Compliance Checklist / Report TLAS SFMLA Sabah Licensee Details Company: Rakyat Berjaya Sdn. Bhd. Ref #: G132-060 Date: 29 August 2014 Address: KK Office: Wisma Innoprise, Jalan Sulaman, Teluk Likas, P.O. Box 11622, 8817 Kota Kinabalu, Sabah. Tawau Office: 5 th & 6 th Floor, 255C, UMNO Building, Jalan Dunlop, P.O.Box 60793, 91007 Tawau, Sabah, Malaysia. Contact: Thaijudin Jeman (Regional Manager) Email: thaijeman@yahoo.com Tel: +6089 772 939 / 775 418 / 771 066 Fax: +6089 763 192 Assessment Date 11 th 15 th August 2014 Assessment Details GFS Lead Assessor GFS Assessor(s) SFD Staff SFD Staff Lai Jia Woei Jessie Ooi and Mohd. Akram Mansur Roslan Junaidi, Subari Suparlan, Narbert Nasly and Solvister Tiongin (FLEGT officers) Sidin Barau (PPM) and Saharuddin Jumit (PH PPD Kalabakan) OBJECTIVES: The objective of this checklist is to verify compliance to the conditions listed in the Timber Legal Assurance System for Sabah 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 FMU 24 Page 1
Overview of Licensee Summary Information Rakyat Berjaya Sdn. Bhd. (RBJ) was incorporated in 1970 to manage FMU 24 which is part of the Yayasan Sabah Concession Area (YSCA) (8 FMUs). RBJ has license to manage FMU 24 where the operations focus on harvesting in NFM and ITP. Tenure is base on o SFMLA 09/1997 which has started on 10 th September 1997 and expires on 10 th September 2097 for all activities within the concession o A supplemental agreement was signed on 15 th February 1999 to the reduction of 799,828 ha to 599,828 ha, and o Tree Plantation and Forest Management Agreement - JP (TKA)122/96(Co) 24 th April 1996-106,310 ha and Supplemental agreement upon JP (TKA) 122/96(Co) 200,000 ha 15 th February 1999 for NFM and tree planting area that falls under Benta Wawasan Sdn. Bhd. area FMU 23 consist areas for NFM and ITP for agro forestry. Serijaya Industry Sdn. Bhd. manages the oil palm plantation (BW5/02) inside FMU 24 under Benta Wawasan license. RBJ engages three logging contractors for NFM harvesting and ITP salvage logging activities: Asiatic Lumber Industries Sdn. Bhd. (YT3/03), Expo Utama Sdn. Bhd. (YT4/08); and Barisan Aman Sdn. Bhd. (YT2/04) respectively. Winmore Development Sdn. Bhd. (YT2/08) and Prima Megamas Sdn. Bhd. / Mulia Eramaju Sdn. Bhd. [YT1/04(1), YT1/04(2) & (3)] have ceased operation since year 2014. Rinukut Sdn. Bhd. is a new company who responsible to carry oil palm plantation at part of YT 2/04 after the surrender of Barisan Aman s coupe area to Sabah Forestry Department. Land classification FMP Area (ha) Current (ha)* Total FMU Area NA 115,176 Logged Over Forest (NFM) NFM (SFMLA) NFM Heli (SFMLA) YS Mosaic Forest Restoration YS (ITP) to Oil Palm Plantation Benta (Oil Palm Plantation) NA 15,758.46 7,072.79 15,123.00 NA 9,950.56 1,385.87 Severely Degraded / Burnt Forest NA 0 Protected Forest & Conservation Areas NA 65,885.32 Social Community & Agriculture NA 0 *Refer to YSG Forest Division map (Ref TLAS_FMUs23_24_26_v1, folio #: V47/42 dated 8 th August 2014) FMU 24 Page 2
Environmental context FMU 24 comprises of Gunung Rara Forest Reserve (GRFR) and Kalabakan Forest Reserve (KFR) (Class II Commercial Forest Reserves), VJR Batu Timbang, VJR Ulu Sg. Napagon and VJR Nurod Urod (Class VI Virgin Jungle Reserves). GRFR is identified as a natural wildlife corridor and also known as an important habitat for a few totally protected fauna species (e.g. Banteng, Orang Utan and Borneon Elephant). Sighted wildlife in the area is Rhinoceros, Orang Utan, clouded leopard, proboscis monkey, wild buffalo and elephants. Maliau Basin Conservation Area (55,840ha) is a part of FMU 24, which has a separate management plan. Imbak Canyon Conservation Area (16,750ha) is adjacent to the northern part of FMU24. The areas in between Maliau Basin Conservation Area and FMU 24 production area are designated as buffer zones - Maliau Buffer Zone Area 1 and Maliau Buffer Zone 2. Maliau Buffer Zone Area 1 is only allowed to be harvested once whereas Maliau Buffer Zone 2 is allowed to be harvested as long as RIL technique is applied. The buffer zone areas also dominated with Mix Dipterocarp Forest which has not been logged before, thus the area contained high value of merchantable timber resources. The principal commercial species are Dipterocarpaceae, Fagaceae, Apocynaceae, Europhorbiaceae and Lauraceae. RBJ coupes which fall within Maliau Buffer Zone Area 2 are: part of YL1/03, part of YL2/03, YT1/09, part of YT1/03, part of YT2/08, YT3/05 (1), YT3/05 (2), YT3/04 and YT4/08. Two places in FMU 24 are identified as Project Area under Conservation Environment Management Division (CEMD) - RIL 2 Project Area and SUAS Project Area; and 4 areas as conservation area - VJR Batu Timbang, VJR Ulu Sg. Napagon, VJR Nurod Urod and water catchment area (2.160 ha); as well as 2 areas identified for tourism - Tourism Area under CEMD (250 ha) and Wellness/ Eco - Tourism Project Area (1,200 ha). Social context There are no communities living inside or adjacent to FMU 24. The nearest village to FMU 24 is Kg. Kemandut, which is located by FMU 26 (Luasong). Scope of Assessment The scope of the evaluation is to verify compliance of Rakyat Berjaya Sdn. Bhd. (RBJ) to the terms within the Sabah Forest Management License Agreement (SFMLA 09/97) for FMU 24. The assessment is in accordance on the terms of the agreement for the Sabah Independent Auditing of SFMLA based on the current Sabah Legality Standard (G188c Sabah Legality Standard v04 Dec 2013). Site evaluation to verify and report the level of compliance by RBJ and contractors to the standard in respect to each of the criteria within this report. Compliance is defined when the auditee demonstrates that operations have no or consist of only minor gaps identified against any applicable criteria of the standard. Non-compliance to the Sabah Legality Standard occurs when the auditee does not demonstrate adequate compliance to a criterion. FMU 24 Page 3
Itinerary of Assessment Date Activity 11 th August 2014 Travelling to Tawau, Opening Meeting (Overnight in Tawau). 12 th August 2014 Site visit to Expo Utama S/B, mile 43 Asiatic Lumber Industries stumping, Asiatic Organic Farm, and Pangkalan Kalabakan (Overnight in Tawau). 13 th August 2014 Rinukut S/B, Barisan Aman, and Winco Jaya S/B (sawmill) (Overnight in Tawau). 14 th August 2014 Document Review in RBJ TWU (Overnight in Tawau). 15 th August 2014 Closing Meeting and travelling back to Sandakan. Highlights of Assessment Rakyat Berjaya Sdn. Bhd. (RBJ) has complied with the Sabah Legality Standard (G100-188c - Sabah Legality Standard v04 Dec 2013) as no non-compliance was identified during the assessment in August 2014. Current status of operations: The current NFM operations in FMU 24 include coupe YT 4/08 by Expo Utama and heli-logging areas under Asiatic Lumber and a ITP area that was under salvage logging by Barisan Aman. A joint venture agreement between RBJ and Rinukut Sdn. Bhd. was signed on 7 th December 2012, to convert part of YT2/04 (approximately 5,000 ha) of forestland from ITP to Oil Palm Plantation, now renamed as coupe BW1/13. The assigned 5,000 ha area to Rinukut Sdn. Bhd. was part of 29,557 ha area under Benta Wawasan. Planning of FMU 24 regarding NFM and ITP management is not clear as areas within FMU 24 consist of both Benta Wawasan and RBJ licensed areas. Benta Wawasan was originally established to conduct ITP activities under YSG while RBJ focuses on NFM that needs to be clearly defined in the FMP and Land Use Planning for FMU 24. Rinukut Sdn. Bhd. received the coupe area after Barisan Aman closed and surrendered its completed salvage logging area to Sabah Forestry Department. The establishment of oil palm plantation has been approved by the forestry department end of year 2012 as part of agro-forestry development project associated to FMU 24 for sixty years. The total area allocated for planting within Coupe YT 2/04 with oil palm trees is about 5,000 hectares. The Intensive Tree Plantation (ITP) to be converted to oil palm plantation has been identified in the revised YSG land use map for FMU 24. RBJ has informed the auditing team that the boundary of the oil palm coupes YT1/04(1), YT1/04(2), and YT1/04(3) are in the process of being surveyed to be excised from the NFM area (Ref. letter #: JPHTN/PP700-21/1/58/13 dated 17 th April 2013). In August 2014, one outstanding Major gap (GAP 003/2011) was addressed, one minor gap (GAP 004/2011) remains as outstanding, and three new minor gaps were raised (GAP 007/2014, GAP 008/2014 and GAP 009/2014). RBJ has closed the outstanding major gap (GAP 003/2011 (major closed) in regards to identifying steep areas for production (heli-logging) and protection within FMU 24 with the land use map (Folio #: v47/42, last updated on 8 th August 2014) approved by RBJ top management. The land use map defines areas for production (NFM, ITP and agro-forestry OPP), conservation and tourism area at a scale of FMU 24 Page 4
Highlights of Assessment 1:170,000. The land use map includes Rinukut s oil palm planting area. This provides an overview current operations within FMU 24 based on active coupe permits, while the FMP is in progress (Ref. letter #: FD/KK/9.06/15/05 dated 20 th August 2014). The FMP is still in development thus the operations are running based on licensed coupe areas. RBJ has not conducted any inventory to justify planned forest conversion within an approved FMP thus GAP 004/2011 minor remains outstanding. GAP 004/2011 (minor)-outstanding C4.3 RBJ does not have an inventory data to justify forest condition prior to conversion. The revised land use map that defines current and planned land use has been drafted to address major GAP 003/2011 has not been approved by SFD as part of the annual plan or FMP that has resulted in GAP 007/2014 being issued. GAP 007/2014 (minor) C4.2 FMU 24 land use map has yet to be endorsed by the forestry department. Note: An up to date FMU 24 land use map was forwarded to SFD for endorsement (Ref. letter #: FD/KK/9.06/15/05 dated 20 th August 2014). RBJ does not have an approved FMP for FMU 24; currently the FMP is still in progress. Issues relating to workers have been raised in 2014 assessment: GAP 008/2014 (minor) C10.1 25 out of 31 workers sampled at campsites associated to FMU 24 did not possess CI. 6 out of 12 machineries (Expo Utama: 3, Asiatic Lumber: 3) were not registered with FD. GAP 009/2014 (minor) C10.2 25 out of 27 workers sampled at various campsites associated to FMU 24 do not have evidence on foreign workers insurance or SOCSO. Observations: Obs 01: C 1.1.5 Year 2013 TLAS assessment reported RBJ has directed Asiatic Organic Farm Sdn. Bhd. to settle outstanding OP fees and penalty to SFD before renewing their OP (FD/TWU/9.06/3/Vol.13/72 dated 14/09/2012). However in year 2014, no information was provided regarding this matter. Obs 02: C 2.1 - The EIA for Expo Utama was approved on the 31 st July 2009 for logging and log extraction, however based on clause 6.0 (ii) the validity of the EIA report is valid for only two years from the signing of Surat Akujanji (Ref. letter #: JPAS/PP/25/600-1/-1/1/258 dated 31 st July 2009). If the project has not been commenced within that period, the EIA report is no longer valid. Thus Expo Utama needs to obtain approval of an EIA prior to enter coupe YT 4/08. Obs 03: C 2.2 - No Environmental Compliance Report was produced for year 2014 by Asiatic Lumber Industries. Obs 04: C 3.7.1 - Part of FMU 24 (Gunung Rara FR) is in the process of being excised from the current PDP as it will be converted to Oil Palm Plantation YT1/04(1), YT1/04(2), YT1/04(3). In year 2014 assessment, the PDP was not updated by RBJ regarding the conversion. Obs 05: C 4.4 - No forest fire management has been developed for the licensed area only basic operating procedures. Obs 06: C 12.3 RBJ does not have a formal system of communication and dispute resolution with stakeholders. FMU 24 Page 5
Results: The following GAPS were raised against indicators & criteria during the August 2014 assessment. GAP Type Checklist Description Status 003/2011 Major 4.2 RBJ has identified the steep areas for production (helilogging) and protection within FMU 24 with the land use map (Folio #: v47/42, last updated on 8 th August 2014) approved by RBJ top management. The land use map defines areas for production (NFM, ITP and agro-forestry OPP), conservation and tourism area at a scale of 1:170,000. The land use map includes Rinukut s oil palm planting area. This provides an overview current operations within FMU 24 based on active coupe permits, while the FMP is in progress (Ref. letter #: FD/KK/9.06/15/05 dated 20 th August 2014). 004/2011 Minor 4.3 RBJ does not have an inventory data to justify forest condition prior to conversion. 007/2014 Minor 4.2 008/2014 Minor 10.1 009/2014 Minor 10.2 FMU 24 land use map has yet to be endorsed by the forestry department. a. 25 out of 31 workers sampled at campsites associated to FMU 24 did not possess CI. b. 6 out of 12 machineries (Expo Utama: 3, Asiatic Lumber: 3) were not registered with FD. 25 out of 27 workers sampled at various campsites associated to FMU 24 do not have evidence on foreign workers insurance or SOCSO. Closed Outstanding Aug 2014 Aug 2014 Aug 2014 Highlights of Close out visit (if applicable) Date Recommendations Rakyat Berjaya Sdn. Bhd. (RBJ) is recommended to receive a Statement of Compliance based on compliance with the Sabah Legality Standard (G100-188c - Sabah Legality Standard v04 Dec 2013) requirements. All minor gaps must be addressed by the next surveillance visit scheduled for August 2015. Actions required to address the gaps identified include: GAP 004/2011 minor (Criterion 4.3) RBJ should define areas for conversion within the Land Use Plan & FMP based on severely degraded status based on some level of inventory to meet SFMLA requirements. FMU 24 Page 6
GAP 007/2014 minor (Criterion 4.2) Request Sabah Forestry Department to endorse the revised forest land use map of FMU 24. GAP 008/2014 minor (Criterion 10.1) To register new workers and follow up on the CI application process. Machineries operate in the forest reserve are to be registered with the Sabah Forestry Department. GAP 009/2014 minor (Criterion 10.2) Workers are to be covered by insurance as required in the SFMLA clauses and Malaysia Labour Law. In addition, recommendations for six observations recorded include the following: a) RBJ and contractor shall follow up the status of the outstanding OPs fees and to be paid to the Sabah Forestry Department. b) Expo Utama shall work with EPD to approve the current EIA prior commencement of logging operations. Asiatic Lumber Industries is required to conduct quarterly ECR should there be logging operation carried out on the ground. c) RBJ shall follow up the current status of YT1/04(1), YT1/04(2) and YT1/04(3). d) Obtain professional advice or consultancy on forest fire management. e) Develop procedures on communication and dispute resolution. End of Summary Report FMU 24 Page 7