NCA controversy blocked Sabah from cashing in on carbon credit trade, says Kitingan's aide

KOTA KINABALU: The controversy over Sabah's Nature Carbon Agreement (NCA) is a major setback for the state in harnessing income from carbon credit sales from its two-million-hectare forest reserve, says an NCA proponent Anuar Abdul Ghani.

The controversy itself put many international parties interested in the deal on the "backfoot" while the Sabah Forestry Department was also slow in providing the necessary data to meet the various technical requirements, he said.

Anuar said this when delivering a paper at a session on "The Asia Foundation: Towards a Community-based Green Economy in Sabah," at the ongoing three-day Borneo Rainforest Law Convention organised by the Commonwealth Lawyers Association and Sabah Law Society that began on Monday (Feb 26).

Anuar, who is political secretary to the Deputy Chief Minister I Datuk Seri Dr Jeffrey Kitingan who heads the state's Steering, Management and Implementation of the NCA Committee (SMIC), said he was reflecting the views of Kitingan.

He said the controversies, including the statement of the Sabah Attorney General that the NCA agreement was "legally impotent", affected the state's efforts to cash in on the carbon credit trade.

"The statement by the highest legal officer in the state sent shockwaves and greatly undermined the legal status of the NCA.

"Fund investment entities, which included some of the world’s largest companies backed off. The Sabah government's First Mover Advantage was quickly whittled down by this rather strange statement," he said, adding that the state's legal officer did not refer the statement to the Chief Minister as the NCA was approved by the Cabinet.

Anuar told the delegates that the October 2022 NCA deal signed by the Chief Conservator of Forest Datuk Frederick Kugan and Singapore-based Hoch Standard was "not a sale, a lease or a charge."

"It does not allow the company to log or mine the designated areas up to 2,000,000 acres.

"The NCA was purely to measure and monetise, among others, Nature Capital and the carbon sequestrated in the Sabah forests, for 100 years," he said, adding that the deal almost immediately came under attack from various parties, specifically the opposition Parti Warisan, Sabah Attorney General and 13 NGOs.

He said that it was hit by the perceived delays and non-implementation by the Sabah Forest Department.

Under the deal, 70% share was under the state government, 25% by Hoch Standard (later taken over by offshore company Lions Gate) and five per cent was for state-owned Yayasan Sabah, the largest timber concession holder in the state.

The share for Yayasan Sabah was to train 3,000 to 5,000 forest rangers to help with the groundwork of the NCA.

"They would be introduced to modern technologies such as satellites, drones, AI, blockchain, machine learning, and new emerging IT that would bring Sabah into the IT world," he said.

He said Hoch Standard and Lions Gate are solely owned by Singapore businessman Dr Ho Choon Hou.

More than 45 local native groups and associations have supported the NCA Free Prior Informed Consent (FPIC) as required.

He said the NCA areas were not necessarily Totally Protected Areas (TPA) but “Designated areas” that will be determined by the Sabah Forest Department.

"The only areas that have been identified so far is the Nuluhon Trusmadi forest reserve for 190,000ha (but) we do not have the complete list of 600,000ha from the SFD to complete the Nature Conservation Master Plan (NCMP)," he said.

"We cannot start the NCMP with the designation of areas not complete, there is no data, coordinates and markers among others provided," he said, adding that the delays and non-implementation were "self-induced" by the Forest Department.

"The Hoch Standard has been patient and has quietly tried to settle this matter but if they decide to take the NCA to court, it could drag the case for years and Sabah will face major losses in the billions," he said.

"The world will say there is no sanctity of contract in Sabah. Don’t trust Sabah.

Sabah has already lost its initial First Mover Advantage which we had more than two years ago," he said.

Anuar noted the opinions of former Malaysian chief justices Tun Raus Sharif and Tun Richard Malanjum that the NCA as it stands is legal, valid and enforceable.

He said the money earned from carbon credit sales could be put under a trust and used to help in the eradication of Sabah's poverty.

The legal experts from the Commonwealth countries are discussing various legal shortcomings and issues faced amid climate change and legal issues on the environment at the Rainforest conference.

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