Forest Industry

The timber industry in Sabah was the main economic backbone to the socio-economic development of the State in the past. It has remained significant even at a much reduced log production level as being experienced of late. The total forest revenue collected for the year 2012 was RM177 million and contributed approximately 4% of the State's total revenue. For many years in the past, contribution from the forestry sector to the State's coffer was more than 50% of the State's total collection of revenue. In 2012, foreign earning from the timber industry to the State on the other hand is recorded at RM2.1 billion, while some 31,416 jobs were generated by this sector. Log production from the natural forest in the year 2012 was 1.97 million m3 while production from plantation forest on the other hand was 1.12 million m³ over the same period of time.

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It has been the policy of the State Government to further develop the wood based industry in Sabah towards more value-added processing as outlined in the Sabah Industrial Action Plan (SIAP). In spite of this, the development of the value-added processing in the State has been quite slow and the wood-based industry remains dominated by primary processing activities namely the saw-milling and plywood sectors. Compared to the nineties, the total active wood processing mills in Sabah has shown a decline due to the dwindling supply of logs. The number of wood processing mills in the future is anticipated to be further reduced unless substantial volume of timber is imported by the local processing mills to meet their raw material requirement.

The installed input capacity of the wood-processing mills in Sabah for year 2012 stands at 4.8 million m³ comprising of sawmill 1.7 million m³; plywood/veneer 2.2 million m³ and pulp and paper 0.9 million m³. There is a big mismatch between the actual input capacity of mill in relation to the supply of domestic timber. In 2010, the consumption of imported logs, flitches and sawn timber by local mills was at 106,348 m³.

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The export of timber products remains dominated by the export of sawn timber, plywood and paper which accounted for 77% of the total forest products export earnings in 2012. Log exports only accounted for 5.2% of the total forest products export earnings over the same period. The future of the timber industry will witness a much reduced activity arising from the declining raw material supply while supplementary supply of raw materials from import and plantation forest is anticipated to become more important in the future to meet the deficit in the domestic demand. Reconsolidation process in wood-based industry is unavoidable and this will definitely result in the reduction of workers and only efficient players will remain in the wood-based industry.

Timber Royalty
The royalty of timber in Sabah varies depending on what the timber is intended for (example: export or domestic processing), the log diameter and the sources of the logs. The rates are shown as below:

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Sabah Timber Royalty 2016

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last updated: 29 June 2016