Timber trade policy and industrialisation : implication for forest harvest and environment in Malaysia.

Shortage of timber input for processing industries is the main issue facing the
Malaysian forest sector. The need to implement policies which will ease the
pressure on timber shortage and induce the expansion of forest sector industry,
development of rubberwood sector in Malaysia is becoming increasingly urgent.
The Malaysian government has announced and implemented three main policies:
timber market restriction, encourage utilisation of rubberwood and promotion of
lesser-known timber species (LKS). Application of timber market restriction
policies has a considerable dispute; firstly because of widespread disagreement
over the effect on efficiency of utilisation of timber that lead to timber harvest and
deforestation and secondly it will undermine the government effort to promote
utilisation of rubberwood and lesser known species. In this thesis, an attempt has
been made to enlarge the available empirical knowledge of such effect through a.
multi-sectoral forest - rubberwood sector model simulation. An analytical
framework is developed, focusing on three major product of the forest sector; log,
sawnWood and plywood, and two major products of rubberwood sector;
rubberwood log and sawn rubberwood. The framework is used to developed an
empirical model of forest-rubberwood and analysed the effect of market restriction
policy on forest harvest behaviour, sawnwood and plywood development,
rubberwood sector development and change in forest cover. The production,
consumption and export of timber, sawnwood, plywood, rubberwood and sawn
rubberwood, and change in forest cover have been examined in relation to a
number of market policies: export taxes, export ban and import ban, and other
alternative policies; royalty, exchange rate, wood utilisation efficiency and
subsidies. A series of simulations was undertaken to describe the effect of these
policies. The analysis suggests that export restriction on processed timber product
will reduced the timber harvest and improved the forest cover but will hinder or
distort the development of rubberwood sector and utilisation of less timber species.
Related to the deforestation, the notion of environmental Kuznets curve is also
examined. The results does not support the existence of this notion for Malaysia.
In addition to sectoral analysis, an extended analysis using species harvest was
undertaken, as a new approach to investigate efficiency of utilisation of wood
resource and forest cover. The results show that promotion of species utilisation
will not be achieved with the implementation of market restriction policy on forest
products. Species analysis also indicate that in the absence of full data on the
quantity of forest harvest, species harvest data would be a good alternative to
estimate the effect of policies on forest cover .