KUCHING: Sarawak Timber Association (STA) has raised concerns over escalating costs associated with the continuous maintenance of certified forest management units (FMUs).
Its chairman Datuk Henry Lau said this has become a significant source of concern for its members as a new directive mandates certified FMUs to contribute to corporate social responsibility through a cess of RM15 per cubic metre, starting July 1.
“While we acknowledge the significance of such contributions for the betterment of Sarawak’s communities, we advocate for transparency in how this cess is utilised. STA actively seeks to participate in the discussion regarding the allocation of these funds,” he said.
He also said the recently concluded International conference on Sustainable Management of Tropical Forests, organised by STA in collaboration with Forest Department Sarawak and WWF-Malaysia with the support of the International Tropical Timber Organisation from March 6 to 7, highlighted the significant value of tropical forests to the environment, economies and livelihoods.
“As responsible forest managers, the industry requires supportive policies and enabling environment, including assurance of long-term tenure and incentives to sustainably manage our forests and safeguard their intrinsic values against conversion for alternative land uses.
“It is imperative to recognise that this unavoidable cost will inevitably translate into higher selling prices for both international and domestic buyers, affecting particularly downstream sector members,” he said.
He said this at the STA annual general meeting held at the STA building here Tuesday. His speech was read by STA secretary Wong Ting Chung.
Consequently, Lau said, downstream sector members will be compelled to adjust their prices, further challenging the competitiveness of their timber and timber products in markets already strained by the state sales tax (SST).
According to him, the SST, ranging from 1% to 2.5% was implemented on June 1 last year, affecting selected timber products outside Sarawak, including sawn timber, veneer, woodships, fibreboard, particleboard, and plywood.
“Furthermore, the decision to use CNF (Cost and Freight) value in determining SST starting March 2024 has sparked concerns among members.
“Would it not be simpler to calculate SST based on the value indicated on the invoice, regardless of whether it is CNF or FOB (Free on Board)?
After all, both Section 15(d) of the State Sales Tax Ordinance, 1988, and Regulation 19H stipulate that the sales value for timber products exported or sold externally shall be the price of goods stated in the contract or invoice,” he said.
Lau said the impact of these financial burdens is starkly evident in the declining export value of timber and timber products.
Despite a robust RM3.947 billion recorded in 2022, the export value plummeted to RM3.141 billion in 2023, signifying a tangible loss of competitiveness in the industry.
He added that effectively competing in international markets is paramount and demands immediate attention; as the escalating costs within the timber industry pose a formidable challenge that cannot be ignored.
“From production to transportation, each facet of our operations requires meticulous review to identify cost-saving measures without compromising on the quality and sustainability of our products.
“This development not only jeopardises our ability to effectively compete in international markets but also poses a serious threat to our initiatives in market development and expansion, both domestically and internationally, essential for sustaining the long term viability and ensuring the continuous growth of timber trade of Sarawak,” he said.
