Selangor FMU becomes PEFCCertified. Inside this issue: Management Operations. Volume 4, Issue 5, October - November 2010

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1 Volume 4, Issue 5, October - November 2010 Selangor FMU becomes PEFC-Certified The Selangor Forest Management Unit (FMU) has become the eighth FMU to be awarded with the accredited Certificate for Forest Management (Natural Forest) against the requirements of the Malaysian Criteria and Indicators for Forest Management Certification [MC&I(2002)] under the MTCS. MTCS-certified logs originating from this FMU and their downstream products are now eligible to carry the PEFC Logo. The Certificate issued to the Selangor FMU by SGS Malaysia Sdn. Bhd. on 1 September 2010 is valid for a 3-year period, subject to annual surveillance audits to ensure continued compliance of the FMU with the requirements of the MC&I(2002). This brought to date a total of eight FMUs covering approximately 4.83 million ha or 34% of the total PRF in Malaysia which have become PEFC-certified. The public summary of the audit report on the Selangor FMU can be obtained from the following website or Stakeholder Workshop on Formulation of Guidelines and Procedures to Assess and Monitor Social Impact of Forest Management Operations A Stakeholder Workshop on the Formulation of Guidelines and Procedures to Assess and Monitor Social Impact of Forest Management Operations was held on 18 October 2010 at Corus Hotel, Kuala Lumpur. Jointly organized by the Institute of Tropical Forest and Forest Products (INTROP) of Universiti Putra Malaysia (UPM) and MTCC, the workshop was attended by 38 participants comprising representatives from the various stakeholder groups, i.e. the social and environmental NGOs, timber industry and the relevant government agencies. The main aim of the Workshop was to inform the stakeholders of the project to develop the guidelines and procedures, and to obtain comments and feedback from the stakeholders on the Questionnaire for Assessment of Social Impact of Forest Management Operations which will form an integral part of the guidelines and procedures. The comments and feedback received from the Workshop will be taken into account by INTROP in revising the Questionnaire before it is field tested in the Pahang FMU. MTCC wishes to thank all stakeholders who participated in the Workshop for their valuable inputs. Inside this issue: Selangor FMU becomes PEFCCertified 1 Stakeholder Workshop on Formulation of Guidelines and Procedures to Assess and Monitor Social Impact of Forest Management Operations 1 Auditor Training Course on MC&I(Forest Plantations) 2 Auditor Training Course on MC&I(2002) 2 Interview with Jurgen de Vries of Smeets, Stuger & De Vries, MTCC PR Representative in The Netherlands 3 Interview with Guntram Kaiser of Kaiser Communication, MTCC PR Representative in Germany 4 Finnish Procurement Policy Aims at Harmonization of Approaches; Recognise PEFC. FSC 5 Export of MTCS-Certified Timber Products 6 Withdrawal of Anap-Muput FMU Certificate 6 Contact Information: Malaysian Timber Certification Council, C-08-05, Block C, Megan Avenue II, No. 12, Jalan Yap Kwan Seng, Kuala Lumpur, Malaysia Tel : Fax : info@mtcc.com.my Website:

2 Auditor Training Course on MC&I(Forest Plantations) MTCC conducted an auditor training course for the auditors and staff of the Accreditation Division of the Department of Standards Malaysia (STANDARDS MALAYSIA) on October 2010, on the use of the forest management standard for the certification of forest plantations under the MTCS, i.e. the Malaysian Criteria and Indicators for Forest Management Certification (Forest Plantations) [MC&I (Forest Plantations)]. A total of 9 participants attended the training course which was held at the office of STANDARDS MALAYSIA in Cyberjaya. The main aim of the training course was to familiarise the auditors of STANDARDS MALAYSIA with regard to the requirements of the MC&I(Forest Plantations), as well as the various requirements for accreditation of Certification Bodies (CBs) for forest management certification, currently covering natural forest, to also cover forest plantations under the MTCS. Participants during training course on MC&I (Forest Plantations) (article on left) Auditor Training Course on MC&I(2002) Briefing during field audit using MC&I(2002) A four-day auditor training course on the MC&I(2002) was conducted by MTCC on 1-4 November 2010 in Ipoh, Perak. The conduct of the training course is to fulfil the requirements of the document ACB FMC 1-1: Competency Requirements for Bodies Operating Forest Management Certification for all auditors to undergo a course on the forest management standard and its related assessment procedures, as part of the requirements for accreditation of CBs by STANDARDS MALAYSIA. A total of nine auditors from three MTCS-notified CBs i.e. SGS (Malaysia) Sdn. Bhd., SIRIM QAS International Sdn. Bhd. and Moody International Certification (M) Sdn. Bhd. attended the training course. Four officers from the Perak Forestry Department also attended the course as observers. Besides lectures, the training course also incorporated hands-on practical assignments where participants were divided into two audit teams to conduct a trial audit of forest management activities in the field. Participants were briefed on the implementation of the MTCS, the accreditation requirements of CBs including the competency requirements for auditors, the various assessment tools used in forest management certification, as well as the detailed requirements of the MC&I(2002). For the two-day field programme to the Kuala Kangsar Forest District, the two audit teams conducted a trial forest management audit, involvin g documentation review, consultation with stakeholders and verification of forest management activities in the field. The two audit teams inspected an active harvesting area, a recently logged-over forest including its closing report, a logged-over forest with post-felling forest inventory conducted, visited a forest checking station to validate the chain of custody system, as well as conducted consultations with forest workers, and the Village Head of the Orang Asli community located at Pos Pelantuk. Presentations of the findings of the trial audits were made by the two groups on the last day of the training course. MTCC would like to accord its heartfelt thanks to the Director and staff of the Perak State Forestry Department, in particular the District Forest Officer of Kuala Kangsar Forest District, for the permission granted, as well as the logistic support rendered, which has resulted in the successful conduct of this training course. Group discussion to prepare audit findings Visit and discussion with Village Head of the Orang Asli at Pos Pelantuk Checking records of Removal Passes at Forest Checking Station, Sungai Siput 2

3 Interview with Jurgen de Vries of Smeets, Stuger & De Vries, MTCC PR Representative in The Netherlands This interview session which was conducted on 22 October 2010 is aimed at providing the latest developments related to the MTCS, current and future challenges that the Malaysian timber industry may face in The Netherlands, which is the biggest market for MTCS-certified timber products. It is acknowledged that The Netherlands is the most important market for certified Malaysian timber products in Europe. Why is it so? The Dutch market is always looking for high quality products such as window frame, door frame, flooring etc. Malaysia is one of the few suppliers that can offer these products in high quality, with a credible timber certification scheme. This is the primary reason why The Netherlands is the most important market for certified Malaysian timber products. There is also a long timber trade relationship between Malaysia and The Netherlands. Can you let us know the latest situation with regard to the measures taken by the Dutch Government to regulate the importation of timber products, particularly from tropical countries, into The Netherlands to provide the assurance to consumers that the products originate from legal and sustainable sources? In 2008, the Dutch Parliament agreed on a set of procurement criteria for timber from tropical forests as well as boreal and temperate forests. Since then a number of timber certification schemes have assessed and endorsed by the Dutch government under the Timber Procurement Assessment System (TPAS), i.e. FSC international, PEFC Germany, PEFC Finland, PEFC Belgium and PEFC France. Quite recently they have concluded their assessment of the PEFC International and the MTCS. This has been probably the most important measure taken by the Dutch Government. The upside is that timber certification schemes endorsed under the TPAS would be eligible for fiscal incentive by the Dutch Government, entitling certified timber used for construction purposes to enjoy special tax deduction. Secondly, at the European level, the Dutch government has been the driving force in implementing bilateral trade agreements on legal and sustainable timber in timber producing countries, including Malaysia. In this connection, TPAC was formed to assess for sustainable timber while FLEGT VPA deals with legal timber. As of now, MTCS is recognised by the Dutch government as meeting the requirements for legality of timber. In June 2008, with the adoption of the Dutch Procurement Criteria for Timber to provide assurance that procured timber in The N e t h e r l a n d s c o m e s f r o m sustainable sources, the Dutch M i n i s t e r o f E n v i r o n m e n t e s t a b l i s h e d t h e T i m b e r P r o c u r e m e n t A s s e s s m e n t Committee (TPAC) to evaluate whether timber certification s y s t e m s m e e t t h e s a i d requirements using the Timber Procurement Assessment System (TPAS). MTCS is one of the schemes being assessed by TPAC. Can you provide an update on the TPAC assessment of the MTCS? In March 2010, TPAC concluded that MTCS conforms to the Dutch procurement criteria for timber. In April 2010, the coalition of Dutch social and environmental NGOs which consist of Greenpeace, WWF Netherlands and Friends of the Earth Netherlands filed an objection against the TPAC decision to endorse the MTCS. The ruling on the objection would be expected in 26 October Based on the outcome of the objection procedure, the Minister for the Environment again would have to decide whether or not to accept the MTCS. We are hopeful that the outcome would be favorable. However, the reality is that the discussion of timber certification schemes has till today, very little to do with sustainable forest management. It has been more of commercial and political interest. (Editor s note: on 22 October, the TPAC issued a Revised Final Judgment which concluded that the MTCS did not conform to the Dutch Procurement Criteria. MTCC has filed an appeal to the TPAC on 3 December) What challenges do you foresee that the Malaysian timber industry may face with regard to the exports of tropical timber products to Europe, particularly to The Netherlands, in the near future? The biggest challenge for the Malaysian timber industry is compliance with the EU-FLEGT VPA and the Due Diligence Regulation (DDR). The main reason is that the export of Malaysian timber products to The Netherlands or Europe comes not only from the permanent reserved forests (PRFs) but also the stateland forest which does not qualify to be certified for sustainability. The Malaysian timber industry would therefore required to provide proof to their buyers that such timber is sourced from legal sources. The European Union has set a deadline of January 2013 for the enforcement of the DDR. It will take two years at least to implement the DDR requirements in producing countries which include Malaysia, and this leaves Malaysia only a couple of months. If Malaysia has not signed the EU FLEGT VPA by then, I foresee that there would be a very high administrative burden for the Malaysian timber companies because of the need to come up with a system of chain of custody to prove legality. continued on page 4 3

4 continued from page 3 This is necessary because the burden of proof in the DDR regulation will be transferred to the supplier which is the Malaysian exporter. The other challenge is the stiff competition from alternative materials such as plastic and aluminum. This is ironical because timber is the most sustainable and environmental friendly product to use as compared to plastic and aluminum which is now being increasingly used for door and window frames. A case in point is the promotion by a company with a slogan of 100% tree free. To me, this must be prevented at all costs, as switching to the use of alternative products would not help the forests, particularly the tropical forests, as it implies the lack of economic value of the forest and render it more susceptible to be converted to other kinds of land uses. The final challenge is the inconsistency in policy development with regard to sustainable forest management. It will be extremely counter-productive when new governments choose to adopt a different or new regulation related to the procurement criteria. In my opinion, the Dutch government needs to make a decision as to whether MTCS meets the Dutch procurement criteria. From my point of view, no decision is even worse than a negative decision. Interview with Guntram Kaiser of Kaiser Communication, MTCC PR Representative in Germany This interview session which was conducted on 15 October 2010 is aimed at providing the latest development related to the MTCS, current and future challenges that the Malaysian timber industry may face in Germany. Can you let us know the latest situation with regard to the measures taken by the German Government to regulate the importation of timber products, particularly from tropical countries, into Germany to provide the assurance to consumers that the products originate from legal and sustainable sources? There are several aspects to the question. 1: Sustainability has always been the benchmark of the federal government of Germany when it comes to the procurement of timber. In this regard, the federal government has always placed high emphasis on making sure that the timber being consumed by the federal union is originating from sustainable sources. For this purpose, in January 2007, the federal government has issued a procurement policy guideline for the federal union. Currently, this guideline is undergoing a review process and we are hopeful that the revised guideline will maintain the present recognition of PEFC and FSC as well as other equivalent timber certification schemes. 2: The federal government is also trying hard to encourage the individual German States and municipalities, who are independent in establishing their own procurement policy, to follow the same approach of the federal government. So far, some German States have a d o p t e d t h e approach of the federal government, while others are still considering or are continuing with their own procurement policy specifying non-acceptance of tropical timber or the acceptance of only Forest S t e w a r d s h i p C o u n c i l ( F S C ) certified timber. Some of the 16 German states have no procurement guideline for timber at all. 3: In terms of providing assurance of legality, the federal government is also very supportive of the FLEGT VPA process and the Due Diligence Regulation (DDR) undertaken by the European Union. In June 2006, MTCC and the City of Hamburg embarked on a two-year joint project to refine the forest management certification standard MC&I(2002) to fulfill the requirements of Hamburg for the use of tropical timber. Since the endorsement of the MTCS by the PEFC Council, the City of Hamburg has granted full recognition to the MTCS. How important has the decision by the Hamburg authority to recognize the MTCS been in influencing other municipalities or Leanders in Germany to also grant recognition to the MTCS? The City of Hamburg is the first authority in the whole of Germany that was brave enough to collaborate with MTCC and to recognise the MTCS. This is considered a very bold move considering the fact that the German Federal government did not even have a public procurement guideline in 2006, and during that time the acceptance of certified tropical timber and the recognition of national systems for tropical timber were still at an infant stage. I consider the step taken by the Hamburg authority as a successful one, speaking on behalf of MTCC and the City of Hamburg. As a result of the MTCC-Hamburg project, MTCScertified timber products are being used in many construction projects undertaken by the City of Hamburg mainly in the construction of windows where timber from South east Asia, mainly the species Dark Red Meranti, has always been preferred. Additionally, many German States, municipalities and private companies in Germany are considering the approach of the City of Hamburg. The Federal Union has used the experience of the City of Hamburg in the formulation of its public procurement policy. Other European countries like The Netherlands have also requested information from the Hamburg Authority with regard to continued on page 5 4

5 continued from page 4 MTCS in assessing the MTCS under the Dutch procurement criteria. With the PEFC endorsement of the MTCS and the acceptance of the MTCS in the federal public procurement policy, what is the level of acceptance of MTCScertified timber products in the German market? Many German authorities and private companies are currently taking the initiatives to establish their own guideline for environmental strategy which recognise the PEFC. In this regard, the PEFC endorsement of the MTCS has enormously increased the awareness and international recognition of the MTCS. The recent participation of MTCC in a joint stand with PEFC Germany in the garden furniture trade fair, SPOGA 2010 further promoted the presence of the PEFC and MTCS certified timber products as a suitable and trustworthy alternative to FSC in the garden furniture segment, which has been the domain of the FSC for a long time. I am glad to report that many window manufacturers and bench producers are now asking for suitable MTCS-certified timber as an alternative. It must be noted that in general, the consumers do not have a deep knowledge about sustainable forest management and timber certification. There are also not many surveys available on this matter but existing surveys do indicate that the level of knowledge about different schemes is not very high. What challenges do you foresee that the Malaysian timber industry may face with regard to the exports of tropical timber products to Europe, particularly to Germany, in the near future? The issue of sustainability and legality of timber will become increasingly important. There will be greater demand for sustainable and/or legal timber even though the willingness to pay a higher price for sustainable and/or legal timber may not always be the case. In order to convince the consumers that Malaysia is managing its forest well, it is needful for Malaysia to convey the message that the permanent reserved forests (PRFs) of Malaysia are not being clear-felled for the establishment of private plantations. Currently, this is one of the main topics of concern regarding tropical forests in Germany as well as in the European Union. Timber products will continue to face stiff competition from other materials such as PVC and modified wood like thermal treated wood from boreal or temperate forests or wood plastic component products (WPC). Presently, 50% to 60% of the window production is using PVC and it is being produced at a lower price. The same also goes for decking which is being replaced by modified wood from boreal and temperate forests. This is a great shift when compared to 20 years ago, when 50% to 60% of window production from Germany were made from wood. One other challenge is on the perception of timber and timber products; it is not confined only to quality but also, state of the art. A review of moulding would be a good case in point. Moulding used to be just a shaped material for decorative purpose, but today, is a high technology product which among other things, is made for specific function such as hiding cables etc. Therefore, for a producer of Malaysian timber products catering for high end market in Germany, one would have to adjust its products range and scope to remain competitive. PEFC NEWS Source: PEFC News Update (6 November 2010) Finnish Procurement Policy Aims at Harmonization of Approaches; Recognises PEFC, FSC With the goal to support the harmonization of guidelines for public procurement of wood-based products within the EU, Finland has launched its public procurement policy for wood-based products earlier this year. The policy, which is now available in English, specifies that forest certification systems such as PEFC and FSC are accepted for the verification of sustainably produced wood. The policy emphasizes that there are varying approaches to public procurement in EU Member States, which "present a number of challenges, and the need for harmonization is increasing as more and more countries implement their own steering mechanisms." Finland's goal is therefore to "support the harmonization of guidelines for the public procurement of wood-based products within the EU", and the Finnish public procurement recommendations have been drawn up to be compatible with the EU Public Procurement Directive. "PEFC Finland welcomes the arrival of the Finnish public procurement policy as an important tool to encourage public authorities to take sustainability considerations into account in their tenders," said Auvo Kaivola, PEFC Finland Secretary General. "With Finnish public procurement estimated to be worth approximately 23 billion Euros, it has the potential to have a significant impact on the well-being of society." Mr. Kaivola emphasized that "we especially appreciate the call for harmonization of public procurement policies across the EU. Private companies are already moving towards a more harmonized and inclusive approach concerning sustainable procurement, supporting the further uptake of forest certification and assisting organizations such as PEFC in promoting sustainable forest management in Finland and abroad." The Finnish public procurement policy was drafted by a multi-stakeholder steering group consisting of different Ministries (Ministry of Agriculture and Forestry, Ministry of the Environment, Ministry of Finance), expert organizations (Central Union of Agricultural Producers and Forest Owners, Motiva, Confederation of Finnish Industries EK, Finnish Forest Industries Federation), public procurement representatives (Association of Finnish Local and Regional Authorities, Hansel Ltd, City of Espoo) and the WWF. 5

6 Export of MTCS-Certified Timber Products By Destination & Product August 2010 September 2010 Destination Volume (m³) Destination Volume (m³) The Netherlands 3, The Netherlands 3, United Kingdom France France United Kingdom USA Belgium Belgium Germany Germany Australia Norway Total 6, Australia Total 5, Product Volume (m³) Sawn Timber 4, Product Volume (m³) Plywood 1, Sawn Timber 3, Moulding Plywood 1, Laminated timber 8.35 Moulding Total 6, Total 5, October 2010 Destination Volume (m³) The Netherlands 4, United Kingdom USA Germany France Belgium Norway Australia Greece Total 6, Product Volume (m³) Sawn Timber 3, Plywood 2, Moulding Total 6, Withdrawal of Anap-Muput FMU Certificate The Certificate for Forest Management issued to the Anap-Muput Forest Management Unit (FMU) on 19 February 2008 against the requirements of MC&I (2002) was withdrawn on 23 November The withdrawal was due to the failure of the Anap Muput FMU to undergo Stage 2 audit within the stipulated deadline in line with the present institutional arrangement of the MTCS. Hence, all logs sourced from the Anap Muput FMU are no longer recognized as certified under the MTCS with effect from 23 November Volume exported in August 2010: 6, m³ Volume exported in September 2010: 5, m³ Volume exported in October 2010: 6, m³ Total cumulative volume exported since July 2002: 430, m³ By November 2010, 160 timber companies are holders of PEFC certificate for CoC under the MTCS. Of these, 48 companies have signed the PEFC Logo Usage Licence agreement which will enable them to use the PEFC logo on their MTCS-certified products. More information on the validity, size, contact information and location map of certified FMUs under the MTCS can be obtained from: 6