Monday, October 23, 2000


Sahabat Alam Malaysia
23rd October 2000



In Kalabakan, Tawau, Sabah, East Malaysia, a business venture between a State-owned company, Lions Group of Malaysia and the China Fuxing Pulp and Paper Industries of China will be developing a US1.1 billion plantation and pulp and paper mill project.
The project will necessitate the felling of 240,000 ha of natural forest to be replaced by a huge pulp and paper mill and a massive monoculture plantation of the Black Wattle trees (Acacia mangium) or also known as dry acacia or the mangium tree, a fast growing plant which is native to tropical Queensland, Australia. The size of this huge project, some 4 times the size of Singapore, will take up approximately 3% of Sabah and 6% of its remaining virgin forest. The mill is expected to process 750 tonnes of pulp a year.

The project is expected to be fully operational by 2005. Mooted by the Federal Government, it is said to be the single largest foreign investment in forest plantation and paper mill by China, which incidentally, has enforced a ban on logging in large swathes of its territory back home.

There are four important issues that the project raises.

Is the project adhering to Malaysia and Sabah's environmental law requirements?
Is the removal of a quarter of a million hectares of forest acceptable, in terms of damage to water, soil, wildlife, human livelihoods and the ecology system downstream?
How much pollution will the huge monocrop plantation and mill cause?
Is the project adhering to Malaysia and Sabah's environmental law requirements?


Under the Sabah Conservation of Environment (Prescribed Activities) Order 1999, any forest which is cleared for the felling of timber covering an area of 500ha or more or any development of forest plantation of 500ha or more requires an Environmental Impact assessment (EIA) to be done.

According to our interpretation of the law, three EIA reports are required for:

forest clearing for the establishment of the tree plantations
development of the tree plantations
Is the project adhering to Malaysia and Sabah's environmental law requirements?

Today, 12 000 ha of the land of the proposed project have already been logged without a single EIA done. The state-owned company, Innoprise Corporation Sdn Bhd is proceeding to log another 33 000 ha.

According to newspaper reports, the company claimed that it could not afford to wait for the EIA to be submitted. The company is only now in the midst of appointing a consultant to handle the EIA.
The company asserted that it need not carry out an EIA for the logging as the Sabah Conservation of Environment (Prescribed Activities) Order 1999, came into effect only in September 1999 while the company had already begun logging since 1998. Innoprise further asserted that it proceeded with the logging operation based on the Coup Permit from the Sabah Forestry Department in 1996. The company reportedly is planning to conduct two EIA reports only, one for the plantation, the other for the mill.

The Chief Minister of Sabah seemed to defend the legality of its state-owned company's operation. He too claimed that the logging operation was legally licensed in 1996, well before the State EIA requirement was enforced and in addition to that, the licence did not specify the need for an EIA.

Further shock came our way when the Sabah Forestry Department in their reply to our queries affirmed that they had indeed issued a Coup Permit for the company to log. According to the Department, in 1996, Benta Wawasan Sdn. Bhd (a wholly owned subsidiary of Innoprise Corporation) entered into a Tree Plantation Agreement with the State Government of Sabah to log 106,310 ha of the Reserve Forest of Gunung Bara/Kalabakan and develop it into a plantation. According to the Department, this agreement binds Benta Wawasan to observe a set of conditions pertaining to environmental protection and conservation. These conditions are claimed to be "functionally equivalent" with the EIA legal requirement.

Prior to the coming into force of the Sabah Conservation of Environment (Prescribed Activities) Order 1999, the Federal Government's Environment Quality Act 1974 and thsubsidiary law made pursuant to this called the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987 instructs that all proposed logging activities intended to be carried out on land larger than 500 ha to require an EIA to be performed and approved before the commencement of the activities. This law is not being followed.

In a response to SAM's query, the Sabah Environmental Conservation Department said that the Federal law did not apply to Sabah as the project involved matters such as 'land' and 'forests' which are within the jurisdiction of the States. Malaysia operates under a Federal-State system, where there is a division of areas between the Federal legislature and the States'. The Sabah Government is clearly using a strict legal argument to maintain that no EIA is needed to log such a huge area of forests until they enforced their own law in 1999!

Worsening things up, on September 26, The Star, a national Malaysian daily, reported that the "conditions" stipulated in the Forestry Department licence on environmental protection are also being disregarded by the company.

According to The Star, the company has violated the restrictions that prohibit logging activities from taking place right to a river's bank or on slopes of more than 25 degrees and clearing of a slope of more than 15 degrees steep. The company also does not seem to maintain the required 20m buffer zone between development activities and the boundaries of a river catchment.

SAM is appalled at how the logging can proceed without the submission and approval of an EIA Report by the Department of Environmental Conservation of Sabah, when the logging is clearly for the pulp mill project. The Sabah Government should not fragment the various activities involved in establishing the pulp mill, viz. logging for the tree plantations, establishing the tree plantations and construction of the pulp mill. We are very troubled by the fragmented approach taken by the Sabah State Government to justify the lack of an EIA for the logging activities.

The purpose of an EIA prior to the commencement of any project is to assess the environmental impacts and ascertain if the mitigation measures proposed by the project developers are sufficient to minimise environmental damage. The cumulative impacts of the project as a whole should be taken into account. If foreseen environmental impacts are severe and the mitigation measures inadequate, the EIA must be rejected and the project should not be allowed to commence. Innoprise's actions seem to imply that they are confident that their two other EIAs (for the plantation and the mill) will be approved. This is legally questionable and environmentally risky.

The Sabah Government in allowing the logging to go on is making a mockery of the law and is undermining the EIA process. By allowing the logging to proceed without an EIA, the Sabah Government is completely disregarding the environmental impacts of the logging activities and is 'manipulating' the law.

Logging before agreement is signed

The most perplexing question about the issue is that as late as September, the commercial department of the Chinese Embassy in Kuala Lumpur reportedly maintained that "the project is still under negotiation." Nothing is finalised yet.

It is a great puzzle to us as to how this one joint venture project was allowed to commence its operation even before its own internal agreements are finalised; risking the area to be wasted, should the project fail to take-off.

In addition to that, Innoprise's claim that it had begun logging the area since 1998 raises another important question. The Memorandum of Understanding for the project was only signed in 1997 and an early agreement between the various joint-venture partners was signed in August 1999. How could have Innoprise begun the logging operation when even the first agreement between their business partners had not taken place?


The proposed project is situated in Sabah's biggest remaining block of continuous forest, sandwiched between two major conservation sites, the Danum Valley and the Maliau Basin. Both are classified as Class One Protection Areas allowing only scientific research and restricted activities such as sustainable ecotourism to take place in the area.

The entire area, a world-renowned biodiversity hotspot, contains significant populations of rare animals and plants. Elephants, orang utans, Sumatran rhinoceros, sunbears, gibbons, clouded leopards and the Bornean Bay cat and wild cattle (tembadau or banteng), once thought to be extinct, are all present. The forest probably contains somewhere in the region of 120 mammals, 280 birds, and more than 2500 tree species.

The proposed plantation scheme would assault this pristine environment, turning the remaining forests as "islands", restricting the movement of wildlife. This could potentially decimate their population. Wild animals are reported to have been sighted more often, probably fleeing from the logged area.

Does it make sense to annihilate this forest, the very area that has the best chance of being managed sustainably, when other forest areas in Sabah have been ravaged by fire to the point where natural forest management is impossible?

The land of the proposed project is mostly steep, and felling for plantations will expose the soil to direct erosion by rainfall. Even a low rate of erosion, for example 25 tonnes per hectare per year, would result in more than 6 million tonnes of eroded material a year from the entire proposed plantation. A higher estimate of erosion at 100 tonnes per hectare per year would give 25 million tonnes of soil entering rivers every year.

What will the effects be on the price of water treatment for the villages downstream? Will excessive silt cause the catch of villagers who fish along the rivers to dwindle? Will there be greater flooding? Will the sediment deposited at the river estuaries eventually reach the coastal mangrove vegetation in Cowie Bay, depleting marine resources?

With only 12 000 ha logged, disastrous reports have already emerged. The lush Danum Valley has already been flooded in recent months.

Threats of fire, pests, wild animal and dry spells

In the 1980s, an Indonesian plantation of Leucena leucocephala was totally destroyed by insects. The Black Wattle trees that will be planted in Sabah are in the menu of 19 kinds of insects. The Black Wattle leaves also contain 43 percent protein, and have even been recommended as an excellent fodder for cattle. Asian elephants (Elephas maximus) are said to love the bark of this tree. Planting such a huge area of the tree slap in the middle of the biggest remaining habitat for Sabah's elephant population may be simply asking for trouble.
The plant is also said to be a thirsty crop that can absorb a lot of underground water, drawing down the water table and making the land drier.
Local microclimate will often dry and heat up once the rainforest is replaced with a plantation scheme. The drier mono-crop plantations will no longer be the cool, damp and heavily clouded woods.
Plantations burn easily. This is made more likely by the accumulation of dry, leathery leaf litter in such plantations.

The processes involved in pulp and paper industry are known to be highly damaging to the environment.

The use of chlorine in bleaching the pulp has caused the industry to be the third largest source of dioxin and its related compound in the world. This problem is further compounded by the fact that Malaysia still has no policy on dioxin and the laws to regulate its presence in the environment.

Furthermore about 300 chemical compounds have been identified in pulp and paper mill effluents. They are:

Organic pollutants and suspended solids.
Chlorophenolics and their transformation products
Acidic compounds
Other organochlorine products

Air emissions of pulp and paper mills are known to emit:

carbon dioxide (global warming)
hydrogen sulphide (rotten egg smell)
oxides of sulphur (acid rain), oxides of nitrogen
chloroform (possible carcinogen)
dioxins and furans
other volatile organics (toxic and precursors to ozone formation).

The area is proposed to be planted at about 20,000 hectares per year, with 32,000 hectares in the first year alone, according to Innoprise Corporation. Clearing at this rate is possible but re-planting is surely not. Even the biggest operator in Sabah is now re-planting up to 6,000 ha a year (less than a third of that proposed), after 15 years of experience.

The proposed plan would require 38 million seedlings to be planted in year one. In the coming years, 23 million seedlings would be planted annually.

The logging operation is certainly an irresponsible corporate decision when we consider the fact that the nursery to produce the seedlings for the plantation has not even been set up while 12 000 ha have been logged.

At the proposed rate, by the start of the project's fourth year, workers would embark on planting the routine load of 23 million seedlings, while taking care of the previous 85 million seedlings already planted over an area of 720 square kilometres, an area larger than Singapore. Can this really be done? It is obvious that the State is dangerously risking the creation of huge chunks of bare and uncovered land in what used to be a verdant rainwater-sponge.

As it is right now, swathes of bare earth are beginning to disfigure the once biodiversity hotspot and the rivers are already brown with silt.

We also must remember that if this estimated high replanting rate fails to be achieved, the mill would also face a shortage of pulp supply. Faced with this predicament, an expensive and huge mill would surely suffer huge losses. The mill then perhaps would have to import timber or pulp.

It is for these environmental concerns that SAM has called the State Government of Sabah and the Federal Government to:

halt all further logging activities
take action against the parties that are responsible for logging the 12 000 ha of forest without an EIA.
undertake a comprehensive EIA for all three aforementioned components of the project
seek extensive and genuine public feedback from the public in relation to the reviewing of the EIA.
review as a whole the project for its overall justification, given the magnitude and scale of its environmental impacts.

Support our call for action
SAM appeals to all concerned groups and individuals to send all letters of concern to:

YAB Datuk Seri Dr. Mahathir bin Mohamad
Prime Minister of Malaysia
Pejabat Perdana Menteri Malaysia
Blok Utama, Kompleks Jabatan Perdana Menteri
Pusat Pentadbiran Kerajaan Persekutuan
62502 Putrajaya

Fax : 603-8883444
Email :

YAB Datuk Seri Panglima Osu Haji Sukam
Chief Minister of Sabah
Tingkat 28 Bangunan Yayasan Sabah
Teluk Likas
88502 Kota Kinabalu

Fax : 6088-435350
Email :

Mr. Eric Juin
Department of Environmental Conservation
Tingkat 2 & 3
Jalan Tuanku Abdul Rahman
Beg Berkunci No. 2078
88999 Kota Kinabalu

Fax : 6088-238120
Email :

Mr. Daniel K.S. Khiong
Forestry Department of Sabah
Beg Berkunci 68
90009 Sandakan

Fax : 6089-669170
Email :

Kindly request the State Government of Sabah and the Federal Government of Malaysia to take the actions that we have demanded above. Please send copies of your letters of concern to us at:

Sahabat Alam Malaysia
27 Lorong Maktab
10250 Penang

Tel : 604-2276930
Fax: 604-2275705
Email: and

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