KUCHING: TA ANN HOLDINGS BHD is expected to get a big boost in logs export volume following Sarawak Forestry Department’s move to raise the timber licensee’s export logs quota to 40% from 20%.
The upward revision by 100% is effective July to December 2019.
The move means that Ta Ann is allowed to export up to 40% of its total logs production, with the balance 60% reserved for domestic downstream processing into value-added products, like plywood.
“The recent upward revision would contribute significantly towards the (company’s) logging division’s performance in the second half of the year 2019, ” said Ta Ann.
The Forestry Department had maintained the industry’s logs export quota at 40% for many years before it was gradually reduced to 20%, as Sarawak’s yearly logs output had been cut drastically in line with sustainable forest management policy and after the crackdown on illegal logging activities.
Ta Ann has stepped up its logging activities this year after it obtained the Malaysian Timber Certification Scheme and Programme for the Endorsed Forest Certification for three forest management units (FMUs) in 2018.
The three FMUs covered a total licensed area of 149,756 hectare (ha). Ta Ann targets to complete the certification process of the other two FMUs – Raplex and Pasin – which cover total concession areas of 197,187 ha by December 2019.
In a quarterly review of its timber operations last week, Ta Ann said the group sales of export logs surged by 155% in the April-June 2019 period from a year ago.
The average selling prices for export logs was surprisingly down by 29% during the same period despite the company’s earlier prediction of better selling price in 2019 due to global tight supply of tropical timber.
Logs prices had remained firm for several years due to supply shortage after Myanmar banned logs export, a move followed by Sabah, which also stopped logs export last year.
In the first half 2019, Ta Ann group’s logs production soared to 211,731 cubic metres (cu m), up 134,070 cu m or nearly 175%, from 77,661 cu m in the corresponding period last year, according to its monthly production figures filed with Bursa Malaysia.
Last year, the group exported 43,040 cu m of logs, which was sharply lower against 60,545 cu m in 2017, as timber harvesting activities had been affected due to the consolidation of its forest timber licences to undergo certification exercise to meet the internationally-agreed principle of sustainable forest management.
WTK blamed the lower logs output to the dry weather, which had affected the transportation of logs from logs ponds down the river due to low water level.
Harvested logs were brought out from the forests and kept at the logs ponds along the river bank. The logs were then brought down via river transportation to the export point.
In the first half of 2019, WTK’s timber segment reported revenue of RM258mil, which was a reduction of RM58mil or 18.4% from the first six months of 2018.
Jaya Tiasa, on the other hand, saw its timber revenue plunged to about RM180mil from RM288mil or down by 38% during the same period. Logs production volume was down by 26%.