MALAYSIA: TIMBER TRADE REGULATIONS AND LICENSING SYSTEM
22 June 2007
Kota Kinabalu, Sabah
Ministry of Plantation Industries and Commodities
1. INTRODUCTION
Production of and trade in timber and timber products in Malaysia are closely monitored and
regulated throughout the production chain; i.e. from where the logs originate, to the
processing mills and the point of export.
The timber industry has contributed significantly towards the socio-economic development
of the country. To ensure the sustainability and the viability of the timber industry, Malaysia
has enacted and implemented a comprehensive set of laws and regulations on sustainable
forest management as well as on trade in timber and timber products. This is aimed at
ensuring the orderly development of the timber sector.
2. OBJECTIVE
The objective of this paper is to explain the legal and regulatory framework that have been
put in place in Malaysia covering the whole of the production chain, thus enabling the
certification of legality of Malaysia's timber and timber products being exported to ED and
other countries.
The framework comprises the following components:
a. the laws and regulations in Malaysia which govern the harvesting, processing, exports
and imports of timber;
b. the procedures, documentation, monitoring and enforcement measures related to the
above laws and regulations; and
c. payment of all statutory charges.
3. SCOPE
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The scope of this paper covers laws and regulations relating to the production and trade of
the following timber products:
a. logs;
b.
sawn timber
c.
plywood; and
d.
veneer.
These products are sourced and manufactured using raw materials from three sources:
a.
natural forests which has been gazetted for timber production, State land
and alienated land;
b.
forest plantations; and
c.
imports.
4. POLICY ON TIMBER AND TIMBER TRADE
As a major producer and exporter of timber and timber products, Malaysia has a liberal
policy on trade of timber and timber products. Malaysia imports raw materials from many
sources, subject to domestic laws and regulations as well as its obligations to international
bodies e.g. CITES.
In June 2002, on the request of the Indonesian government, Malaysia banned the import of
logs from Indonesia and this was subsequently extended to cover large squares and
scantlings (LSS) in June 2003. While these measures are inconsistent with the multilateral
trading regime, they demonstrate Malaysia's efforts to curb imports of illegal timber and
timber products and its pro-active cooperation to combat such problems.
5. LICENSING FOREST HARVESTING SYSTEM
The harvesting of logs and their movement to the processing mills in Malaysia are closely
monitored and regulated. The following regulations and procedures ensure logs are legally
sourced and payments of all statutory charges made.
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5.1 REGULATIONS AND PROCEDURES FOR HARVESTING AND REMOVAL
OF LOGS
5.1.1 Natural Forest
i.
Demarcation of Felling Area - All licensees must identify their respective
licensed area by appropriate marking which will be verified by the respective
forest authorities. The external boundary of the licensed area/compartment
designated for harvesting will be surveyed and clearly marked on the ground (by
painting on selected boundary trees) to determine the limit of the permitted
logging areas.
ii.
Pre-felling Forest Inventory (Pre-F) - is conducted to prescribe the cutting limit
and determine the total volume of timber by species which may be extracted
from the licensed area by taking into account the assessment of damage to the
logging area and the surrounding environment.
iii.
Marking of Tree for Felling - Tree for felling are marked based on the prescribed
cutting limits. A record containing information on the tree number, species,
diameter, estimated volume per tree is prepared and kept by the designated
forest checking station.
In addition, the trees in the certified forests are numbered sequentially with tags; the
number of tags issued is based on the estimated number of logs per tree. The
numbering system used for the tags will ensure that each log can be traced back to the
stump from which it was produced.
Trees which are not meant to be harvested, such as protected trees and mother trees,
will be marked differently.
iv
Recording of trees felled - a record, with details of trees felled in each licensed area, is
checked at the forest checking station, which is operated by the respective forest
authorities, and the record is verified against the details pertaining to the tree tag number,
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species and number of logs per tagged tree recorded in the tree tagging record. The forest
checking station staff will check to ensure that the total volume of logs harvested is within
the permitted limit. In addition, monitoring of the forest checking station will be conducted
through reporting and random checking by the enforcement team.
v
Each log is stamped with Property Mark by the licensee (in the licensed area) which
specifies its origin and ownership prior to the removal from the licensed area to the
designated forest checking station.
vi
Revenue/Royalty Mark - upon assessment and payment of royalty at the forest
checking station, each log is stamped with the revenue/royalty mark by the respective forest
authorities.
vii
Issuance of Removal Pass - to be issued subject to inspection and confirmation on the
above procedures. A removal pass contains information on license number of logging area,
logging license holder, details of the logs (i.e. log number, species, length, diameter,
volume), conveyor registration number and destination of logs. One Removal Pass is
issued for each conveyer of logs at the forest checking station.
viii
Logs in transit are subject to random checking by the forestry authority to ensure that
the details of logs being transported are as recorded in the accompanying removal pass.
The consignment will be detained for further investigation if any infringement or irregularities
are detected. Logs in transit are not allowed to be stored temporarily once the removal pass
is issued.
Note: For harvesting and removal of logs from State land and alienated land (which are
meant for conversion to other land uses), procedures i, v, vi, vii, and viii are applicable.
(See flow chart as in Annex A)
5.1.2 Forest Plantation
All procedures under paragraph 5.1.1 are not applicable to timber or biomass derived from
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plantations. Malaysia has embarked on developing forest plantation and it may be noted
that although such raw materials are not significant currently, forest plantations are
envisaged to be important sources of raw materials in the future.
6. MILL LICENSING SYSTEM
All wood-based processing mills are licensed by the relevant authorities prior to
commencement of operations and are subject to annual renewal. The application for annual
renewal is subject to the evaluation by the licensing authorities prior to approval.
6.1 Regulation for recording and monitoring of logs entering licensed mill
All wood processing mills receiving log consignments are required to maintain a log input
book containing information on the number of removal passes, date of entry into the mill,
log number and species. The original copy of removal pass which is kept by the mill will be
stamped "cancelled" by relevant authorities after verifying that the logs have been received
through physical inspection at the mill and/or recorded in the mill's log input book.
6.2 Regulation for reporting of logs input and output of final products
The information on volume input into the mills, volume input into the processing machinery,
and output of final products, is forwarded to the relevant authorities through the monthly
returns to be checked and verified. Physical checks on the information contained in the
monthly return are carried out by the respective authorities on a random basis or upon
information received.
7. LICENSING OF EXPORTS
7.1 Registration for export
For the export of timber and timber products, an export licence is required. To apply for an
export licence, an exporter of such products has to be registered as a timber exporter with
the relevant authority (Malaysian Timber Industry Board or MTIB for Peninsular Malaysia
and Sabah, and Sarawak Timber Industry Development Corporation or STIDC for
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Sarawak). A timber processing mill which supplies timber products for the export market will
similarly have to be registered with MTIB or STIDC. For this purpose, only mills that have
been licensed by the relevant authorities will be registered. For registration, exporters have
to fulfill the necessary conditions required by the respective authorities. (See Annex D)
Registration for export is subject to annual renewal. The application for annual renewal is
subject to the evaluation by the respective authorities prior to approval.
7.2 Issuance of export licences
Application of export licences from any registered timber exporter has to be accompanied
by the necessary documents. Amongst the documents required are:
- Customs Export Declaration Form 2 (CD 2)
- Invoice
- Removal pass (for export of logs)
An export licence will be issued after the verification of the necessary documents.
Consignments of timber products are also subject to physical checking by the issuing
authorities prior to shipment as follows:
- Logs and sawntimber: All consignments.
- Veneer and plywood: All consignments in Peninsular Malaysia and random checks
Sabah and Sarawak.
In
(See flow chart as in Annex B)
8. LICENSING OF IMPORTS
8.1 Application for timber import licences
Imports of logs and LSS from Indonesia are totally banned. Import licences are required for
imports of logs and LSS from other countries.
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In Peninsular Malaysia and Sabah, importers of logs and LSS need not be registered with
MTIB. However, details of the importer relating to its paid up capital and activities, have to
be submitted to MTIB prior to the approval to import.
In Sarawak, importers of logs, LSS and all other timber products are required to be
registered with STIDC.
8.2 Issuance of import licences
For the import of logs and LSS into Peninsular Malaysia and Sabah, the following
documents are required:
-
Import approval from MTIB
-
Proof of bona-fide sources for supply from tropical region only (e.g. certificate of
origin, verification on supply))
-
Customs Declaration Form 1
-
Contract
An import licence (JK 69) will be issued after the verification of the necessary documents
and physical inspection of the consignments before final approval for customs clearance
and the issuance of a removal pass and stamping of a hammer mark for the imported logs.
Import licences for other timber products are not required and shipments will be allowed
upon submission of the necessary documents to the Customs as follows:
- invoice
- packing list
- Bill of lading
- Customs Import Declaration Form 1 (CD 1)
In Sarawak, application for an import licence (JK 69) has to be accompanied with the
following documents:
- Letter of approval from the Ministry of Planning and Resource Management (for logs)
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- Import permit from Agriculture Department (for logs)
- Certificate of origin
- Mill licence
- Customs Import Declaration Form 1 (CD 1)
- Packing list
- Documents such as Pemben'tahuan Eksport Barangan (PEB), Sijil Keterangan Sah
Hasil Hutan (SKSHH) from relevant authorities for timber imports from Indonesia
only.
Import licences will be issued after the verification of the necessary documents and physical
inspection. Consignment will be hammer marked and issued with Removal Pass for onward
transportation. To ensure the legality of timber import from Indonesia, the following border
controls (sea and land) are implemented:
-Establishment of timber depo by Harwood Timber Sdn. Bhd. at authorized entry points,
-All imports must go through and handled by Harwood at harwood's Depo;
-All timber must bear STIDC hammer markings and tagging.-Random enforcement together
with other relevant enforcement agencies such as SFC, forestry department, marine police,
customs,and army is conducted regularly at both designated and non-designated entry
points along the border. There are currently 5 designated landing points in Sarawak.
(Semantan, Biawak, Tebedu, Lubuk Antu and Batu Lintang)
Timber products which require import licence will be accompanied by the import licence (JK
69) and CD 1. Timber products which do not require import licence will be accompanied by
CD 1. (See flow chart as in Annex C)
9. LEGISLATION AND ENFORECEMENT
The harvesting and removal of logs, licensing of processing mills, registration of timber
processing and exporting companies and the issuance of export/import licences as
described earlier are governed by the relevant provisions in the following laws and
regulations:
8
Laws/ Regulations
Implementing agencies
1
National Forestry Act, 1984 (amended 1993)
State Forestry Departments,
Peninsular Malaysia
2
Forest Rules, 1985
State Forestry Departments,
Peninsular Malaysia
3
Sarawak Forest Ordinance, 1954
Sarawak Forest Department,
Sarawak Forestry Corporation
(SFC)
4
Sarawak Wildlife Protection Ordinance, 1958
Sarawak Forest Department,
SFC
5
National Parks & Nature Reserves Ordinance
(Sarawak), 1957 (amended 1998)
Sarawak Forest Department,
SFC
6
Sabah Forest Enactment, 1968 (amended 1992)
Sabah Forestry Department
7
Forest Rules (Sabah), 1969
Sabah Forestry Department
8
Malaysian Timber Industry Board (Incorporation)
Act, 1973 (Act 105)
MTIB
9
Sarawak Timber Industry Development
Corporation Ordinance, 1973
STIDC
10
Sarawak Forestry Corporation Ordinance, 1995
SFC
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Customs Export Prohibition Order (1998) Customs Customs, MTIB, STIDC
Act 1968
12
Customs Import Prohibition Order (Fourth
Schedule, item 50 and 51, First Schedule Item 15
(June 2006) Customs Act 1968
Customs, MTIB, STIDC
13
Wood-based Industries Act, 1984
Peninsular Malaysia State
Forestry Departments
14
MTIB Registration Rules 1994
MTIB
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15
Timber Export Cess Order (2000) Peninsular
Malaysia
MTIB
16
The Sarawak Timber Industry (Registration)
Regulations 1983 (Amendment 1999)
STIDC
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The Ramin Logs Prohibition of Export Order, 1980 Sarawak Forest Department,
Sarawak Forestry Corporation
(SFC), STIDC
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The Ramin Shorts and Ramin Squares Prohibition Sarawak Forest Department,
of Export Order, 1991
Sarawak Forestry Corporation
(SFC), STIDC
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The Sepetir Timber Export Restriction Order, 1980 Sarawak Forest Department,
Sarawak Forestry Corporation
(SFC), STIDC
To ensure the effective implementation of these laws and orderly trading of timber in the
country, enforcement of these laws and regulations has been intensified. Collaboration
between MTIB and STIDC with other enforcement agencies such as the Royal Malaysian
Customs, Marine Police, the Maritime Malaysia Enforcement Agency, Port Authorities,
Forestry Departments and consignments.
On the harvesting and removal of logs and other forest products, stiffer penalties including a
mandatory jail sentence for illegal logging have been instituted. A network of forest
checking stations has also been established throughout the country. Other measures
include the issuance of removal pass, spot-checks, roadblocks and the work of mobile
enforcement teams.
Many of the procedures described earlier have been ISO certified. These procedures are:
I.
sustainable timber production from the Permanent Reserved Forests (PRF)
(Forestry Department, Peninsular Malaysia);
ii.
registration of export activities, issuance of licences, physical inspection for
timber consignments (MT1B);
iii.
registration of companies trading of timber, sales and distribution of timber,
identification of material and traceability, log endorsement and inspection of
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log exports (STIDC); and
iii.
provision of security, asset protection, compliance and regulation of
sustainable forest management (SFC).
iv.
approval process for Comprehensive Harvesting Plan, royalty assessment and
collection of logs for domestic processing (Sabah Forestry Department)
10. CONCLUSION
The legal framework of laws in Malaysia which governs and regulates the licensing of
timber harvesting, movement of logs, processing, import and export of timber and timber
products are briefly described in this paper. The system demonstrates that logs harvested
from gazetted forests may be traced to the stump while those from State land and alienated
forests can be traced back to the licensed areas. The procedures being implemented and
the documentation required together with the control measures in place, all of which are
strictly enforced, demonstrated that the raw materials used in Malaysia’s wood based
industries, whether from domestic or imported sources, are of legal origin. With such a
production chain, which is closely monitored and regulated, consumers of Malaysia’s timber
and timber products are therefore assured of their legality.
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Annex D
Terms and Conditions for Registration as timber exporter
1. MTIB (for Peninsular Malaysia and Sabah)
Registration is mandatory for all companies or individual intending to engage in business
related to the export of timber and timber products. Conditions imposed for a person or
company to register with MTIB as an exporter are:
(a) Submission of Registration Application form (Form A)
(b) Members of any recognized associations (Association as listed in the Registration
Guidelines)
(c) Evidence on timber supply from a registered supplier that owned mill/factory licensed by
the Forestry Department of godown/warehouse from Customs or licensed mill from the
Malaysian Industry Development Authority (MIDA)
(d) Submission of Form no. 24 and 14 (Evidence of registering with Commissioners of
Companies of Malaysia)
(e) Company Organisation chart with the composition of Board of Directors
(f) Minimum paid-up capital subject to company's equity ranging from RM 50,000 to RM
250,000
2. STIDC (for Sarawak)
The conditions are as follows:
a. For sole proprietor or partnership business must register their business with the
Registrar of Business (for new registration only).
b. For Private (Sdn. Bhd)/Public(Bhd)must register with The Companies
Commission of Malaysia (Suruhanjaya Syarikat Malaysia) (for new
registration only)
c. Valid trade licence from Inland Revenue
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d. To submit sales and purchase agreement for export of logs.
e. To grade sawntimber (except Ramin) for export in accordance to The
Timber Grading Regulations, 1975.
f.
To obtain exemption form Grading Certificate from STIDC fro export of
Ramin Sawntimber.
g. To obtain permit from Director of Forests, Sarawak for export of restricted
timber species such as Ramin, Belian, Bakau, Sepetir, Bintangor and
other species specified from time to time.
h. To obtain licence from the Controller of Wildlife, Sarawak for exporting
and importing of Gaharu.
i.
To obtain CITES Certificate from the Forests Department, Sarawak for
export of Ramin and Gaharu.
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