LOGGING IN EAST MALAYSIA - Part 3
MALAYSIA TODAY SPECIAL REPORT
COMPANY OPERATIONSCompany operations have been subject to increasing scrutiny by the government and national and international NGOs since the exposure in 1992 of years of widespread evasion of taxes through transferring profits overseas. As a result of that investigation, 20 timber companies were issued with demands for large back taxes. According to Primary Industries Minister Lim Keng Yaik, one of the biggest groups was assessed for RM100 million (Asian Wall Street Journal Weekly, 1994).In 1994, revenue officials again mounted a number of raids on timber company offices in Sarawak, with one official describing the process: "Log export values have been understated or logs have been sold at a loss to other family members in Hong Kong before being re-exported to Japan or South Korea at great profit" (Financial Times, 1994). Also, in 1994, logs worth RM5 million destined for the black market were seized by the Sarawak forestry department, and there were a number of court cases on illegal logging incidents (New Straits Times, 1995).Sibu in Sarawak is the headquarters of some of the largest timber groups in the world. As most of their operations are registered as private limited companies, with ultimate control resting with key families, they are able to operate in relative secrecy, away from public scrutiny. Another common feature is a close relationship with key politicians in the State.The biggest Malaysian companies operating overseas are mostly the ones that have become notoriously known to the Sarawak´s natives for destroying their forests, crops and polluting the rivers. Three of the top five timber giants in Sarawak are outlined below. Like other Malaysian logging companies, the wealth and technological capacity generated by exploiting natural resources in the country has formed the basis for their expansion overseas. However, massive investments on such a global scale required novel ways to raise capital. Accordingly, during 1994 and 1995, most of the privately-owned logging companies took over companies listed in the Kuala Lumpur exchange to raise funds for their expanding operations.
Main Malaysian Logging Companies Operating outside Malaysia) Samling Corporation - Guyana, Cambodia, Brazil Rimbunan Hijau - Papua New Guinea Berjaya Group - Solomon Islands, Suriname, Guyana WTK Group- Indonesia, Papua New Guinea, Cambodia, Burma, Brazil Aokam Perdana and Idris Hydraulic - China Kumpulan Emas Berhad - Solomon Islands Parklane - Vanuato Maving Brothers Ltd - Solomon Islands Benta/Mun Loon - Laos Chew Piau/Eastern Era - Papua New Guinea Solid Timber Sdn. Bhd - Guyana Tenaga kemas Sdn. Bhd - Guyana SAMLING GROUP OF COMPANIESThe Samling group of companies and its subsidiary, Samling Strategic Corporation Sdn Bhd, control around 1.5 million hectares of forests in the state of Sarawak (Asia Money, 1995). It also owns large timber operations in Guyana (another 1.69 million hectares), Cambodia (at least 800,000 hectares) and elsewhere. The Samling group of companies is a huge conglomerate consisting of 54 subsidiaries and associate companies (Asia Money, 1995). The Samling group is controlled by the ethnic-Chinese Yaw Teck Seng and his family, and the family's net worth is estimated at US$ 1.6 billion (Forbes, 1995). Whilst most of the group is made up of private companies it has recently acquired a listed company, Lingui Developments Berhad, through a reverse take-over, thus gaining access to the Kuala Lumpur Stock Exchange. The Lingui 1995 annual report shows that Samling Strategic Corporation Sdn Bhd holds 29.67% of the Lingui shares. Some securities analysts view the Samling Group as the country´s largest and most aggressive fully integrated timber group. The group´s overseas business stretches to Japan, Taiwan, South Korea, the US and Canada. (The Edge, December 1993).Politically, Yaw Teck Seng is related to a prominent Sarawak State Minister by marriage. Mirzan Mahathir, son of Malaysia's (previous) Prime Minister, also sits on the board of directors of Tamex Timber Sdn Bhd, a timber contractor in which the immediate and ultimate holding companies are Samling Strategic Corporation and Yaw Holdings Sdn Bhd. Samling Strategic Corporation is a major shareholder (70 percent) of Tamex Timber Sdn Bhd. Through Limbang Trading (Bintulu) Sdn Bhd, the group also works with Datuk James Wong Kin Min, the President of Sarawak National Party (SNAP, a component party of the National Front, the ruling coalition government in Malaysia). Datuk James Wong is also the current Sarawak Minister for the Environment and Local Government.Controversy surrounds the operations of Samling in Sarawak. The company has tried to obtain signatures on 'Goodwill Agreements' from communities which give the company carte blanche to operate as they wish. Such agreements 'place the responsibility for monitoring operations onto the community where they wish to claim a royalty, give up any claim to traditional lands used for farming and hunting or gathering and must compensate the company for any protest action they may take. Logging operations have been described on many occasions as having destroyed land, fruit trees and other forest products, as well as polluting the rivers. Such actions are said to have driven off game, depleted fish stocks from rivers and deprived communities of potable water.' (Forests Monitor, 1996). WTK GROUP OF COMPANIESWong Tuong Kwong (WTK) Group is the oldest of the big five Sarawak timber giants, founded in the 1960s by Datuk Wong Tuong Kwong. It has become a huge conglomerate with 70 subsidiaries operating in several activities such as mineral exploration, insurance, etc. and has logging concessions in Papua New Guinea as well as Sarawak (450.000 acres). It was through working for WTK that Wong Tuong Kwong's nephew, Tiong Hiew King, learnt about the business and following a split in 1975 left to establish the Rimbunan Hijau group (Asian Wall Street Journal Weekly, 1994). WTK is managed by the two sons of Wong Tuong Kwong; Wong Kie Yik and former Senator Wong Kie Nai. Kie Nai and Kie Yik are prominent financiers of James Wong's Sarawak National Party (SNAP). WTK operations in Sarawak have encountered resistance by local people. When offers of gifts such as casting nets for fishing and money were refused by the Penan of the Magoh-River region and they maintained a road blockade, WTK is said to have employed a Chinese versed in Penan matters. He threatened the people: "If you do not abandon the blockade, you had better watch out at night. I will come and kill your children..." (Manser, 1996, p39). After losing a court case in 1987 concerning blockades on private roads WTK is said to have offered the blockade spokesperson RM30,000 (US$11,900) to persuade his people to accept a profit share of RM2 (US$0.79) per cubic meter of timber to allow the company to continue working. The spokesperson declined. (Manser, 1996). RIMBUNAN HIJAU GROUP OF COMPANIESMalaysia's largest timber group is Rimbunan Hijau ("Forever Green") (Forbes, 1995). It has timber concessions in Sarawak of around 800,000 hectares (FT,1994), dominates Papua New Guinea's forestry sector and has forestry interests in New Zealand and China, as well as diversifying into other activities such as the ownership of newspapers in Malaysia and Papua New Guinea (AsiaMoney, 1995). Rimbunan Hijau also owns a 40% share in Limgang Trading Sdn Bhd, which has a 310,000 hectares concession in Sarawak (55% of Limbang is owned by Sarawak´s Minister for the Environment and Tourism, James Wong Kim Min) It is privately owned and controlled by one family, headed by Tiong Hiew King. The family are estimated to be worth about US$2.5 billion (Forbes, 1995). Whilst it remains largely a private group of companies, whose operations are veiled in secrecy, the Tiong family has sought to obtain a more public face through the reverse take-over of Berjaya Textiles Bhd (now renamed Jaya Tiasa Holdings Bhd), giving it a listing on the Kuala Lumpur Stock Exchange (Finacial Times, 1994). Its overseas logging operations appear to remain under the control of the private parts of the group and in Papua New Guinea it is the dominant player through control of a number of associate and subsidiary companies. There are recent rumours that Rimbunan Hijau group owns, or is in the process of acquiring, Primegroup Holdings, a British Virgin Islands registered company with logging interests in Guyana and Papua New Guinea. If this is true, then Rimbunan Hijau group's international logging interests are, or will shortly become, even more extensive, both geographically and in terms of size. Apart from its logging activities, the company has interests in banking, newspapers and oil-palm plantations. One of Hiew King's younger brothers is a member of the Malaysian Parliament. Despite the company´s political connections, it has been caught for tax evasion, the Asian Wall Street Journal reported. BERJAYA GROUPBerjaya Group Berhad's ownership structure and some of its past practices are well-documented. It is a large, diversified Malaysian conglomerate controlled by the Malaysian businessman Vincent Tan Chee Yioun. Berjaya Holdings include seven public and about 200 private companies involved in gambling, textiles, tourism, hotels and property development. Total group assets, according to the conglomerate's 1994 Annual Report, were around US$2.2 billion. Timber and the related processing industries are relatively new interests for Berjaya (Sizer & Rice, 1995. p.11). Like the Samling Group, the Berjaya Group also has close connections with the Mahathir family businness, the Malaysia's Prime Minister (G. Aditjondro). The group became active in the timber business in 1994. In May of that year, Berjava´s wholly-owned subsidiary, Berjaya Group Cayman Ltd, acquired a timber company and obtained a forest concession of 600,000 hectares in the Solomon Islands. In September 1994, Berjaya Group Bhd bought 60% stake of the Canadian timber company Taiga Forest Products Ltd and aimed at expanding Taiga´s operations into the US. In Novermber 1994, the Securities Commission approved a deal between Berjaya Textile and Rimbunan Hijau through which Berjaya Textile became one of the largest timber companies on the Kuala Lumpur Stock Exchange and Rimbunan Hijau got access to the stock market and the new timber concessions that Berjaya was accumulating in several countries. Mr. Tan himself has been quoted as saying 'we are not a logging company' (Solomons Star, 1994), indicating that the group do not have an established record in forestry management and calling into question the group's ability to manage timber concessions in countries such as Suriname and Guyana. Note that this company's forays into the timber sector in the Solomon Islands did not perform well and the promised investment of MR100 million (aprox. US$40 million) in downstream activities did not materialize due to a lack of interest from underwriters (South China Morning Post, 1995). Some recent incidents cast a shadow over Berjaya's corporate responsibility. In July of 1994, Tony C.T. Yeong, the managing director of Berjaya Group Limited in the Solomon Islands, was expelled from the country for allegedly attempting to bribe the Solomon's Minister of Commerce, Employment and Trade (Solomons Star, 1994). The Berjaya Group has also been accused by Malaysian environmentalists of destroying coral reefs off Redang Island, Malaysia, to develop coastal property. In another case, the Berjaya Group withdrew from a plan to develop a forested area in Malaysia following protests from environmentalists (Sizer & Rice, 1995).
COMPANY OPERATIONSCompany operations have been subject to increasing scrutiny by the government and national and international NGOs since the exposure in 1992 of years of widespread evasion of taxes through transferring profits overseas. As a result of that investigation, 20 timber companies were issued with demands for large back taxes. According to Primary Industries Minister Lim Keng Yaik, one of the biggest groups was assessed for RM100 million (Asian Wall Street Journal Weekly, 1994).In 1994, revenue officials again mounted a number of raids on timber company offices in Sarawak, with one official describing the process: "Log export values have been understated or logs have been sold at a loss to other family members in Hong Kong before being re-exported to Japan or South Korea at great profit" (Financial Times, 1994). Also, in 1994, logs worth RM5 million destined for the black market were seized by the Sarawak forestry department, and there were a number of court cases on illegal logging incidents (New Straits Times, 1995).Sibu in Sarawak is the headquarters of some of the largest timber groups in the world. As most of their operations are registered as private limited companies, with ultimate control resting with key families, they are able to operate in relative secrecy, away from public scrutiny. Another common feature is a close relationship with key politicians in the State.The biggest Malaysian companies operating overseas are mostly the ones that have become notoriously known to the Sarawak´s natives for destroying their forests, crops and polluting the rivers. Three of the top five timber giants in Sarawak are outlined below. Like other Malaysian logging companies, the wealth and technological capacity generated by exploiting natural resources in the country has formed the basis for their expansion overseas. However, massive investments on such a global scale required novel ways to raise capital. Accordingly, during 1994 and 1995, most of the privately-owned logging companies took over companies listed in the Kuala Lumpur exchange to raise funds for their expanding operations.
Main Malaysian Logging Companies Operating outside Malaysia) Samling Corporation - Guyana, Cambodia, Brazil Rimbunan Hijau - Papua New Guinea Berjaya Group - Solomon Islands, Suriname, Guyana WTK Group- Indonesia, Papua New Guinea, Cambodia, Burma, Brazil Aokam Perdana and Idris Hydraulic - China Kumpulan Emas Berhad - Solomon Islands Parklane - Vanuato Maving Brothers Ltd - Solomon Islands Benta/Mun Loon - Laos Chew Piau/Eastern Era - Papua New Guinea Solid Timber Sdn. Bhd - Guyana Tenaga kemas Sdn. Bhd - Guyana SAMLING GROUP OF COMPANIESThe Samling group of companies and its subsidiary, Samling Strategic Corporation Sdn Bhd, control around 1.5 million hectares of forests in the state of Sarawak (Asia Money, 1995). It also owns large timber operations in Guyana (another 1.69 million hectares), Cambodia (at least 800,000 hectares) and elsewhere. The Samling group of companies is a huge conglomerate consisting of 54 subsidiaries and associate companies (Asia Money, 1995). The Samling group is controlled by the ethnic-Chinese Yaw Teck Seng and his family, and the family's net worth is estimated at US$ 1.6 billion (Forbes, 1995). Whilst most of the group is made up of private companies it has recently acquired a listed company, Lingui Developments Berhad, through a reverse take-over, thus gaining access to the Kuala Lumpur Stock Exchange. The Lingui 1995 annual report shows that Samling Strategic Corporation Sdn Bhd holds 29.67% of the Lingui shares. Some securities analysts view the Samling Group as the country´s largest and most aggressive fully integrated timber group. The group´s overseas business stretches to Japan, Taiwan, South Korea, the US and Canada. (The Edge, December 1993).Politically, Yaw Teck Seng is related to a prominent Sarawak State Minister by marriage. Mirzan Mahathir, son of Malaysia's (previous) Prime Minister, also sits on the board of directors of Tamex Timber Sdn Bhd, a timber contractor in which the immediate and ultimate holding companies are Samling Strategic Corporation and Yaw Holdings Sdn Bhd. Samling Strategic Corporation is a major shareholder (70 percent) of Tamex Timber Sdn Bhd. Through Limbang Trading (Bintulu) Sdn Bhd, the group also works with Datuk James Wong Kin Min, the President of Sarawak National Party (SNAP, a component party of the National Front, the ruling coalition government in Malaysia). Datuk James Wong is also the current Sarawak Minister for the Environment and Local Government.Controversy surrounds the operations of Samling in Sarawak. The company has tried to obtain signatures on 'Goodwill Agreements' from communities which give the company carte blanche to operate as they wish. Such agreements 'place the responsibility for monitoring operations onto the community where they wish to claim a royalty, give up any claim to traditional lands used for farming and hunting or gathering and must compensate the company for any protest action they may take. Logging operations have been described on many occasions as having destroyed land, fruit trees and other forest products, as well as polluting the rivers. Such actions are said to have driven off game, depleted fish stocks from rivers and deprived communities of potable water.' (Forests Monitor, 1996). WTK GROUP OF COMPANIESWong Tuong Kwong (WTK) Group is the oldest of the big five Sarawak timber giants, founded in the 1960s by Datuk Wong Tuong Kwong. It has become a huge conglomerate with 70 subsidiaries operating in several activities such as mineral exploration, insurance, etc. and has logging concessions in Papua New Guinea as well as Sarawak (450.000 acres). It was through working for WTK that Wong Tuong Kwong's nephew, Tiong Hiew King, learnt about the business and following a split in 1975 left to establish the Rimbunan Hijau group (Asian Wall Street Journal Weekly, 1994). WTK is managed by the two sons of Wong Tuong Kwong; Wong Kie Yik and former Senator Wong Kie Nai. Kie Nai and Kie Yik are prominent financiers of James Wong's Sarawak National Party (SNAP). WTK operations in Sarawak have encountered resistance by local people. When offers of gifts such as casting nets for fishing and money were refused by the Penan of the Magoh-River region and they maintained a road blockade, WTK is said to have employed a Chinese versed in Penan matters. He threatened the people: "If you do not abandon the blockade, you had better watch out at night. I will come and kill your children..." (Manser, 1996, p39). After losing a court case in 1987 concerning blockades on private roads WTK is said to have offered the blockade spokesperson RM30,000 (US$11,900) to persuade his people to accept a profit share of RM2 (US$0.79) per cubic meter of timber to allow the company to continue working. The spokesperson declined. (Manser, 1996). RIMBUNAN HIJAU GROUP OF COMPANIESMalaysia's largest timber group is Rimbunan Hijau ("Forever Green") (Forbes, 1995). It has timber concessions in Sarawak of around 800,000 hectares (FT,1994), dominates Papua New Guinea's forestry sector and has forestry interests in New Zealand and China, as well as diversifying into other activities such as the ownership of newspapers in Malaysia and Papua New Guinea (AsiaMoney, 1995). Rimbunan Hijau also owns a 40% share in Limgang Trading Sdn Bhd, which has a 310,000 hectares concession in Sarawak (55% of Limbang is owned by Sarawak´s Minister for the Environment and Tourism, James Wong Kim Min) It is privately owned and controlled by one family, headed by Tiong Hiew King. The family are estimated to be worth about US$2.5 billion (Forbes, 1995). Whilst it remains largely a private group of companies, whose operations are veiled in secrecy, the Tiong family has sought to obtain a more public face through the reverse take-over of Berjaya Textiles Bhd (now renamed Jaya Tiasa Holdings Bhd), giving it a listing on the Kuala Lumpur Stock Exchange (Finacial Times, 1994). Its overseas logging operations appear to remain under the control of the private parts of the group and in Papua New Guinea it is the dominant player through control of a number of associate and subsidiary companies. There are recent rumours that Rimbunan Hijau group owns, or is in the process of acquiring, Primegroup Holdings, a British Virgin Islands registered company with logging interests in Guyana and Papua New Guinea. If this is true, then Rimbunan Hijau group's international logging interests are, or will shortly become, even more extensive, both geographically and in terms of size. Apart from its logging activities, the company has interests in banking, newspapers and oil-palm plantations. One of Hiew King's younger brothers is a member of the Malaysian Parliament. Despite the company´s political connections, it has been caught for tax evasion, the Asian Wall Street Journal reported. BERJAYA GROUPBerjaya Group Berhad's ownership structure and some of its past practices are well-documented. It is a large, diversified Malaysian conglomerate controlled by the Malaysian businessman Vincent Tan Chee Yioun. Berjaya Holdings include seven public and about 200 private companies involved in gambling, textiles, tourism, hotels and property development. Total group assets, according to the conglomerate's 1994 Annual Report, were around US$2.2 billion. Timber and the related processing industries are relatively new interests for Berjaya (Sizer & Rice, 1995. p.11). Like the Samling Group, the Berjaya Group also has close connections with the Mahathir family businness, the Malaysia's Prime Minister (G. Aditjondro). The group became active in the timber business in 1994. In May of that year, Berjava´s wholly-owned subsidiary, Berjaya Group Cayman Ltd, acquired a timber company and obtained a forest concession of 600,000 hectares in the Solomon Islands. In September 1994, Berjaya Group Bhd bought 60% stake of the Canadian timber company Taiga Forest Products Ltd and aimed at expanding Taiga´s operations into the US. In Novermber 1994, the Securities Commission approved a deal between Berjaya Textile and Rimbunan Hijau through which Berjaya Textile became one of the largest timber companies on the Kuala Lumpur Stock Exchange and Rimbunan Hijau got access to the stock market and the new timber concessions that Berjaya was accumulating in several countries. Mr. Tan himself has been quoted as saying 'we are not a logging company' (Solomons Star, 1994), indicating that the group do not have an established record in forestry management and calling into question the group's ability to manage timber concessions in countries such as Suriname and Guyana. Note that this company's forays into the timber sector in the Solomon Islands did not perform well and the promised investment of MR100 million (aprox. US$40 million) in downstream activities did not materialize due to a lack of interest from underwriters (South China Morning Post, 1995). Some recent incidents cast a shadow over Berjaya's corporate responsibility. In July of 1994, Tony C.T. Yeong, the managing director of Berjaya Group Limited in the Solomon Islands, was expelled from the country for allegedly attempting to bribe the Solomon's Minister of Commerce, Employment and Trade (Solomons Star, 1994). The Berjaya Group has also been accused by Malaysian environmentalists of destroying coral reefs off Redang Island, Malaysia, to develop coastal property. In another case, the Berjaya Group withdrew from a plan to develop a forested area in Malaysia following protests from environmentalists (Sizer & Rice, 1995).
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