Corruption Risks in the Forestry Sector
Forests cover over a half of Malaysia’s land area, but between 1990 and 2010 almost 8.6% were lost. (Reference 1) A proportion of this loss was due to legally felled timber, which contributes to economic and social development. However, instances of illegal logging, enabled by a lack of resources to monitor the industry and corrupt practices such as bribery and the exertion of undue influence, account for 14 to 25% of production, according to Chatham House (Reference 2).
In response to this challenge Transparency International is implementing the Forest Governance Integrity Programme, which provides a basis on which to analyse and monitor corruption risks in the forestry sector. The Forest Governance Integrity study conducted in Malaysia took the form of an analysis of the whole chain of activities in the forestry sector: the regulatory chain; the licensing chain; the timber supply chain; the revenue chain; the reporting chain; and the enforcement chain. (Reference 3) Each of these activities was analysed to identify the most high corruption risk areas in the sector, using a combination of desk-based research and focus groups with relevant stakeholders.
Based on a template that identifies the generic types of corruption in the sector, an assessment was made of the impacts of corruption and the likelihood of it occurring, given the legislative environment, the implementation of laws and regulations, and the effectiveness of the existing instruments and institutions meant to mitigate corruption risk. Several key weaknesses were identified in Peninsular Malaysia, including policy and operational infringements that could affect good governance and threaten sustainable forest management:
- Regulatory Chain: Forest zoning changes – establishment and excision of Permanent Reserved Forests and conversion of high forest to plantation forest
- Licensing chain: Award of timber concessions and logging licenses
- Timber supply chain: Control of harvesting and restrictions on re-entry logging in Permanent Reserved Forest areas
- Enforcement chain: Exercising responsibilities and authority by forestry officers to handle the commission of forest offences
The research found that there is a tendency for state governments to use their discretion to excise forests and convert them to other land uses, despite the fact that they have been designated as Permanent Reserved Forests (PRF). This is largely due to the excessively long process involved in designating land as PRF and the discretion at the hands of the state government to override objections made by the Forestry Department. State governments also have the authority to award preferential timber concessions and logging licenses without ensuring that competitive bidding takes place. This can lead to inexperienced operators and inappropriate logging activities degrading forest resources and not abiding by sustainable forestry management practices.
The monitoring of forest activities is also identified as a particular weakness, as lack of resources and the potential for forest officers to be influenced by powerful logging companies, means that there is little control or oversight of logging activities leading to illegal logging, such as in PRF areas. Finally, even where offences are identified through monitoring enforcement is weak, as officers lack training and authority to bring cases to court. In some cases corruption can lead to failures to conduct investigations, manipulation of evidence, or delays and failures to take cases to court.
For further details on the corruption risks in the forestry, please download the following report: Publication Report Peninsular Malaysia.
Please note that this report covers only the situation in Peninsular Malaysia.
Consultations are on-going with stakeholders in the two other regions of the country i.e. Sabah and Sarawak.
Reference 1: http://rainforests.mongabay.com/deforestation/2000/Malaysia.htm
Reference 2: Chatham House, 2010, Illegal Logging and Related Trade: Indicators of the Global Response, Country report cards – Malaysia, London.
Reference 3: See: http://www.transparency.org/content/download/57705/923172/file/FGI_risk-manual-edit_final.pdf.