Sarawak Timber Association calls for govt support, relief measures amid economic uncertainties

KUCHING (March 31): The Sarawak Timber Association (STA) has appealed to the government to consider appropriate support measures as the industry continues to face mounting cost pressures and regulatory challenges amid a volatile global economic environment.

STA chairman Dato Henry Lau Lee Kong said this includes a review of royalty, cess, and premium rates where necessary, as well as targeted assistance to sustain both upstream and downstream operations during the current period of sustained cost pressures.

When delivering his report on the Workings of STA for 2025 at the STA annual general meeting opening here on Tuesday, Lau stressed that geopolitical tensions, particularly ongoing conflicts in the Middle East, have pushed up global oil prices and created energy market volatility, resulting in higher diesel costs – a key component in logging, extraction, transportation, and processing activities.

“These increases have raised operating costs across the value chain, especially in fuel-intensive activities. Some operators have had to scale down or suspend operations, and there are growing concerns that parts of the industry may struggle to recover if these conditions persist,” said Lau, who is KTS Group managing director.

He noted last year was challenging for the industry, with annual log production staying low at 1,930,351 cubic metres.

Downstream production also continued to decline, with plywood output falling sharply from about three million cubic metres in 2008 to approximately 550,000 cubic metres last year.

Production from planted forests also dropped significantly from 1,903,526 cubic metres in 2024 to 540,323 cubic metres in 2025, which he attributed to the cancellation of Licence for Planted Forest (LPF) licences without due process.

He said the downturn has left multi-billion-ringgit worth of plants, machinery, and vehicles idle, while many workers have been retrenched and companies are facing serious financial strain.

“By any standard, the impact on the private sector is significant,” he stressed.

He pointed out that employers are currently required to make upfront payments of RM904 per worker across various processing stages.

“In addition, the renewal fee for foreign worker is set to increase progressively to RM1,854 per worker by 2027, significantly raising operating costs. STA respectfully seeks the government’s consideration to maintain the renewal fee at RM904.

“Cumulative costs and administrative pressures intensified in 2025. The minimum wage increased from RM1,500 to RM1,700 effective Feb 1, 2025. In addition, the expansion of SST scope, the unwarranted and quite unproductive mandatory stamping for employment documents, mandatory EPF contributions for foreign workers, and additional costs arising from FWTA were unfriendly policies and rules. Some of these measures were untimely and introduced without due diligence or clear purpose,” he said.

He revealed that members in the tree plantation category were blamed for poor planting performance and, in some instances, faced unwarranted licence cancellations, affecting efforts to replace wood supply from natural forests.

“In reality, many of these issues arose from land encroachment, illegal claims, continued renewal of forest timber licences for overlapping areas and alienation of land within LPF areas to third parties,” he added.

While acknowledging that illegal logging activities by unscrupulous operators had occurred, Lau emphasised that many timber operators are law-abiding and have been at the forefront of sustainable forest management practices.

“Whenever illegal activities are exposed, the entire industry is often perceived as black sheep. This does not reflect the commitment of many responsible operators,” he said.

He reiterated that natural forests are immensely valuable – environmentally, socially, and economically – and must continue to generate legitimate economic value to remain protected in the long term.

“It is vital to adopt a balanced approach to forest management that takes into account both ecological and socioeconomic considerations. Otherwise, forests that do not maintain such balance may succumb to other competing land uses,” he said.

Lau said STA has continued to serve as a common platform for members and as a vehicle for constructive engagement with the Sarawak government and regulators such as the Forest Department and Natural Resources and Environment Board.

Recent collaborative initiatives include regulatory improvements in enrichment planting and environmental compliance audits, as well as capacity-building efforts such as the Biodiversity Observation for Land and Ecosystem Health (Boleh) Workshop Series II.

Lau said the STA council is proposing amendments to the STA Constitution to institutionalise the association further and strengthen its founding objectives.

He expressed confidence that through continued collaboration with the Sarawak government under the leadership of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg, industry stakeholders, international bodies, researchers, and local communities, STA will continue to play a key role in ensuring forests are managed with dignity, transparency, and sustainability.

He thanked STA advisors director of forests Datuk Hamden Mohammad and Sarawak Timber Industry Development Corporation general manager Datu Zainal Abidin Abdullah, as well as council members, subsidiary directors, and secretariat staff for their continued support and dedication.

Among those present at the AGM opening were STA secretary Dato Sri Patrick Wong Haw Yeong, treasurer Philip Choo Kwong Hui, as well as council members Joseph Lau Ching Hoo, Yap Fui Fook, Tsen Teck Fen, Adeline Lau Kor See, Philip Law Buong Hoo, Ling Chiong Sing, Datin Sri Annie Wong Haw Bing, Diana Lau Kor Ping, and Stephen Hii Hium Ung.