The big players in Sarawak's long-established timber trade are optimistic that a change in the Indonesian government's forestry policy after the presidential elections will lift the damper on market prices.

According to a Sarawak-based timber consultant, illegal logging - which the Indonesian government has admitted is rampant in their own country - has contributed to depressed market prices over the years.

"Market prices for our timber could have been much better if not for the big volume of illegally-felled logs across the border," the consultant, who asked not to be identified, told malaysiakini in Kuching today.

He was referring to newspaper reports quoting the governor of the Indonesian Borneo province of East Kalimantan as saying that the problem was so serious that the authorities had even issued a shoot-on-sight order against illegal loggers (as well as illegal fishermen).

The consultant, who had previously worked with a Malaysian timber-based conglomerate after a stint with the Sarawak Forestry Department, now operates a timber consultancy firm.

Sarawak is one of the world's biggest round-log producers with annual harvesting officially put at about 13 million cubic metres, down from a high of 21 million cubic metres in the early 1990s.

There is a 40 percent export quota on log production as the government's policy is to encourage value-added processing, largely plywood, which is a major component in terms of export value for the state's timber industry.

Logging regulated

Timber is Sarawak's second largest export earner, accounting for some RM5 billion to RM6 billion export earnings annually, after oil and gas.

Log extraction activities are largely in the hands of several established conglomerates such as Rimbunan Hijau, Samling, KTS, WTK, Shin Yang, Sanyang and Ta Ann. They also control downstream activities such as plywood making.

In the face of adverse global environmentalist reaction over the years to control logging, the Sarawak government has taken steps to regulate the activities, first through the Sarawak Forestry Department and now the Sarawak Forestry Corporation which works closely with international timber bodies like the International Timber Trade Organisation (ITTO).

It has rushed into a reforestation programme, requiring the big players in the logging industry to put the cover back on the forest or to turn completed logged areas into oil palm plantations.

At the same time, it has brought log harvesting down to the present level, more than sufficient to sustain downstream activities while allowing a certain percentage to be exported in log form to traditional markets like Japan, Taiwan and Korea.

But with the rampant illegal logging across the common border in Indonesia - as well as Sumatra on the other side of the Straits of Melaka from Peninsular Malaysia - have not helped to improve market prices for everyone in the business.

According to the timber consultant, about 30 million cubic metres of logs come from illegal logging in Indonesia.

"There is a long largely unguarded border separating Malaysia from Indonesia on Borneo island. Illegal logging takes place right in the centre," he said.

He said a few months ago, The Jakarta Post ran a story quoting Indonesia's Forestry Minister M Prakosa as saying that the four Indonesian province governors in Borneo would be shot if they failed to stop illegal logging in their areas.

Unfairly accused

"We've to wait and see what will happen after the presidential elections in July," the consultant said, pointing out that all logging equipment brought into Indonesia had to be registered under the national timber company.

Because some illegally-felled timber from Indonesia had found its way into the world market through some third countries, Malaysia had been unfairly accused of a collusion, he said.

European buyers, already subjected to close scrutiny to environmentally-conscious consumer groups at home as well as by some international NGOs such as Greenpeace, have been known to reject shipments from Malaysia because of uncertainty over the origin of the timber.

Europe is now insisting on internationally certification standards as advocated by the Forestry Stewardship Council. Without the FSC certification, they reserve the right to refuse purchase and to reject shipment.

The authorities in Sarawak, together with the Sarawak Timber Association, have already taken steps to comply, working closely with the Malaysian Timber Council (MTC) and the Malaysian Timber Certification Council (MTCC) as well as the Sarawak Forestry Corporation.

This week, an important European timber group , the German Timber Trade Federation (ITF), led by its chairperson Hugo Habisreutiner, was in Kuching to look at the certification techniques. They pronounced themselves satisfied after briefings and visiting sites.

Germany is a big market for Malaysian timber finished products, especially from Sarawak

UK-based Wood Resources International Ltd (WRI) president Hakan Ekstrom said the visit to Sarawak has given him a better understanding of the workings of the Malaysian timber industry, particularly in terms of the tracking of illegal logs and lumber coming from Indonesia.

He added that in Britain, people were more alarmed about what was happening in Indonesia than in Malaysia.

But because there was a tendency to link Indonesia and Malaysia as one entity, there was a general perception among people in Britain and Europe that would work against the Malaysian timber trade, he said.