GLOBAL FORESTRY SERVICES. Sarawak Audit Checklist / Report STLVS Principles 1-4

Transcription

1 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Sarawak Audit Checklist / Report STLVS Principles 1-4 Licensee Samling Plywood (Miri) Sdn. Bhd. (11317-A) Reference # GFSS a Contact Person Office Address Site Address Mr. James Ho Yam Kuan (Chief Operating Officer) Mr. Tsen Teck Fen (Head of Planning & Development Department) Wisma Samling, Lot 96, Jalan Temenggong Datok Oyong Lawai Jau, P. O. Box 368, Miri, Sarawak, Malaysia. T/0413 Samling Plywood (Miri), Baram, Miri, Sarawak. hoyk@samling.com.my tsentf@samling.com.my Report Date Date of close out 8 April Aug 017 Telephone Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 1 Fax Approved By Dr. Kevin Grace Statements GFS Audit Statement # GFS 03 LVS Issuance Date 14 August 017 Expiration Date 13 August 018 Assessment Details Assessment dates 17 th 8 th April 017 / Close Out on 1 Aug 017 Scope of Assessment Forest Timber Licenses T/0413 Samling Plywood (Miri) Sdn. Bhd. Shorea spp. (Meranti), Anisoptera spp. (Mersawa), Shorea spp. (Selangan batu), Dryobalanops spp. (Kapur), Dipterocarpus spp. (Keruing), Shorea spp. / Lithocarpus spp. (Empenit), Cephalomappa spp. (Arau), Sapotaceae spp. Species (Nyatoh), Eugenia spp. (Ubah), Mangifera spp. (Asam), Vatica spp. / Cotylelobium spp. (Resak), Cratoxylum spp. (Geroggang), Agathis spp. (Bindang), Dacrydium spp. (Sempilor), Gluta / Semecarpus / Melanochyla & Swintonia (Rengas), Dialium spp. (Keranji), Lauraceae (Medang) GFS Lead Assessor Dr. Kevin Grace and GFS Assessor(s) and Others - OBJECTIVES: The objective of this checklist is to verify compliance to the Criteria listed in the Sarawak Legality Standard as defined by STLVS Principles 1-4 for Sarawak dated 6 Feb 017. Compliance is defined when all applicable criteria are observed to be compliant. A Minor Gap to any indicator does not constitute non-compliance to a criterion. A Major Gap to any applicable indicator does reflect non-compliance to a criterion. Compliance for a criterion where multiple minor gaps are identified in indicators under the criterion may reflect non-compliance to the criterion. All issues identified under this standard shall be considered appropriate to the scale and degree of forestry operations undertaken by the parties under the agreement.

2 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Summary Information Overview of Licensee Organization Information: The Samling Group has a number of associated companies that include Samling Plywood (Miri) Sdn. Bhd. Samling Group of Companies has multiple Forest Timber Licenses (FTL) as well as Licenses for Planted Forests (LPF) within Sarawak, Malaysia. Current Licenses includes 14 FTL and 9 LPF of which 3 overlap with existing timber licenses. Total license area under Samling management covers nearly 1.5 million ha. Key regulations: The legal framework is provided in the following laws (ordinances), rules and regulations: - Statement of Forest Policy (1954) - Forest Ordinance (1954, 003, 006, 015) - Forest Rules (1954) - National Parks Ordinance (1956) - National Parks and Nature Reserves Ordinance (1998) - Wildlife Protection Ordinance (1958) - Sarawak Timber Industry Development Corporation Ordinance (1973) - Sarawak Timber Industry (Registration) Regulations (008) - Sarawak Forestry Cooperation Ordinance (1995) - State of Sarawak Forest Timber License (FTL) - Inter-agency Standard Operating Procedures (SOPs) for Performance of Forestry Functions in Sarawak (Ministry of Resource Planning and Environment, 01) - Minimum Wages (Amendment) (No.3) Order Sarawak Labour Ordinance (Cap.76) - Employment Act 1955 Description & Licenses: Samling Plywood (Miri) holds Forest Timber License # T/0413 granted by the Sarawak government authority for timber harvesting within a licensed area of 04,377 ha of natural forest. Management / Land Tenure: The license tenure based on the Forest Timber Licence T/0413 was issued and approved to Samling Plywood (Miri) on 1 st September The FTL is valid until 31 st August 018. Management planning (FMP): The Forest Timber License T/0413 serves as the Working Plan that has been approved by the Director of the Sarawak Forestry Department. Working Plan period and expiry date is identical with the Forest Timber License T/0413, i.e. from 1 st September 1993 to 31 st August 018. The revised General Plan (GP) was approved by the Sarawak Forestry Department on 4 th August 014 (Ref. letter #: WPO (VI)-1) which covers 04,377 ha of the licensed concession with a net operable area of 141,984 ha. Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page

3 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Operational activities: Syarikat Samling Timber Sdn. Bhd. (SST) is the registered logging contractor for timber license (T/0413). SST implements all forest operations of infrastructure development and maintenance, timber harvesting and log transportation from the license area to the central log pond located at Tuyut. In line with the State Government Policy Direction, T/0413 is committed to obtain Forest Management Certification (FMC) and are required to implement Reduced Impact Logging (RIL) harvesting system in all Coupes / Blocks that had been endorsed with Permit to Enter Coupe (Operation 1-4) and all future coupes within the Forest management Unit with immediate effect. All timber operators are also encouraged to use RIL-Log Fisher for timber extraction (Ref. #: DF (Jld.4)-1 dated 6 th August 016). SST is conducting 100% tree enumeration in Coupe 1A Block 3 to identify and mark harvestable tree on the ground under RIL system. The harvesting plan is in the preparation process. Land classification GP Area (ha) Total Licensed Area 04,377 Coupe Licensed Area 190,198 Production Area 141,984 Protected Forest & Conservation Areas (Kerangas Forest, 7,50 Terrain Class IV & Buffer zone, Sg. Moh Wildlife Sanctuary) International Border Zone,957 Social Community & Shifting Agriculture 31,916 Infrastructure, Roads Buildings, etc km Currently, the State Government and FDS are in the process of degazetting 10,01 ha of T/0413 natural forest for oil palm plantation. Samling Plywood (Miri) was given the right to conduct salvage logging operations in the area planned for conversion prior to de-gazettement based on the approved PEC. Areas for conversion to oil palm plantation are shown in the table below. Coupe # Lot #s Area (ha) Operator Remarks Coupe 10A(S) 5 & 6,83 Upaya Harapan Sdn. Bhd. Mixed of normal and Terrain Class IV areas Coupe 10A(S)(II) 3 & Hellegerwish Sdn. Bhd. Mixed of normal and Terrain Class IV areas Coupe 9A(S) 3 1,13 Hellegerwish Sdn. Bhd. Mixed of normal and Terrain Class IV areas Coupe 9A(S)(II) 8 1,457 Tiang Laju Plantations Normal terrain Sdn. Bhd. Coupe 8A(S)(II) 7 1,57 Tiang Laju Plantations Sdn. Bhd. Mixed of normal and Terrain Class IV areas Coupe 8A(S) Mulia Plantations Sdn. Consists normal terrain Bhd. Coupe 7A(S) 15 & 16 1,80 Mulia Plantations Sdn. Bhd. Total - 10,01 and SA areas Consists normal terrain and SA areas Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 3

4 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Environmental context: The area consists of Mixed Dipterocarp Forests of 3 density classes (MD1, MD, MD3), Kerangas Forest, and shifting agriculture (SA) areas. Except for the shifting agriculture areas, the area was also partially stocked with Primary Forests at the time of issuing the Forest Timber License in year Yield regulation consists of the area control method by dividing the operable area (net production area) by the length of the cutting cycle, which is 5 years. Besides a 10% enumeration of harvestable commercial timber at Block level (ranging from ha in size), no overall forest management inventory has been carried out. Minimum cutting limits are 60 cm dbh for Dipterocarp species and 45 cm for Non-Dipterocarp species. An exception to these cutting limits exists for areas that will be inundated when the HEP Dam project materializes. In these areas no cutting limit is imposed since the future water basin needs to be cleared of all extractable timber. However, implementation of the planned Baram Hydroelectric Project (HEP) has been deferred by the State Government of Sarawak. As a consequence, all approved salvage logging activities in FTL T/0413 affecting the planned inundation area have been suspended by Sarawak Forestry Corporation (SFC) with effect from 14 Sep 015 (Ref. letter #: SFC.MRO ). The current vegetation consists of mainly Mixed Dipterocarp Forests, and some secondary forests developing on former shifting cultivation sites. Mammals reported from the license area include totally protected species (Wildlife Protection Ordinance, 1998), such as bay cat, clouded leopard, Bornean gibbon, tufted ground squirrel, slow loris, langur, giant tree squirrel, and tarsier. Mammals found that belong to the protected species category include bear cat, civet, flying lemur, sun bear, porcupine, pangolin, red giant flying squirrel, and tree shrew. Common birds found in the Project Areas are babblers, barbets, drongos, flycatchers, broadbills, falconets, pigeons, doves, cuckoos, ground coucals, chestnut-breasted malkoha, kingfishers, bee-eaters, swiftlets, pied fantails, bulbuls, leafbirds, magpie robins, white-rump shamas, common mynas, sunbirds, spiderhunters, and flowerpeckers. Some of the reptiles reported in the Project Areas are hill terrapins, soft-shelled turtles, (Trionyx cartilaginous), geckos, skinks, and snakes such as vipers, elaphids (Elaphe taeniura), kraits (Bungarus fasciatus), racers, and the paradise tree snake. The cobra (Ophiophagus hannah), spiny terrapin (Geochelone emys), reticulated python (Python reticulates) and tree monitor lizard (Varanus dumerili) are the protected reptiles found in the sites. The EIA study found that some adverse impacts on the environment will result from the operational forest activities, such as changes in water quality and damage to residual natural forests. Incorporating the mitigation measures proposed by the EIA consultant will help to reduce such impacts to acceptable levels. EIA requires the adoption of RIL practices, whereas Forestry Department of Sarawak (FDS) does not prescribe RIL and accepts conventional logging. ( 1 Re-entry hill logging within coupes 01AR to 07AR and 15AR to 19AR under the Forest Timber Licence (FTL) no. T/0413 at the Batang Sg. Baram Sg. Silat area, Miri Division, Sarawak: - Chapter 5 Page 6 Adoption of Reduced Impact Logging(RIL). EMR 1 st quarter 016 report stated that RIL practices were implemented and complied). Environmental Impact Assessment: EIA was conducted by Ecosol Consultancy Sdn. Bhd. as the registered EIA consultant. The Natural Resources and Environment Board (NREB) has approved two EIA for previously harvested areas within Forest Timber License T/0413: Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 4

5 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : # Project name NREB reference # Date of Approval 1 Re-entry hill logging within coupes 8AR to 14AR under Timber Licence No. T/0413 at the Sg. Selio Sg. Silat Sg. Palutan area, Miri Division, Sarawak. Re-entry hill logging within coupes 01AR to 07AR and 15AR to 19AR under the Forest Timber Licence (FTL) No. T/0413 at the Batang Sg. Baram Sg. Silat area, Miri Division, Sarawak. (14) NREB/6-3/H/30 15 June 01 (1) NREB/6-3/H/37 10 Sep 014 No EIA requirement exists for Coupes 0A 6A as they are not re-entry forest areas. According to the EIA Guidelines of the Natural Resource and Environment Board (NREB), only re-entry (previously logged-over) forest areas are required shall be subject to an EIA. Social context: Social Assessment: Samling has not conducted a Social Impact Assessment as the license provisions do not request for such an assessment. The Company however, maintains a detailed database of all the longhouses and settlements within and adjacent to the license area. The company has successfully negotiated agreements with most of the communities affected by its operations (further details about the agreements between Samling and the T/0413 communities is described in Checklist 4.1.3). The region is settled by the Kenyah and Penan. The Kenyah are predominantly farming communities, whereas some Penan communities still follow a more nomadic lifestyle of hunting and gathering. Village Locations with GPS Coordinates (T/0413) No. Race Village Name Coupe Longitude Latitude 1 Penan Lg. Tikan 1A; 13A; 14A E N Penan Lg. Jekitan 06A; 07A; 08A;09A E N 3 Kenyah Lg. Apu 01A; 0A; 03A E N 4 Kenyah Lg. Anap 04A E N 5 Kenyah Lg. Mekaba 05A-0A shared E N 6 Kenyah Lg. Moh 05A-0A shared E N 7 Kenyah Lio Mato 1A; A 4A E N 8 Kenyah Lg. Tungan 1A; A 4A E N 9 Kenyah Lg. Jeeh 05A-0A shared E N 10 Kenyah Lg. Julan 01A; 0A; 03A E N 11 Kenyah Lg. Semiang 1A; A 4A E N 1 Penan Lg. Bee 10A; 11A E N 13 Penan Ba Purau 15A E N Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 5

6 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Kenyah Lg. Silat 15 Kenyah Lg. Pelutan 16 Kenyah Lg. Selawan 05A-0A shared 01A; 0A; 03A 05A-0A shared E N E N E N According to the EIA, certain areas within the license area are subject to NCR claims by the local people based on their shifting cultivation areas or native farmlands along with resource use such as hunting or fishing. Areas of shifting cultivation are mapped but areas claimed are not clearly defined according to each individual longhouse. The Company has excluded the shifting cultivation area (31,916 ha), and the Kerangas area (4,83 ha) within the site from the current round of logging activities. The shifting cultivation and Kerangas areas were reflected in the GP map. In addition, the Company observes certain tribal customs to foster amicable relationships with the locals. Social Monitoring: Samling has not conducted a Social Monitoring Program to define a formal system of communication with longhouses. However, regular communication and mutual consultation between Samling and local communities has been demonstrated over the years since the commencement of the logging operations. Any community claims or issues are recorded, monitored and dealt with according to the Company s Standard Operating Procedures. Samling compensates the local communities for any damage or losses to claimed forest resources through signing written agreements on the type and amount of compensation given. Meetings between the Company and the local communities are recorded and issues or questions raised in the meetings have been documented. Scope of Assessment The scope of the evaluation is to verify compliance of T/0413 licensed to Samling Plywood (Miri) Sdn Bhd with the STLVS P1-4 Standard. Site evaluation to verify and report the level of compliance by Company and contractor (Syarikat Samling Timber Sdn. Bhd.) to the standard in respect to each of the criteria within this report. Compliance is defined when the auditee demonstrates that the indicators consist of only minor gaps or no gaps against any applicable criteria of the standard. Non-compliance to the Sarawak Legality Standard occurs when the auditee does not demonstrate adequate compliance to a criterion. Itinerary of Assessment Date Activities GFS Staff Mandays 16/04/017 Sunday 17/04/017 Monday Travel to Miri Opening Meeting and Documentation Review (morning). Travel to Baram Central Base Camp CTB (afternoon). Overnight at Baram Central Base Camp (CTB). Dr. Kevin Grace Dr. Kevin Grace 18/04/017 Site visit: T041 / T0390 and T0390 / T0413 license boundary, Dr. Kevin Grace Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 6

7 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Tuesday stream buffer zone at T0413 Coupe 4A B41, B38 / B39, B3 / B37, B31 / B3, B9 / B30, B30 / B31, Block 3 RIL implementation block MT & MT3. Overnight at T0390 Merawa base camp. 19/04/017 Wednesday 0/04/017 Thursday 1/04/017 Friday /04/017 Saturday 3/04/017 Sunday 4/04/017 Monday Site visit: T0413 Coupe 4A B31 (including boundary & steep slopes checks, sampling of stumps and logs in the field), Tudan stumping area visit, T0413 Tudan base camp (workshop, lubricant storage, scheduled wastes storage area, waste disposal pit, fuel depot, workers quarters), T0390 Coupe 0AR B36 & B37 (including boundary & steep slopes checks, sampling of stumps and logs in the field); B37 / B39, B39 / B40, B36 / B44, B44 / B37 block boundary and respective stream buffer zones, B31 / Terrain Class IV, B1 / Terrain Class IV and B48 / Terrain Class IV boundary & buffer as well as Merawa stumping area visit. Overnight at T0390 Merawa base camp. Site visit: Documentation at Merawa base camp, logs checking at T0390 Coupe 0AR, log landing at B37, T0390 Marawa base camp (workshop, lubricant storage, scheduled wastes storage area, waste disposal pit, fuel depot, workers quarters). Overnight at Baram Central Base Camp (CTB). Site visit: T0413 Coupe 01AR and 0AR boundary, Coupe 0AR B37 and B31 (including boundary & steep slopes checks, sampling of stumps and logs in the field), Kerangas Forest demarcation, Coupe 0AR and LPF001 Paong Plantation licensed boundary, T0413 Julan base camp (workshop, lubricant storage, scheduled wastes storage area, waste disposal pit, fuel depot, workers quarters) and Julan stumping area visit. Overnight at Baram Central Base Camp (CTB). Site visit to local communities of Long Apu and Long Anap. Overnight at Baram Central Base Camp (CTB). Site visit to Tuyut logpond and travel to Miri (morning). Documentation Review in HQ Miri (afternoon). Overnight at Miri. Dr. Kevin Grace Public Holiday - 0 5/04/017 Documentation Review in HQ Miri Tuesday Overnight at Miri. 6/04/017 Documentation Review in HQ Miri Wednesday Overnight at Miri. 7/04/017 Documentation Review in HQ Miri Thursday Overnight at Miri. Documentation Review (morning) 8/04/017 Closing Meeting (afternoon) Friday Overnight at Miri. Travel to Sandakan 9/04/017 Reporting: GFSS Saturday Reporting: GFSS Kevin Grace 4 Total 8 Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 7

8 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : (Major Gap = 1 / Minor Gap = / Observation = 1) Highlights of Assessment (1 th August 017: Major = 0 / Minor Gap = / Observation = 1) Samling Plywood (Miri) Sdn. Bhd. has not complied with the Sarawak Legality Standard (Principles 1-4) as non-compliance was identified against Criterion.3 during the assessment on 17 th 8 th April 017. Principle 1. Right to Harvest: Samling Plywood (Miri) demonstrated compliance to license requirements, EIA and management planning. One outstanding GAP 003/016 (Minor) raised in the previous audit is now closed based on recent field audit conducted at the license area. The assessing team observed scheduled waste such as contaminated soil / sawdust, used vehicle batteries and used oil filters were stored in container/ area with proper labels. Besides, the diesel kiosk at Tudan and Julan camps were observed to be free of any oil spills. Currently, the State Government and FDS is in the process of degazetting 10,01 ha of T/0413 natural forest for oil palm plantation. Samling Plywood (Miri) was given the right to conduct salvage logging operations in the area planned for conversion prior to de-gazettement based on the approved PEC. SST appointed Mobijaya Sdn. Bhd. as the logging contractor to carry out the salvage timber harvesting which include felling and extracting merchantable logs within the allocated harvesting blocks in Coupe 10A(S) of the licensed area. SST was advised to expedite the logging operation within the said areas as soon as possible before it is handed over to the respective companies for plantation purpose (Ref. letter #: WPO (VI)-63 dated 6 th May 016 and WPO (VI)-67 dated 0 th October 016). Principle. Forest Operations: Samling Plywood (Miri) assessment resulted in one non-compliance to forestry operations as areas for protection were disturbed. Five of six stream buffer areas sampled were disturbed based on field observations at Coupe 4A. Samling Plywood (Miri) did not adequately protect stream buffer zones from disturbance in accordance to EIA requirements. GAP 004/017 (Major). 1 August 017: Samling Plywood (Miri) has provided evidence of actions taken to address the disturbance to the streams observed during the April 017 assessment. Samling has taken measures to rehabilitate the streams as well as identify and block the areas from future disturbance. Samling has also provided evidence that the Contractor SST is identifying and protecting ALL stream areas in current operations and planned blocks in Coupe 4A and 0A (Appendix 4). (GAP 004/017 Major Closed). The company has a system to control access into concession area. The licensee strictly adhered to cutting limits and monthly production limit as approved by SFC. The current code of practice of harvesting for Coupe 0AR is based on conventional harvesting practices with all marketable trees over 45 cm (Non- Dipterocarp) and 60 cm (Dipterocarp species). SST is starting a trial RIL in Coupe 4A Block 3 and is identifying and marking all harvestable trees on the ground to prepare a harvest plan for submission to SFC. Since T/0413 is under the Heart of Borneo Samling needs to provide a schedule to implement RIL over the concession (Observation 001). Logs randomly sampled in field, stumping and log pond were royalty paid. Related documents on production, royalty payment and transportation were adequately maintained for crosschecking and inspection. Forest workers sampled had valid documents and were covered by SOCSO and insurance. All field Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 8

9 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Highlights of Assessment workers were equipped with PPE. Various types of training were provided to workers and the workers were fully aware of the safety and health procedures. Trainings conducted were documented and maintained. Principle 3. Statutory Charges: Samling Plywood (Miri) demonstrated compliance to payment of Royalty Fees and other charges as required. Principle 4. Other User Rights: Samling identified longhouse communities associated with T/0413 and signed agreements for compensation for use of resources with most of the longhouse communities. However, the agreements made between Samling and the longhouses did not clearly define and map the actual NCR areas claimed and associated compensation for extraction of timber from claimed areas of each longhouse. Disputes against compensation for timber extraction has been recorded whereby Samling and the longhouses worked out terms of compensation on an Ad-Hoc basis that was not adequately defined in the agreements. Some agreements were combined but no clear mapping of claimed forest areas exist outside of shifting cultivation areas. As such minor gaps were identified: Checklist 4.1. Gap 005/017 (Minor): Samling has not adequately identified the NCR areas claimed by each longhouse to define compensation for timber harvesting and forest activities under the shared agreements or for protection where there is no agreement between the company and a longhouse. Checklist GAP 006/017 (Minor): Agreements by Samling with communities do not clearly define claimed forest areas, and social issues to calculate the compensation due to the longhouses associated with volumes extracted from NCR areas for each longhouse community. Samling has paid longhouses according to a monthly schedule; however, records are not readily available or clearly reflect payment as per agreement for volume extracted within defined and mapped claimed areas. Samling does not have a formal system of communication with each longhouse to discuss issues and settle disputes; but actively engages communities on an Ad Hoc basis to resolve issues as they arise. Summary results: (Major Gap = 1 / Minor Gap = / Observations = 1) (1 th August 017: Major = 0 / Minor Gap = / Observation = 1) GAPs: 17 th 8 th April 017 GAP # Type Checklist Description 5 of 6 stream buffer areas sampled were disturbed based on field observations at Coupe 4A. Samling did not consistently protect stream buffer zones from disturbance: 004/017 Major.3. Measures to control excess soil (due to road construction) from entering the stream buffers zone were not adequate. Permanent stream which were used to define block boundary on the ground were not being protected as required by the NREB. Samling has not adequately identified or mapped the NCR areas 005/017 Minor 4.1. claimed by each longhouse to define compensation for timber harvesting and forest activities under the shared agreements or for Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 9

10 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : /017 Minor protection where there is no agreement between the company and a longhouse. Agreements by Samling with communities do not clearly define claimed forest areas, and social issues to calculate the compensation due to the longhouses associated with volumes extracted from NCR areas for each longhouse community. Samling has paid longhouses according to a monthly schedule however, records are not readily available or clearly reflect payment as per agreement for volume extracted within defined and mapped claimed areas. Samling does not have a formal system of communication with each longhouse to discuss issues and settle disputes; but actively engages communities on an Ad Hoc basis to resolve issues as they arise. *Note: Major Gap = Non-Compliance / Minor Gap = Minor Gap raised can be upgraded to a Major Gap if not adequately addressed by the date of the next surveillance visit. Status of Outstanding GAPs GAP # Type Checklist Status Description 003/016 Minor Old Checklist New Checklist 1..4 Closed 004/017 Major.3. Closed April 016: Scheduled Wastes (e.g. waste oil drums, oil filters, used vehicle batteries) were not labelled according to DOE regulations. Oil spillage was observed at dispensing area of fuel tank at Julan Camp. No spillage prevention and collection equipment were available. April 017: Scheduled waste such as contaminated soil / sawdust, used vehicle batteries and used oil filters were stored in container/area with proper labels. The diesel kiosk at Tudan and Julan camps were observed to be free of any oil spills. April 017: 5 of 6 stream buffer areas sampled were disturbed based on field observations at Coupe 4A. Samling did not consistently protect stream buffer zones from disturbance: Measures to control excess soil (due to road construction) from entering the stream buffers zone were not adequate. Permanent stream which were used to define block boundary on the ground were not being protected as required by the NREB. 1 August 017: Samling Plywood (Miri) has provided evidence of actions taken to address the disturbance to the streams observed during the April 017 assessment. Samling has taken measures to rehabilitate the streams as well as identify and block the areas from Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 10

11 Registered Office: 446 N. San Gabriel Blvd., Suite #C, Rosemead, CA 91770, USA. Tel : / Fax : Note: o/c = Old Checklist & n/c = New Checklist future disturbance. Samling has also provided evidence that the Contractor SST is identifying and protecting ALL stream areas in current operations and planned blocks in Coupe 4A and 0A (Appendix 4). Observations Obs # Checklist Description As T/0413 is located in the Heart of Borneo, Samling needs to develop a scheduled plan for implementing RIL systems and sustained forest resources in accordance to FDS / SFC requirements. *Note: Observation raised can be upgraded to a Minor Gap if not adequately addressed by the date of the next surveillance visit. Highlights of Close out visit (if applicable) Dates 1 August 017 Samling Plywood (Miri) has provided evidence of actions taken to address the disturbance to the streams observed during the April 017 assessment. Samling has taken measures to rehabilitate the streams as well as identify and block the areas from future disturbance. Samling has also provided evidence that the Contractor SST is identifying and protecting ALL stream areas in current operations and planned blocks in Coupe 4A and 0A (Appendix ). (GAP 004/017 Major Closed). Recommendations Samling Plywood (Miri) Sdn. Bhd. has now demonstrated compliance against the Sarawak Legality Standard (Principles 1-4) for Forest Timber License T/0413 as Gap 004/017 Major (Criterion.3) has been adequately addressed. All Minor/Observation gaps must be addressed by the next surveillance visit in April 018. Actions required to address the gaps/observations identified include: GAP 005/017 (Minor) Checklist 4.1.: Documentation of forest areas claimed by longhouses and associated compensation: Forest areas within T/0413 claimed by longhouse communities should be clearly defined and mapped and included in all Resource Use Rights Agreements associated with each Longhouse along with agreed compensation. Areas claimed by longhouse communities not under an agreement must be clearly identified and protected from all forestry activities. GAP 006/017 (Minor) Checklist 4.1.3: Native rights shall be respected. Agreements need to be current for all longhouses that include agreed compensation for harvesting operations within areas claimed by each longhouse community. Agreements should clearly reflect agreed compensation values associated to extraction volumes (or other agreed payments) within the PEC & permitted harvesting Coupe that are associated with defined claimed areas for each longhouse as per the agreement. Samling needs to develop a formal system of communication with longhouses to discuss and resolve issues over the current Ad Hoc system. The next surveillance visit is scheduled in April 018. End of Summary Report Doc #: GFS-Form STLVS P1-4 Title: Checklist / Report STLVS P1-4 Issue: Draft 06 Date: 19 Feb 017 Samling Plywood (Miri) Sdn. Bhd. / T/0413 Page 11