5.9 million hectares is the amount of Malaysia directly that is currently covered with rubberwood, palm, acacia, gmelina, teak and other plantation woods. This represents about 18% of the country. Every 25,000 hectares of land planted is expected to produce approximately 5 million cubic meters of timber per annum. (Note, that this 5.9 million figure is still dwarfed by the 18.48 million hectares covered by natural forests, a majority of which is designated as "permanent reserved forests," with 1.83 million hectares defined as non-commercial land-reserved for recreation or wildlife conservation.)
I had the pleasure of meeting with the Malaysian Minister of Plantation Industries and Commodities, Mr. Bernard Dompok. The Minister was in the U.S. for a variety of meetings, which included offering a presentation at the IWPA (International Wood Products Association) convention. During a break between panels, the minister was pleased to tell me more about the Malaysian condition:
Q: Over 20 years ago, my first-ever international buying trip was to Malaysia, and I've always been impressed with the extent of the industry there. How important is forestry to Malaysia?A: It is important to both the U.S. and Malaysia. For over a decade, the U.S. has been one of Malaysia's top trading partners with a very good trade balance. In 2011, Malaysia's exports of goods and services to the U.S. were valued at USD19 billion, while the U.S. exports to Malaysia amounted to USD18.2 billion.
The U.S. has been a major market for Malaysia's timber products for many years. The U.S. is the single largest furniture market for Malaysia and in 2011, the U.S. placed just behind Japan as the second-largest overall export destination for our wood products.
Our timber industry is a major contributor to the country's export earnings. The industry's contribution to Malaysia's Gross Domestic Product (GDP) in 2011 was about 2.3% and accounted for 2.9% of total merchandise exports. In addition, the forestry-based sector provides employment opportunities to over 300,000 people. Malaysia is one of the world's largest producers and exporter of tropical timber products, with exports to more than 160 countries.
In addition, we are also encouraging the industry to diversify in using non-indigenous timber species from other countries. To this end, Malaysian timber companies are a good market for American logs, veneer and sawn timber.
Q: There is a lot of concern about having native natural forests replaced by plantations and in many cases, Malaysia has been criticized for conversion. How would you respond to this charge?A: The conversion of natural forests into plantations is not Malaysia's policy. Currently, Malaysia has 56.4% of its total land area under forest cover, and that is growing. Forests converted earlier were selected through a system that earmarked specific areas for infrastructure development and the establishment of new townships for a growing population.
To ensure that our forests are managed in a sustainable manner, our annual logging quotas have been progressively reduced. This is a deliberate move by the government to sustain the country's forest resources as well as to ensure the sustainable development of the timber industry in the long term. To supplement the supply of raw materials to the timber industry and reduce our dependence on the natural forests, my ministry has embarked on a forest plantation program.
Under the forest plantation program, about 25,000 hectares of tree plantations will be established annually over a period of 15 years to achieve a target of 375,000 additional hectares. This is in addition to private sector forest plantation initiatives, which have seen rapid development in recent years. Let me assure you that the development of forest plantations will not be at the expense of natural forests, as forest plantations will mainly be developed on idle lands or abandoned agriculture lands.
Q: How will you encourage the expansion of plantations?A: The ministry provides soft loans for companies to establish forest plantations, in an effort to boost the production of local timber raw materials. The program is open to any company wishing to establish forest plantations in Peninsular Malaysia, Sabah or Sarawak. The disbursement of the loans, auditing processes, provision of technical support and training are all done by a company known as Forest Plantation Development Sdn Bhd, set up by the Malaysian Timber Industry Board.
Q: Is there any system for changing forest plantation acreage from one plantation item to another based on market demand? For example, do you convert rubberwood to palm oil based on demand? Or is the species planted based only on the soil and other environmental conditions?A: There is no specific policy that dictates what is to be planted on plantations. Conversion of land under rubberwood into other cash crops depends very much on market forces and prices of commodities such as palm oil and latex. So, for the land owners, especially the small holders, this is often a business decision. In terms of returns, an oil palm plantation can deliver returns much faster at 2.5 years as opposed to a rubber plantation at 4.5 years (minimum) depending on the clones.
Generally speaking, most soil/land areas in Peninsular, Malaysia, Sabah and Sarawak are suitable for oil palm or forest plantations.
We'll take a break here-next week, we'll talk about Malaysia's first, and most famous plantation species-rubberwood-as well as some of the other species available.