CERTIFICATION, FLEGT VPA & MALAYSIA. Sheam Satkuru-Granzella Director Malaysian Timber Council London

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1 CERTIFICATION, FLEGT VPA & MALAYSIA Sheam Satkuru-Granzella Director Malaysian Timber Council London

2 MALAYSIAN EXPORTS TIMBER & TIMBER PRODUCTS 2012 Source:MTIB & DOS M SIA

3 MALAYSIA S top 10 MARKETS 2012

4 Malaysia s Export Of Major Timber Products to EU 2012 Plywood % Others 49 3% Furniture % Mouldings % BJC % Sawntimber % Source: MTIB & DOS M sia Total Approx 1 billion

5 MALAYSIAN timber exports to major EU destinations 2012 (by Value RM mln) Jan - Dec 2009 Jan - Dec 2010 Jan - Dec 2011 Jan - Dec

6 FORESTRY IN MALAYSIA Land area: million hectares Tree cover: million hectares (73.7% of land area) Forested area: million hectares (56.0% of land area) Other tree crops: 6.06 million hectares (18.4% of land area) Permanent reserved forests (PRF): million hectares National parks, wildlife and bird sanctuaries: 1.83 million hectares (9.9% of forested area) Conversion forest: 2.38 million hectares (13% of forested area) Note: This forest is to be converted to other uses in the context of a balanced long term development.

7 CERTIFICATION IN MALAYSIA CERTIFICATION IN MALAYSIA CERTIFICATION IN MALAYSIA 4.65 million hectares of forest in Malaysia is certified under the Malaysian Timber Certification Scheme (MTCS). The MTCS has been endorsed by the Programme for the Endorsement of Forest Certification (PEFC) schemes SINCE May 2009 As of July 2013, 249 companies are PEFC CoC holders The MTCS is recognised as a credible timber certification programme in key markets, such as Japan, New Zealand, Germany, France, Australia, Italy, UK, Belgium, Denmark, Canada, USA, Singapore and Abu Dhabi, UAE for Updated Information.

8 MALAYSIAN TIMBER INDUSTRY Timber product export earnings (2012): US$6.5 billion Timber product exports contributed 2.9% of the country s total merchandise exports. Timber product exports contributed 2.3% of the country s GDP. Timber sector contributed 2.5% of the country s total employment (300,000 people)

9 PRIORITY Policy Challenges in the EU INCREASING DEMAND FOR SUSTAINABLY PRODUCED TIMBER & WOOD PRODUCTS, recognised as most environmentally friendly construction material EU Timber Regulation 3rd March 2013 Main issues for MY industry: 1. Specie description by trade name OR BOTANICAL name e.g. MLH what species constitute MLH for ply products? Bintangor sub-species? 2. Due Diligence what does this mean? WHO should practice Due Diligence? What level of Due Deiligence to be exercised? 3. Evidence of Legality of Source: HOW to prove Legality? PEFC/FSC COC= Low/Negligible Risk. If not, Verification of Legality Compliance e.g. SGS Legality Assurance etc Use Timber Legality Assurance System (TLAS) as test??

10 Sustainability & Legality of Malaysian Timber Logs harvested from 3 land categories: Permanent Reserved Forests (PRF) State Land (SL) Alienated Land (AL) PRF under SFM One third certified mainly under MTCS and logs legal & sustainable Logs from uncertified PRF legal SL & AL not under SFM but logs harvested legal Need for TLAS to assure legality of logs harvested from SL / AL and uncertified PRF

11 EU-MY FLEGT VPA Negotiations UPDATE Formal Negotiations commenced in 2006 Under the VPA, once signed, Malaysia is to implement a Timber Legality Assurance System to verify that timber products for shipment to EU are legally produced Only timber products verified as such and that are issued with a FLEGT licence can be exported to the EU once the VPA is signed and the TLAS is operational. Phased implementation; Peninsular Malaysia and Sabah during initial phase.

12 Malaysia-EU FLEGT VPA Legality definition of timber would not involve new or amendment of existing legislation VPA would be built upon current timber licensing system General understanding of Malaysia VPA Process 6 Principles and relevant criteria agreed with the EU prior formal negotiation Assistance for capacity building would be provided Stakeholder consultations on key issues such as development of the Timber Legality Assurance System (TLAS) 12

13 FLEGT VPA Process and Negotiation Structure MPIC (Lead Ministry) Malaysia-EU Senior Officials Meeting (negotiating team) Stakeholder Consultations National Steering Committee (chaired by MPIC) Technical Working Group WG I (legal text) WG II (TLAS) WG III (market access & capacity building) Joint Expert Meeting 13

14 TLAS Development Process The TLAS had undergone a joint technical evaluation by a team of 6 consultants from both EU and Malaysia; Subjected to Eleven Stakeholder Consultations; Discussion by five Joint Expert Meetings; Implementation of TLAS involves 8 agencies under 5 different Ministries for Peninsular Malaysia.

15 Implementation Structure of MYTLAS MYTLAS GOVERNANCE MONITORING - Third Party Compliance Audit - Internal Audits by Implementing Agencies IMPLEMENTATION - Implementing Agencies: SFD MTIB DOE DOSH DoL SOCSO RMC DoA - TLAS Advisory Group (TAG) COORDINATION - Implementing Agency Coordination Committee (IACC) MYTLAS Licence 15

16 CONCLUSION?? FLEGT VPA negotiations at final stretch hope to conclude by end 2013 BUT IN THE MEANTIME Malaysia is fully committed to the sustainable management of her forests, evidenced by certification and ongoing FLEGT VPA negotiations Malaysian industry fully supportive of either obtaining certification and supporting the implementation of the MYTLAS Peninsular Malaysia TLAS operational from 1 st February over 4000 MYTLAS licenses have been issued, well received in the EU as instrumental in meeting Due Diligence Requirements Either certification OR MYTLAS will ensure continuous flow of sustainable or legal timber products from Malaysia

17 Thank you