(’000m3) Suspicious volume, total (’000m3) Suspicious volume, % of exports Suspicious volume, % of production Softwood
Roundwood 2 0 n.a. n.a.
Lumber n.a. n.a. n.a. n.a.
Plywood n.a. n.a. n.a. n.a.
Hardwood
Roundwood 2,900 2,900 100.0 5.5
Lumber 4,500 2,925 65.0 36.6
Plywood 6,752 3,714 55.0 49.5
Note: n.a. = not applicable Source: Seneca Creek (2004: 15–16)
Suspicious exports of hardwood in the form of lumber and plywood are also very high. It is estimated that almost 3 million cubic metres of lumber or 65 percent of all exports are suspicious. Approximately 55 percent or 3.7 million cubic metres of plywood exports are said to be suspicious (Table 18).
A particular pattern that has emerged since the export ban was reintroduced in 2001 is that logs from Indonesia are initially smuggled from Indonesia into Malaysia. The overland route from the Indonesian province of Kalimatan into Sarawak in neighbouring Malaysia, and the sea route from Sumatra to Peninsular Malaysia, have been identified as two of the main smuggling routes (Brack, Gray & Hayman 2002: para 2.8; ICG 2001: 16). Although Malaysia imposed a ban on log imports from Indonesia in June 2002, NGOs have suggested that between 3 and 5 million cubic metres of illegal Indonesian timber enters Malaysia each year (EIA & Telapak 2003: 3, 4). There are also reports that 650,000 cubic metres of sawn timber were exported to Malaysia in the first five months after Indonesia imposed a ban on such imports in 2004 (EIA & Telapak 2005: 5–6). Once in Malaysia, the logs are re-badged as logs of Malaysian origin and documents are forged accordingly. From Malaysia, they are exported to third countries that have no way of establishing the true origin of the logs. There are several reports from China about imports of Indonesian timber that have been falsely declared as Malaysian (EIA & Telapak 2005: 3; ICG 2001: 16).
There are equally reports about illegal shipments of Indonesian logs to Singapore. To disguise the exports, they are concealed in containers beneath legal wood, or false species names are used on relevant documents. From Singapore, the timber is often exported to China or, in some cases, back to Indonesia where it is then considered as imported wood, thus avoiding regulations applicable to domestic timber (EIA & Telapak 2003: 6). A small number of cases are known in which Indonesian timber has been accompanied by false documents from Papua New Guinea (EIA & Telapak 2005: 3).
China emerges as one of the principal destinations for illegal timber exports from Indonesia via Malaysia or directly by sea from West Papua (ICG 2001: 11, 16). For example, in 2004 China Customs registered 90,000 cubic metres of illegal log imports from Indonesia (Stark & Cheung 2006: 38). There have also been some reports about Indonesian timber being laundered through Singapore and the Philippines, although further details about these avenues are not available (EIA & Telapak 2003:1).
Malaysia
Production and processing
According to ITTO figures, Malaysia’s annual log production in 2007 was 29.2 million cubic metres (ITTO 2007: 76). As a result of declining forest resources and greater protection of forest areas, annual log production in Malaysia declined considerably throughout the 1990s from 39.3 million cubic metres in 1990 to 22.3 million cubic metres in 1999 then 17.9 million cubic metres in 2002. Log production has increased slightly over the past five years (ITTO 2006: 161; ITTO 2007: 76).
Supported by government policy, Malaysia has become home to a vast timber processing industry including many sawmills, wood panel manufacturers, wood moulding, and parquet and furniture makers. The ITTO suggested that total value of timber products from Malaysia amounted to US$4.5b in 2003 (ITTO 2006: 161). In 2007, Malaysia produced approximately 5,572,000 cubic metres of sawn timber (making Malaysia the world’s second-biggest sawnwood producer after Brazil) and 5,190,000 of plywood (second only to Indonesia), as well as 357,000 cubic metres of veneer (second only to China); a significant increase compared to previous years (ITTO 2007: 6–8, 11, 76).
The growing production capacity in Malaysia, and the domestic and international demand for Malaysian timber products, has resulted in a situation where demand exceeds supply, especially in the face of declining logging volumes. Much of Malaysia’s furniture production involves rubberwood from domestic plantations, but the supply falls short of the industry’s need (Chen 2004: x–xi). Many see the discrepancy between supply and demand as an incentive to use illegally obtained timber, including imported logs, to offset the supply deficit. In particular, despite a ban imposed in 2002 on imports of logs from Indonesia, there is ample evidence of logs beings exported illegally from Indonesia to Malaysia for processing or further export (see also section ‘Indonesia: Exports’ p. 95 and section ‘Malaysia’, p. 131). In an attempt to prevent use of timber from suspicious sources in wood production, Malaysia maintains a log tracking system designed to stop the timber manufacturing industry from buying logs from illegal or unspecified sources. Government officials regularly control the logs that sawmills and plywood mills use, and fine those operators who are found using unmarked logs. But despite comprehensive regulation and enforcement, use of
suspicious logs continues. Furthermore, once illegally sourced logs have been processed, it becomes difficult, if not impossible to distinguish the manufactured products. As a result, the provincial governments in Malaysia are now exploring additional control mechanisms such as DNA analysis of logs and introduction of new, more comprehensive chain-of- custody schemes (Chen 2004: xi–xii; Seneca Creek 2004: 46).
Exports
In recent years, Malaysia has exported approximately 25 percent of its domestic log production. According to the ITTO, log exports in 2007 amounted to 4,846,000 cubic metres in addition to 3,148,000 cubic metres of sawn timber, 4,800,000 cubic metres of plywood and 396,000 cubic metres of veneer (ITTO 2007: 77). Over the past 15 years, log exports have gradually declined as a result of fewer resources and government attempts to limit export of logs and increase domestic processing facilities. Peninsular Malaysia has instituted a complete ban on raw log exports, and log exports from Sabah are also restricted. Sarawak remains the main exporter of raw logs. For example, in 1999, Malaysia exported only 5.24 million cubic metres of logs compared with 20.3 million cubic metres in 1990 (ITTO 2006: 161). In 2003, about 4.4 million cubic metres of log exports originated from Sarawak. Although most of the roundwood production in Malaysia is for domestic consumption (see section ‘Malaysia’ p. 131), it remains the world’s largest tropical log exporter (ITTO 2007: 6).
Japan, China, Taiwan and India are the four most important destinations for timber exports from Malaysia, each accounting for about 20 percent of exports. Other important destinations for Malaysian sawnwood and for plywood are Europe, Thailand, Singapore and South Africa. Wood furniture is, for the most part, exported to the United States, Japan, Australia and Europe (ITTO 2007: 32; Seneca Creek 2004: 82–83).
The total value of exports of timber and timber products from Malaysia is estimated to be US$2.47b. Plywood constituted about 43 percent of these exports (in value), followed by sawnwood (27%) and logs (21%) (ITTO 2006: 161). Malaysia is widely regarded as the largest exporter of tropical logs in the world, supplying about 35 percent of the worldwide trade (Seneca Creek 2004: 82–83). Due to the growth of processing capacity in Malaysia, exports of logs have gradually declined while exports of processed timber, especially plywood and furniture, are on the rise.