Production Objectives

The management objective is to ensure that the FMU is responsibly managed in order towards providing an optimum and continuous supply of high quality timbers and other wood or non-wood products. Achievement of this objective requires to enhance the growth of commercial timber species and general health of the forest ecosystem, through active intervention management such as, silvicultural treatment and enrichment planting.

Timber Harvesting Methods

All timber harvesting that will be carried out shall apply Reduced Impact Logging (RIL) methods as prescribed by the Sabah Forestry Department. Tractors will be used for log extraction to the roadside landing as a standard harvesting method. In environmentally more difficult terrain, tractors will be equipped with long-distance ground winching systems and/or logfisher machinery will be employed to ensure minimum skid-trail density and environmental impacts.

Timber Marketing & Sales

The past 15 years of the tropical hardwood market are characterized by a more or less steady decline in exports of the three important suppliers: Indonesia, Malaysia, and Brazil. On the demand side, however, an increase of 25% has been reported, though tropical hardwood consumption estimates vary from source to source. In other words, the global market is facing a supply constraint. As a result of declining natural forests, erratic supply disruptions and surging end-use demand in China and India premium tropical hardwood species continue to be highly valued. This situation has caused an average annual price increase of 11% during the period 2001 to 2010, while softwood and low value hardwood prices have retreated considerably.

Price levels for Malaysian logs have been fluctuating throughout the years with three criteria as most important price determinants: species, log diameter and log quality. For Sabah producers, average log export prices range between RM 470 and RM 1,000 per m³ FOB, depending on the price factors mentioned above. These figures indicate that quality matters and hence, the company needs to ensure that reasonable efforts and investments are made to ensure bets possible product quality to capture the higher market end of the log prices.

Considering the continuous growth in global demand for wood products it can be safely assumed that price levels will continue to move upwards, despite some trends of timber substitution for non-timber products. With well-established Dipterocarp species such as, e.g., Selangan Batu, Seraya, Keruing, and Kapur delivering the raw material for classical products of the high-end solid wood consumer market producers are not expected to be affected by possible wood substitution trends.

In conclusion the company expects good business opportunities in the years to come and will endeavour to draw optimum benefits from its sustainable managed natural forests.