A very good evening to all of you. It gives me great pleasure to thank Mr. N.C. Lau, the organizing committee and the Sabah Timber Industries Association (STIA) for inviting me to grace the occasion of STIA "Lumber Nite". I would also like to extend a warm welcome to Y.B. Dato’ Seri Lim Keng Yaik and Y.A.M. Tunku Osman to Sabah. To all my colleagues and old friends who are present tonight, its nice to see you again.

I have been following the growth of the forestry industry in Sabah for some time. Today, this sector is at a crossroad. Like it or not, we must come to terms that gone are the days when our forests can be relied upon to churn ample supply of logs, especially for the export market. The figures speak loud and clear. Since 1996, log production, from forest reserves, has declined rapidly; from 5.6 million cubic meters to just about 2.0 million cubic meters for the year 2002. This plight is further aggravated by a low market price for our logs. Looking back, in hindsight, this scenario is not something unusual. Natural resources will be depleted if they are not sustainably managed!

We used to rely on the extraction of logs as the dominant source for generating revenue. In the whole process there was not much consideration to put into practice the value-added concept within the industry. And I must say, we were quite happy with this business culture for quite sometime. However, the present scenario forces us to make a change! There is an urgent need to move from the old mindset to embrace practice of sustainable management of forest resources. We must look at our forests from a development perspective. How do we maintain and develop our natural resources in a sustainable manner? It is important that we address this question seriously. Our future survival depends on it.

Taking these into consideration, the government has taken a number of initiatives. We have instituted sustainable management of our natural resources, including the forests. Some time back, the State Government had formulated its own sustainable concept under the FMU or Forest Management Unit. This concept is in line with the ITTO guidelines. Through this concept our forests will be maintained and developed in a sustainable manner, while generating substantial revenues for the companies and the state. However, since its launching progress towards its successful implementation has been rather slow.

In line with the practice of sustainable management we have also made progress by instituting harvesting techniques, like RIL, that are more ecologically friendly and less damaging to the inhabitants of the forests. I am sure many in the logging industry would consider such enforcement as unfriendly to the industry. We have to be more rational over these changes. Living in a more globalized world has its rules. As global citizens we must work towards the betterment of all. Thus, I like to appeal to all to adopt new refined techniques of extraction that are effective, but less damaging.

The creation of forest plantations is, yet, another means of regenerating our logged forests. Various types of forest plantations can be undertaken to meet the needs of the market. Through these plantations we should be able to improve our supply of logs and other products. If done well, we will have them complementing those from the depleting reserves. To date some 750,000 hectares have been identified for forest plantation development. Of these some 530,000 hectares are within the forest reserves. I am hoping that forest plantations will be playing a long-term important role for the revival of the Sabah timber industry.

Looking at the downstream activities we find that our wood-processing mills have a total input capacity in the region of 7.5 million cubic meters. However, these mills are unable to operate at full capacity. The local supply of woods has steadily declined, making life very difficult for the operators. Some 30-40 percent of these mills have ceased operations. Most certainly, these mills need to be supported by a more improved and sustained supply of raw materials. Thus, there is the urgency to act, in concert, and make all our endeavors successful.

Today, there is more awareness on the dynamic roles of forests. Apart from its role in serving economic needs there are also roles that are becoming more prominent. The forests also play a critical role in keeping the ecological balance. For example, we are more familiar of the forests functioning as carbon sinks and reducing the specter of global warming.

We are also introduced to the growing significance of biodiversity. As a matter of fact, we are sitting on a mega biodiversity. This biological abundance is the new gold mine. We have yet to fully explore this new source of wealth. Natural habitations and beauty also serve as the main assets for the development of eco-tourism. Thus, while timber might be losing its shine we have much to look forward in the future.

Over the years, the State Government has become more focused in its commitment towards conservation and reforestation. Conservation is a necessity to protect the disappearing fauna and flora as well as the special habitats and riches nature has built over the years. We must ensure the uniqueness of Sabah’s natural heritage is preserved for all.

As active industry players you must also take into cognizance that our nation is moving into the new economy, knowledge-based economy or K-economy. The government is all out to promote its acceptance among all levels of Malaysians. Most certainly, the timber industry must take up this challenge. There is a need to reinvent the industry to meet the new ways of doing business. We should be more open and ready to tap knowledge and information that are more readily available. These should be strategically applied to make your industry more competitive, regionally and globally. Future success will be determined in your ability to leverage ICT and apply knowledge-based solutions to solve your problems.

In tandem with this global change Research and Development (R & D) must feature more in the timber industry. Many might not be receptive to the idea of investing for the future through R & D. If we keep ourselves away from addressing such critical areas, how are we going to expect the state’s timber industry to survive and make progress in a more globalized market? Are we to remain at the lower end of the industry and happy just to supply a non-value added commodity? What happens when others don’t want to buy our logs?

Another area that is seriously being considered for adoption is agroforestry. It is an area that we should venture into as it has the means to diversify from an over dependence on monoculture. Through agroforestry we can introduce multicultural, cultivars, for example, in the forest plantations. There will be a mixture of forest trees and shrubs, and even animals. Through such mixture the land yield will increase. In many ways, agroforestry is an application of an ecological concept. It introduction is also in line with the National Agricultural Policy (NAP3).

I am happy to note that STIA is taking the initiative to organize meetings and dialogues with the State and Federal Ministries to find ways and means to strategize the future direction and development of the timber- based industry. We welcome such efforts from you. In the making of a dynamic and successful timber-based industry we must act smart partners.

I certainly hope that through the various platforms established, like the Malaysian Timber Association, of which STIA is a founding member, and the Malaysian Timber Marketing Convention, our timber industry will be able to forge forward and reestablish itself as a very important component of the State’s economic driver.

With that positive note and the assurance that the State Government will always work closely with you I conclude my address.Thank you.