Forestry Dept forecasts RM3 to RM4 mln net profit from 2010


SANDAKAN: The state Forestry Department forecasts a net profit of RM3 to RM4 million against the yearly management cost of RM5 to RM6 million from this year onwards.“This translates to a rate of return on capital that ranges from 50 per cent to 70 per cent, which is competitive enough against other alternative investments,” state forestry director Datuk Sam Mannan disclosed yesterday.

He said the auction of 805 logs (2386.84 cubic metres) last Jan 29 from Deramakot Forest Reserve (DFR) marked a historic day for the forest reserves management in that it represented the full payment of the capital invested by the state government in its management over the last 20 years.

The total sum invested was RM90.82 million as of Dec 31, 2009 against an income of RM91.37 million for the same period, a surplus of RM0.5 million after all capital outlay has been repaid, Sam said.

The DFR remains the first and longest FSC (Forest Stewardship Council – the Gold standard for forest management) certified Tropical Rainforest in the world having been first certified in 1997. This is an accolade that Sabah is very proud of.

Nevertheless, Sam also cautioned that many lessons, from an economic and financial perspective, could be derived from the experiences of Deramakot over the last two decades.

These include: • If Deramakot had been well managed from the beginning before logging was first allowed in the 1950s, the Sabah Government would have made profits from day one, and be sustainable. Unfortunately, it has instead taken 20 years to recover from the poor management practices of the past. It is therefore most imperative to get it right the first time.

• Poor logging practices are a cost to society, especially to the future generations. For example, the expensive mistakes of the past in Deramakot had to be rectified by todayís generation, through costly forest restoration, silvicultural operations and continuous protection on the ground. The repair works also take a long time.

• Given time and perseverance, tropical rainforests can be managed profitably and on sustainable basis, even if already reduced to a degraded condition.

The Forestry Department, said Sam, appreciated the continuous and unrelenting support given by the Sabah Government, in particular, the close attention given by the Chief Minister to the success of Deramakot and the financial support from the Ministry of Finance and the Sabah Economic Planning Unit, for its management.

The concept of Deramakot is being systematically expanded to other forest reserve areas in Sabah, the biggest one being at Ulu Segama-Malua (240,000 ha approximately), the world’s premier home for the endangered orang utan, declared for Sustainable Forest Management (SFM) on March 15, 2006 by the State Cabinet.