This report is an output of the project Hardwood Plantations in the Tropics and Subtropics (GCP/INT/628/UK), funded by the United Kingdom and executed by FAO. The overall aim of this project was to contribute to regional and global planning of timber (specifically hardwood timber) supplies in the medium-term. This study covered the case study of Malaysian tropical forest plantations.
The study provides an overall historical resume of forest plantations in Malaysia showing that first plantings of rubber (Hevea brasiliensis) were made already at the end of 1800s and in the beginning of 1900s for rubber production. Forest plantations have been dominated by Acasia mangium but many other species like teak (Tectona grandis), sentang (Azadirachta excelsa) and Eucalyptus and Pinus spp. species have been planted on a wide scale, too. Forest plantation area in 1997 was 180,000 ha of which 90,000 ha in Sabah, 77,000 in Peninsular Malaysia and 13,000 ha in Sarawak. Besides forest plantations there are some 1,650,000 ha of rubber plantations. It is estimated that annually around 2 million m3 of hevea wood logs are harvested and utilized for the production of furniture and furniture components.
Forest plantation management is discussed to meet deficit in timber supply, to reduce pressure on natural forests and to ensure better land use. Constraints and challenges in forest plantations like ecological issues, land availability, species selection, supply of planting material, labour and mechanization are presented.
Planting is constrained by a number of economic factors. These are the high initial capital investment to establish the forest plantations; the long period between initial planting efforts and harvesting and thus the corresponding concern for the high capital cost or interest being carried until harvesting period; the high biological and economic risk involved in forest plantations; and unattractive and inappropriate investment incentives provided by the government for forest plantation investments in the past.
The Government has recently offered a monetary incentives package in the form of Pioneer Status (tax exemption from corporate tax of 100% for 10 years on all statutory income) and Investment Tax Allowance (an investment tax allowance at the rate of 100% of the statutory income for 5 years).
Economic profitability of six different alternatives are compared namely: Hevea plantations for timber and latex production; Hevea plantation for timber production; sentang plantation; teak plantation; acacia plantation; and mixed plantation: of Hevea-sentang and Hevea-teak. As monoculture teak appears to provide highest return. The profitability of Hevea wood plus latex extraction depends highly on the price of Hevea wood. Mixed plantation of Hevea trees interspersed with sentang or teak is considered appropriate for smallholdings and is intended to maximize revenue from logs while ensuring a continuous flow of annual income during the latex exploitation period.
