Safoda gets RM13.6m for forest plantation

The agreement between Safoda and the Forest Plantation Development Sdn Bhd (FPDSB), a wholly-owned subsidiary of the Malaysian Timber Industry Board (MTIB), was sealed Friday, witnessed by Plantation Industries and Commodities Minister, Tan Sri Bernard Dompok, and Deputy Chief Minister Datuk Seri Joseph Pairin Kitingan on behalf of the State Government.

Dompok said FPDSB had received many applications from Sabah, mainly Forest Management Unit (FMU) companies for the loan, which were still being processed for approval.

"There are currently three (applications) in queue," he said after the ceremony at Le Meridien Kota Kinabalu.

To a question, he said it was not a question of giving priority to the FMU concessionaires in giving them the soft loan but "so long as they fulfil all the set criterions, then there is very little reason for us not to entertain them".

Earlier, acknowledging the significance of the timber industry in Malaysia, which contributed about RM22.79 billion to the country's export earnings last year, of which RM3.023 billion was from Sabah, he said the loan facility was in line with the commitment to support the expansion of the country's forest plantation to reduce the extraction of timbers from the natural forest.

"As we are all aware, managing forest plantations is financially challenging. The returns involve a long gestation period requiring at least 15 years or more before the investment could be recouped.

"The Government understands this dilemma and hence has taken appropriate action to assist the forest plantation sector to plant commercial timber with a selected species in a big way, not only to sustain our wood and timber industry but also to nurture it further and be an important sector of our national economy," he said.

Dompok said the Federal Finance Ministry had allocated RM1.065 billion in the form of soft loan to finance the forest plantation programme.

Companies obtaining the soft loan are given a 15-year grace period and further five-year repayment schedule which starts only on year 16 to year 20 with an interest rate of three per cent compounded yearly.

The plan to embark on the forest plantation on a commercial basis had been initiated by his Ministry since 2004, which was expedited after it received approval in early 2005 to take the lead in implementing the programme.

"Not only that, the Prime Minister himself also is giving special attention to this programme," he said, adding that the Ministry had also formed the Task Force on Forest Plantation Development for this purpose.

According to him, more than five million cubic metres of sawn timber are required from year 2020 onwards and this reflected the Ministry's target to plant 375,000 hectares of forest plantation within the 15-year cycle to ensure the sustainable growth of the timber sector and continued contribution towards the growth and development of Malaysia's economy.

Toward this end, he said the private sectors are encouraged to participate in the programme to develop more forest plantations to support the country's local timber industry.

So far, Dompok said 14 loan agreements have been signed with companies operating in Peninsular Malaysia and Sarawak involving a total of 52,435 hectares of forest plantation.

Soft loans given to these companies amount to about RM233 million.

He assured that continuous support for the development of commercially viable timber plantations from the Government was not only in the form of financing but also various incentives to companies involved in the forest plantation sector.

Dompok commended Safoda, a Sabah government company, for meeting all the set criteria as well as fulfilling specific conditions in order to acquire the soft loan.

"We do not doubt its capabilities and hope our cooperation will bear fruits in the years to come when the forest plantation by Safoda matures and reaps bumper harvests," he said.

Safoda General Manager, Francis Otigil said that with the soft loan, Safoda is developing a total of 2,500 hectares of the timber latex clone.

He said 1,000 hectares of the plantation are each in Kota Belud and Lumat, Beaufort while another 500 hectares are set for development in Mandahan, Papar.