Sabah Forestry Department’s Clarifications in Response to FERN Allegations on The Credibility of The Sabah Timber Legality Assurance System (Sabah TLAS)

Introduction
The Sabah Forestry Department feels the article published by Fern in September 2016 on legality of timber from Malaysia is highly biased as it does not reflect the ongoing Sabah Timber Legality Assurance System that has been operational since 2010.

Malaysia has three district regions that each functions to regulate forest resources that consist of Peninsular Malaysia, Sabah & Sarawak. Each region and state within Malaysia has regulatory rights for land and forest resources. The article by Fern that claused virtually all timbers from Malaysia that is NOT under FSC system for certification as high risk of being illegal is NOT based on any credible facts or research. The Fern article ignores evaluating FSC certification based only on the small volume of timber exported to the EU but readily stated that PEFC/MTSC as well as other Due Diligence systems do not adequately comply with the EUTR requirements. The Fern article does not provide any real objective analysis of the systems relevant to the EUTR requirements.

The Fern article only cited references from other NGOs, newspaper articles, etc. that highlighted specific issues and do not objectively evaluate the MTCC certification and due diligence systems. There are highly biased and not professional in their arguments. The Fern article incorrectly combines two (2) different due diligence systems of Peninsular Malaysia and Sabah to make general accusations, which are not factual. The Fern Article also makes allegations without any basis or facts by just referencing other unsubstantiated articles.

The Sabah TLAS system was developed in conjunction with the Mal-EU Voluntary Partnership Agreements (VPAs), negotiations and currently functions as a Due Diligence system to document the legality of ALL forest licensed areas as well as manufacturing companies and exports of timber and wood products. The Sabah TLAS was recently revised to improve the chain of custody requirements that enables raw materials to be traced to the stump. The revised Sabah TLAS Standard consists of 6 Principles; 25 Criteria and 128 indicators that define the regulatory requirements of Sabah. The Sabah TLAS requires that ALL forest license areas and ALL manufacturing/Export companies be monitored by an independent organization to provide unbiased assessment reports and audit statements to SFD. The Sabah TLAS system is also independently audited under the ISO 9001 – 2008 standard.

The Sabah TLAS provides a high level of credibility in that both monitoring system as well as the entire Sabah Timber Legality Verification system (STLVS) system is independently verified. Summaries of all assessment reports are available on line. SFD only issues a Compliance Certificate to each forest license and each manufacturing/export company following documented verification of compliance. Sabah TLAS Certificates of Compliance can be used to identify forest areas complaint to Principles 1-4, and materials that flow through the Chain of Custody under Principles 5-6. The Sabah TLAS system is a comprehensive Due Diligence system that provides documented evidence of compliance to Sabah Regulations for ALL licensed forests, manufacturing and exporting companies.

It was alleged by FERN that based on their assessment, whilst the major obstacles in the implementation of EU-VPA is Sarawak’s refusal to take part in the negotiations and the government’s continuous refusal to recognize the customary tenure right of the communities, the Malaysian authorities have attempted to re-assure EU wood buyers from EU with the establishment of legality auditing system under the name of MY TLAS in Peninsula Malaysia and Sabah TLAS for Sabah. It added that based on the independent assessment conducted in 2013, it has uncovered a number of fundamental weaknesses that led to the usage of unreliable systems to identify illegal timber.

Therefore, the statement outlined below are the clarifications and hopefully will enlighten the factual scenarios of the issues raised.

Sabah TLAS
The Sabah Forestry Department is committed in its compliance on the international agreements with the EU regarding the implementation of the FLEGT-VPA and Timber Legality Assurance Systems (TLAS), within licensed forest areas of Sabah, in accordance to EU Timber Trade Regulations. FLEGT Certification Scheme is based on existing laws and regulations governing forest harvesting, mill operations and timber trade. The key objective of the project was to develop and implement a field verification system for legal compliance of the Sabah Legality Standard of Forestry under the FLEGT/VPA (Voluntary).

The implementation of Sabah TLAS was started in May 2009 and it was part of the EU technical assistance package to support
  1. The Malaysia–EU FLEGT – VPA process by the Government of the Federal Republic of Germany and the Government of The Netherlands, whereby GTZ acted on their behalf, while The Malaysian Timber Council (MTC) – an executing agency on behalf of the Ministry of Plantation Industries and Commodities, Malaysia, supervised the project.
  2. The Sabah Forestry Department (SFD) is an Implementing agency of the various activities involved in the project such as audit checklist and guidelines development, conducting workshops, training and audit assessment in the field.
In the beginning of its inception, Global Forestry Sdn. Bhd. (GFS) was appointed by the SFD as the independent third party auditor to conduct field assessments. GFS was required to operate and facilitate the development of the Timber Legality Assurance System (TLAS) standard checklists and audit guidelines, which are within the framework of the TLAS under The FLEGT– VPA process.The task involved the reference to relevant laws, regulations and operational procedures; and control procedures for verifying compliance to legality of timber covering forest harvesting, transportation, mill operation, import and export. It was developed with the involvement of a wide-range of stakeholder’s participation.

In 2015, in collaboration with NEPCon and WWF, the SFD has outlined and revised the checklist of the Sabah TLAS for the purpose of:
  1. revising the criteria and verification procedures related to verifying industry conformance with Principles 5 and 6 and its compliance audit checklist.
  2. Revising the compliance audit checklist for Principle (1) to Principle (4) based on the updated Sabah TLAS.
These checklist were efficiently applied throughout Sabah in audit assessments covering both the upstream and downstream processes. The Sabah TLAS Checklist consists of 6 Principles, 25 Criterion and 129 Indicators that define the regulatory requirements. The checklist comprises of six Principles, viz. Principle 1: Right To Harvest; Principle 2: Forest Operation; Principle 3: Statutory Charges; Principle 4: Other Users’ Right; Principle 5: Mill Operation and Principle 6: Trade and Customs.

The current legality standard for Sabah was developed under the FLEGT program which currently functions as a Due Diligence system. As part of the continuous development, SFD periodically organizes the meetings with the full participation of the stakeholders and the relevant agencies in the State. Since 2013, Sabah TLAS has undertaken seven Stakeholders Consultation Meetings and five Inter-Agency Consultation Meetings.


Standard Procedure for Sabah TLAS
The Sabah TLAS system is a comprehensive Due Diligence system that provides documented evidence of compliance of all forest harvesting licensees and timber Mills licensees to Sabah Rules and Regulations at every level of forest operations. The legality of the timber from the officially licensed area does not arise since 9 criteria and 23 indicators for Principle 1, on ‘Right To Harvest’ and 6 criteria and 59 indicators for Principle 2, on Forest Operation, need to be duly complied with and rigorously verified in assessing the performances of the licensees on the ground by the 3rd Party Auditors.

Upstream and Downstream Auditing
The Sabah TLAS requires that all forest licence areas be monitored by an independent auditor to provide unbiased assessment reports and audit statements to SFD. These provide a high level of credibility in the monitoring system as well as verification of the timber legality at source. In the downstream processes, the Sabah TLAS requires that all timber manufacturing companies and timber product exporters are included in the auditing. The credibility in the verification of the timber legality is enhanced through monitoring of material flows in the Chain of Custody (CoC) procedures. Although the CoC is considered as an issue with regards to its procedure, however these are currently being addressed through the revision of Sabah TLAS Checklist in the stakeholders consultation meetings and in the FAO CoC training for SMEs.

Certification under Sabah TLAS-CC and ISO9001-2008 Sabah TLAS Certification are considered as a testimony for the compliance and due diligence status of licensed forest areas and timber manufacturing companies in Sabah. The Sabah TLAS auditing system also has been awarded with ISO Standard of ISO9001-2000 and currently under the scrutiny of Bureau Veritas, an independent, internationally recognized independent auditor.

Conclusion
The Sabah Timber Legality Assurance System (Sabah TLAS) is an auditing system formulated specifically to suit the requirements on presently enforced rules and regulations, local sentiments on other users’ rights and at the same time to streamline with the national and international rules and regulations. Its implementation significantly elevates the level of traceability and ensures that only legal timbers are being traded in the domestic, national and international market. Sabah TLAS should not be generally categorized as a system similar with MYTLAS. In comparison with Peninsula Malaysia, Sabah progresses more due to the 3rd Party Audit, continuous improvement in the Sabah TLAS, the issuance of Sabah TLAS Certificate and successfully awarded the ISO9001-2008 Certificate.