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Wednesday, December 11, 2013

STIDC

Anniversary

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Spearheading the Timber Industry

Wednesday, December 11, 2013

INTRODUCTION

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Spearheading the Timber Industry

ARAWAK TIMBER INDUSTRY DEVELOPMENT CORPORATION (STIDC) also known as PUSAKA was established in June 1973 under the Perbadanan Perusahaan Kemajuan Kayu Sarawak Ordinance 1973. Its incorporation was initiated following the recommendation of the Food and Agriculture Organization (FAO) of the United Nations, which conducted a comprehensive forest inventory in the state from 1968 to 1972 following an invitation from the Chief Minister Pehin Sri Abdul Taib Mahmud who was Minister of Development and Forestry back in 1966. Its function would be to stimulate the planned expansion of wood-based industries throughout Sarawak at a rate consistent with the overall interest of the economy, the availability of capital and the technical expertise and effective management of the forest resources. STIDC’s main vision was to spearhead the advancement of the state’s timber industry with its mission statement: “We strive to regulate and facilitate the advancement of an innovative timber industry.” The corporation is also responsible for the development of the downstream timber industry. Among its objectives are to formulate new policies; plan and strategise towards more active promotion and development of the timber industry; the marketing of high quality timberbased products suitable for both overseas and domestic markets and to develop economical and beneficial harvesting and utilization of the forest resources of Sarawak. The corporation is tasked to create new concepts and strategies in the timber industry to ensure that benefits from harvesting the state’s forest resources will be fairly and equitably shared among the people of the state and the nation. This is in addition to enabling the State Govern-

STIDC 40th Anniversary

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Chief Minister Pehin Sri Abdul Taib Mahmud (second left) officiated at the launching of the Wisma Sumber Alam building on Sept 7, 1988. ment to have an instrument for the formulation, co-ordination and implementation of overall timber industry development strategies and to act as a catalyst with private sector interest through the encouragement of new industry. The main functions of STIDC is to control and co-ordinate the manufacturing standards and trade practises of timber industries and make recommendations to the government as to the methods, measures and policies to be adopted to facilitate the improvement of existing timber industry. The corporation encourages effective utilisa-

tion of timber with emphasis on product diversification and quality control; Promote, stimulate and facilitate the development of the timber industry in Sarawak, and in connection with the discharge of its function to assist any person engaged in the production and marketing of timber. STIDC also provides technical advisory services to assist in the development of the existing timber industry and in the establishment of new industries and provide training in various aspects of logging operations, activities connected with the timber processing, sawmilling, sales and marketing of timber.

Wisma Sumber Alam: Located on a three ha site near Stadium Negeri at Petra Jaya, Kuching, Wisma Sumber Alam serves as STIDC headquarters. The complex also provides space for other government agencies such as the Ministry of Planning and Resource Management, Ministry of Public Utilities and the state Forestry Department. Completed on December 1986 at a cost of RM38.4 million, the 22-storey Wisma Sumber Alam was launched by Chief Minister Pehin Sri Abdul Taib Mahmud on Sept 7, 1988. Today, STIDC boasts about 450 personnel statewide. The complex houses a Timber Museum showcasing the unique composition of the state’s forest resources, history and evolution of timber-based industries in the state; a library with a collection of more than 4,000 forestry related publications; a 200 capacity multipurpose hall; a fully equipped 300 seating capacity seminar hall; conference room, training room, prayer room, day care centre, cafeteria and spacious car park adjoining the State Indoor Stadium. Prior to the building of the complex, STIDC was based at the Sarawak Foundation building.

STIDC Corporate Logo: This logo was officially launched on May 7, 1993 during the Corporation’s 20th Anniversary. This logo was designed to reflect the aspirations, functions and objectives of Pusaka as well as its corporate vision. Its circular shape signifies Pusaka as the leader and catalyst for the timber industry. The green letter “P” depicts the abbreviated name of the Corporation in Bahasa Melayu Pusaka that bears the meaning of the forest as a heritage and invaluable resource of the people of Sarawak. The brown colour symbolises wood as a raw material for the timber industry. The letter “S” is an abbreviation of the name of the Corporation - STIDC in English. The golden colour depicts the leadership role played by Pusaka in the development of the timber industry. The combination of colours reflects the efforts of Pusaka in stimulating the growth of the timber industry towards a more dynamic and progressive era as far as the downstream processing sector is concerned.

Spearheading the Timber Industry

Wednesday, December 11, 2013

STIDC 40th Anniversary

EARTH-BREAKING:(from left) Taib, Bujang Nor and the late Datuk Amar Laila Taib listening to Len Talif explaining on the downstream facilities and integrated port at the Tanjung Manis Industrial Zone after its earth breaking ceremony.

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GREAT PROSPECTS: (from left) Assar Senari Group chairman Tan Sri Bujang Mohd Nor, Taib and Deputy Chief Minister Datuk Patinggi Tan Sri Alfred Jabu Numpang listening to Assistant Minister of Environment Datu Len Talif Salleh (fifth left) on the Tanjung Manis Industrial Zone.

Celebrating 40 years of growth By Peter Sibon and Lian Cheng

Initially, we hoped that we can explore various areas of the wood-based industry for a more consolidated development. Over the years, we have achieved that and now, we are now venturing even further.

ollowing the recommendation of FAO which conducted a comprehensive forest inventory in Sarawak 1968 to 1972, Sarawak Timber Industry Development Ordinance 1973 was passed.

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With the provision of the Ordinance, Sarawak Timber Industry Development Corporation (STIDC) was established as the custodian of the Ordinance. Throughout the 1980s when Pehin Sri Abdul Taib Mahmud first became Chief Minister, he developed STIDC into a catalyst for the wood-based industry, responsible for the development of downstream timber industry in Sarawak. Since then, the timber industry became the State’s major revenue earner. Tasked to stimulate the expansion of wood-based industry for the state, the Corporation has aimed to make sustainable advancement in the industry at a rate consistent with the overall interest of the economy, the availability of capital and the technical expertise as well as effective management of forest resources. After four decades of its establishment, Taib said it has been a great joy to see how STIDC has grown, from a simple office into a well-managed giant which not only looks into wood based related industry and initiatives, but has expanded its scope into other areas which was not foreseen when it was first established. From just developing the woodbased industry, STIDC has contributed to the development of a sea port and later a township.

— Pehin Sri Abdul Taib Mahmud

INDUSTRY DIVERSIFICATION: Taib (second left) admiring locally-made wooden furniture during the Sarawak Grand Timber Expo and Conference 2013 together with the Small and Medium Enterprises (SMEs) expo at the Borneo Convention Centre Kuching (BCCK) in June this year. Also seen are (from left) Second Resource Planning and Environment Minister Datuk Amar Awang Tengah Ali Hassan who is also STIDC chairman, general manager Datu Sarudu Hoklai, Jabu and expo participating company Brown’s director Leo Chiang (right). “Initially, we hoped that we can explore various areas of the wood-based industry for a more consolidated development. Over the years, we have achieved that and now, we are now venturing even further. “From a wood-based industry driver, STIDC has successfully diversified into other ventures, such as developing a sea port, then running it. “Apart from managing ports, STIDC is also the catalyst in town development as shown by the

successful case of Tanjung Manis. Now Tanjung Manis is a modern town with diverse economic activities such as shipping and seafood processing using latest bio-tech methods especially at Tanjung Manis Halal Hub. “Along the way, STIDC has been entrusted with the task of managing the shipbuilding industry near Paloh. This is how diverse it is. Actually, with steady revenue from Tanjung Manis, STIDC can even build an airport in the town, that is how far STIDC has grown over the

years,” said Taib. Due to the fact that planted forests can produce five times more than natural forest and thus the potential to develop the pulp and paper industry in Sarawak, Taib said the state aimed to have 20 per cent of forested areas to be replanted to support the pulp and paper industry in the near future. “To increase the yield of the forests and sustain the wood-based industry, room has to be made to expand planted forest. The state government hopes to create one

million hectares of planted forest by 2020 through fast growing species. “Presently, we have more than 200,000 hectares of planted forests and these forests will provide the raw material for our pulp and paper industry which will be supported by cheap electricity provided by our dams. “When all is in place, we can afford to produce pulp and paper by mechanical means instead of by chemical-processing methods,” said Taib. His ultimate aim has been to transform the wood-based industry into a modern sector that produces value-added products. On the whole, his greatest worry has been the availability of skilled labour and adequate technical workers for various sectors when Sarawak marches into an industrial stage of economic development. “That is why the government has been paying so much emphasis on the escalation of technical education training,” said Taib.

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Spearheading the Timber Industry

Wednesday, December 11, 2013

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Future prospects and the year 2013 in review By Adrian Lim

Out of the total timber product export value, 93 per cent consists of three main products, namely plywood and veneer (RM3.25 billion), logs (RM1.25 billion) and sawn timber (RM486 million).

arawak’s timber products export is expected to garner a value of RM7 billion by the end of this year.

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This was revealed by STIDC chairman Datuk Amar Awang Tengah Ali Hassan recently. He observed that the State’s timber product export value had hit RM5.39 billion in the first three quarters of the year to September 2013. “Out of the total timber product export value, 93 per cent consists of three main products, namely plywood and veneer (RM3.25 billion), logs (RM1.25 billion) and sawn timber (RM486 million),” said Awang Tengah. “Seven per cent of the export value consists of various products such as wood chips (RM40.938 million), moulding (RM13.851 million), dowel (RM2.268 million), medium density fibreboard (RM194.771 million), laminated board (RM25.805 million), particle board (RM45.518 million) and others,” he said. He observed that the total of RM5.39 billion in the first threequarters of the year is a decrease of 2.8 per cent compared with RM5.54 billion for the same period last year. Awang Tengah noted that the downward trend was caused by the global economic slowdown that has yet to fully recover. “For the same time period, log export value decreased by 7.9 per cent from RM1.36 billion last year. “Sawn timber also saw a decline of 17 per cent from RM586 million last year. “However, the export value for plywood and wood chips has recorded an increase of 4 per cent and 31 per cent respectively in comparison to last year’s. Awang Tengah also revealed the log production volume in the state compared to Peninsular Malaysia for last year. “In 2012, the log production volume in Peninsular Malaysia was 4.467 million cubic metres, sawn timber production was (2.79 cubic metres), plywood (415,466 cubic metre), and veneer (61,774 cubic metre),” he said, adding that the total export value for the three products was RM1.626 billion.

— Datuk Amar Awang Tengah Ali Hassan, STIDC chairman

Datuk Amar Awang Tengah Ali Hassan Sarawak in 2012 processed 8.041 million cubic metres of log. The plywood production volume was 2.74 million cubic metres, sawn timber (1.026 million cubic metre) and veneer (640,442 cubic metre). “All these produced an export value of RM5.051 billion,” he said. With the prices of logs steadily trending upward, some timber analysts believe that the prospects for the timber sector is expected to improve in the coming months following a slowdown in the first

quarter of this year. Earlier on, Awang Tengah said at the national level, Sarawak timber sector accounted for 36 per cent of Malaysia’s total timber export earnings of RM20 billion in 2012. He added that the demand for Sarawak’s timber has been well accepted internationally, noting that it has successfully gained access to many emerging markets in the Middle East, Asia and Africa amidst stiff competition in the global market. He believes that Sarawak is capable of fulfilling demand from its traditional markets such as Japan, India, Taiwan, Middle East and South Korea. Awang Tengah who is also the Minister of Resource Planning and Environment said the ministry continues to take various steps to secure more demand for

Sarawak’s timber products in the global market. Among the efforts include timber sales promotion overseas, participation in local and foreign trade exhibition as well as meetings with industry associations in the importing countries. Moreover, he pointed out that STIDC is also taking steps to conduct research on small and medium industries in order to strengthen their positions in the timber industry. Furthermore, Awang Tengah said the government is also implementing the policy of ‘nothing should go to waste’, which means every piece of wood including dust, are processed into usable products such as medium density fibreboard, particle board, wood pellets and many more. Meanwhile, during the Grand Timber Expo and Conference

BOUND FOR EXPORT: A worker transferring logs to be exported to other countries.

2013 and Small and Medium Enterprises’ (SMEs) Expo 2013 held in Kuching earlier, Awang Tengah said the state government had formulated the SME Masterplan 2012 - 2020 to accelerate the growth of SMEs, which have been recognised as the backbone of the economy. He pointed out that SMEs comprised of 97 per cent of the total business establishments throughout the country and they are an important generator of employment and economic growth of the country. He said the state government would like to witness more contribution from SMEs to economic growth, income and overall prosperity of the country by 2020. Awang Tengah added that SMEs should no longer be an enabler of growth but also a key driver of growth to the economy. Therefore, he said the government has announced measures to enhance access to financing, encourage innovation and promote entrepreneurship especially among Bumiputeras, and micro enterprises to further support the growth of SMEs over the short to long term period.

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TOWARDS TRANSFORMATION: STIDC is gearing towards transforming Sarawak’s economic development in the timber industry from the manufacturing and exports of sawn timber and plywood to the production of parts, components and finished products.

Creating more value for timber products export By Adrian Lim

arawak Timber Industry Development Corporation (STIDC) through its various agencies has embarked on new initiatives to bring more value through timber products export.

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With the value of Malaysia’s timber export expected to hit RM53 billion by 2020, there is vast potential for players in the timber industry to explore in the global market. Therefore, STIDC is gearing towards transforming Sarawak’s economic development in the timber industry from the manufacturing and exports of sawn timber and plywood to the production of parts, components and finished products. Some of these finished products include furniture, kitchen cabinets, wardrobes, flooring, doors, wall panels among others to appeal to the global export market. This comes as a result of STIDC’s extensive research and development to diversify the usage of finished products and provide more innovative and improved features to customers. For instance, the palm wood, a by-product of the palm oil industry is an eco-friendly resource material which is safe for consumers due to its low formaldehyde level and its high resistance against termites compared to other timber produce. Additionally, research and

development on Acacia wood has made it a versatile resource. Besides being sustainable, the Acacia can be a sustainable source of raw materials. Moving on, there are various challenges and opportunities for STIDC to reinvent itself in order to achieve sustainable growth in the timber industry. STIDC general manager Datu Sarudu Hoklai shares the challenges affecting the timber industry and how the agency stays relevant to move ahead. “The challenge for us now is to maintain our exports to existing mature markets at current levels, while exploring and penetrating

new markets,” he said, explaining that to achieve this, STIDC had been cooperating with the industry to drive timber product promotion through a variety of avenues, including participating in trade fairs or exhibitions both locally and abroad. “Looking at the big picture, the growth of the downstream timber processing industry is closely linked to the State’s ability to execute a structured development plan.” The sector has progressed tremendously since STIDC was established 40 years ago following the government’s investment in infrastructure and industrial

estates as well as the implementation of conducive policies such as log quota for local processing plants. “To secure future sustainable growth, the State government has implemented the Planted Forest Plan, which is designed to make sure that there are enough raw materials for new growth areas. “Modern forestry technology will be crucial for us to achieve the target of 1 million hectares of planted forest besides aiding the processing of logs harvested from the planted forests. “As our planted forest industry is still relatively young, modern technology and practices are critical for us to achieve high-quality seed production, nursery management, plantation development, log harvesting and processing capabilities,” he said. Moreover, to ensure that there is the right amount of land for the development of the timber industry, Sarudu said a clear land use policy had been drafted by the State government for the purpose of timber extraction. He added that in the case of forestry sector, adequate land had been reserved for permanent forest estates to ensure continuous supply of log production from natural forest. “To manage and eliminate overreliance on natural forests for the supply for logs, the government has also allocated land for forest plantations which is being implemented and monitored.

Datu Sarudu Hoklai “The target is to develop a total area of 1 million hectares for planted forest,” he revealed. He observed that other agriindustries can also be a potential source of raw material for the timber industry. Sarudu said trees from rubber plantations can be used to produce many timber products like Medium Density Fibreboard (MDF), particle board, dowels, mouldings and furniture. He added the timber industry can also utilise biomass from the agri-industries, especially from the oil palm industry, to develop new products such as bio-composites panels and biomass fuel. He believes that the growth of the timber industry lies in its ability to capitalise on the development of the planted forests. He observed that the industry needs to be more innovative in processing planted species to produce competitive products. He noted that the current focus of development is to make Sarawak a competitive producer of pulp and paper products. He added that there was also significant potential to attract more investment in the furniture industry for export-oriented capacities.

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Spearheading the Timber Industry

Wednesday, December 11, 2013

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Preparing STIDC for the next stage of growth By Adrian Lim

n early October, STIDC signed a reorganisation and rationalisation (R&R) agreement with Pusaka Capital Sdn Bhd (Pusaka Capital), a special purpose vehicle incorporated by STIDC to lead the initiative of developing projects worth RM3.8 billion.

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The corporate exercise will enable Pusaka Capital and its subsidiaries to pursue its commercial functions to generate more sources of income while STIDC will focus on its regulatory roles for the timber industry. STIDC general manager Datu Sarudu Hoklai said: “The R&R exercise has resulted in a business model that will be more efficient for managing the capital, cashflow, businesses and growth to ensure a focused and sustainable future for the STIDC group. “The proposed R&R exercise

The R&R exercise has resulted in a business model that will be more efficient for managing the capital, cashflow, businesses and growth to ensure a focused and sustainable future for the STIDC group. — Datu Sarudu Hoklai, STIDC general manager

will serve the group to enable each core function to expand to greater heights and this will add value for both the group and its shareholders,” he said. Meanwhile, the proposed R&R exercise involved the transfer of

STRATEGIC PARTNERSHIP: Sarudu (second left) exchanging documents with Pusaka Capital director Hashim Bojet witnessed by (from left), STIDC board member Datuk Dr Yusuf Hadi, Assistant Minister of Industrial Development (Investment and Promotion) Datuk Julaihi Narawi (third left), STIDC chairman Datuk Amar Awang Tengah Ali Hassan (third right) and Permanent Secretary to the Ministry of Resource Planning and Environment Datu Sudarsono Osman (right). real properties in land of approximately 1,280 hectares in Tanjung Manis by STIDC and several of its

key operating companies, such as Tanjung Manis Integrated Port Sdn Bhd, Tanjung Manis Development

Sdn Bhd and others to Pusaka Capital which will be satisfied through the issuance of new Pusaka Capital ordinary shares with warrants. Within Pusaka Capital, four wholly-owned subsidiaries have been set up to serve the four targeted business segments, namely Pusaka Palm Oil Industry Sdn Bhd, Pusaka Logistics & Services Sdn Bhd, Pusaka Realty & Construction Sdn Bhd, and PusakaTimber Industries Sdn Bhd. The identified projects for Pusaka Capital will range from the development of Palm Oil Industry Cluster (POIC) and related ports and logistic infrastructure investment such as the Independent Operating Terminals as well as the establishment of new Administrative Centres and Townships for Tanjung Manis and various timber-related initiatives within the state.

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The state’s future direction towards a sustainable timber industry By Geryl Ogilvy Ruekeith and Yvonne Tuah

T CREATING ALTERNATIVES: The state is looking to establish about one million hectares (ha) of planted forest by 2020.

STEADY GROWTH: Acacia mangium nursery

fast growing: A fully grown Acacia tree can be harvested after seven years.

HE state aims to establish about one million hectares (ha) of planted forest by 2020 and greatly reduce its dependency on natural forest. In seven years’ time, the government aims to cut its dependency on natural forest resource by about 80 per cent. Logging is limited to extracting only high quality species in selected areas. The mainstay of the supply for the timber industry would come from planted forest. Assistant Minister of Environment Datu Len Talif Salleh said the forest growth in Sarawak is currently at 25 cubic metre per hectare per year (m3/ha/yr). The state is extracting about 10 to 12 m3/ha/yr from its natural forest. The one million ha of planted forest is a target which will be translated into production based on a rough estimation of mills annual increment of 25 m3/ha/yr. “Assuming we plant one million ha. Using a cycle of 10 years, this means that we will harvest about 100,000 ha per year. In terms of productivity, based on 25 m3/ha/yr, that will become 25 million m3/ha/yr in production from the planted forests in years to come. This will result in perpetuity. “Against the production of our natural forest, cutting about 100,000 ha annually is not good in the long run. Over the years, we will reduce our dependency on natural forest to be taken over b y

planted forest. This will ensure that we do not need to cut more area to produce double the volume to enable the industry to sustain over the years.“ He explained that this would give the state leeway in terms of how to plan its downstream processing in years to come. Len Talif is also a member of Sarawak Timber Industry Development Corporation (STIDC) board of directors.

sustainable supply of raw materials for the wood-based industries and to mitigate pressure on natural forests. Most of the planted trees are from the Acacia mangium species because the acacia genus is the only tree that can grow well in the local environment. The species was deemed quite hardy (adaptability) which enables it to grow in almost any terrain in the state except for waterlogged areas.

Assuming we plant one million ha. Using a cycle of 10 years, this means that we will harvest about 100,000 ha per year. In terms of productivity, based on 25 m3/ha/yr, that will become 25 million m3/ha/yr in production from the planted forests in years to come. This will result in perpetuity. Datu Len Talif Salleh, Assistant Minister of Environment The in-store capacity for plywood, sawn timber and other products is about seven to eight million m3 per year, giving the state vast opportunities in the downstream processing industries especially furniture. Most of this would also go to pulp and paper once the state embarks on the sector. The planted forest project emphasises on growing tree species such as Acacia mangium to ensure a

Datu Len Talif Salleh

PROMISING: The state Forestry Department revealed that as of December 2012, a total of 221,089 hectares (ha) or 72 per cent of the total planted forest areas here had been planted with acacia.

“Another key factor was due to the strong market acceptance of Acacia mangium especially in the global market. Apart from its usage for plywood and sawn timber, Acacia is widely used in furniture-making industry including pulp and paper. It has been highly recognised as a good utility species,” he continued. Being a species of flowering tree in the pea or bean family (Leguminosae), it is also a nitrogen fixing plant which can enrich the soil (to become futile) over the years, said Len Talif adding that this was still subject to more research. He also mentioned that Sarawak has the best research and development (R&D) for Acacia mangium in the country. The Acacia species has already begun to replace rubber wood as the sturdier and better alternative. Acacia furniture industry is currently a billion dollar market on the global stage.

WELL MANAGED: Logging is limited to extracting only high quality species in selected areas. The mainstay of the supply for the timber industry would come from planted forest.

SUSTAINABLE: The planted forest project emphasises on growing tree species such as Acacia mangium to ensure a sustainable supply of raw materials. Acacia wood STIDC spearheads and facilitates the utilisation of Acacia wood through R&D projects with the timber industry players. Acacia mangium is among the most commonly fast growing tree species found in the planted forest in the state. The state Forestry Department revealed that as of December 2012, a total of 221,089 hectares (ha) or 72 per cent of the total planted forest areas here had been planted with acacia. This was to ensure a sustainable supply of raw materials for downstream processing industries while at the same time mitigate the over dependency of the wood-based industry for raw materials from natural forests. Acacia woods are processed to produce sawn-timber for flooring, wall panels, doors, window frames and furniture (both outdoor and indoor). To ensure that nothing goes to waste, Acacia wood residues are used to produce charcoal briquette. “The prospect of Acacia wood is better compared to other timber species due to

NEW OPTION: Although Acacia is a new alternative, the wood-based industry will eventually rely on this timber species due to its viability and sustainability

its continuous supply of raw materials and strong demand. The state government is promoting intensive emphasis on Acacia. Hence, R&D on Acacia wood is crucial in supporting the down-stream industries as well as to add value and diversify the finished products. “This will help to expand the industry besides accelerating the economy and its spin-off benefits. Although Acacia is a new alternative, the wood-based industry will eventually rely on this timber species due to its viability and sustainability,” STIDC quarterly newsletter Perkasa said in its April-June 2013 report. Fast growing species - key to a sustainable forest resource The state has a land use of one million ha for totally protected areas (TPA) and six million ha for permanent forest and forest reserves. This translates to seven million ha under forest perpetuity. Out of the six million ha allocated for permanent forest and forest reserve, about one million will be converted into planted forest (plantations for the fast growing species). The available five million ha will not be logged entirely. He estimated that some 2.5 million ha will be logged which translated to about one to two million m3 in the upcoming years. “With our planted forest initiative, the future mainstay from the timber industry will come from its planted forest.” To date, the state has planted about 325,000 ha of planted forest, which he noted was behind schedule. Due to heavy investments in processing plants, the government is fully committed to invest in forest plantation. The state is looking into certification of timber from its planted forest. Challenges of the timber industry Land issue posed a challenge in expediting the forest plantation initiative. Landowners, especially those of the native customary rights (NCR) land, needed to be engaged considering that most NCR land was either involved in palm oil or not fully utilised.

FURNITURE: Acacia woods are processed to produce sawn-timber for flooring, wall panels, doors, window frames and furniture (both outdoor and indoor). “The state has about 1.6 million ha of NCR land. From this, how much is under real production? Those participating in estate development schemes or palm oil ventures are less than 300,000 ha. The state needs to utilise these lands to generate returns to landowners,” Len Talif estimated. He mentioned that most of the areas to be converted into forest plantations are inundated log over areas which will be re-planted with fast growing species. The state is adamant about keeping its forest as a natural heritage. In response to NGO claims on the state’s destruction of its natural forest, Len Talif pointed out that sustainable forest management will be in place in both its planted and natural forest. “Forest plantation will not destroy biodiversity because the state already dedicated certain areas. The question of destroying biodiversity does not arise considering the state already allocated certain areas for biodiversity conservation, which is the TPA that will act as wildlife habitat,” he clarified. The anti-tropical timber movement and campaigns led by certain NGOs and environmental groups has impacted the state. However, the government is very positive over the industry as everything was done based on the recommendations on sustainable timber production and timber

harvesting. The state is also guided by recommendations of the International Tropical Timber Organisation (ITTO). He added the government had always adopted a transparent policy on timber production and had even invited the NGOs to come and see the actual situation on the ground. Future outlook In the upstream industry, Len Talif highlighted the need for the industry to strengthen its R&D in seeds supply, genetic engineering and also forest engineering to create efficient harvesting methodology. Industry players need to improve its human resource expertise and forest management (especially on the design of the forest plantations). Research has been done (in terms of harvesting) to ensure high productivity. Through planted forest, harvesting would only be dealing with uniform sized timber. The processing challenges would see the state embarking on training human capital in wood technology and machining. Increase in production quality would create a positive effect on marketing. “The main stay of the state economy has always been the timber industry apart from oil and gas. The multiply effect of the timber industry is higher when compared to the oil and gas sector,” Len Talif said.

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Corporate sector boosts state growth By Geryl Ogilvy Ruekeith

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he mainstay of the state economy has always been the timber industry where its multiple effect on Sarawak’s development is higher than the oil and gas sector, said Assistant Minister of Environment Datu Len Talif Salleh. From the days of heavy reliance in logging throughout the 70s, processing sector in the 80s and 90s to vast focus on downstream industries today, the development of the timber industry has always been carefully constructed. “The way the state timber industry has developed was not by coincidence. The capacity building enjoyed today was all planned. Over the past 40 years, a few giant corporate groups have emerged within the timber industry, developing their capacities and expand to the hospitality industry and construction among others. “It all began from the timber industry. Now these companies are building roads, bridges and other infrastructures,” Len Talif who is also a member of Sarawak Timber Industry Development Corporation (STIDC) board of directors told The Borneo Post. Involved in the timber industry since 1979, Len Talif is no “Jack of all trade, master of none”. From an executive forester to becoming the general manager of STIDC and direc-

Datu Len Talif Salleh tor of both the state Forestry Department and Sarawak Forestry Corporation (SFC), the Belawai assemblyman has seen it all.

nies, Rimbunan Hijau, Samling, Shin Yang, Interhill, WTK and Ta Ann. “The success of these seven groups has been translated into what we are seeing today. The positive outtake from their success stories is that they invested what they have derived from the timber industry back to the people.” “All of these players have hotels, they expanded to the construction industry, they build infrastructures for the people,” he continued. In this sense, Len Talif explained that when the government embarked on mega projects, it could be assured that the state had companies with the capacity and expertise without having to look outside the state.

The way the state timber industry has developed was not by coincidence. The capacity building enjoyed today was all planned. Over the past 40 years, a few giant corporate groups have emerged within the timber industry, developing their capacities and expand to the hospitality industry and construction among others.

QUALITY CONTROL: A worker conducting log grading.

DOWNSTREAM PRODUCT: From 70s to the 90s, the development of the timber industry has always been carefully constructed.

Assistant Minister of Environment Datu Len Talif Salleh.

Among the main timber industry players which have branched out to other sectors to aid the state’s economic growth and infrastructure development today included KTS group of compa-

While local companies can merge with foreign parties for the more complex projects, the important factor was that the core teams contributing to the state’s development are always Sarawakians.

success: Over 40 years ago, a few giant corporate groups have emerged within the timber industry, developing their capacities and expand to the hospitality industry and construction among others.

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Developing a one-stop halal centre By Ronnie Teo

The development of Tanjung Manis Halal Hub is in realisation of the government’s vision to make Tanjung Manis a port city by the year 2030.

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HE push for Tanjung Manis to become a port city by the year 2030 was the key driver for the Tanjung Manis Halal Hub project. Featuring a sustainable green development model, this project encompassing 77,000 hectares is well-positioned to become the one-stop halal hub in the state from both upstream and downstream lines in terms of food processing and manufacturing activities. Globally, the movement for halal products grow increasingly every day. With two billion Muslims around the world and counting, demand for halal products is expected to grow by 15 per cent in the next two years. This is the area Tanjung Manis Halal Hub hopes to tap into. This halal hub promises immense investment opportunities in many fields such as agriculture, aquaculture, agro-based industries, biotechnology, farming, halal food processing, research and development, pharmaceuticals and healthcare products, food restaurant chains, pineapple plantations, organic chicken farming and chorella. It holds great potential, being the gateway to two billion consumers from Asia, Middle East and Europe.

— STIDC

LAUNCHING: The launching of Tanjung Manis Halal Hub back in Feb 18, 2009 by the then Prime Minister Datuk Seri Abdullah Ahmad Badawi along with other dignitaries. “The development of Tanjung Manis Halal Hub is in realisation of the government’s vision to make Tanjung Manis a port city by the year 2030,” noted Sarawak Timber Industry Development Corporation (STIDC). “By then, the population of Tanjung Manis will reach 25,000 pax as a diverse society with an influx of foreign investors and workers expected,” it added. “The hub also augurs well with the increasing demand for halal products for both Muslim and non-Muslim markets from all over the globe.” The global halal market as-

sets are valued at between US1 trillion and US2 trillion. This will augur well for players such as those in Tanjung Manis to cater to the mounting demands of halal products among both Muslims and non-Muslims alike. Led by executive chairman Datuk Norah Tun Abdul Rahman, Tanjung Manis remains a core component of SCORE in which STIDC plays a crucial role in providing the infrastructure, besides overseeing the overall implementation of this project and ensuring its success. “The Sarawakian state government through STIDC is develop-

ing Tanjung Manis Halal Hub in consonance with the Malaysian Government Master Plan to transform the country into a global halal hub. “Featuring a sustainable green development model, the hub is poised to become the first onestop halal hub in Sarawak for upstream and downstream halal food processing and manufacturing activities,” STIDC said. The incorporation of advanced technologies, renewable energy and sustainable practices will also make this one of the most scientifically and environmentally advanced halal hubs in the world,

it added. STIDC offers competitive operating costs for businesses in Tanjung Manis Halal Hub, in addition to a deep water port as well as provide accessibility to roads and airports. The climate in Sarawak is also suitable for the development of agricultural products, STIDC highlighted, with an abundance of water and favourable climate conditions as well a large pool of trainable local skilled and semi-skilled labour force at hand. Building on STIDC’s experience in developing Tanjung Manis from an unknown remote swampland to the new township it is today, the state government has given STIDC the mandate to undertake the development of Tanjung Manis into a new growth centre for the central region.

An aerial view of Tanjung Manis Halal Hub.

ACCESSIBLE: Besides its diverse ways of accessibility, STIDC offers competitive operating costs for businesses in the hub, in addition to a deep water port as well as provide accessibility to roads and airports.

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FURNITURE INDUSTRY DEVELOPMENT: Chief Minister Pehin Sri Abdul Taib Mahmud (seated second left), together with (from left) Second Resource Planning and Environment Minister Datuk Amar Awang Tengah Ali Hassan, Deputy Chief Minister Datuk Patinggi Tan Sri Alfred Jabu Numpang and Assistant Minister of Environment Datu Len Talif Salleh seen sitting on Acacia chairs as they pose with other VIPs in a photo call at a STIDC “R&D Project on Acacia” booth during the recent Sarawak Grand Timber and SMEs Exhibition 2013.

Towards strengthening the state’s furniture industry By Geryl Ogilvy Ruekeith

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s a catalyst for the development of the timber industry, Sarawak Timber Industry Development Corporation (STIDC), is shifting the sector towards downstream processing for value-added products. The state is looking to develop its furniture industry and increasing furniture export as the future of the state timber industry would rely on the production of more value-added timber products and the growth of the furniture industry in the state. Embarking on its newly revised vision ‘Spearheading the Development of an Innovative Timber Industry’, STIDC is focusing on Research and Development (R&D) activities to spur the growth of the furniture industry in the state. The corporation aspires to collaborate with the private sector and other government agencies to enhance R&D roles and activities for the

In 2012, Sarawak’s contribution remained negligible with RM27 million or merely 0.4 per cent of the state’s total timber export value of RM7.4 billion. The state’s export of furniture last year had also declined by 13 per cent from RM31 million in 2011. — Datuk Amar Awang Tengah Ali Hassan, Second Resource Planning and Environment Minister timber industry. Second Resource Planning and Environment Minister Datuk Amar Awang Tengah Ali Hassan, when officiating at the Sarawak Furniture and Home Expo 2013 in Kuching last September, said the timber industry remains a very important contributor to Sarawak’s economy. Over the past two years, it generated a revenue of RM7.454 billion in 2012 and RM7.06 billion the previous year. Despite facing many challenges, the sector is fourth overall largest contributor to

revenue. The state hoped its export earning for timber and timber products would be able to sustain its performance at about RM7 to RM7.4 billion for 2013. The Industrial Development Minister added that there are immense opportunities in the global market which are not fully tapped by the state’s industry players including furniture manufacturers. These included Eastern European countries which have promising opportunities for furniture. To penetrate the global market, he added that the ability to pro-

duce quality products that meet consumer requirements and marketing was imperative. Towards that end, STIDC participated and visited many international exhibitions worldwide. The corporation also organised timber selling and investment missions globally to assist industry players in expanding their markets. Malaysia’s export of wooden furniture has been the main export earner in terms of its contribution to the country’s wood-based industry, accounting for 32 per cent or RM 6.5 billion of the overall timber export earnings in 2012. This showed an increased of five per cent from RM 6.2 billion registered the previous year. “In 2012, Sarawak’s contribution remained negligible with RM27 million or merely 0.4 per cent of the state’s total timber export value of RM7.4 billion. The state’s export of furniture last year had also declined by 13 per cent from RM31 million in 2011. “In the first five months this

Datuk Amar Awang Tengah Ali Hassan year, Sarawak exported RM8.91 million worth of wooden furniture. The main markets for the Sarawak furniture in 2012 were Japan (83 per cent of the furniture total export value), followed by Taiwan (1.5 per cent) and Canada (one per cent),” Awang Tengah who is also STIDC chairman disclosed, adding there were also shipments of wooden furniture to Sabah (five per cent) and Peninsula Malaysia (7.8 per cent) last year. In terms of the overall export value of timber and its products, Sarawak registered RM3.61 billion from January to June 2013, representing a drop of 2.7 per cent compared to RM3.71 billion earned for the same period last year. u Turn Page E43, Col 1

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The gallery at the Kota Samarahan Furniture Industry Complex. u From Page E42 “There are more than 400 furniture manufacturers registered with STIDC and many of them are small scale and cottage industries producing mainly for the domestic market and only a few of them have been able to penetrate the export markets. “The size of our domestic market

is very small and saturated with the supply of more competitive products from other sources such as China. For long term business the furniture manufacturers should target for a bigger global market share. Sarawak has the advantage of being one of the biggest suppliers of tropical hardwood in this region. “Therefore it is capable of pro-

ducing tropical hardwood furniture to the world market. For a successful furniture export, furniture design played a very important role and that furniture manufacturers must produce their products that meet customers’ need and satisfaction,” he advised. At the time, his speech was read by Assistant Minister of Environment Datu Len Talif Salleh.

Tanjung Manis Furniture Industry Complex

The Kota Samarahan complex is equipped with 20 state-of-the-art workshops and business premises for wooden furniture entrepreneurs.

Future Outlook To encourage downstream processing activities, the government implemented a log reservation quota policy in 1989. Since then, the timber manufacturing mills grew in numbers making Sarawak the biggest producer and exporter of tropical hardwood plywood in the region. Currently, more than 90 per cent of the RM7 billion in total earnings from timber and timber products comes mainly from exports of primary timber products such as logs, plywood, sawn timber, veneer, with less than 10 per cent coming from downstream processed products. On the future of the timber industry, Awang Tengah said emphasis would be placed on developing the tertiary processing industry. The shift would enable the state to experience a gradual change in the composition and ratio of export earnings of primary products and value added products in the future. To spearhead the development of the timber industry, STIDC will commission a comprehensive study on SMEs in the timber industry here. The study will look into the current strength, challenges and opportunities of the state’s furniture industry. The findings, expected to be completed next year, would enable the government to develop a blueprint and roadmap for the future growth of the state’s furniture industry. “Currently, the furniture factories in Sarawak are mostly cottage industries and scattered. As such, there is a need to develop an integrated furniture manufacturing zone with supporting industries. In tandem with this, the government is studying the possibility of earmarking an industrial zone. “We hope that with the establishment of such infrastructure, the export value of timber products will become the major component of Sarawak total export earnings in the future,” he explained. Challenges In a recent interview with The Borneo Post at the State Legislative Assembly (DUN) complex, Len Talif said STIDC understood the need for industry players to be proactive on both the local and international stage, taking advantage of the vast market opportunities offered globally considering the state’s abundant sustainable raw materials. There is a need to strengthen innovation and optimise resources through more mechanisation and automation of the manufacturing processes that would reduce dependency on labour and optimisation of raw material use. “This is imperative as the future

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of the industry depends on the ability to innovate and create market driven designs as well as maintaining our hallmark of high quality finishing. “It is vital to invest in R&D activities particularly in terms of furniture designing towards the production of innovative timber products that meet market requirements. Innovative designed furniture products with high quality finishing could prove the basis in strengthening exports and complement future efforts in furniture promotion and marketing,” Len Talif who is also a member of STIDC board of directors continued. Furniture Industry complex STIDC had established three furniture industry complexes complete with modern infrastructure and business premises in its bid to empower development of entrepreneurs in the furniture industry sector. One such centre is located at Kota Samarahan which started operation in 2004. The other two centres are situated at Baram, Miri and Tanjung Manis in Mukah. The centre provides a conducive environment and business operations for entrepreneurs involved in furniture making. The Kota Samarahan complex is complete with training and administrative blocks, furniture gallery, 20 state-of-the-art workshops and business premises, including an incinerator and Kiln Drying Facility to enable entrepreneurs becoming more competitive. STIDC offers skills training and technical services for entrepreneurs and furniture vendors to improve their productivity and ensuring continuous quality productions. Rental of the premises at the Kota Samarahan centre is set at RM1,400 per month for Bumiputera and RM1,800 for non-Bumiputera. Entrepreneurial Development STIDC established its Vendorship Programme in 1996 which represented a breakthrough for Bumiputera entrepreneurs in the furniture industry. The programme’s main objective was to create Bumiputera commercial and industrial community in the wood-based industry in line with government policy in developing successful small and medium (SME) industry entrepreneurs. The vendorship programme would provide a core market for the SME Bumiputera furniture manufacturers through the development of infrastructure with basic amenities, industrial training, technical advisory, financial support, marketing and promotion. This programme is a joint effort between STIDC with the Public Works Department and the state Financial Secretary Office.

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Industrial training to train up skilled workers By Adrian Lim

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ittle is known about STIDC Timber Training Centre in Tanjung Manis new township but the training centre has attracted many school leavers to take up courses in wood carving as a career. Since the establishment of the training centre in the early 1990s, it has received an encouraging response from the public. To date, the training centre in Tanjung Manis has trained more than 3,700 youths and managed

to produce skilled human resource workers in the wood-based sector knowledgeable in the aspects of processing related activities, timber trade and factory management. The objectives of the training centre are to produce technically skilled workers to meet the demand of the timber industry, to upgrade the skills of the current workers in accordance with the latest development in the timber industry as well as meeting the quality standard and retrain the wood-based industry’s employees

on related technical aspects. STIDC said trainees have the chance to undergo industrial training with its furniture vendors either in Samarahan, Mukah, Bintulu or Miri Divisions in the course’s final module. The corporation added that trainees are being taught skills in the woodcarving process based on calligraphy and ethnic group motifs besides learning product finishing, costing and packaging on wood-based industries. It also exposes the trainees to plan layout, safety and health,

CREATIVE: A student carving a piece of wood under the guidance of an STIDC officer while other trainees look on. raw materials and adhesive, hand tools and work bench skills as well as basic wood working machines. At the end of the course, STIDC said trainees will be awarded with a competency certificate as recognition of their achievements.

STIDC noted that the industrial training course is part of its responsibility to develop disciplined, skilled and capable workers to ensure that the industry stays competitive in producing quality timber and wood-based products in the global market.

TECHNICAL SKILLS: Officers from STIDC guiding students on the method to create various designs and perform woodcarving at the training centre.

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Educating the public By Joash Kong

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arawak is renowned for its rich and verdant tropical forests, of which over 76 per cent of its 12.4 million hectares is still forested. Hence, it is a natural forest treasury where tens of thousands of flora and fauna is found and is one of the sources of abundant wealth contributing to the growth and strength of the state’s economy, through the timber industry. Timber has played an important and influential role in the life, customs and traditions of the diverse ethnic groups in the state since time immemorial. From timber, their tra-

ditional and daily implements were produced and it is also timber that has evolved to become the pillar of Sarawak’s economy. Therefore, the Sarawak Timber Industry Development Corporation (STIDC) set up the Timber Museum which not only showcases the unique composition of the state’s forest resources and its growing timber industry but also presents and preserves its forest heritage as the array of traditional wood products dwindles from our everyday lives. The museum consists of various sections which are ‘Man and Forest’, showcasing the types of forests in the world. World forests

include natural vegetation and is classified into three main biomass consisting of tropical, medium and gondola. Another section in the museum highlights ‘Forest Management and Conservation’ which classifies the types of forest in the state including the 14 gazetted national parks. The museum also features a section that gives insight on the early days of the timber industry from the days of the White Rajahs to the establishment of STIDC in 1973. The section also shows the development of Tanjung Manis New Township as a wood-based industrial zone in the Central Region of the state.

TRADITIONS: Some traditional ethnic instruments made partially or wholly from wood such as the sape.

PANORAMA: Part of the Forest Panorama.

An interesting highlight of the museum is the ‘Forest Panorama’ of a timber-producing area in Sarawak detailing the whole spectrum of activities in the timber industry, equipped with a ‘Forest Diorama’ where an artificial jungle setting is created with all the sights and sounds of the tropical forest and features stuffed animals like the gibbon, slow loris, orang utan and hornbill among others. The ‘Forest Inventory’ section takes visitors back to the early days of field data collection by foresters, who are dressed in their period costumes and the instruments used. Such information is gathered for the purpose of formulating guide-

lines for ensuring proper management and harvesting of the forest resources. In the ‘Botany and Wood Anatomy’ section, samples of common tree species are found. Visitors can have a microscopic section view of the anatomy of different species of timber magnified 20 times to show their anatomical structure. This section also includes samples of common wood defects and specimens of dried leaves and also the various types of edible jungle produce or those possessing medicinal and commercial value found in the peat swamp and hill forests. u Turn Page 47, Col 1

MODERNISATION: Tanjung Manis New Township, a wood-based industrial zone in the Central Region of the state.

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KUDA-KUDA: The ‘kuda-kuda’, a wooden sled used to skid logs from the felling site to the railway line in the peat swamp logging operation. u From Page 46 The locomotive ‘kuda-kuda’, a kind of wooden sled used to skid logs from the felling site to the railway line in the peat swamp logging operation, is also featured here. The museum also highlights the logging activities carried out using

conventional methods such as axes and saws to the modern method and tools used such as heavy machinery and helicopters. There is also a depiction of logging areas now equipped with infrastructure and facilities such as private residences, clinics and good roads. In the museum, visitors can also

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BLAST FROM THE PAST: The Forest Inventory section which takes visitors back to the early days of field data collection by foresters, who are dressed in their period costumes and their instruments used.

find out about jungle products such as the engkabang, ketiau, pedada and others used for food consumption, traditional medication and daily usage. Another section highlights the importance of wood in the our everyday lives since the days of our forefathers, displaying boats to furniture made partially or wholly

of wood. The museum also touches on the sawmill operations in Sarawak that started in the 1900s, and how the government today is actively promoting the setup of the timber industry to acquire maximum benefits from our forest resources. Museum visiting hours are 8.30am to 4.30pm on Monday to

Thursday and 8.30am to 11.30am and 2.30pm to 4.30pm on Friday. The museum is closed on Saturdays, Sundays and public holidays. For more information on the museum, members of the public are advised to call 082 - 473000 or visit http://www.sarawaktimber. org.my.

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Towards better service delivery By Joash Kong

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or a country to successfully enterprise itself, the import and export trade is a very important component to do so and with an abundance of timber, it was only logical for the state of Sarawak to venture into this business. The Trade Control Division (TCD) of Sarawak Timber Industry Development Corporation (STIDC) handles the trade of timber, which is one of Sarawak’s highest revenue earners, and under the guidance of senior assistant general manager Tagat Jimbat and Quality Control manager Awang Mentali Awang Mohamed Sulaiman, it has indeed flourished. “TCD was given the task to issue export and import licenses for log and timber products from Sarawak, and we also have the responsibility of carrying out the grading of timber for export,” he explained in an exclusive interview with The Borneo Post, adding that STIDC is the grading authority on timber for the state based on the Malaysian Grading Rule, edition 2009. Mentali added that STIDC provides services for wood or timber verification as well as a platform for wood identification courses.

TCD was given the task to issue export and import licenses for log and timber products from Sarawak, and we also have the responsibility of carrying out the grading of timber for export. — Awang Mentali Awang Mohamed Sulaiman, Quality Control manager

Tagat also said that STIDC is the first government agency to have made the move from manual to electronic processing. “We started to go online in 2006, when the government urged all agencies to go online. We did not have a ‘wait and see’ attitude about it and we jumped on board straightaway,” he enthused. He added that export and import licenses are using an ‘e-permit’ system while grading systems are on ‘e-grading’. Since the move, TCD has been providing a series of enhancement on issuing licences and grading certificates that made a dynamic system in continuously moving forward to achieve a world class civil service. “This is how STIDC improves our service delivery and enhanced it in order to facilitate the trade in timber products,” Mentali interjected, emphasising on timber being an important revenue for the state, having maintained a RM7 billion export revenue for the past

five years. Tagat said that going online was a good move, as online services are very fast, efficient, transparent and most importantly, meets the needs of the customers, who are timber industry players in the export and import business and stakeholders as a whole. As a whole, in the 28 years that he has served in STIDC - he started in 1985 - Tagat has seen a tremendous growth in STIDC both in the number of staff and the efficiency in giving service to their customers. “The internal management and working atmosphere has also improved a lot, and now it is a very conducive environment for working,” he beamed. STIDC has indeed seen tremendous leaps and bounds, as now even students from local universities are sent here to do their practical attachment. “This shows that STIDC does not just focus on serving the

Trade Control Division senior assistant general manager Tagat Jimbat.

Quality Control managerAwang Mentali Awang Mohamed Sulaiman.

timber industry but also does its Corporate Social Responsibility (CSR) by providing such an employment,” he said with pride. Tagat had served five different portfolios, having been an executive officer at the old Yayasan building opposite the Sarawak Museum before he was transferred to Bintulu to serve as executive officer in the Bintulu office. “When I came back to Headquarters (STIDC in Kuching) I became the head of resource development for two years, before becoming the head of registration and industrial planning division

before being promoted to my current position,” he explained. There are five divisional offices in Tanjung Manis, Sibu, Bintulu, Miri and Limbang which act as liaison offices and this shows that STIDC has a good network of administration to serve the timber industry in the whole of Sarawak efficiently, he added. With Tagat’s background as a forester and Mentali’s background as a wood technologist, it’s no wonder that the two professions match each other and have improved STIDC in the years leading up to present day.


STIDC Supplement 2013