SPECIAL REPORT ON BENTA WAWASAN SDN BHD - Part 4

Thursday, August 18, 2005

The RM11 billion silap mata (sleight of hand)

In 1996, during Yong Teck Lee's tenure as Sabah’s Chief Minister and Musa Aman's tenure as head of the Sabah Foundation (Yayasan Sabah), a business venture between a state-owned company and the China Fuxing Pulp and Paper Industries of China to develop a US1.1 billion plantation and pulp and paper mill in Kalabakan, Tawau, was mooted. The project was expected to be fully operational this year.The project involved the felling of hundreds of thousands of years old tropical rainforests of an area of 250,000 hectares, comprising 3% of Sabah’s land area and 6% of its virgin forest.This area is four times the size of Singapore Island.This is probably the largest forest destruction in history since 1800; forests that took hundreds of thousands of years to develop but which will take a mere generation to exterminate.Ironically, though a Chinese national company is involved in this project, back home in China the Chinese government has enforced a ban on large-scale logging of the proportion of this Sabah project.And what is 250,000 hectares of virgin rainforest worth?On a conservative calculation of RM42,000 per hectare, the market value of 250,000 hectares of virgin rainforest is roughly 11 billion Ringgit. Yes, that’s right, RM11,000,000,000; more than you can count in your lifetime.The perplexing part about this whole deal is, logging started as far back as the 1990s though the project was only supposed to kick off in 2005. This means they started extracting the logs almost ten years before the commencement of the paper mill -- starting from Yong Teck Lee’s tenure as Chief Minister, right through to Bernard Dompok, Osu Sukam, Chong Kah Kiat and now Musa Aman.Why was this allowed? Why did they need to extract the logs long before the existence of the paper mill? And what did they do with the logs if there was no paper mill yet that required them?Now, does this explain where Osu Sukam got his RM200 million to burn in casinos the world over and how Musa Aman could declare assets of RM300 million when he took over as Chief Minister on 27 March 2003?And that is not all that is wrong with this arrangement.No environmental Impact Assessment (EIA) for loggingUnder the Sabah Conservation of Environment (Prescribed Activities) Order 1999, any forest which is cleared for the felling of timber covering an area of 500 hectares or more, or any development of forest plantation of 500 hectares or more, requires an Environmental Impact Assessment (EIA) study to be done.Today, large areas of land of the proposed pulp and paper mill project have already been logged without a single EIA study done. And the state-owned company, Innoprise Corporation Sdn Bhd, is continuing with its logging activities in total disregard of this law. (See: Special Report on Innoprise Corporation Sdn Bhd).Innoprise claims it cannot afford to wait for the EIA study to be done (and why, since there is no paper mill yet that requires the logs, is not explained) and the company is only now in the midst of appointing a consultant to handle the EIA report.The company explained that it need not carry out any EIA study for the logging as the Sabah Conservation of Environment (Prescribed Activities) Order 1999 came into effect only in September 1999, while the company had already begun logging a couple of years earlier.Innoprise further argued that it proceeded with the logging operation based on the Coup Permit from the Sabah Forestry Department issued in 1996. However, the company is now planning to conduct two EIA reports, one for the plantation and the other for the paper mill. The various Chief Ministers of Sabah since 1996 have defended the legality of its state-owned company's operation. They argue that the logging operation was legally licensed in 1996, well before the State EIA requirement was enforced and, in addition to that, the licence did not specify the need for an EIA study to be done.And this argument is supported by the Sabah Forestry Department that said it had indeed issued a Coup Permit for the company’s logging activities way back in 1996.According to the Forestry Department, in 1996, Benta Wawasan Sdn Bhd, a wholly-owned subsidiary of Innoprise Corporation, entered into a Tree Plantation Agreement with the State Government of Sabah to log 106,310 hectares of the Forest Reserve of Gunung Bara/Kalabakan to develop into a plantation. This agreement, explained the Forestry Department, binds Benta Wawasan to a set of conditions pertaining to environmental protection and conservation. These conditions, according to the Forestry Department, are "functionally equivalent" to the EIA legal requirement.Logging before the agreement is signedThe most perplexing thing about this whole issue is, though they had already started logging the area since the 1990s, the commercial department of the Chinese Embassy in Kuala Lumpur declared that the project is still under negotiation and that nothing has been finalised yet.It is indeed very puzzling as to how this joint-venture project was allowed to commence its logging operation even before its own internal agreements were finalised. Should the project fail to take off, this would raise the risk of the area being turned into a wasteland.Further to that, Innoprise's claim that it had begun logging the area since the 1990s raises another important question. The Memorandum of Understanding for the project was signed only in 1997 and an early agreement between the various joint-venture partners was signed in August 1999. How could Innoprise begin its logging operation when the first agreement between their business partners had not even been sealed yet?And now we are told that the pulp and paper mill project has been aborted. Yet, the logging activities are still continuing as it has been for almost ten years now.In the next part of this series we will look at Benta Wawasan Sdn Bhd and reveal present Sabah Chief Minister Musa Aman’s roll in this whole matter.

To be continued.