Forest Management Plan Summary

The Sabah Foundation(YAYASAN SABAH) is a statutory government entity formed by enactment  in the Sabah State legislative Assembly in 1996. It's general objectives are to provide educational opportunities, social welfare support, as well as equitable economic opportunities  for the peoples of Sabah. In order to fulfill these objectives, the Foundation was allocated a large forest concession area in Sabah, comprising 8 FMU which covers the total area of close to 800,000 hectares. This entire concession area is licensed for 100 years to the foundation under Sustainable Forest Management Licensed Agreement 09/97(SFMLA). By an agreement in 1971, the Sabah Foundation. assigned the rights to manage and conduct all commercial forestry operations related to this concession to Rakyat Berjaya Sdn. Bhd, a wholly-owned subsidiary of the Sabah Foundation. As such, Rakyat Berjaya serves as the commercial arm of the Foundation.

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In accordance with clause 44 of the SFMLA, forest management plans have to be prepared for the forest management units within Foundation's concession area. In October 2014, the Forestry Department approved an area of not more than 10,000 ha within FMU #24 to be developed into forest plantations mainly in the form of mosaic planting. The gross area allocated for this project is a about 14,158 ha, currently under the management of Rakyat Berjaya Sdn. Bhd. The proposed project area forms part of the Gunung Rara Forest Reserve within the Sabah Foundation concession area, which is designated by law as a Commercial Forest Reserve (Class II), meaning that it is intended primarily for timber production. The project area was previously allocated for logging under Coupes YT3/04 and YT3/05. A field assessment of the project area found existing timber stands to be extremely poor, both in terms of merchantable timber stocking and commercial regeneration. Since prospects for harvesting under a natural forest management regime is poor, Rakyat Berjaya decided that an emphasis on short-rotation forest plantations following a mosaic planting approach would be the best development option for the area.

               This forest management plan (FMP) is submitted by Rakyat Berjaya in reference to the project area. The plan outlines the development and implementation plan for the 14,158 ha project area over a period of 10 years (i.e. covering the period January 2015-December 2024) for the purpose of sustainable timber production from forest plantations. Rakyat Berjaya views this project as a long-term commercial venture that will yield financial benefits to the company. Usahawan Borneo Greenwood Sdn. Bhd., a Tawau-based company with a long-term interest in the timber industry, has been appointed by Rakyat Berjaya as the contractor to undertake the task of developing the project area.

               Forest plantation establishment within the project area is constrained by slope restrictions given in the table below. In addition, plantations are not allowed to be established within riparian buffers(30 m on either side of perennial streams) and protected area buffer zones (50 m from the boundary of legally gazetted protected areas). Such prescriptions lead to a planting design that combines forest plantations and natural such that they form a mosaic of planted forests integrated with natural forests, instead of a pure monoculture.

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• ≤15° -No diameter limit for salvage logging. Clear-felling and complete plating is allowed.

• 15° -25° - Enrichment planting following a 50:50 ratio of planted forest to natural forest. Planting is limited to native species. Salvage logging limited to trees 30-120 cm DBH

• ≥15° - Establishment of forest plantations prohibited

               The species to be planted are mainly batai,laran,binuang and talisai. All species were selected based on their known commercial value, relatively fast growth, and ease of procuring planting material. All chosen species have an approximate rotation age of between 10 and 15 years, and merchantable yields ranging from 220 to 280 m3ha-1 upon clear-felling.

               Tree planting will be carried out in 47 compartments ranging in size from 169 to 569 ha. After taking into accounts roads, swamps, rivers, riparian buffers, steep areas, etc., the estimated net production area is about 9,523 ha (of 14, 1558 ha). The entire project area is intended to be completely planted within 11 years.

               Analyses of the project’s financial viability was calculated only up to year 11 of project operation. The total project cost up to year 11 is estimated to be about RM 53,028,000. Revenues during this period are derived from salvage logging and the harvesting of planted forests beginning in Year 9. The total projected revenue up to year 11, i.e., after three harvests of planted forests, is about RM 93,649,500. At a discount rate of 15%, the net present value (NPV) of investments at year 11 is positive (RM 5,292,404). The internal rate of return is about 14.5%, thus suggesting that this venture is financially viable. Subsequent harvests result in higher NPVs.