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Friday May 26, 2006

26 companies to gain from Forest Plantation Programme scheme

PUTRAJAYA: Twenty-six companies have been shortlisted for financial assistance under the Forest Plantation Programme, which has received an initial government funding of RM200mil, said Plantation Industries and Commodities Minister Datuk Peter Chin. 

He said the ministry had received 36 applications from private companies and government-linked companies for about 495,000ha comprising species of rubberwood, acacia, kelampayan and teak, and involving total financing requirement of RM2.5bil. 

“The ministry has set up the Forest Plantation Project Financing Evaluation Committee to evaluate all applications. The first batch of planting under this programme will begin in September,” he said yesterday at the signing ceremony between the Ministry of Finance (MOF) and Malaysian Timber Industry Board (MTIB) for the disbursement of the fund. 

He added that the names of the companies would also be announced in September. 

Chin said the ministry had formed a special purpose vehicle (SPV) called Forest Plantation Development Sdn Bhd to undertake forest plantations commercially. 

“The amount (RM200mil) is far from enough but I'm informed that we will get more funds from MOF,” he said, adding that the ministry would also look into other options, including issuing “green” bonds to fund the programme, 

Malaysian Timber Industry Board director general Datuk Mohd Nazuri Hashim Shah (right) exchanging documents with Treasury Secretary General Datuk Izzuddin Dali after the signing of loan agreement for the Forest Plantation Programme in Putrajaya on Thursday. With them are Plantation Industries and Commodities Minister Datuk Peter Chin (second from right) and Deputy Finance Minister II Datuk Dr Awang Adek Hussin.
Under the forest plantation programme, landowners and plantation companies farming on state-lease forest land are expected to plant some 375,000ha with valuable timber species like rubberwood, semangkok and acacia mangium over the next 15 years in an effort to sustain the growth of the timber industry. 

“If the programme is successful, we will have enough timber supply to meet the forecast demand of five million cu m of sawn timber in 2020,” Chin said. 

Earnings from the timber sector rose 33% to RM21.4bil in 2005 from RM19.7bil the previous year. 

Chin said the fund came about following poor response to the government's call for the private sector to embark on commercial forest plantations.  

“Clearly, forest plantations involve relatively long payback period, a high level of risk and large capital which make commercial banks and financial institutions reluctant to lend to such activities,” he said. 

Deputy Finance Minister II Datuk Dr Awang Adek Hussin said the RM200mil fund, allocated under Budget 2006, would be in the form of a soft loan to MTIB at an interest rate of 2.5% per annum over three years.

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