Concept Note detail
Project resulting from this CN: PD935/23 Rev.1 (I)
Note: CNs are developed into project proposals following consultation with donor(s).
Promoting Sustainable Wood Use for Domestic Market in Malaysia
Malaysia
Malaysia
| ITTO | 271,040 |
|---|---|
| Counterpart | 17,000 |
| Total | 288,040 |
In the 1980s, the Malaysian wood products industry was focused on meeting domestic demand, but a large proportion of the primary products produced, particularly saw-logs, sawn timber, and veneer and plywood, were exported predominantly to East Asian countries, particularly to Japan, Taiwan and South Korea. Since 1972, the ten most valuable, commercial wood species were banned from export in the form of saw logs, and a complete ban on all saw logs from Peninsular Malaysia came into effects in 1985. This was followed by the imposition series of export quotas, levy and cess (which is a tax imposed on exported primary products) in the 1990s, which aimed to encourage further down-streamed processing activities. Due to high demand for Malaysian wood products in the global market, the impact of such restriction in transforming the industry was limited. Malaysia is committed to the implementation of Sustainable Forest Management (SFM). While focusing on economic growth and development, Malaysia will give equal emphasis on promoting the conservation of its natural resources and giving due attention to social and environmental aspects as well. In accordance to the Malaysian Constitution, the forestry policy is a State matter where each State Government is in charge of its own forestry policies. Hence, the National Land Council was established to allow the Federal and State Governments to discuss and resolve common problems and issues relating to forestry policy, administration, and management, as well as to enhance cooperation between the Federal and State Governments. In order to maintain the steady flow of timber production in Malaysia, the area control and/or volume procedures outlined in the forest management plan are used to manage and regulate the forest resources. In order to balance the production and extraction of timber based on the net area of production forest inside the Permanent Reserved Forest, the annual felling coupe allocation is put into place.
MALAYSIA TIMBER CERTIFICATION COUNCIL
Sabrina Mawasi
bushra@kpk.gov.my
+60321612298
Malaysian Timber Industry Board (MTIB), Malaysian Timber Council (MTC)
Established in 1998, the Malaysian Timber Certification Council (MTCC ) is an independent organisation tasked to develop and operate the Malaysian Timber Certification Scheme (MTCS). As a voluntary national scheme, the MTCS provides for independent assessment of forest management practices and audit of timber product manufacturers or exporters to ascertain that the timber products manufactured or exported are sourced from sustainably managed forests, ensuring SFM and certified timber products.
3.1. Conformity with ITTO Objectives (ITTA,2006) and priorities (Current SAP)
Under ITTA 2006, ITTO has two closely related and overarching objectives:
• To promote the expansion and diversification of international trade in tropical timber from sustainably managed and legally harvested forests
• To promote sustainable management of tropical timber-producing forests
ITTO Strategic Action Plan 2022 - 2023:
Strategic Priority 1. Promoting good governance and enabling policy frameworks to enhance financing and investment in sustainable tropical forest management, legal and sustainable forest product supply chain and related trade.
Strategic Priority 2. Increase the contribution of the tropical forest sector to national and local economies and resilient livelihoods, including through the further processing and trade of tropical timber and other forest products and services.
Strategic Priority 4. Improve the quality, availability and timeliness of information on tropical forest product markets, supply chains and international trade, including challenges and opportunities related to market access, expansion and diversification.
The ITTO's programme line on Legal and Sustainable Supply Chains (LSSC) is relevant to the project that is being proposed. For local wood processing industries and downstream manufacturers, the impact of LSSC will be two-fold. From a commercial standpoint, LSSCs offer better chances for businesses to formalise and become more professional, as well as a greater share of the investments that were previously skipped and the value added by tropical wood products through partnerships. Price premiums are a possibility as well. Conversely, operators who disregard legal and quality requirements will experience a decrease in their access to the market, making it more difficult for them to carry on with business as normal. Applying SFM certification, legality verification, traceability, and chain-of-custody standards to one's own concessions and closely examining wood supplies sourced from other concessions or traders will require more coordinated efforts from a forest management and log supply perspective.
The Activity contributes to the achievement of SDGs, especially
SDG 1 (No Poverty), SDG 13 (Climate Action), and SDG 15 (Life on land).
The Activity will help promote domestic uses of wood and wood products from legal and sustainable supply sources in Malaysia. Local communities and smallholders’ livelihoods will be improved with more incomes generated from their wood plantation and their multiplier-effects on productive economic activities. Concerted efforts to promote legal and sustainable wood supply chains will be facilitating the economic, environmental and social benefits of sustainable forests management.
The project is also consistent with some of the six global goals of the UNSPF 2017-2030, namely:
• Global Forest Goal 1 - Reverse the loss of forest cover worldwide through SFM, including protection, restoration, afforestation and reforestation, and increase efforts to prevent forest degradation and contribute to the global effort of addressing climate change.
• Global Forest Goal 2 - Enhance forest-based economic, social and environmental benefits, including by improving the livelihoods of forest dependent people.
• Global Forest Goal 3 - Increase significantly the area of protected forests worldwide and other areas of sustainably managed forests, as well as the proportion of forest products from sustainably managed forests.
This proposed project is relevant to the forest utilization business process policies in Malaysia. Following are the key policies that are in favor of project implementation:
i. The Malaysian Government is committed to keeping at least 50 percent of its land area under forests and tree cover in line with its commitment made at the Earth Summit in 1992.
ii. National Forest Policy 1978 (Revised 1992) objectives statement as follows:
• To conserve and manage the nation's forest based on the principles of sustainable management;
• To protect the environment as well as to conserve biological diversity, genetic resources, and to enhance research and education.
iii. Malaysia was one of the first countries to begin negotiating an EU FLEGT Voluntary Partnership Agreement (VPA) with the EU in January 2007, and negotiations has stalled in 2014 and Malaysia has offered MYTLAS certificate to fulfilled due diligence under EU Timber Regulation.
iv. National Timber Industry Plan (NATIP) launched in 2009 was formulated as the guiding framework for the development of the overall wood products industry in Malaysia from 2009 to 2020.
v. National Agri-commodity Policy (DAKN) 2021 – 2030 was formulated to ensure the timber sector continues to be driven and contributes to the country’s GDP and national export earnings.
vi. Different TLASs are operated as Due Diligence systems for Peninsular Malaysia; Sabah & Sarawak. Peninsular Malaysia operates MYTLAS; Sabah has operated the Sabah TLAS since 2010 in concession forests and in January 2015 included all forests, mills and trading companies. Sarawak operates a Sarawak Timber Legality Verification System (STLVS) that was developed in 2016 and has been operating under a voluntary system since 2017.
vii. The principal certification scheme in Malaysia is the MTCS that has been endorsed by the PEFC system since 2009.
Proposed project aims to strengthen Malaysian timber industry through sustainable and efficient utilization of the huge supply of wood as raw materials dominated by planted timbers. Specifically the project will promote sustainable wood use in domestic market through:
• improving domestic/ national strategies / action plans on sustainable wood production;
• improving the stakeholders / production capacity building on producing innovative wood and wood products needed by domestic markets;
• enriching the assortment of wood products in Malaysia; and
• educating consumers on the benefits and advantages of using wood products instead of substitute products.
• To encourage the original brand manufacturer instead of original design manufacturer where they can have the advantage of having full control on the design, production, and marketing of their products, which allows them to build strong brand identity and customer loyalty.
• The increasing competition from other materials such as steel and concrete. To remain competitive, the construction and building industry must adopting the IR4.0 to improve efficiency, reduce costs, and develop new products and applications for timber.
• Less awareness about CoC certification in Malaysia, among small and medium-sized enterprises (SMEs). Currently, there are 351 companies certified with PEFC CoC Certificate, comprising 22 types of certified timber products i.e. sawn timber, plywood and moulding.
• Challenges faced by the SMEs in promoting sustainable wood use:
i. Access to information: Many SMEs lack access to up-to-date information on sustainable forestry practices and the certification systems that promote them. This can make it difficult for SMEs to adopt sustainable practices and access markets that demand sustainably sourced wood.
ii. Limited resources: SMEs often have limited resources to invest in sustainable forestry practices and certification. This can make it difficult for them to compete with larger companies that have more resources to invest in sustainability.
iii. Complex certification systems: Certification systems can be complex and difficult for SMEs to navigate. The costs associated with certification can also be an hinderance for SMEs, making it difficult for them to access markets that demand sustainably sourced wood.
• Related ministry in wood industry: Ministry of Plantation & Commodities, NRECC, MIDA, MITI;
• Stakeholders: Malaysian Timber Industry Board (MTIB), Malaysian Timber Council (MTC) and Malaysian Timber Certification Council (MTCC)
• Wood industries and traders;
• Community as consumers of wood products;
• Think tank, university, or research institute in the field of wood production and supply chain.
Output 1: Strategies/policies in promoting sustainable domestic use of wood & wood products formulated
-organize dialogues among national stakeholders related promotion of wood use & Japanese counterparts such as JWMA for the use of advanced technology in wood processing
-formulate policy incentives for the promotion of investment in essential facilities for efficient & quality wood processing by SMEs
-develop a roadmap for mandatory CoC certification using a phased approach
-hold discussions between EA & Japanese counterparts on improving efficiency & quality of wood processing using advanced technologies
Output 2: Awareness of domestic consumers on the role sustainable supply chains in forest management raised
-conduct public outreach on wood products with prime quality, creative design & cost efficient while targeting more urban &young-generation consumers. Activities that give real-live experience to the consumers e.g organizing forest tours, tree planting
-educate the advantages of using sustainably manufactured wood products for the environment as well as human health & living in comfort through outreach/communication strategy targeting urban consumers & young generation. e.g demonstrations of sustainable forestry practices & presentations on the importance of certification systems
-disseminate project findings through a webinar under the ITTO outreach programs
-highlight the findings & Malaysia’s efforts in producing sustainable timber products while maintaining its forest cover
Output 3: Market demands & supply for sustainable wood & its CoC higher quality & more diverse products studied
-conduct an FS on per capita consumption of wood products, taste & preference of consumers
-conduct FS of investment in large-scale wood centers, kiln-drying & wood preservation facilities to support SMEs
-identify needed efforts to increase processing capacity & diversity of wood products in view of sustainable utilisation of the large supply of planted timber
At the end of the project, strategic / action plans for promoting sustainable domestic use of wood and wood products will be submitted to the Ministry of Plantation & Commodities and related Ministries and authorities for approval. The approved strategic / action plans will ease and fasten the processes to strengthen domestic market and mandatory Chain of Custody for Malaysian sustainable wood and wood products.
Awareness of domestic consumers, especially among young generation and urban inhabitants on the role sustainable supply chains in forest management and wood use raised
International investment and domestic market demands for sustainable wood and its Chain of Custody with higher quality and information on products in all sectors are identified increased and strengthened.
N/A
N/A
The success of the proposed activities depends on the continued commitment and political will of the authorities in the country both at national and states level and related stakeholders in supporting sustainable production of wood and wood products. In order to mitigate the risk of being unable to implement the project and to achieve the project’s objectives, the project will select qualified personnel with high acceptance by the authorities to manage the project and to hire (or sub-contract) qualified consultants with extensive and in-depth knowledge in the encountered issues. The project will also work with all related stakeholders and will closely collaborate with ITTO for guidance in implementing the project’s activities.
| Description | ITTO | Counterpart | Total |
|---|---|---|---|
| Personnel | 53,000 | 0 | 53,000 |
| Sub-contracts | 54,000 | 0 | 54,000 |
| Travel and DSA | 25,000 | 12,000 | 37,000 |
| Capital Items | 12,000 | 0 | 12,000 |
| Consumables | 10,000 | 5,000 | 15,000 |
| Publication / Dissemination | 7,000 | 0 | 7,000 |
| Miscellaneous | 60,000 | 0 | 60,000 |
| Total | 221,000 | 17,000 | 238,000 |
| ITTO Project Monitoring & Review | 11,000 | - | 11,000 |
|---|---|---|---|
| Annual/Final Audit | 10,000 | - | 10,000 |
| ITTO Programme Support | 29,040 | - | 29,040 |
| ITTO Ex-post Evaluation | 0 | - | 0 |
| GRAND TOTAL | 271,040 | 17,000 | 288,040 |