CERTIFICATION, FLEGT VPA & MALAYSIA

Sheam Satkuru-Granzella Director

Malaysian Timber Council London

MALAYSIAN EXPORTS TIMBER & TIMBER PRODUCTS 2012

Source:MTIB & DOS M’SIA

MALAYSIA’S top 10 MARKETS 2012

Malaysia’s Export Of Major Timber Products to EU 2012

Source: MTIB & DOS M’sia Total Approx € 1 billion

Plywood

210

10%

BJC

277

13% Sawntimber

383

18%

Furniture

859

41%

Others

49

3%

Mouldings 306 15%

MALAYSIAN timber exports to major EU destinations 2012 (by Value RM mln)

0

100

200

300

400

500

600

700

800

900

1 000

Jan - Dec 2009

Jan - Dec 2010

Jan - Dec 2011

Jan - Dec 2012

FORESTRY IN MALAYSIA Land area: 32.98 million hectares Tree cover: 24.31 million hectares (73.7% of land area) Forested area: 18.48 million hectares (56.0% of land area) Other tree crops: 6.06 million hectares (18.4% of land area) Permanent reserved forests (PRF): 14.61 million hectares National parks, wildlife and bird sanctuaries: 1.83 million hectares (9.9% of forested area) Conversion forest: 2.38 million hectares (13% of forested area) Note: This forest is to be converted to other uses in the context of a balanced long term development.

CERTIFICATION IN MALAYSIA CERTIFICATION IN MALAYSIA CERTIFICATION IN MALAYSIA

4.65 million hectares of forest in Malaysia is certified under the

Malaysian Timber Certification Scheme (MTCS). The MTCS has been endorsed by the Programme for the Endorsement of Forest Certification (PEFC) schemes SINCE May 2009 As of July 2013, 249 companies are PEFC CoC holders The MTCS is recognised as a credible timber certification programme in key markets, such as Japan, New Zealand, Germany, France, Australia, Italy, UK, Belgium, Denmark, Canada, USA, Singapore and Abu Dhabi, UAE www.mtcc.com.my for Updated Information.

MALAYSIAN TIMBER INDUSTRY

•Timber product export earnings (2012): US$6.5 billion

•

•Timber product exports contributed 2.9% of the country’s

total merchandise exports.

•Timber product exports contributed 2.3% of the country’s

GDP.

•

•Timber sector contributed 2.5% of the country’s total

employment (300,000 people)

PRIORITY Policy Challenges in the EU

INCREASING DEMAND FOR SUSTAINABLY PRODUCED TIMBER & WOOD PRODUCTS, recognised as most environmentally friendly construction material EU Timber Regulation – 3rd March 2013 Main issues for MY industry: 1. Specie description by trade name OR BOTANICAL name e.g. MLH – what species constitute MLH for ply products? Bintangor sub-species? 2. Due Diligence – what does this mean? WHO should practice Due Diligence? What level of Due Deiligence to be exercised? 3. Evidence of Legality of Source: HOW to prove Legality? PEFC/FSC COC= Low/Negligible Risk. If not, Verification of Legality Compliance e.g. SGS Legality Assurance etc

Use Timber Legality Assurance System (TLAS) as test??

Sustainability & Legality of Malaysian Timber

Sustainable timber product of SFM

(social, environmental & economic factors)

Sustainable timber assured through certification

schemes, e.g., PEFC, FSC, LEI, MTCS etc.

SFM / certification long-term goal

Legal timber milestone on journey to attain SFM /

sustainable timber

Legal timber embraces relevant legislation dealing with

social, environmental & economic aspects with lesser

number of criteria and indicators

Verification of legal timber through TLAS

Logs harvested from 3 land categories:

• Permanent Reserved Forests (PRF)

• State Land (SL)

• Alienated Land (AL)

PRF under SFM

One third certified mainly under MTCS and logs legal & sustainable

Logs from uncertified PRF legal

SL & AL not under SFM but logs harvested legal

Need for TLAS to assure legality of logs harvested from SL / AL and uncertified PRF

EU-MY FLEGT VPA Negotiations UPDATE

Formal Negotiations commenced in 2006

Under the VPA, once signed, Malaysia is to implement a Timber Legality Assurance System to verify that timber products for shipment to EU are legally produced

Only timber products verified as such and that are issued with a FLEGT licence can be exported to the EU once the VPA is signed and the TLAS is operational.

Phased implementation; Peninsular Malaysia and Sabah during initial phase.

Malaysia-EU FLEGT VPA

12

General understanding of

Malaysia VPA Process

Stakeholder consultations on key issues such as development of the Timber Legality

Assurance System (TLAS)

Assistance for capacity building would be provided

6 Principles and relevant criteria agreed with the EU prior formal negotiation

VPA would be built upon current timber licensing system

Legality definition of timber would not involve new or amendment of existing legislation

FLEGT VPA Process and

Negotiation Structure

13

MPIC

(Lead Ministry)

Stakeholder

Consultations

National Steering

Committee

(chaired by MPIC)

WG I

(legal text) WG II

(TLAS)

WG III

(market access

& capacity

building)

Malaysia-EU

Senior Officials

Meeting

(negotiating team)

Technical

Working

Group

Joint Expert

Meeting

TLAS Development Process

The TLAS had undergone a joint technical evaluation by a team of 6 consultants from

both EU and Malaysia;

• Subjected to Eleven Stakeholder Consultations;

• Discussion by five Joint Expert Meetings;

• Implementation of TLAS involves 8 agencies under 5 different Ministries for Peninsular Malaysia.

Implementation Structure of MYTLAS

15

MYTLAS

MONITORING

- Third Party

Compliance Audit

- Internal Audits by

Implementing

Agencies

IMPLEMENTATION

- Implementing

Agencies:

SFD

MTIB

DOE

DOSH

DoL

SOCSO

RMC

DoA

GOVERNANCE

- TLAS Advisory

Group (TAG)

COORDINATION

- Implementing

Agency Coordination

Committee (IACC)

MYTLAS Licence

CONCLUSION?? FLEGT VPA negotiations at final stretch – hope to conclude by end 2013

BUT IN THE MEANTIME

•Malaysia is fully committed to the sustainable management of her forests,

evidenced by certification and ongoing FLEGT VPA negotiations

•Malaysian industry fully supportive of either obtaining certification and

supporting the implementation of the MYTLAS

•Peninsular Malaysia TLAS operational from 1st February 2013 - over

4000 MYTLAS licenses have been issued, well received in the EU as

instrumental in meeting Due Diligence Requirements

•Either certification OR MYTLAS will ensure continuous flow of

sustainable or legal timber products from Malaysia

Thank you www.mtc.com.my

www.mtc.com.my