ENVIRONMENT-MALAYSIA: Soft Loans for Reforestation or Deforestation?

ENVIRONMENT-MALAYSIA: Soft Loans for Reforestation or Deforestation? - The Sun
By Anil Netto

PENANG, Sep 6 (IPS) - With a dozen timber firms set to receive new government soft loans to finance ‘reforestation’ projects, critics are saying that the money will translate into logging subsidies for the timber lobby.

Six of these firms are from timber-rich Sarawak state in North Borneo. Five other firms have already signed up for loans making a total of over a dozen firms so far under a forest replanting programme that aims to create plantations of latex timber clone (LTC) rubber trees and acacia.

The federal government has set an initial target of dispensing 200 million ringgit (57 million dollars) in loans to firms. These loans will support up to 12,000 ha of tree plantations for 2006 and a further 24,000 ha for 2007 and 2008.

Over a billion ringgit (300 million dollars) has been allocated for financing tree plantation projects until 2011.

Plantation Industries and Commodities Minister Peter Chin said that Sarawak alone plans to increase its forest plantations to one million hectares by 2020. The plantations would produce the raw material for timber processing mills in the state.

As part of this endeavour, private firms would plant 70,000 ha annually while the public sector would grow 2,400 ha.

The minister said that plantation forests would reduce dependency on natural forests. "To the successful borrowers, it is my hope that all planting operations and activities be carried out in accordance with sound forestry practices and principles", as well as existing rules and laws, said Chin at a loan-signing agreement in July.

Under the replanting programme, soft loans of 3,200 ringgit (920 dollars) per ha are reportedly being provided to plant acacia mangium and 5,400 ringgit (1,550 dollars) per ha to replant rubber trees. Once the trees reach maturity, the firms will repay the soft loans at an interest rate of 3.5 percent.

In contrast, a senior bank manager in Kuala Lumpur told IPS that a commercial loan to a typical established, financially sound timber firm would bear an interest rate of 8.25-8.75 percent.

The savings in interest charges as a result of soft loans could thus work out to millions of ringgit. "As the commercial banks are a bit stringent in providing such funding or soft loans to companies to undertake their forest plantation projects, the initiatives by my ministry and the Ministry of Finance should be lauded and (are) indeed timely," said Chin.

But critics wonder why profitable firms should be given soft loans for reforestation. "A soft loan is a subsidy. You want to give a loan, give it at the market rate. Why a soft loan?" asked political scientist Andrew Aeria, pointing out that the government was subsidising some of the very companies that destroy the forests.

"These companies already make huge amounts of money, much of it invested overseas; so why is the federal government giving them more subsidies?" he asked. "Is it because the plantation minister is from a Sarawak-based party and most of the big timber firms are linked to the same political party? Is this a case of cronyism?"

Some of these firms have come from nowhere to become lucrative concerns, raking in hundreds of millions or even billions of ringgit from logging, say analysts.

Timber firms, said an academic familiar with Sarawak, should have been responsible for enrichment planting and rehabilitation planting in their logging concession areas in the first place. "If they had done so, and had carried out logging responsibly, there would be no need for this so-called ‘re-forestation’."

"This is testimony to the lies told all these years that the logging was selective and sustainable," he added.

Even the designated catchment area for the proposed Bakun Dam project in Sarawak has not been spared from logging and forest clearing, resulting in doubts over the economic viability of the dam itself.

In contrast, sustainable logging practices, while causing some damage, would leave forests able to recover in a single 20-25 year cycle -- though it would take a lot longer to restore the massive trees of the original rain forests.

Even badly degraded natural forest stands a chance of recovering, given enough time. "But of course it's not going to earn anyone big bucks in that time," said the academic who did not want to be identified. Awarding soft loans to timber firms actually amounts to funding deforestation and not reforestation, he added.

He pointed out that "forest plantations" are actually carried out on primary forest land that had been badly degraded by logging operations and usually "involve planting low-value exotic species such as acacia mangium – a highly invasive species regarded as a threat to natural forests and the natural environment".

The Sarawak Forestry Department head could not be reached for comment. The director of the Forestry Department in neighbouring Sabah declined to comment about replanting with acacia, referring IPS instead to the "wealth of information" in the department’s annual reports on its website.

Whatever the condition of the existing forest, planting fast-growing acacia would mean clear felling and removal of stumps, creating a denuded landscape for replanting.

"It’s a plantation like any other plantation," said the academic. "It’s also a mono-crop; nothing will grow in the shadow of acacia, and even if you try to recover the original, it’s very, very difficult as acacia is hardy, its seeds surviving for up to eight years, surviving even through fires, and it sprouts at the slightest chance."

Acacia thus cannot support the rainforest's faunal diversity, which is capable of surviving even in logged-over forest although the species composition may change once the bigger trees are gone.

When contacted, a Sarawak Timber Association official was unable to provide immediate comment, saying that the issue was "sensitive" and that any query would have to be formally sent in writing. He added that they were wary as the media had quoted them out of context before.

A senior Plantation Ministry official Ahmad Loman told IPS that reforestation with acacia would only be carried out in forest land that has been almost cleared. "We plant only on the degraded parts, which are almost empty. Acacia could produce good timber within 15 years," he asserted. According to him, these plantations would have to comply with guidelines in environmental impact assessment reports

As for logged-over (but still viable) forests, he said that planting of trees such as Chengai and Meranti is carried out by the Ministry of Natural Resources and the Environment. Such enrichment planting and silviculture programmes are aimed at increasing tree density and regenerating the forests.

But that is not always the case, challenges the academic. "Why is it then that in Sarawak acacia is being grown on relatively good logged over forest, hardly the (virtually) cleared forests that he’s (Loman’s) talking about? And if it is the case that such planting is also getting the subsidy then, indeed it amounts to financing deforestation!"

He pointed to a recent statement by the Sahabat Alam Malaysia (Friends of the Earth, Malaysia), which revealed that even parts of the Bakun Dam catchment area were being converted to tree plantations. "These are areas that only began to be logged less than 20 years ago," he said.

The fact of the matter is that the government is pushing the cause of tree plantations, much of it with acacia. In the case of the "re-forestation" with acacia mangium for the proposed Bintulu pulp and paper mill in Sarawak, the academic pointed out that ''while a fair bit of this is on badly degraded forest, some of it is on good logged-over forest which, if left alone, would definitely recover."