

2006

SARAWAK: EXPORT OF PLYWOOD BY DESTINATION - 2006
VOLUMEM33,500,00 0
3,000,00 0
2,500,00 0
OTHERS2,000,00 0

INDIA
EU

1,500,00 0

TAIWAN
CHINA

1,000,00 0

MIDDLE EAST
KOREA

50 0,000

USA
JAPAN

0

2001 2002 2003

2004

2005

2006

POLICY: RESOURCES
Sustaining the momentum ofgrowth by ensuring adequate
long term raw material supply.
Production - 9.2 million m3
annually from Permanent Forest
Estate as recommended by ITTO.
Log Quota Policy - 60% of log
production for local processing
mills & 40% export.

FUTURE RAW MATERIAL SUPPLYFOREST PLANTATION
Sarawak Government in collaboration withprivate sectors have embarked on large scale
forest plantation. Establishment of forest
plantation to ensure sustainable supply oftimber in the long term.
Target: About 1.0 million hectares of planted
forests within the 15-20 years to produce 20
million m3 of fast growing timber species
annually.
Species planted include species such as
Acacia Mangium, Albizia falcataria, Shorea
macrophylla, Durio zibethinus and Hevea
braziliensis.

CHAIN - OF - CUSTODY20

Laws & regulations
relating to timber industry

SARAWAK RELEVANT LAWS ON FOREST AND TIMBER INDUSTRY
ORGANIZATIONSLAWS/ORDINANCESFOREST DEPARTMENT,SARAWAK• Forests Ordinances, 1954 (Cap.126)• Wild Life Protection Ordinance (Cap. 26), 1998
• National Parks and Nature Reserves Ordinance (Cap.27), 1998
• The Ramin Logs (Prohibition of Export) Order, 1980
• The Ramin Shorts and Ramin Squares (Prohibition of Export) Order, 1991
• The Sepetir Timber (Export Restriction) Order, 1980
• The Forest Rules 1962

SARAWAK FORESTRYCORPORATION (SFC)• Sarawak Forestry Corporation Ordinance, 1995

SARAWAK TIMBER INDUSTRY
DEVELOPMENT CORPORATION(STIDC)• The Sarawak Timber Industry Development Corporation Ordinance, 1973
• The Sarawak Timber Industry (Registration) Regulations, 1999
• The Timber Grading Regulations, 1975 (Amendment 1983)

CUSTOMS DEPARTMENT• Customs Act 1967, Customs (Prohibition of Export) Order 1988
• Customs Act 1967 Customs (Prohibition of Import) Order 2006

LAND AND SURVEY
DEPARTMENT• Land Code, 1958 (Cap.81)

NATURAL RESOURCES AND
ENVIRONMENTAL BOARD(NREB)
DEPARTMENT OFAGRICULTURAL (DOA)•The Natural Resources and Environment (Amendment) Ordinance, 1997

• Plant Quarantine Act 1976

CHAIN OF CUSTODY (CoC) SARAWAKORGANIZATION FOREST LICENSEFOREST (LANDING)

TRANSIT CAMP

LOG PONDMILL

EXPORT

POINT

ForestDepartment

LoggingCompany/
Licensee
Sarawak
Forestry
Corporation(SF & C)• Approve Forest

License• Issuance ofForest License• Re-trim, re-scale,
re-grade• Sort-export/mill• Tagging logs serial no• Prepare log specs• Apply royalty marking• Scaling,• General Harvesting
Plan (GH)• Detailed Harvesting
Plan (DP)• Permit to Enter
Coupe (PEC)• TimberHarvesting• Marking &Tagging

Grading& Sorting• Property
Mark• Royalty Assessment• FD Hammer Marking• Issuance ofRemoval Pass (Royalty)

FOR LOGS EXPORT• Inspection
before Removal• Issuance of TRP

FOR MILLING LOGS
Harwood
Timber
Sdn.Bhd

Sarawak
Forestry
Corporation(SAPU)
TimberIndustry

STIDC

Customs
Dept• Inspection ofMilling Logs
• Endorsement
Clearance
Certificate(ECC) issued• Inspectionof Milling
Logs byriver transport• Issuance ofShipping Pass

•Inspection ofMilling Logs
on arrival at
Mill• Inspection ofLogs on arrivalat Mill• Inspection of Logs
• Issuance of Export
Clearance Certificate(EXCC)•Checkingof Incoming
Log•Records
verified• Inspectionof Logs• Issuanceof TRP• Processing

Logs into
timber Products• Process & Verify Application• Inspection ofTimber Products• Issuance of Export License

23
Customs Clearance& Endorsement

SARAWAK TIMBER INDUSTRY DEVELOPMENT CORPORATION

Process Flow Chart for Export Permit

APPLICANT/EXPORTERSTARTEXPORTEREXPORTER

Submits Application

Approved & STIDC
Produce Export License
SUPPORTING DOCUMENTSNO

INSPECTION& VERIFY

YES

STIDC
NO

APPROVEYES
HARWOODTIMBER
SDN.BHD.

NO• STIDC Grading Certificate(for Sawntimber except Ramin)• Exemption from Grading
Certificate (Ramin sawntimber)• CITES Certificate from FD(Ramin sawn & timber Products)• Permit to Export Sepetir from FD• Shipping Order• Invoice• Packing List
• Log Specification (Log Export)• Removal Pass (TRP from FD)(Logs Export)• Declaration of Source of Supplyof Timber Products• Log Quota Compliance Report

APPROVED EXPORTLICENSE• Print Export License
at the back of CDF No. 2• Authorized Signatory

EXPORT POINT• Inspection by SFC for Exportof Ramin timber Product• Joint Inspection by Harwood
Timber Sdn.Bhd & SFC(for logs Export)

REGISTERSFCYES

CUSTOMSCUSTOMSACKNOWLEDGECUSTOMSEXPORTEnd

ENDORSE & GOODS
CLEARANCECustom Form 2

(Back page of Custom Form 2)
Export Permit

IMPORT

27

POLICY . Ban on log import from Indonesia. Ban on import of sawn timber of size 60 sq.inches
and above from Indonesia. Log import from other countries approved on caseby case basis• Approval of Import by
Ministry of Planning &Resource Management

Issuance of Import Permit
ExportCountryoforiginEntry
Port

Sawmill

Local
Sale

• Approval of Import Permit
by STIDC• Custom Declaration• Inspection by STIDC, andDept of Agriculture (Plant &Quarantine Division)• Hammer Marking• Tagging• Removal Pass
• Inspection at mill
28

IMPORT OF SAWN TIMBER FROMINDONESIA29

30

Authorized entry points for import of sawn timber from Indonesia

Miri

SEMATANBIAWAKTEBEDU

Mukah

Sibu
Sarikei

LUBOK ANTU

Kuching

Sri AmanAman
SriBATU LINTANG
Entikong

Nanga Badau
31

Procedure for import of sawn timber from Indonesia

REGISTERED WITH STIDCIMPORTER• Physical Inspection( Ramin? )DOCUMENTS• Customs Form No.1
• STIDC Inspection Note
• PEB/SKSHH from Indonesia• CITES Certificate from Indonesia(Ramin)STIDC

CUSTOMS DEPTHARWOOD TIMBER S/B

STIDC• Discharge timber at Harwood Timber
Depots• Customs Form No.1
• Tallying & Bundling• Receipt Note & Despatch Note

• Customs Form No.1 & Harwood Receipt Note
• CITES Certificate from Indonesia (Ramin)• Form A (Hammer Marking)

DESTINATION • Form B (Removal Pass)

DEVELOPMENTS

33

Review of Chain of Custody
Study conducted by : URS AUSTRALIA PTY. LTD. (consultant engaged by thestate government of Sarawak)

Recommendations
To strengthen existing Chain of Custody System
Logs for export & processing (CoC from log pond and mill/ log export point)> One agency to maintain log and timber product database to reduce duplication andimprove efficiency across agencies involved> Pre-harvest inventory with SFC auditing> 100% tree marketing or Tree / Log production No. to commence at forest landing> Log Production No. to be carried through the entire supply chain (including inbatching for mill CoC)> Introduction of an Internal Audit Systems to facilitate 3rd party audit which would
assist with credibility> Documented audits at logs ponds by Sarawak Forestry Corporation and Harwood
Timber Sdn Bhd

Timber Processing (Introduce CoC into all mills)> Develop simple and robust CoC system based on those currently in use> Ensure Log Production No. is used throughout the process> Utilise the detailed electronic data kept by most mills to avoid duplication> Centralised database will enable all logs and timber products to have ‘origin’
identified if required
Export point – ship
> More STIDC staff allocated where ‘midstream’ loading is involved>STIDC and SFC staff work in shifts on a 24-hour basis to better monitor ship
movements and loading
Database for CoC & Reporting> STIDC and Harwood Timber map out each point in data collection, responsibilities
and data format to identify how these can be linked and shared> Develop a single section within Harwood Timber devoted exclusively for
management> Linking of enumeration data (from companies) to harvest date (collated bycompanies and Harwood Timber)> Linking STIDC Export Permit (ePermit) to Harwood log tracking systems(HENDIS)> Linking or sharing data in STIDC ePermit with Customs or Port Authorities

Briefing on Japan’s Green Procurement Policyby

5th April 2007
STIDC Head Office, Kuching, Sarawak

Briefing on “Japan’s Green Procurement Policy”
by Mr. Kazuyuki Morita, Director of Wood Products
Trade, Ministry of Forestry & Fisheries, Japan
5th April 2007, STIDC Head Office, Kuching, Sarawak

Datu Haji Len Talif Salleh, General Manager of STIDC
handing over publications to Mr. Kazuyuki Morita

37

ILLEGAL TIMBER

38

Illegal Logging
Illegal Logging is most referred to in the literature as
when timber is harvested, transported, bought orsold in violation of national laws.

Seneca Creek Associates & Wood Resources International,
Illegal Logging and Global Wood Markets:
The Competitive Impacts on the U.S Wood Products Industry
November 2004

39

Issues of Illegal Timber•

Harvesting without authority in designated national parks orforest reserves•

Harvesting without authorization or excess of concession
permit limits•

Failing to report harvesting activity to avoid royalty payments
or taxes•

Violating international trading rules or agreements, such asexport bans or CITES

Seneca Creek Associates & Wood Resources International, Nov. 2004

40

ILLEGAL TIMBER IN SARAWAK CONTEXT• Harvesting without valid licence• Harvesting in National Parks or Forest Reserves• Harvesting in excess of concession permit limits & outside boundary coupe• Failing or avoid royalty payments• Export & Import without permits• Not registered with STIDC

41

The Sarawak Timber Industry (Registration) Regulations, 1999

Regulation 3(1)Notwithstanding any other written laws, no person shall be engaged in or
associated with:a) The manufacture of timber; orb) The sale, distribution or marketing of timber.
Unless he is registered under these Regulations.

42Forests Ordinance, 1954. The Taking of Forest Produce

Section 49(1)“The taking of forest produce in forests reserves and protected forests shall becontrolled and regulated by the Director who may a) Issue such licences or permits in such form and under such conditions as
he may deem expedientb) Call for tenders for the right to take forest produce from a specified areac) Fix the fees, royalties, premia or other payments to be made in respect ofsuch forest produce in any particular cased) Permit any other works that he may deem necessary for the taking of suchforest produce or for the management of the forest”

43

ACTIONS TO COMBATILLEGAL LOGGING

44

45

46

47

48

49

50

TO CONCLUDE
Sarawak formulated and implemented a reliable legal framework andregulatory system to manage the forest and timber industry
The implementing agencies and stakeholders alike uphold dutifully tothe system implemented
Administrative system is multi-agencies linked to ensure continuous
auditing along the supply chain
Implementing agencies certified core functions under ISO 9001:2000
quality management systems
Third party audit and continuous improvement are important elements
to adhere in ISO:9001:2000 system
Sarawak government allow transparency by inviting and allowing
external credible parties to evaluate the system implemented
Consumers can procure without doubts that timber issued with export
permit issued by STIDC is “legal”

51

52