Some of the world's largest transnational logging companies are headquartered in Malaysia despite concerns by the government that these companies are tarnishing the country's reputation by their overseas operations.
According to a case study entitled "Malaysian logging companies abroad" published by the Uruguay-based World Rainforest Movement (WRM), Malaysia is the world's largest tropical log producer, exporting to mainly northeastern Asian countries such as Japan, South Korea and China.
Due to declining log supply within the country, Malaysian companies have come to dominate forestry sectors in several countries.
"Much of the rapidly-expanding Malaysian investment in forestry is in other developing countries, placing Malaysian forestry companies in virtually all the last remaining large areas of the world's tropical rainforests," said the study compiled in
Ugly Malaysians? South-South investments abused
, a book published by the Durban, South Africa-based Institute of Black Research.
In Papua New Guinea, Guyana in South America and the Solomon Islands and Vanuatu, in the Pacific, Malaysian companies are said to control more than 50 percent of total concession areas. Malaysian companies are also estimated to control 30 to 50 percent of total concession areas in Cambodia, Gabon and Suriname.
Meanwhile, Malaysian companies have also expanded rapidly to several new countries, such as Burma, although the full extent of their involvement is not known. Based on a chart compiled by the WRM, two Malaysian companies Aokam Perdana Bhd and Idris Hydraulic Bhd hold among the largest tracts of known logging concessions in Burma at 3.4 million hectares each.
According to the study, logging companies often operate abroad through numerous private, locally-registered companies or as sub-contractors to national concession holders.
"In this way, not only are each company's financial details difficult to track, but the actual links between operations (both nationally and internationally) are also obscuredThese practices have enabled companies to dominate the forestry sector of a country or to circumvent the maximum concession holding limits," the study found.
Secretive licensing system
As a result, the companies are able to pressure governments to issue logging licences despite the inadequacies of forestry departments to monitor operations effectively or enforce legislation and despite claims to the land by indigenous groups.
"Political elites at both national and local levels benefit through the receipt of funds and support of wealthy patrons. Whilst these are inevitably difficult to prove, especially in a secretive licensing system, allegations of bribery and attempted bribery of government and community representatives have been made in Papua New Guinea and Solomon Islands on several occasions," the study added.
In several of the countries where Malaysian logging companies operate, the WRM found that the companies' overbearing influence on governments had resulted in strong reactions by local communities.
For instance, the national forest resource inventory in the Solomon Islands calculated in 1995 that although annual sustainable harvest was 325,000 cu m, production for that year was nearly triple that at 850,000 cu m.
"Illegalities, environmental damage and social disruption have been widespread for a number of years, with companies operating virtually unchecked by the government," said the study.
"The mainly Malaysian companies operating in the country had failed to improve the living conditions of the local people and had caused major environmental damage," the report quoted Hilda Kari, Solomon Island's former forestry minister, as saying in 1997.
Earlier in 1994, Papua New Guinea's former forest minister Tim Neville was quoted as claiming, "Some of the richest and most prized rainforests in the world are being secretly shipped out of the country by logging companies, mostly Malaysians, despite government attempts to control the industry.
"Monitoring logging companies is almost impossible and the loggers are very organised. Even though things have been tightened up, I would estimate about a million dollars' worth of logs per day is still disappearing (as illegal log exports)."
According to WRM, influential Malaysian logging companies include Rimbunan Hijau, the largest timber operator in Papua New Guinea; Berjaya Group, a major operator in the Solomon Islands, Guyana and Suriname; as well as Samling Corporation, whose operations are said to extend to Cambodia and Brazil.
Establish regulatory framework
Over in Malaysia, WRM said that although the Malaysian government has been unable to address forest degradation problems because individual states control their forest resources, this should not hinder it from regulating the logging companies' overseas operations.
Malaysia, as an influential member of timber organisations such as the International Tropical Timber Organisation (ITTO), should instead establish a regulatory framework within which its companies can operate, both at home and abroad, said WRM.
Instead, although the Malaysian government publicly stresses the need for its companies to operate responsibly abroad, closeness between senior ministers in states such as Sarawak and logging corporations have led to changes in legislation favouring the loggers.
For instance, during the Asian financial crisis in 1997, the Malaysian government had lifted export taxes on plywood and 23 other timber products in order to counter lower demand from Japan and South Korea.
The WRM case study came in the light of allegations by environmental non-governmental organisation, Greenpeace, last month that Malaysian-owned company Concord Pacific is illegally logging large tracts of rainforests in Papua New Guinea in the guise of building a road.
Recently, Malaysia has also been accused of acting as the laundering centre for logs felled illegally in Indonesia. Following this, Primary Industries Minister Dr Lim Keng Yaik had earlier this month proposed the implementation of a ban of imported logs from Indonesia.
This is the final part of a four-part series based on the book Ugly Malaysians? South-South investment abused (Institute for Black Research, Durban, 2002) which highlights the growing resentment abroad to various foreign direct investments by Malaysian firms.
