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Session 9: Adapting institutions to the future SESSION

Are forestry institutions failing to adapt?

Maharaj Muthoo1

Awareness is growing and dialogue is underway about so-called sustainable forest management in the Asia–Pacific region. But the requisite institutional mechanisms and means are beyond the current culture and capacity of most of the entities entrusted with the custodianship of forest resource assets by governments. Inclusive approaches and measures are needed to institute and implement appropriate policies and programmes for addressing Millenium Development Goals and climate change that compensate communities for environmental and social services, recognize their ownership, mitigate their vulnerability and risks, leverage their entrepreneurial potential, tap investment resources and valorize forest produce and products with unobstructed access to markets. Break-out strategies and innovative institutional infrastructure are warranted for converting these challenges into an opportunity. This calls for synergies among national policies and institutions, their operational and legislative frameworks, equitable benefit-sharing and stakeholder stewardship, environmental agreements and international cooperation and private–public–people partnerships for realizing the region's comparative advantage of forest-based trade and services in the globalization process. Essential for attaining such a scenario are fast-paced and well-worked institutional reforms without further procrastination by forestry organizations that have been branded as bureaucratic, hierarchical and static. As they fail to adapt to existing challenges and emerging opportunities, they are relegated to back-burner status. This is happening in many cases. Others have taken over and overtaken the forestry agenda.

In the quest for redesigning and energizing existing organizations as the policy pillar of updated institutional mechanisms, the goal is good governance and modernized managerial modus operandi for holistic delivery of cross-sectoral sustainable forest management. It is a major task in view of the prevailing perception of superannuated forestry institutions and the lack of will and vision for the much-needed revolutionary reform. This calls for more than mere adaptation. It is a do-or-die scenario.

Keywords: forest sector, sustainable forest management, superannuated institutions, organizational change, revolutionary reform, change, stakeholders

Introduction

The forestry sector in the Asia–Pacific region (APR) has witnessed some slow and some rapid changes over the recent decades. Traditional focus on protection and extraction has been challenged. Awareness has been growing, as well as acceptance of the fact, that forests play a critical role in the well-being, livelihoods and food security of the millions of poor forest-dependent communities. Public forestry departments, which have dominated the institutional scene, have been or are being forced to move away from being "supervising subjects", as the de facto owners of forest resources, to "supporting citizens" as custodians of a public resource (Brown et al. 2002). At the same time, a plethora of new players has entered the institutional arena; some challenging the role and even the very existence of public forestry entities. The pace of change is only likely to accelerate, forcing the institutional actors, particularly the state forestry services, to question their roles, seek a strategic space in the sector and reinvent themselves in order to remain relevant.

Moving from the traditional "command-and-control organizations" to "coordinate and connect" mode (Malone 2004) is a challenge for government-run forestry departments, which are perceived to exemplify the ABC (arrogance, bureaucracy and complacency) of enfeebled organizations (Foster and Kaplan 2001). While addressing the critical institutional issues which impede the proper functioning of these departments, mere organizational restructuring is unlikely to work. To remain relevant in the future, organizational re-engineering backed by wide-ranging institutional reforms is a dire need.

Forestry sector challenges and the role of government-run forestry entities

Most countries in the APR adopted the hierarchical structures and processes prescribed by colonial influence. These have been retained well after independence. The raison d'•tre for such structures was to preserve, protect and sustainably harvest high-value timber to meet the needs of industry and defense forces. Even where forests were under local rulers, this system prevailed to protect the hunting grounds for maharajas and mandarins.

In the absence of counterbalancing forces, the oligarchic and government-run forestry departments played the roles of policy-makers, landowners, resource managers, entrepreneurs, knowledge creators, educators and police. Given the large land areas under the domain of the state forestry systems, a structured hierarchy and a strong command-and-control mechanism were viewed as necessary and relevant. These mutually re-enforcing functions, although contradictory and conflict-ridden, created a peculiar stability in the forestry departments. As a consequence, government-run forestry departments enjoyed absolute power and political patronage. The outcome was a system often characterized by arrogance, insularity, complacency and an inherent inability and unwillingness to adapt to the changing environment.

The other key player in this sector — industry — consciously or unconsciously understood the role of forestry departments better than other players and entered into arrangements which led to huge profits, proportions of which were generally shared with people in power. This led to forestry departments often turning a blind eye to illegal logging, which was depleting and destroying the very resource that they were mandated to "preserve, protect and sustainably harvest." At the same time, the disenfranchisement of local communities from formal rights over resources led to illicit use on a de facto open access basis, causing further forest degradation.

Growing resource depletion and resulting loss of livelihoods among forest-dependent communities and their agrarian counterparts led to increasing alienation of the resource-dependent population with growing demand for rights over resource ownership and usage. New players began to occupy critical strategic space and perform roles which hitherto were overlooked by government-run forestry departments. They responded to the changing environment by attempting to, and succeeding in, further consolidating their power base, refusing to listen to and understand the emerging needs of the people and rapidly changing contextual realities, consciously disregarding alteration in their mode of functioning. Saxena (2004) calls it the culture of "lick up and kick below". Despite this, or perhaps by doing so, the departments managed to occupy a strategic space in the national forestry sector, perhaps purely on account of their respective states' backing. They were, however, presiding over a crumbling empire.

Figure 1. Generalized trend in the APR forestry sector and emergence of new institutional players

The advent of the twenty-first century has introduced a set of complex and increasingly interlinked issues related to the forestry sector. These issues demand innovative solutions delivered jointly by a set of institutional actors. An array of scientific, technical, social, political, cultural, economic, environmental, managerial and institutional issues needs to be quickly assimilated, understood and acted upon in order to meaningfully and effectively respond to these challenges. New institutional players have emerged and are addressing these issues at various levels — international, national, regional and local. Citizens' action groups and the media are becoming vociferous, drawing upon increased information flows and knowledge exchange.

A national anchor that could coordinate the inputs and learning from multiple sources, adapt them to suit local needs and facilitate meaningful implementation is conspicuously missing. Forestry departments are envisaged as being ideally placed in the institutional set-up to play this role. But can they? Probably not, given the obstructive factors of hierarchy and complacency, among other values and structures they have inherited. They could, if they were willing to shed their traditional ways of functioning and able to re-invent themselves as pro-active players in the changing context of cross-sectoral stakeholder synergies and knowledge networking.

What ails government forestry organizations?

Forestry entities in the APR typify the traditional systems and structures that were designed by colonial influence in the late nineteenth and early twentieth centuries for so-called "administration" purposes. The situation in the twenty-first century is vastly different. Yet, these entities adhere to bygone bureaucratic mechanisms and to the values, functions and structures that have become out-dated. Why is this so? What ails the forestry departments? The answer perhaps lies in nonchalance and a non-starter conformist culture that runs counter to innovation.

Archaic organizational systems

The organizational structures inherited in most APR countries are oriented towards adherence to procedure, and at best to inputs and outputs, but not outcomes. In addition, critical functions are strictly compartmentalized, preventing effective transfer and exchange of information, knowledge and expertise across functions.

Weak and decrepit decision-making processes

Decision-making is science and art which is perfected through practice and learning. But the prevailing organizational environment is rarely conducive to such perfection.

Given the excessive dependence on procedure and a chain of command, more often than not critical decisions either get delayed beyond their shelf life, thus rendering them useless, or else do not get taken at all. Also, the onus of taking many decisions, even trivial, invariably lies with the top echelons. Those at lower levels seldom get an opportunity to exercise and develop their decision-making abilities. More so the frontline staff who are in touch with ground-level realities and local communities on a daily basis. Officials also do not exercise their decision-making skills for fear of retribution. Innovation and risk-taking are discouraged. Even when opportunities arise for taking a decision, they prefer to avoid responsibility and play it safe. Concomitantly, therefore, there is an enormous backlog of work lying on the desks of higher level officials. They have no time to innovate or to promote innovation, much less to undergo the learning processes.

To make matters worse, seniority supersedes merit and suitability. As such, most officials who occupy key decision-making positions have very short tenures to be effective. They prefer not to spoil their service records by taking potentially unpopular decisions. As they have been indoctrinated into a habit of not taking decisions during most of their service tenure, it is generally unlikely that they would begin to do so at the end of their careers, no matter the power that they wield.

Information asymmetry and information hoarding

Given the command-and-control system in forestry departments, officials feel constrained to share information freely and openly with their peers and others. Information sharing for managerial purposes is seldom done with so-called subordinates. As a result, pockets of information are created and these are used by the possessor for personal gain and/or career advancement. The gathering, storage and use of such information are dependent solely on the ingenuity of the officials. Given that most officials occupying middle and senior level positions in state-run forestry entities come into the system after either meeting stringent entry requirements or after satisfying powerbrokers, the individual ingenuity of the concerned officials is never in question. While strategic information can and should be used to advance organizational objectives, the use of information for personal gain is what exemplifies the situation in most forestry departments. Transparency is rare. Secrecy or so-called confidentiality is common.

Poor communication processes

Forestry entities are yet to understand and/or appreciate the use of communications for managerial and partnership purposes. Communication processes among officials and staff of the department and between forestry department officials and other stakeholders are determined not by managerial need, but by the power equations between the two parties. As a result, the culture of command-and-control has been institutionalized in the interactions between forestry department officials. Moreover, driven by a misplaced sense of power, they tend to look down on the day-to-day forestry sector stakeholders, other than powerbrokers and well-connected sections of society. Small-scale local entrepreneurs, poor forest-dependent communities and forest fringe villagers are often ignored, even if they are increasingly co-opted, often at the behest of politicians, particularly during the election season. Communication and awareness-raising among various target groups is yet to be part of the culture and a core competency of forestry organizations.

Diffused accountability relationships

Knowledge networking is too novel a paradigm to be taken seriously by state forestry entities in the current static scenario. Confidentiality and formality are mostly the routine. Transparency and accountability largely are only tokens of talk. Procedural rigour and rigidity are the norm rather than adaptability, flexibility and openness. Indeed, who are government-run forestry departments accountable to? In democratic countries, as in most of the APR, the answer should ideally be "the people". If asked, forestry officials may also answer accordingly. However, in practice, government-run forestry departments seem to be accountable to none other than themselves. This is perhaps the most critical hurdle to reforming the departments. It is difficult to overcome, like breaking a steel frame, if anyone has the vision and courage to do so.

Performance is measured through achievement of "targets" not "outcomes"

Across the APR region, the performance of forestry departments is measured through whether or not they have been able to meet their predetermined annual physical and financial "targets". The entire forestry department machinery is geared towards meeting these simplistic targets. And when targets are not met for whatever reason, figures are often arranged to demonstrate that they have been achieved. The system encourages shrouded data and manipulation in place of honesty and transparency. Getting away with such manipulations is easy in the absence of an independent monitoring and evaluation (M&E) system and/or transparent M&E indicators. While the current and emerging needs of the sector are heavily loaded, indeed as they should be, on achievement of outcomes and demonstrating how the outcomes were achieved and validated, this is a concept that is yet to be fully understood, appreciated or even acknowledged by forestry departments.

Training and orientation not synchronized with ground realities and future needs

Forestry department officials across countries in the APR are often good professionals per se, inducted through carefully designed selection processes and given fairly thorough pre-induction training. As a result, the best and the brightest enter national forestry services. This used to be the case in countries like India, especially before the recent economic reforms threw open enticing job opportunities to talented young people in other sectors. Whatever the situation, it cannot be denied that some very bright young people enter national and state forestry services. However, while the pre-induction training is rigorous, its focus is primarily on "scientific forestry" and "administrative functions". Managerial skills are seldom acquired. As such, the entire preinduction orientation of young forestry service officials focuses on being good foresters and able administrators, but mostly not on being good resource managers.

Officers attend several in-service training programmes during their careers. However, more often that not, the training is not aligned to their functional requirements. The shelf life of skill transfer or knowledge building through short-term training programmes is limited. Hence, even when officials have an opportunity to use specific training inputs, they have either forgotten what they learned, or the training received in the past has little practical value, unless it is updated regularly.

Administrators versus managers

Forestry organization officials are trained and indoctrinated as good administrators, while the current need is for competent resource managers who can continuously learn, adapt, coordinate and implement plans based on in-depth knowledge about holistic forest management. Forestry departments' responses to twenty-first century challenges are shaped by mindsets and practices that were relevant in the nineteenth and early parts of the twentieth century. The challenges of the twenty-first century call for smart, nimble and sure-footed movement, working through small focused teams of specialist professionals and real-time responses. But forestry departments respond to these needs through monolithic bureaucracies, seeking solutions through outdated channels and generalists working in sharply compartmentalized functional areas.

Forestry officials are not equipped to be resource managers, being hardly more than technically trained administrators. Little is done to strengthen existing forestry education and training institutions by providing adequate facilities in terms of trained teaching staff, improved course content and curricula. Moreover people with skills in managerial and other areas and dimensions should be employed to enhance overall intersectoral abilities. However vision and resources are absent for education and training facilities to be rationalized and upgraded to cater to the changing needs of the forestry sector.

Outdated mindsets, value systems and behavioural and attitudinal issues

Focused and sustained efforts to manage change could be attained. But the biggest challenge is to change mindsets. There is no "one size fits all" solution. Every organization, although seemingly similar to another of the same coin, is different, as are entrenched mindsets and behavioural and attitudinal attributes. While similarities in trends are perceptible, solutions need to be customized to be effective. What is even more challenging is the fact that forestry departments have to be guided, and perhaps forced, to accept that existing attributes and mindsets need to be changed to make them relevant for today and tomorrow. This is perhaps the most profound, and paradoxically the most lasting change that needs to be generated. Superficial changes in the name of reforms, reshuffling the boxes and changing designations will not suffice (Nair 2007) if there is no realignment of mindsets, behavioural and attitudinal attributes and value systems. This has not worked and will not work in the current static state.

Organizational reforms and wider institutional reforms — the need to tango

Presence of powerful informal networks and formal straitjackets

Most institutions tend to have one or more informal networks within the organization, outside its formal structure. These informal networks are sometimes much stronger and can have either a positive or negative influence. Especially in the case of income-generating public sector forestry organizations, these informal networks could be, and generally are, very powerful and strongly linked with other informal networks in the political system. Any change that could potentially undermine their influence is likely to be strongly resisted. Even in the case of public sector organizations that are purportedly "professional" what transpires is largely determined by the informal "less professional" networks (Nair 2007).

Reform of existing forestry organizations is critical, but bringing about the needed change will be difficult. One of the problems confronting public forestry organizations is that of being part of the governmental system. There are inherent difficulties in making major changes that deviate from the overall system. Forestry departments, notwithstanding the diversity of functions and the flexibility that are required, are compelled to adhere to a common set of rules and regulations, including for example, personnel and financial management. In the absence of broader institutional changes encompassing the entire public sector, it is often extremely difficult to bring about institutional changes in the forestry sector. The overall culture has to be in tune with change and change management, as exemplified in New Zealand by abolishing the Forest Service as part of the overarching governance, privatization and related reforms. The APR needs to appreciate "an idea of government as permanent revolution, thrusting change upon recalcitrant but ultimately grateful" people and "revolutions need strong leaders" (Bagehot 2007).

Limits to sector-focused reforms

The reform of forest organizations is unlikely significantly to change outcomes, if these are not accompanied by wider institutional and governance reforms.

World Bank (2005).

Change is not a one-way street

Once established, institutions assume various characteristics. While they are able to respond to external changes, they are also able to influence the external environment, more often to ensure their survival. In many cases they can, and do, manipulate the information in order to create a favourable image, contrary to the reality for enabling it to survive. This applies to most public forestry agencies.

Quite often the inherent ability to respond to change is also linked to the age of institutions, and on the whole, the older the institution, the more difficult generating changes becomes. In a number of countries the public forestry service is the oldest civil service, sometimes more than a century old. Customs, practices and informal networks that develop over a long period may masquerade as virtues of stability and continuity, becoming stumbling blocks to change. Even after major political changes, such institutions may remain intact. Especially if the organization provides power and influence to its staff, changes will be very slow and the system could hijack the change process to its advantage. Assumed professionalism often provides a convenient ploy to maintain the status quo.

Established traditions — strength or constraint?

In many countries forest authorities are the oldest, largest and most powerful land management agencies. This long tradition has facilitated a process of identity building (and) the development of an administrative sense of mission, which is very effective in perpetuating conformity to established norms and traditions and resisting external pressures.

Pettenella (1997). True today, ten years later, through most of the APR.

Bargaining and break-out strategy

Successful leaders adopt, internalize and express strategic principles and practices that dramatically increase the possibility of making the break and establishing a dominant position (Lawton et al. 2006). But the organizational changes demanded by strategic success are numerous and all embracing. The organizational requirements of break-out invariably are formidable, and if these requirements are not met, then the goal may be frustrated. Managing the goals is thus integral to strategic enactment in break-out situations. The dynamics of break-out strategy and demands made upon organizations can be more fully appreciated through reference to the revised strategy, built on three guiding pillars: harnessing the potential of forests to reduce poverty, integrating forests into sustainable economic development and protecting global forest values along with the development of appropriate institutions to ensure good governance and the mainstreaming of forests into national development programmes.

In this context, any toolbox for the leaders of complex forestry organizations needs the application of game theory, and chaos theory will be helpful to leaders of institutions that must work in contexts where change is the only constant and where continuous adaptation, anticipation and visualization of unseen patterns are necessary prerequisites for effective leadership and stewardship. In practice, forestry agencies and "national governments are often deploying the game theory but not meaningfully or knowingly. They are continuously engaged in a variety of negotiations on environmental and related issues, such as carbon emissions trading, biodiversity conservation and intellectual property rights. An important determinant of the outcome of bargaining is the extent to which information about various variables or factors is known to all the parties. A key principle of the role of such asymmetric information on the bargaining outcome is that costly delays are mechanisms through which privately held information is credibly communicated to the uninformed party. Knowledge is veritable power in negotiations and enhances the bargaining strength of the better informed" (Muthoo 2000).

However, foresters are missing the bus in this bargaining game, largely because typical forestry organizations are not devoted to improving local governance unless it adds to their power. Watching leaders "make things worse by creating conflicts" and by "being demagogues", it is plain that they "need skills of mediators" (Gerzon 2006). Institutional mechanisms and extra effort are necessary to enable people's participation in decision-making by those "who depend for their livelihoods on forest resources but are limited in participation through lack of information, of understanding of their rights and of time and resources to engage in decision-making processes, let alone in legal proceedings" (Schmidt 2006).

Given the competing and "often-irreconcilable claims on forests", sustainable forest management is "a conflict resolution issue" (Lele 2002). Sagacious deployment of game theory could help, but how many forestry organization and their staff employ it? "It isn't the changes that do you in, it's the transitions" (Bridges 2003). Yet, transition is underway, a process by which people unplug from an old world and plug into a new world. They start with an ending and finish with a beginning — beginning with creative destruction. Destroying and creating for the sake of the people and the region's forest resource assets with increasing value on human well-being. There is still scope to undertake robust revolutionary reform (refolution) rather than relegating the region's government forestry organizations to the backstage. This would be part of the break-out strategy, before it is too late for fortress forestry organizations to become genuine custodians and open-minded managers of forests and related resources.

If such a break-out strategic policy is taken to mean what institutions actually do, it is important to analyse institutional factors in policy work. Three main aspects of institutions generally need to be understood: institutional roles — the functional mandates of some organizations in relation to others, internal dynamics and characteristics and factors shaping institutional change. This needs champions of change, to counter resistance to change, with bargaining power using knowledge and persuasion, power analysis and power to the people. An example comes from India where the forest departments are apparently accommodating new initiatives for community participation by inventing Joint Forest Management, but it is often a tool to extend their power and "regain control" (Springate-Baginski 2007). The aim should not be to become "fortress forestry institutions", but to derive a legitimate mandate, with commitment to learning, leadership skills, leveraging resources and equitable relations with stakeholders and other institutions — to catalyse a break-out culture.

APR case studies and snippets about institutional reforms

Despite the burgeoning urbanization in the APR, there is a lack of urban and peri-urban forestry institutions and greening policies and programmes at the national level. This calls for "integration of institutions, professionals and disciplines" (likewise emissions' trading and ecotourism with emerging potential) — forestry agencies lack all these capacities, to say the least (Akerlund 2006). They are missing untold opportunities.

Forestry institutions must become innovative and proactive rather than remaining reactive; they must help to shape the future and not attempt vainly to retain the past. In too many countries in the APR, forestry institutions have become victims of their own immobility. The result in the face of a changing world with evolving demands on forestry has been decreasing effectiveness followed by the loss of stakeholder support. This has led to reduced financial and human resources devoted to forestry institutions. The "resources of the Thai Royal Forest Department (RFD) have become limited to implement its mandate, clarity about which is increasingly lacking and its organizational structure is not optimal, either in terms of human resources or its tasks and means" (ITTO 2006). Growing concern over an "exclusive, centralized approach has led the RFD to increasingly attempt greater engagement with civil society, but with little success (UNDP 2006).

Thailand is not an exception. In extreme cases the essential functions of forestry institutions have been re-assigned to institutions with only marginal core competency in forestry. "This downward spiral can be arrested and reversed only if forestry institutions themselves take the lead role in conceptualizing and implementing the changes needed for restored and continued effectiveness" (Dembner 1994). The situation has worsened. It is better to be prepared to face "significant, often traumatic, change in organizations" (Kotter 1996), notwithstanding several success stories, many through community-led initiatives (Durst et al. 2005).

Institutional uncertainty about how public forestry administration will be organized is a major obstacle. In fact, many APR forestry departments have a feudal past with policing to protect the forests as the main thrust. Over time there have been pressures/compulsions to transform them as resource management and facilitating organizations. However, often the feudal values and perceptions linger on, promoting a culture of conformity that makes changes extremely difficult (Nair 2007).

Transfers of "productive resources to the poor — such as property rights reforms in forests "are often top-down initiatives, rather than required institutions and "coalitions of the poor", which forestry organizations rarely help to build and work with (IFAD 2007a). CHARM in Cordillera (IFAD 2002) and mangrove reforestation in Kalibo (Durst et al. 2005) are exemplary Community-Based Forest and Natural Resources Management (CBNRM) initiatives authorized by the Philippines Forestry and other pertinent agencies, which awarded secure rights over the forests and enabled the local communities to capitalize on the forest asset and establish successful ecotourism and other ventures. But, on the whole, there is not a clear answer to the question of whether CBNRM has promoted equity in rural societies in Asia (Malla 2006). There are cases where people have preferred a nurturant style of leadership, i.e. a supportive relationship with forestry departments, rather than just being participatory (Parul 2002).

People are the main concern, rather than the resources they use or their governments. Despite policy-level recognition of the potential of local people to conserve and manage forest resources, forestry departments remain essentially the estate managers paying little attention to technical and scientific competence, technology diffusion, tree productivity and economics. Morale in the forestry departments "is at an all time low" and their "structure no longer matches their goals and strategies". Long-established policies and institutions no longer meet the needs of society. "Reform of the sector is, therefore, urgently needed" (IFAD 2007b). In any case, new policies and legislation in various APR countries regarding the empowerment of forest dwellers and local communities will force the reforms if not revolution, as is expected by the recent Right to Information Act and the Tribal (Forest Dwellers) Rights Act in India — which the stalwarts of the forestry agencies "opposed" till the D-day in December 2006.

India has one of the oldest professional forestry services in the world. Deficient data and inadequate market information are among important institutional gaps, despite the burgeoning demand and democratic set-up. Modernizing the system and nothing less than a comprehensive reform of the forestry sector will be necessary if India is to meet its market demand while conserving its forests (Muthoo 2005). The World Bank (2006) study in India prescribes an integrated and inclusive approach that engages with the legal and policy framework, institutions "and marketing systems, that will improve local livelihoods in a community-based forestry model." There are lessons from elsewhere about adaptation of institutional and policy frameworks which "assist forestry organizations in developing market orientation" with a trend "towards separation of state authority and commercial functions" (Dieterle 2004). Markets are explicitly mentioned because of their role in determining how the poor can convert the resources at their disposal into livelihood assets (Dorward et al. 2003).

China's greening effort and reforestation are acknowledged worldwide and the State Forest Administration announced forestry sector reform in 2006 focused on forest zoning and forest tenure. Already, responsibility for forest use and management has shifted away from the state towards rural households "and to generate private returns from forestry investment" (Wenming et al. 2002). It is no wonder that China now leads the world in both roundwood imports and furniture exports and is seen as "an existential threat" for manufacturers in Europe and elsewhere (UNECE/FAO 2007). Yet environmentalism in China is stated to have "been robbed of the opportunity, as well as the immediate urgency, to openly confront the government — so different is the bargaining theory in action there" (Ho 2001).

Cambodia has experienced some of the highest deforestation rates in the APR, with forests as a source of revenue for the government and others, legally and illegally. Under a new marketoriented economy, many forest concessions have been granted to large companies by different authorities and without clear legality, coordination or public disclosure. This has resulted in a frenzy of logging, conflicting claims and confusion. A community forestry (CF) project has concluded that negligible land area is "allocated" to communities, but it is the only area under "active management", that "no single organization can effectively undertake CF from the national to the local levels and across all types of contexts" and that there is added "value of partnerships as well as inter-institutional and multi-sectoral co-ordination" (Kamnap and Ramony 2006).

In Indonesia, the story is not dissimilar, with a senior forestry ministry official admitting that the government has failed to reach its 2007 forest rehabilitation target due to lack of funds and poor coordination (Jakarta Post 2007). Indeed the need and capacity building for institutionalized resource mobilization for forestry in the APR is urgent, possibly by setting partnership consortia and revolving funds, as has been accomplished successfully in Bhutan or by making private sector involvement a paying proposition so that this potentially major player can become engaged (Ganguly 2002).

Viet Nam provides an exemplary case. The Prime Minister (2007) promulgated a forestry development strategy for renovating forestry sector institutions: to create a favourable environment according to market orientation; to strengthen the organizational system, with the broad participation of households, communities and the private sector; and to update policy and forestry institutional systems to be more decentralized to local levels. It is being backstopped by a "Forestry Partnership" institution with an independent coordination office in the Ministry of Agriculture and Rural Development. The partnership per se focuses on capacity building to use effective information systems and mobilize resources to support sectoral priorities.

Lao PDR has launched a reforestation campaign to recoup lost ground and to combat illegal logging. It is one of the few APR countries to have adopted certification, but is being questioned about the origin and legitimacy of some of the certified timber — this calls for improved institutional mechanisms (Lang 2006; PhonNgem 2007). Malaysia has led the region in this context by having established a national forest certification council, but it is still striving to be recognized by so-called elitist forest certification institutions globally. At the same time, the Indonesian ecolabeling entity has been facing distress periodically on account of forest certification. These countries need to remain resilient, set standards and evolve sagaciously, for "only those institutions that constantly evolve and adapt successfully will thrive in the future" (Jones 2007).

The "key point about institutions is how to institutionalize the capacity for innovation and adaptation" (Herath et al. 2003), which is generally lacking in the region's forestry agencies, as is coherence between policies and institutions, notwithstanding that "the two must be closely integrated" (ibid). There is a need for "institutional measures that will assign appropriate values to the multiplicity of goods and services" provided by sustainable forest management. Only then will the role of forestry be fully apparent for the sector to "receive the attention that it deserves" (Muthoo 1991). Search for excellence continues with the need for moulding the right institutional framework — the creation of sound and robust institutional structures as an effective foundation for sustainable forest management in the region (Durst et al. 2005). A farewell to arms!

Analysis and synthesis

The frontier of the forestry sector is institutions and their human capital. Technology and technological progress are important, but the desired links of technological changes will not take place without an enabling institutional environment for promoting private, public and people's participation and strong stakeholder support.

Government-run forestry entities, like any other organization, have three critical elements: (i) core values and principles; (ii) functions that reflect these core values; and (iii) structures that enable them to successfully undertake the functions. The extent, range and depth of change depend on the changing external conditions and the appropriateness of the organization in the context of changing external conditions. Frequently, mere tinkering with the structures and functions would suffice to deal with a particular externality, as occurred during the 1980s and 1990s. However, given the profound changes that have been taking place since the mid-1990s, a complete re-invention of public forestry institutions is called for. Unless this takes place, the threat that they will fade into oblivion will become reality. Government-run forestry departments, especially in the APR, have to change from being de facto landowners to custodians of a natural resource of important strategic and stakeholder value. Even this will not be enough.

As the pace of change in the external environment is accelerating and the resultant impact is far deeper and wide-ranging, government-run forestry organizations have to adapt on a real-time basis, re-orient themselves as learning organizations and engage with an ever-widening range of stakeholders, each of whom impact the pace and implications of change even further. This is a major task for government-run forestry departments. The upside for those forestry departments that do change, irrespective of how painful and destructive the process might seem to be, is that they can thereby find and occupy a critical strategic space once again. The downside for organizations that do not change is that they will fade into irrelevance. It is no wonder that the forestry agenda is being hijacked by all and sundry, including those targeting social and environmental lobbies and vote banks in and around forest fringe villages.

Countries that wisely or haphazardly opt for wide-ranging organizational reforms of their public forestry institutions have to keep in mind that mere organizational change, no matter how profound the changes are, will not work without concomitant reforms in the larger institutional mechanisms and processes. Doing one without the other is a recipe for assured destruction not only of the organization, but also large parts of the institutional set-up. Reforms need to be carried out holistically and objectively. Before embarking on the reform path, the concerned institutions need to objectively assess whether the benefits from the reform processes outweigh the costs. If not, it is better to dismantle a superannuated institution and related organizational infrastructure rather than to keep sustaining it on expensive life-support systems; instead an entirely new institutional arrangement, which holistically and effectively addresses today's needs of the changing environment and adapts to a continual change process with a futuristic vision can be created. Being ahead is better than being relegated to the backwoods. Most if not all people who work within these organizations and institutions and are too closely associated with them are not in any position to take these critical decisions. The harsh reality is that the answer is not easy.

The government alone cannot ensure that forests are managed sustainably and provide the goods and services that are demanded of them. They have to deal with themes and topics that government forestry departments in the region are not normally accustomed to, nor are included in forestry training curricula. Some examples are:

The organizational and institutional reforms of the nature and extent that are warranted will be extremely painful and destructive. There is not a remote possibility of a "quick win" here. The reform processes and their outcomes will have to be owned, supported and sustained by the respective countries. This will call for unprecedented levels of transformational leadership from the top, sincere and supportive political backing and sustained technical, financial, managerial and strategic support — also from international agencies committed to the reform process. The need of the hour is refolution for creating adaptive institutions open to rising awareness of the rights and resources of forest dwellers and local communities with shared goals for harmony between humanity and the environment. Only then can the appropriately restructured and reinvented forestry institutions effectively and meaningfully involve all the stakeholders and partners with competent and devoted human resources for ensuring intersectoral cooperation and coordination for translating into action the commitments to Millenium Development Goals, Agenda 21 and Forest Principles, among other global, national and local mandatory and regulatory devices for delivering holistic sustainable forest management in the APR.

Conclusion

Most of the APR forestry institutions have presided over decline in forest extent and quality. Despite their efforts, in many cases they are being accused of failing to achieve a wider range of social, environmental and governance goals. This is threatening their legitimacy and survival. They are seen as ineffective and anachronistic. Should they accept their inevitable fate: that their day has passed? Or can they find a renewed relevance in the future? The answer is that it depends on whether they understand and accept the need to undergo radical restructuring and reform. Forestry organizations are valuable repositories of experience, knowledge and capacity. But these assets are of little use in an antiquated outfit. To maintain relevance in a rapidly changing world they must desist from self-serving perpetuation. They must change and become learning institutions committed to diverse functions that are duly de-clustered, assessed and updated. Forestry institutions must recognize and understand the challenges and risks and pragmatically take opportunities to become dynamic and proactive organizations, while they still have some chance. There is only one other option: creative destruction.

Acknowledgements

Appreciation is due for the background papers and peer reviews by several esteemed colleagues. Notable is the intellectually authoritative draft paper of Dr C.T.S. Nair, the Chief Economist of the FAO Forestry Department and lead author of regional Forestry Outlook Studies. Similarly thought provoking is a background study by Mr A.K. Chatterjee, Senior Consultant with PricewaterhouseCoopers and DFID on Institutional & Organizational Strategy, Human Resources and Change Management. I have benefited no less from the inputs of Prof D.K. Bandyopadhyay, Director of the India-based Institute of Forest Management and Dean of the Lucknow Institute of Management, and of Dr O. Springate-Baginski, Senior Research Fellow at the UK Overseas Development Group and lead editor of Forests, people and power. All these background papers and case studies were compiled in 2007, reflecting the latest hard-boiled realities in the region.

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1 President, Roman Forum, Rome. E-mail: muthoo@rforum.org

Institutional frameworks and organizational structures for future forest management

Ian Ferguson1

Institutional frameworks are the formal and informal rules that govern the operations of a democratic society. They require various forms of organizational structures for implementation. These are the often forgotten links in sustainable forest management and good forest governance. This paper examines some of the major causal influences that have shaped and are shaping institutional frameworks and supporting organizations in Australia and that are likely to influence trends in the Asia–Pacific region. These include sometimes conflicting and sometimes complementary influences between state and corporate forestry, industrial and smallholder forestry, in-house expertise and contracting out, regulation and certification and decentralization and centralization. Almost every conceivable combination now exists in the organizational structures responsible for state forestry policy, regulation, commercial timber management, reserve management, research and fire management across the different states of Australia. The greatest challenge in Australia is whether the gulf in the mutual perceptions of the major timber management and reserve management organizations can be bridged. Other countries of the Asia–Pacific region may be able to avoid or reduce this problem. In most other respects the trends that have influenced or are influencing institutional change in Australia are likely to affect most other countries of the region as national incomes increase and populations become increasingly urbanized.

Because institutional change is largely a political and economic response to satisfy different constituents, change is likely to continue with increasing diversity in the resulting organizations and complexity in their interactions. Competitive market processes will increasingly replace bureaucratic allocation and management wherever commercial products and services are supplied or wherever potentially commercial services can be broken away from state departments. Joint coordination mechanisms therefore need to be fostered to reduce interagency conflicts and to improve coordination and integration of activities across geographic and other organizational boundaries. Regulation and certification functions need to be jointly reviewed and rationalized. Professional institutes need to strive to reduce the gulf between timber management and reserve management entities and to promote the benefits of membership to a wider array of organizations and their staff. Forestry education needs revision to deal with the demands for increasing specialization and to engender greater regional interchange.

Keywords: institutional frameworks, organizational structures, governance, sustainable forest management

Introduction

Institutional frameworks are the formal and informal rules that govern the operations of a democratic society. They require various forms of organizational structures to implement them. Together, institutions and the supporting organizational structures are the often forgotten links in issues concerning forests, communities and future forest management. While this review draws primarily on experience and trends in Australian forestry, they are mirrored elsewhere in many countries in the Asia–Pacific region.

Hierarchical unitary state agencies with a simple mandate to control the problems of exploitation of public (and private) forests have disappeared in Australia. Current institutional frameworks are characterized by the:

These features have radically changed the institutional frameworks and organizational structures needed for sustainable forest management.

One aim of this paper is therefore to highlight the diversity of models, rather than to suggest a single panacea. These features also have important implications for forestry education, the mentoring of young staff members and the maintenance of professional ethics and expertise under the ever-increasing specialization of technology. Another aim is to reflect on the educational needs for future forestry.

This paper discusses the trends relating to state and corporate forestry, industrial and smallholder forestry, timber and conservation management, in-house expertise and contracting out, regulation and certification and decentralization and centralization. It then summarizes the causal influences. Finally, it draws some conclusions on future trends for forest management and on the implications for the forestry profession.

State and corporate forestry

One of the most fundamental changes that has occurred in forestry organizations in Australia has been the trend to privatize or corporatize commercial activities such as timber management that were originally the responsibility of traditional state forestry departments, either through the sale of the business to private entities or the establishment of a separate quasi-corporate state entity to manage the business. The rationale lies in the desire of the private sector and NGOs to see competitive neutrality introduced between the public and private sectors with respect to the treatment of taxes, subsidies and other conditions, together with the desire of governments and public sector management (especially the Treasury) to see a greater emphasis on efficiency in an era in which sources of public income are under increasing pressure. This includes fiscal efficiency, where the capital in forest plantations is liquidated to support spending in other sectors or to retire public debt.

Where the business was sold, the state typically retained ownership of the public land and sold the rights to manage the existing and future crops of timber often over a substantial period — up to 90 years. The division of property rights was relatively simple and effective for plantations in which the provision of environmental services or non-wood forest products was not a major management responsibility.

Where the business was corporatized, it involved the establishment of a corporate board of directors (or commission) with a degree of independence from government but ultimately responsible to a state minister for quasi-corporate commercial entities. The division of responsibilities between the quasi-corporate entity and the state is defined in legislation establishing the entity but often lacks the legal clarity of separation that characterizes private property rights. This opaque clarity is not surprising, given that this arrangement is more typical of arrangements developed for commercial management of native forests, for which continuing uncertainty exists as to community demands for other purposes.

With one exception, organizational structures for the management of national parks and reserves (hereafter termed "reserve management") in Australia have adhered to the traditional state forestry model. Here the rationale follows Leslie's (2007) conclusions regarding organizational structures. Most of the services they supply (e.g. conservation) are public consumption goods such that one individual's consumption of the service has no effect on the supply available to others. This lack of excludability makes it difficult to impose fees or charges. It also makes economic analysis of investment in and choice between multiple uses difficult, rendering a corporate model ineffective. Most receive less than one-third of their operating funds from direct fees and charges, the overwhelming majority of the funding coming from state government recurrent grants. Most therefore operate on a central planning system, assisted by central and regional advisory committees.

The aforesaid exception was implemented in Victoria in 1996. Approximately 40 percent of its annual funding comes from a park management levy placed on Melbourne household water bills, a charge that is updated from time to time and seems to be well-accepted by the community. About 15 percent of the annual funds comes from direct commercial charges such as visitor and licence fees and the remainder comes as a government recurrent grant. It is less research-oriented than traditional state departments, partly because of the funding implications and partly because of the greater emphasis on operational management through environmental management systems.

In his analysis of the issue, Leslie (2007) concluded that the traditional state forestry department model should be limited to managing those forests in which the provision of products and services is principally associated with public consumption goods such as environmental services. Any commercial benefits from timber or other products or services should only flow from complementary functions of management in such an organization. While this is still the conventional wisdom for most existing reserve management organizations in Australia, the example in Victoria highlights that there is always scope to explore new paradigms.

Timber management and reserve management

Apart from the organizational (e.g. corporatization or privatization) and geographic differences that presently distinguish state timber management entities from reserve management entities, there are other areas of concern. The most pressing concern in Australia is fire management, where responsibilities are spread even more widely than state timber management and reserve management entities to include emergency agencies, private timber growers and farmers. Farmers contribute to mainly volunteer fire-fighting organizations that serve rural farming areas but also contribute to suppression elsewhere under extreme conditions. One agency, often the emergency agency, has peak control but extensive collaboration and cross-training is required to coordinate fire suppression activities effectively, given the difficulties posed by extreme conditions.

Another area of concern spanning timber management and reserve management is the need to integrate policies and processes for ecosystem management, especially the coordination of monitoring and review across the "whole-of-forest". The recent book by Sayer and Maginnis (2005) contains a number of examples that illustrate the importance of integration, including a personal lament (Ferguson 2005) over the difficulties that the Australian public perception of "one tenure, one use" poses in identifying national parks exclusively with conservation and state forest exclusively with timber supply.

At the state level, interagency conflicts have greatly hindered integration, notwithstanding various devices to promote coordination and cooperation. The development of Regional Forest Agreements involving the commonwealth and state governments has been more successful and is discussed further in a later section.

Industrial and smallholder forestry

The old state forestry departments in Australia generally occupied a dominant position in the overall level of timber supply. Privatization or corporatization to form industrial forestry entities have not changed this situation, although in some cases the supply markets have been more clearly segmented by the formation of separate plantation softwood and native forest entities. In common with most spheres of primary commodity production, industrial plantation activities relating to timber supply (whether privately owned or government-owned) are generally being scaled up to take advantage of economies of scale, scope and innovation. State quasi-corporate timber management entities, on the other hand, are intensifying management on the reduced areas of native forest available to them in order to maintain or increase their supply capacity.

Managed Investment Schemes (MIS) have provided an effective mechanism for raising funds from non-traditional sources of capital to facilitate rural restructuring, product diversification and revegetation through plantation establishment. Individuals interested in legally avoiding some personal income tax liability can subscribe to an investment fund by taking up offers promoted in formal Prospectuses that describe the proposed investment in wood production (or other multiyear crop or animal investment). This investment then becomes deductible from taxable income for the external investor provided the forest is established within 18 months. The MIS company has to either buy or lease land on which to plant the forest. The MIS companies charge management fees, generally on an up-front basis and receive a percentage of the net revenue at harvest. Most of the establishment and tending and all harvesting are contracted out and most are highly mechanized.

However, the impact of the MIS schemes on smallholders is limited to those who seek an immediate or gradual exit path from their farming activities through the sale or lease of their land. They do not assist or encourage smallholders who wish to retain their farming activity and/ or diversify into a forest-based investment under their own ownership and control. Thus they tend to exacerbate the tensions between the industrial forestry investors and the remaining smallholders. These tensions became acute in several centres where remaining smallholders feared a decline in social infrastructure and conditions as the plantation industry became dominant. This highlights the difficulties of achieving equity between constituents in the implementation of any subsidy scheme, so some measures targeted at smallholders have been introduced.

Regulation and certification

Regulatory organizations responsible for monitoring and control of forest practices on forests and plantations available for timber growing and harvesting differ widely across the states but controls and sanctions have increased considerably over the past two decades. Not all states that have responded to the pressure separate the regulatory functions and some have different organizations handling public and private forests. Some also have some supporting research functions, although the tendency is for them to be broken away in full or in part to either universities or departments responsible for agriculture.

Most industrial forestry organizations in Australia, be they state or privately owned, have undertaken or are undertaking certification through the Programme for the Endorsement of Forest Certification (PEFC)-recognized Australian Forestry Standard (AFS) process in the case of native forests or through the Forest Stewardship Council (FSC) or AFS process for plantations. Given that certification involves reviews of practices by accredited auditors, one has to ask whether the duplication of state and voluntary regulatory processes has created an inefficient and costly system in a number of cases. The difficulty in combining them lies in the details of implementing formal sanctions and penalties under the various legislations dealing with regulatory control. However, other forms of self-administered certification being used in international trade of some forest products are creating concerns that their labels may weaken public confidence in the FSC (and by inference AFS) certification and labels. This has prompted suggestions that regulatory recognition be extended to FSC and/or AFS schemes, which would add weight to the need for a review and rationalization of the overall system.

State reserve management entities are generally not bound by the same regulatory provisions, even though some aspects of their activities in road building, facility development, revegetation, etc., can have the same environmental impacts. This also suggests there is a need for extending these provisions to them, especially if contracting out of work by reserve management authorities increases, as seems likely.

In-house expertise and contracting out

Traditional state forestry departments typically had in-house expertise covering almost the whole gamut of areas relevant to their operations. Today, private forestry and state quasi-corporate entities tend to contract out areas of technical expertise other than those required for continuing day-to-day management, although the state entities tend to be constrained by union and political considerations. Contracting out represents a possible means of avoiding the inefficiencies posed by continuing employment if the demand for the service is sporadic. Specialized contractors may also benefit from specialized supervision and workers may be more highly skilled and motivated. In the future, much hinges on the regional (e.g. Australasian or Asia–Pacific) entrepreneurial development to supply technical services and the capacity of those contractors to organize their work over a number of geographically dispersed clients in a cost-effective and sufficiently profitable manner.

In Tasmania and New Zealand, day-to-day plantation management is also being contracted out by some plantation organizations. The use of day-to-day forest management contractors is potentially more uncertain and some time is needed to determine its success or otherwise. To be attractive for the forest owner, there is a need for sufficient potential contractors willing to compete with the organizational skills and expertise required. To be attractive for the contractor, contracts have to span several years. Clear signalling of the time limit and retendering provisions are essential because changing contractors for a large industrial entity is not a task to be undertaken lightly, given the possible loss of history and local networking.

This trend toward outsourcing of professional and technical services, together with senior executives in the public service being appointed based on more generic leadership and management skills rather than particular professional skills and qualifications, has created a significant change in the role and function of professional foresters. Foresters, rather than leading decisions on forest management, may now be one voice among a group of professional experts providing advice to an executive decision-maker.

Decentralization and centralization

Contrary to a general perception of the desirability of decentralization (Colfer and Capistrano 2005), these changes in Australia are being accompanied by increasing centralization. Small rural work centres have largely disappeared to be replaced by regional work centres, reflecting better roads and mobility, the need for better facilities for staff families and lower overall numbers of staff on continuing appointments.

As noted elsewhere (Ferguson 2007a), the development of joint Regional Forest Agreements between the commonwealth and state governments represents a form of centralization that is a response to the tendency of the controversies over timber management versus conservation to "go national", despite the constitutional mandate of the states over land and forest management. Others have argued that these agreements allowed the commonwealth to abrogate its responsibilities in relation to forest land-use decisions. As with the boundaries between nations and between state and local government, this reflects the growing tendency to establish coordinating organizations to deal with the transboundary issues, blurring the formerly clear hierarchical structures of sovereignty.

Institutional change and changing organizations

The most important institutional change is the increasing use of competitive market-based organizations, not just through the privatization or corporatization of state-owned assets, but in the carriage of policy, management, operational, research, monitoring and control functions. The subdivision of property rights inherent in privatization and corporatization has been accompanied by the subdivision of traditionally all-embracing management responsibilities to define specialized roles that can be tendered to specialized contractors. The trend is more marked in the commercially oriented areas of forestry such as timber management but the trend towards contracting out of technical services will increase the pressures on the remaining more traditional-style state departments responsible for reserve management, policy and regulation to follow suit and seek similar economies and greater flexibility.

Almost every conceivable combination now exists in the organizational structures responsible for state forestry policy, regulation, commercial timber management, reserve management and fire management (see later) across the different states of Australia. From a political perspective, this greater division of functions provides organizational mechanisms to serve different political constituents and thus to respond to very different pressures from different parts of the community, arguably on a more cost-effective basis because of greater clarity in the strategic role of each entity. On the other hand, it creates an environment in which interagency conflicts and communication barriers may be fostered, coordination and/or integration across geographic or policy boundaries neglected and multitasking skills lost.

The fragmentation and specialization of organizations has obvious implications for the forestry profession or, perhaps more accurately today, the professionals in forestry. Will the Institute of Foresters of Australia (IFA), a professional institute, be able to recruit membership from the wider array of professional disciplines and specialized organizations that now exist? Only time will tell.

The demise of the traditional forestry departments has also reduced the extent of mentoring that was once a feature of their management. Here, in concert with the employers, professional institutes have a clear role in promoting professional development. The introduction of the "Registered Professional Forester" scheme by the IFA provides a means of demonstrating the currency of competencies to auditors and others. Registration provides a peer review system for screening that is not confined to particular degrees or qualifications but rests on evidence of competencies (which may be academic and/or experiential), adherence to a code of ethics, evidence of professional indemnity insurance and the undertaking of regular professional development.

The development of specialist contracting that is international in character has already started in research, general consulting and some specialist areas and suggests that closer linkages will need to be developed between national institutes in the Asia–Pacific region (Ferguson 2007b).

In Australia, as in many other countries (Leslie et al. 2006), the demand for entry into forestry courses has declined. Various reasons have been advanced, many of them mirroring the diagnoses of Kanowski (2001), Brown (2003) and Leslie et al. (2006). Where "forestry" once represented a mission of challenge associated with conservation to young school-leavers, the term "forestry" has lost that connotation and public image, and conveys a negative image to some. The task is now to rebuild this image, if necessary under different terminology, and to rebuild linkages with all spheres of forestry, including park and reserve management. What is unclear is whether employment and education will separate completely between timber management and reserve management or whether there can be a rapprochement. Any rapprochement has to recognize that other non-forestry (in the traditional sense) schools are training and educating students for employment in various parts of the forestry spectrum.

Nevertheless, the demand for advanced training in new technologies to provide a basis for later specialization is very evident in Australia. This cannot be achieved in a three- or four-year degree and hence the move by several Australian universities towards a collaborative postgraduate coursework programme in forestry (Keenan 2007). Brown (2003) has made a plea for problem-based learning in such courses, involving small tutorial classes and case study teaching. To this, I would add the need for a substantial amount of case study work to involve on-the-ground activities that enable the student to appreciate the forest landscape, as distinct from the trees, and to learn the difficulties of access, diagnosis and treatment.

Conclusions

What conclusions can be drawn from this review for the future shape of forestry institutions and organizations in the Asia–Pacific region?

  1. Institutions and the resulting organizations are largely a product of the attempts of politicians, with support from senior bureaucrats, to satisfy their current constituents and/or to provide improved outcomes for the use of tax-derived funds. This suggests that change will continue apace and concern will be given to the long-term nature of forestry because it renders the transfer of historical knowledge more fragile as organizations and staff change more rapidly.

  2. Given the diversity of the distribution of forests and their uses relative to major centres of populations in Australia (and in the Asia–Pacific region), we should not expect to see uniformity in forestry organizational structures in the future across different states or countries.
  3. As national incomes rise, the pressures for greater economic efficiency in the conduct of state activities increase, leading to greater reliance on competitive markets rather than bureaucratic allocation of resources. These changes promote division between commercial timber management and predominantly non-commercial reserve management functions because of the relative ease of introducing competitive market operations in the former case.
  4. This in turn creates an environment in which interagency conflicts and communication barriers may be fostered, coordination and/or integration across geographic or policy boundaries neglected and multitasking skills lost. Joint coordinating mechanisms are being developed but suffer inherent limitations.
  5. Regulation and certification functions overlap and invite a rethinking of the relevant institutions and organizations to achieve greater efficiency and to bolster public confidence in certification.
  6. Professional institutes need to take a more active role in seeking membership across the ever-increasing array of forestry-related organizations and promoting the benefits of membership to both staff and leaders of these organizations. The greatest challenge in Australia is whether the gulf between timber management and reserve management organizations can be bridged. Other countries in the Asia–Pacific region may be more fortunate if the political division between development and conservation has been less acrimonious or is at an earlier stage.
  7. The increasing demand for professional specialization, the duration and consequent scope of a first degree course and the decline in student enrolment in first degree forestry courses has led to the development of a collaborative postgraduate coursework programme by Australian universities. Similar trends may be expected in other countries of the Asia–Pacific region. Interchange needs to be encouraged, similar to the Erasmus scheme in the European Union, if the benefits of specialization and globalization are to be harvested in forestry in the Asia–Pacific region.

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Ferguson, I. 2005. Australian forestry: beyond ‘one tenure: one use'. In J.A. Sayer & S. Maginnis, eds. Forests in landscapes: ecosystem approaches to sustainability, pp. 147–65. London, Earthscan. 257 pp.

Ferguson, I. 2007a. Integrating wood production within sustainable forest management: An Australian viewpoint. In R.J. Deal, R. White & G.L. Benson, eds. Sustainable forestry management and wood production in a global economy, pp. 19–40. Binghamton, New York, Haworth Press. 307 pp.

Kanowski, P.J. 2001. Forestry education in a changing landscape. International Forestry Review, 3, 175-183.

Ferguson, I. 2007b. Collaboration between the Australian and New Zealand institutes of foresters. Aust. For., 70(2):73–4.

Leslie, A.D., Wilson, E.R. & Starr, C.B. 2006. The current state of professional forestry education in the United Kingdom. Int. For. Rev., 8(3):339–49.

Leslie, A.J. 2007. The skeptical forest economist. Melbourne, Ian Ferguson. 350 pp. (available from Ian Ferguson on request, iansf@unimelb.edu.au).

Sayer, J.A. & Maginnis, S. 2005. Forests in landscapes: ecosystem approaches to sustainability. London, Earthscan. 257 pp.

School of Forests & Ecosystem Science. 2007. Master of forest ecosystem science. Melbourne, University of Melbourne (available on www.forests.unimelb.edu.au).


1 Professor Emeritus of Forest Science, School of Forest & Ecosystem Science, University of Melbourne, Parkville, Victoria 3010, Australia. Tel: +61 408 547 036. E-mail iansf@unimelb.edu.au

Prospects for Malaysian forest governance: an NGO perspective1

Meng-Chuo Wong2

Malaysia has inherited a legacy of institutional strength from her former colonial governments, with a relatively complete legal framework on environment and forest management in the region. However, several assessments indicate that Malaysian forests are being logged a few times over the sustainable level and large areas of forest lands are being converted for agriculture and tree plantation. Current global options for biofuel have accelerated further conversion of secondary forests, peat swamps and traditional lands for palm oil production. This has not only caused environmental devastation, but also negatively impacted on forest-dependent people. In the last 50 years, forest exploitation has made a few people extremely wealthy and created a number of employment opportunities. The state has also gained substantial revenues and taxes. Unfortunately, local indigenous people remain poor and underdeveloped while illegal logging activities and unsustainable timber trade remain largely unchecked.

Over the last two decades, Malaysian civil society and international environmental groups have protested and campaigned against the unsustainable forest exploitation but to little avail. Lately, in responding to western green markets and the EU's public procurement policy, Malaysia has engaged in timber certification as well as the Forest Law Enforcement and Governance (FLEG) voluntary partnership agreement (VPA) process. The aim to achieve sustainability has progressed rather slowly. However, these efforts are seen by some as new opportunities for institutional and administrative reform. This paper argues that political will, participation and strengthening of civil society as well as empowerment of local communities are essential in achieving the goal of good forest governance that will protect the environment and promote social equality.

Keywords: forest governance, civil society, native customary rights, participation, social equality

Introduction

Deforestation in Malaysia has received a great deal of attention over the last two decades. Over a century ago the British colonial administration in Malaya started converting large areas of forest land for cash crop cultivation. Rubber was introduced in the early 1900s in response to the international market boom. In the 1960s, shortly after the independence of Malaya (1957), oil-palm became the major plantation crop in the peninsula. Likewise, the idea of cash crop farming was first introduced by British colonial administrators to (then) the two Borneo states of Malaysia, namely Sabah (North Borneo) and Sarawak.

However, land conversion for agricultural purposes notwithstanding, forest degradation in all the three regions in Malaysia is largely attributed to the logging industry. Yet for several decades, traditional hill rice cultivators have been officially, and conveniently, blamed as the culprits of forest destruction. Indigenous agriculture was accused of being wasteful of natural resources (FAO Staff 1957; Lau 1979; Rasul and Thapa 2003; Watson 1989 cited in Pedersen 2006). But other studies have shown that the impact of indigenous rotation farming3 is insignificant4 and, instead, commercial logging has been widely identified as the main cause of deforestation and the loss of biodiversity (Colchester 1989; Hong 1987; Jomo et al. 2004: 177–179).

The British colonial government left behind a sound administrative and legislative system in Malaysia, including the forestry sector. Undoubtedly, this has had an impact on the institutional capacity of the postindependent government to enact a number of forestry institutions.5 However, it has been argued that political leaders need strong will and must set examples of high ethical and moral standards themselves to realize sustainable forest management (Kathirithamby-Wells 2005: 407).

Malaysian forest policies

Malaysia is divided into three regions namely, Peninsular Malaysia which comprises 11 states, Sabah and Sarawak. The peninsula states generally are governed by the National Forestry Policy, whilst Sabah and Sarawak have their own policies. In accordance with the Federal Constitution, forestry is a state matter and thus the state governments have complete jurisdiction over their respective forest resources.

The policies and strategies of the three regions are geared towards sustainable yield for present and future benefits, socially, economically and environmentally.6They emphasize both the economic interests and the protection of the forest physical environment. Inevitably, in these "all-rounded" policies, contradictions occur between extracting the highest revenue and environmental protection, efficient harvest/utilization and conservation, local use and export trade, as well as present and future needs. To balance the different interests is nearly impossible, especially in a society where powers are shared rather unevenly. As a result, policy implementation has become lopsided in favour of the politically and economically powerful, regardless of how the notion of "sustainable management" is interpreted.

Forest loss and degradation

Logging in the Malaysian forest estate adopts the selective method. However, contrary to the official perception that considers selective logging to be sustainable forest management, the practice is causing damage to other non-target plants as well as the ecosystem. Studies reveal that degraded forests are more susceptible to fires, while logging roads provide ingress for the poor and non-traditional users; this makes the sustainability of forest lands and other land resources unattainable (Dauvergne 2001: 16). Meanwhile, the global switch to biodiesel as a fossil fuel substitute, an ill-conceived anticlimate change measure, has further accelerated the conversion of forest land to oil-palm plantation in Malaysia.

In Peninsular Malaysia, agricultural expansion was the main cause of deforestation, especially rubber plantations during the boom in 1904 to 1932 and oil-palm during 1966 to 1984. Some 1.36 million hectares were lost between 1966 and 1984 (Jomo et al. 2004: 84). Logging has been another main cause of forest degradation.7 Apart from the rapidly diminishing state-land forest, Permanent Reserves Forest (PRF) in Peninsular Malaysia remained at some 4.6 million hectares by 2000, representing the entire forest holding. However, the PRF status is insecure under the current forest administration (Kathirithamby-Wells 2006: 393). Cases of PRF conversion reveal that the definition of "permanent" is indeed ambiguous (Lawson et al. 2004).8

As for Sabah, log production was just over 1.5 million m3 in the late 1950s. Production rose to over 6 million m3 in 1969 and further increased to 11.1 million m3 in 1973. This rate remained until 1987, and then declined to 9.4 million m3 . Log exports were banned in 1994 reducing production to 8 million m3 . It was estimated that more than 80 percent of Sabah's dipterocarp forests was allocated for commercial production (Sulaiman 1993, in Dauvergne 2001: 20).

Forest conversion for agricultural development in Sabah is rather ambitious. In just three decades about 1 million hectares of forest were felled for oil-palm, cocoa and rubber plantations (Chala 2000, in Majid-Cooke 2006: 7). Oil-palm plantations then expanded to 1 130 100 hectares in 2003 (Malaysia Palm Oil Board 2004, in Majid-Cooke 2006: 8).

Official statistics indicate that Sarawak has 8.2 million hectares of natural forests, about two-thirds of the total land area of 12.4 million hectares. Around 6 million hectares are being set aside for "sustainable timber production", known as Permanent Forest Estate (PFE). By the end of the 1980s, old-growth forests still covered 4 to 5 million hectares of Sarawak (WWF Malaysia 1994). Logging activities moved on steadily in 1990s and culminated in 1997 with an annual production height of 16.8 million m3 (STIDC; Sarawak Forest Department). Although it is difficult to predict accurately at recent rates of harvest, some analysts expect that the remaining old-growth forests will degrade in about a decade (Dauvergne 2001: 21; ITTO 1990).

Meanwhile, private sectors, state agencies and joint venture corporations are vigorously taking over secondary forest and native customary land for oil-palm planting. As of 2006, over 50 000 hectares of land area had been planted. The area is to be doubled to 1 million hectares by 2010 with at least 400 000 hectares to come from native customary land (Majid-Cooke 2006: 30).

As indicated, timber harvesting in all the three regions has consistently exceeded the maximum annual allowable cut many times over; this has been reported in numerous studies, for example ITTO (1990); Chala (2000); Khan (2001, in Majid-Cooke 2006: 6). In Sarawak and Sabah (also Kalimantan), the "get rich quick mentality" often resulted in predatory logging, poor management and the depletion of a concession before the licence period expired (Majid-Cooke 2006: 6). Today, more than two-thirds of the commercial forest reserves in Sabah are degraded logged-over forests (Kollert et al. 2003, in Majid-Cooke 2006: 6).9

Uncertainties in conservation

Official statistics reveal that the overall national conservation or total protected area is about 6 percent of the total land area.10 The recent increment reveals some interest to improve conservation since the rectification of the Biodiversity Convention in 1994.11 However, it is still far below the recommendation of the Tropical Forest Action Plan (TFAP) for a higher, 10 to 15 percent of the total land area as a reasonable national minimum quota for Totally Protected Areas or TPAs (Kithirithamby-Wells 2005: 393).

National parks in Malaysia are not secured. Investigation found that Loagan Bunut National Park (Sarawak), covered by the United Nations Development Programme under the Global Environment Facility (UNDP-GEF),12 was being logged for ramin (Lawson et al. 2004). Other intended TPAs in Sarawak are also not spared; they include the proposed Hose Mountain National Park, the proposed Batu Laga Wildlife Sanctuary and the Pulong Tau National Park (Jomo et al. 2004: 174). A survey by Sahabat Alam Malaysia (Friends of the Earth, Malaysia) also found possible evidence of encroachments in Samunsam Wildlife Sanctuary, Maludam National Park and Similajau National Park.13 One of the most diverse tropical forests in Lambir National Park is being illegally logged.14

Malaysian mangrove forests too are under extreme threat. These fragile ecosystems have been decimated in the last 50 years to make way for agriculture, aquaculture and settlement projects. Total mangrove cover in the country shrank from 650 000 hectares in 1991 to 553 000 hectares in 2001 (SAM undated: 55).

The higher reaches of the landscape, such as the montane forests, are not spared either. The Yearbook of statistics of Sabah (1999) shows a loss of nearly 10 percent of the high forests including Mount Kinabalu in just two years. Developers are eyeing the main ranges of Peninsular Malaysia, which are important reservoirs of biological diversity containing many endemic and endangered species, for highway projects (SAM undated: 55).

Ill-conceived tree plantation

Rubber, oil-palm and timber tree plantations are classified as conversion forests that constitute 17 percent of the total land area or 33 million hectares.15 As such, a National Forest Plantation Development Policy has been formulated to ensure the continuing supply of raw material to timber-related industries. In Peninsular Malaysia, 350 000 hectares are being allocated for "forest plantation" over the next 15 years; while in Sarawak 2.82 million hectares are being issued to 40 plantation licences.16 For Sabah, 600 000 hectares are targeted for the same purpose. Official claims are that present "forest plantations" throughout the country, so far, cover 310 553 hectares (Yong 2006: 9–10).

Monocropping does not provide the necessary conditions for the diversity of a forest ecosystem. Researchers have found that the only animals foraging in acacia plantations are bearded pigs.17 It is rather misleading to call tree plantations "forests". Other concerns include chemical pollution and exotic plants that cause potential threats to local species and soil health.18 Furthermore, successive harvests of timber from the plantations might result in soil mining in the long run.19

Industrial tree plantations have proved to have negative social and environmental impacts worldwide (Lohmann 2003: 14). In Sarawak, the customary lands belonging to the Iban communities are encroached by the Borneo Pulp Plantation (BPP).20 The conflict has resulted in community protest that led to a dispute between an Iban community of Nor ak Nyawin and BPP.21

Environmental threats and social costs

The contradictory nature of Malaysian forest policy and its implementation has not only resulted in the decline of timber harvests, but also affected the other functions of forest services and contributed to global warming.22 Adverse consequences are reflected in numerous forest fires, smoke haze, landslides and flash floods that cause loss of life, social destruction and environmental degradation. Invariably, the poorer sectors of society are most vulnerable to these threats due to poor administrative support and lack of personal resources and capacity to protect themselves. For example, several orang asli (indigenous people) of Peninsular Malaysia were killed and many livelihoods affected due to the bursting of an old logging debris-waterlogged pond upstream (COAC campaign brochure 2005).

Dam construction and industrial parks are also posing social and environmental threats. For instance, the 2 400 megawatt Bakun Hydroelectric Dam in Sarawak will flood an area of 700 km2 . The project has displaced 10 000 indigenous people.23 Subsequently, the power generated will feed an aluminium smelter plant to be constructed in Bintulu that will pose potential threats to the adjacent Similijau National Park.24

Deforestation causes negative social impacts on forest-dependent people, despite the official claim that logging is a development effort that benefits local people. Today, many indigenous communities remain undeveloped,25 while in Sarawak, for instance, the timber royalty was RM730 million (US$21.47 million) in 2005, comprising one-third of the state budget and with a total external earning of RM5.5 billion (US$1.6 billion).26 It is evident that the Malaysian forestry sectors have generated much wealth and many concession awardees have become millionaires. In fact, the volume of royalty collected by state governments in relation to the actual price of the timber is barely 1 percent, which is appallingly low. It has been contended that timber concession policies generally fail to ensure optimal forest tenure and management with effective capture of stumpage value.27

The role of markets in forest governance

Global market expansion has been perceived to be more of a negative force as far as the environment is concerned. The mainstream developmental view of developing economies, such as Malaysia, generally thinks that it is acceptable to sacrifice the environment for the sake of economic gain. Even until the 1990s, some Malaysian political leaders still viewed environmental protection as a luxury that the country could not afford.28

Over the last several decades, green consumerism began to take shape, especially in developed countries. Labeling of timber products is widely believed to provide consumers with a choice to contribute to better forest management. This is a "business-to-business" voluntary market initiative with no legal binding. However, as this dynamic develops, the governments of both consuming and producing countries begin to step in at some point.

Timber certification for sustainable forest management

In the early 1990s, when the idea of certification was conceived, civil society, especially environmental and social NGOs, held high hopes that it would contribute to improved forest management. Some expected that it might contribute to improving workers' conditions and solving the land rights issue. However, it remains questionable whether certification is the correct tool for good forest management. Today various schemes are competing for recognition among the "green" markets in Europe and other industrialized societies, while it appears that certifications are made merely to justify continued exploitation of timber. Malaysia, as a major tropical timber-producing country, does not want to lose these market shares that generate higher profit.29

Malaysia's certification scheme in question

The Malaysian Timber Certification Council (MTCC) was established in 1998. Between July 2002 and July 2007, its cumulative export of certified timber to Europe had reached 165 000 m3 .30 The MTCC has, so far, certified nine Forest Management Units (FMUs) with a total area of 4 730 774 hectares that include eight state FMUs in Peninsular Malaysia and one concession FMU in Sarawak.31

Unfortunately, the MTCC scheme has been heavily criticized in that it does not guarantee legality neither does it respect customary tenure and the usufruct rights of indigenous people.32 The scheme's Chain of Custody (CoC) procedures and standards allow for up to 30 percent uncertified wood with no adequate requirements on the uncertified material, which could come from controversial sources.33 Due to the lack of credibility, a recent tribunal of the Dutch clearance house, Keurhout decided to nullify the decision to accept the MTCC certificate of Lonex CoC as a guarantee for legality.34

The MTCC's criteria and indicators for certification of "tree plantation" were adopted in March 2007. However, they do not seem to fit in the Forest Stewardship Council's (FSC) standard cutoff date of November 1994 for tree plantation certification (areas converted from natural forests after this date would not be certified).35

Forest Law Enforcement, Governance and Trade (FLEGT)

The Malaysian Government responded rather quickly to a new market initiative of the European Union, i.e. FLEGT. The process involves a VPA of the EU and tropical timber-producing countries. It aims at re-enforcing partner countries' ability to control illegal logging. The FLEGT action plan shall set up a licensing scheme that will urge the producing country to reform forest laws, if necessary, to improve access to EU markets and other advantages, such as increased revenue, development assistance and additional enforcement tools to combat illegal activities.36

FLEGT–VPA encourages transparency through the provision of accurate information on forest ownership, condition and legislation. For these issues, the governments of the producing countries will be urged to build capacity for their agencies to enforce existing legislation and implement governance reforms.

This seems to be a well-intended new effort to protect tropical forest from further degradation. However, it tends to deal only with the surface value of legality where the logging politics of producing countries can easily be side-stepped. In Sarawak, a good number of "legal" concessions clash with native customary claims. Meanwhile, the decision to withdraw logging licences for severe infractions remains in the hands of the state cabinet. There are no published guidelines on the criteria for licence withdrawal, neither are the summaries of the State Executive's decision made public (Wells 2006: 33).

Prospects for Malaysian forest governance

As mentioned already, Malaysia does not seem to lack the necessary mechanisms (law, institution, administration) or capacity (finance, human resources, technical access) to deliver good governance. Malaysia's recent response to market initiatives in timber certification and FLEGT– VPA has given the impression that the country is on the right track to improving its forest management. However, civil society questions these new moves and argues that they are insufficient to ensure sustainability. To achieve good governance, the following recommendations should be taken into consideration.

Define legality through a multistakeholder consultation process

While engaging in the EU FLEGT–VPA, the partner country is required to have a clear definition of legality that is objectively defined in consultation with all relevant stakeholders.37

The ministry (plantation and primary industry) attempted to adopt a definition of legality in a one-day consultation — Timber harvested by licensed persons from approved areas and timber and timber products exported in accordance with the laws, regulations and procedures pertaining to forestry, timber industry and trade of Malaysia.38

Civil society is deeply puzzled not only by the narrow definition but also the inappropriateness of the procedure that does not provide sufficient discussion.39 Social NGOs and indigenous organizations want an equal and open consultation process that allows all concerned parties to express their concerns. For instance, it is suggested that Malaysia could learn from the Indonesian experience, which took three years to reach a consensus with the establishment of a multistakeholder team.40

Bind with international laws

International laws such as the Convention on International Trade on Endangered Species (CITES) and the Biodiversity Convention (BDC) will have to be observed without being negotiated by the argument of national sovereignty. In other words, national laws must be harmonized with international laws.41

Improve enforcement

Malaysian forest administration needs to improve its enforcement. For instance, the National Forestry Act (1993) has introduced a mandatory jail term of up to 20 years and quantum fines from a ceiling of RM10 000 to RM 500 000.42 However, although there were over 1 700 cases of illegal logging in the peninsula between 1987 and 2003, no one was ever prosecuted.43 Confiscated illegal timber usually ended up in auction with no syndicate held responsible. It is clear that without strong enforcement measures, the effort to curb illegality and corruption is bound to fail.

Respect land tenure and access rights of the indigenous community

Forest authorities of Malaysia nominally recognize indigenous community usufruct rights in forest lands. However, in the peninsula and Sarawak, these rights are not specifically provided for in forest law and policy. The National Forestry Policies make no specific mention of orang asli's customary rights within Permanent Reserved Forest. Neither do the National Forestry Act nor the Sarawak Forest Ordinance, 1958 provide for customary rights in these areas.44 Nevertheless, in Sabah, the 100-year Sustainable Forest Management License Agreements (SFMLA) does place certain duties on licence holders with regard to native rights and community development in the management of licensed areas. This includes rights to collect forest products for subsistence, the designation of community forestry areas, as well as support from the government in the delivery of health and education facilities (Wells 2006: 11).

Logging concessions as well as temporary occupation leases (TOL) for plantation and other purposes always overlap indigenous community claims. This has given rise to disputes and law suits. It had been reported that in Sarawak alone 150 cases are filed in court.45 Orang asli communities in Peninsular Malaysia too are challenging unlawful occupation by development projects that intrude on their customary land.46 The land rights issue needs to be addressed at the political level and cannot be separated from forest governance.

These land rights issues need to be addressed with a sense of urgency and all forest exploitation as well as land development projects should obtain free and prior informed consent from the community affected. An indigenous statement says:

For logging to be legal, the law must fully recognize our customary rights, both on our temuda (farms) and pulau galau (communal forests) — the entirety of the menoa (territorial domain). The law must be able to protect the customary rights of nomadic groups who are still living in the forest and do not engage in any cultivation activities. If this does not take place, the timber harvested on our land should not be recognized as legal.47

Provide support to community initiatives

Traditional and cultural practices of the rural community have in many aspects proved sustainable; they include minimum tillage, multiple cropping and fallow land systems. Community initiatives, such as agroforestry and Sloping Agricultural Land Technology (SALT) or non-burning terracing systems should be encouraged and appreciated.48 These efforts could be seen as a self-determination process that builds on existing indigenous knowledge and accessible and manageable technology, which harmonize with nature. If given sufficient and proper support, the community could gain better economic self-reliance. Indigenous people in many parts of the world have demonstrated the ability to protect forests, which are their homes (Reed 1997).

Legal reform and native customary rights (NCR)

Although native rights are broadly protected in the Constitution of Malaysia, new legislations have given excessive power to administration, superseding laws that protect indigenous people.

Indigenous communities, NGOs and concerned lawyers have been appealing for legal reform and urging for full recognition of native customary rights in Sarawak (JOANGOHutan 2006; Bian 2000; SUHAKAM 2007). This deserves serious attention from state authorities. Over the past decade, at least ten tropical forest countries have implemented new legislation to strengthen indigenous ownership. They include Bolivia, Mozambique, Tanzania and Indonesia (White and Martin 2002, cited in Contreras and Peters 2005: 42). There is no reason why Malaysia should not follow suit.

Increase transparency and reduce corruption

Transparency International ranked Malaysia 44 in its 2006 assessment, a slip from 23 in 1995.49 There is indeed ample room for Malaysia to improve transparency. It is a key concern that information from public agencies should be made accessible to everyone. Likewise, the government should be held accountable with public sector audits.

With regard to the forest licensing system, respective state jurisdictions should be more transparent; this could include setting up a committee guided by criteria for open tenders. This could possibly reduce corruption in the award of forest concessions.

Similarly, in association with logging and the timber trade, certification needs to impose an independent assessment and monitoring system that the current MTCC scheme does not provide (Wells 2006: 33).

Strengthen participation and capacity building

Non-state actors or NGOs and indigenous people must be given room to participate, not just at a later stage of implementation but from the early stages of policy-making and planning. Conservation or environmental groups as well as social NGOs should be included in the process with equal voices and be treated in an open and fair manner.

To allow the fuller participation of all relevant stakeholders, NGOs, especially community support groups and indigenous community-based organizations, must be provided with financial support and all related information must be made available in local languages. Technical services, including translation, must be made available during meetings. Community level consultation and other capacity-building measures must be carried out; this could be done in collaboration with NGOs. To achieve this aim, administrative reform is needed to seriously review and change the top-down approach and the bureaucratic mindset.

Protect forest workers' rights

Civil society also urges forest enterprises to safeguard the health and well-being of forest workers; this should be monitored by a government body.50 Also, forest workers' rights need to be included in the criteria for sustainable forest management with necessary labour law review.51

Rationalize forest policy

It was mentioned earlier that the various forest policies in Malaysia are contradictory in nature. The country needs a sound and coherent forest policy for the development of clear, transparent and consistent legislation. Forestry in the three regions is operated by respective regional authorities with considerable autonomy; yet they have high power centralization with little participation by local governments and potential partners in civil society. It is important that Malaysia reviews its forest policies to democratically set priorities to meet the needs and interests of the people, and to harmonize the various contradictory aspects.

Conclusion

Civil society's efforts are beginning to shape consumers' buying attitude, especially in industrialized societies. There is no doubt that western NGOs have been influential in formulating a stronger public opinion. In the case of timber markets, public views in Europe and other industrialized countries have pressured their governments to set up public procurement policy that demands good forest governance by the producing countries.

We must recognize that good forest governance can help to reduce poverty. It is therefore suggested that national governance should strengthen rights, capacities and local decision-making; reduce poor people's vulnerability; enable market opportunities for rural indigenous people; and work in partnership. Likewise, international governance must recognize the power of good forest governance that involves fundamental rights, institutional roles, policy incentives and systems by which decisions are actually put into action and monitored (Mayers and Vermeulen 2002).

Civil society has demonstrated that it would like to see the positive impacts of good governance in timber-producing countries where governments and corporations must respond in order to maintain their trade opportunity. Malaysian governments are urged to ensure that "the forest management system places not technical issues as its supreme guiding principles but rights, justice and equality" (Yong 2006: 33).

However, many social NGOs think that Malaysia has yet to move in the right direction. The various stakeholders, especially dominant players (the timber sector and state authorities) must commit to a strong political will to effect changes. It would be a foregone opportunity if the response to these new market initiatives is merely to "smooth the timber trade without engaging in fundamental administrative and institutional reform".

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1 This is a revised version of a paper entitled "Will green market reform Malaysian forest government" by the same author.
2 Institute for Development of Alternative Living, 11D, Bruang Road, 96000 Sibu, Sarawak, Malaysia. E-mail: mchuo@yahoo.com
3 Rotation farming is considered a more appropriate term for shifting cultivation or slash and burn. This practice is
now diminishing in Malaysia.
4 According to Hong (1987), the natives of Sarawak prefer secondary forest for cultivation and thus the damage to the
forest is minimal.
5 Including the Forest Research Institute of Malaysia, the Malaysian Timber Industry Board, the Sabah Forest
Development Authority and the Sarawak Forestry Department.
6 See extracts in Appendix 1.
7 In the early 1970s, an average of 70 000 hectares of forest was being cleared in Peninsular Malaysia annually, while in the 1980s, 240 000 hectares were cut per annum (Jomo et al. 2004: 87).
8 An alarming example was the scandal of the 60 000 hectares of PEF, which was controversially handed over to the key ruling party United Malays National Organisation (UMNO) in 1998. This tract of forest land, which contains high market-valued ramin was clear cut in 2000 for the development of an oil-palm plantation. (Online satellite photos of ramin logging on UMNO's concessionaire, available at http://www.malaysiakini.com. 24 July 2004).
9 Former deputy Prime Minister, Musa Hitam indicated that the political reward system led to poor forest governance (PowerPoint Presentation at a forestry dialogue in Kuala Lumpur, 2006).
10 Total protected area refers to national parks, wildlife and bird sanctuaries both within and outside the Permanent Reserved Forest, amounting to 2.02 million hectares of the total land area of 32.83 million hectares (Malaysian Timber Council, Fact Sheets - Forestry & Environment 2005).
11 For details of Biodiversity Convention parties see http://www.biodiv.org/world/parties.asp
12 UNDP-GEF funded a US$6 million project aimed at furthering the conservation of Malaysia's remaining peat
swamp forests (UNDP-GEF June 2000).
13 Sahabat Alam Malaysia. Modern forest and land legislation and native customary rights in Sarawak, Briefing
Paper II, 2007.
14 Professor Peter S. Ashton's presentation at FRIM, Kepong on 13 August 2007.
15 Forest land use in Malaysia 2005, available at http://www.mtc.com.my/publication/mtc_factsheet05_low.pdf
16 Sahabat Alam Malaysia. Briefing Paper I, 2007.
17 The Star online. Choking our forest reserves, 23 January 2007.
18 Richard Corlett of Hong Kong University warns that current science knows little about the re-establishment of mycorrhizae (essential soil organisms), therefore growing so-called "forest plantations" only gives a false sense of security. In Marcus Ng. 2007. The fading future of Asian tropical rainforests (part 2). available at http://www.wildasia.net/main.cfm?page=article&articleID=335&id=2
19 World Rainforest Movement: WRM Campaign Material: Ten replies to ten lies to forest plantation. Available at www.wrm.org.uy/plantations/material/lies.htm
20 Rengah Web site. Resistance to tree plantations in Sarawak, 2001-05-29, available at http://www.rengah.c2o.org/news/article.php?identifer=de0020t&subject=9
21 Rengah Web site, Rh. Nor files appeal to federal court, 2005-10-20, available at http://www.rengah.c2o.org/news/ article.php?identifer=de0442t&subject=9
22 Estimates contained in the Stern Report and findings from the United Nations show deforestation accounts for up to 25 percent of global emissions of heat-trapping gases.
23 Coalition of Concerned NGOs on Bakun 1999.
24 Wong, Meng Chuo. 1999. A review of the Detailed Environmental Impact Assessment (DEIA) of the proposed Alumina Project, available at http://www.rengah.c2o.org/news/article.php?identifer=de0051t&subject=4
25 Malaysiakini online, Penan deprived under NEP, 8 November 2006, http//www.malaysiakini.com
26 Sarawak Forestry Corporation Sdn Bhd.
27 Sahabat Alam Malaysia. Logging in Malaysia, some key issues, Briefing Paper I, 2007.
28 In a report issued in November 1999, the Ministry of International Trade and Industry accused the Forest Stewardship Council of being a US plot to impose foreign values on Malaysia. Wong (2001). Malaysian forest certification process fails to address indigenous rights, available at http://www.rengah.c2o.org/news/article.php?identifer=de0328t&subject=8
29 Malaysian timber export to Europe was only 16 percent in volume. However the value was 32 percent for the overall revenue generated. (Seminar presentation by S.K. Tham, Director of the Malaysia Timber Council, London Office, at Oslo, 25 November 2002).
30 MTCC News, Volume 1, Issue 8, April 2007.
31 Another FMU in Sarawak (Anap Muput) is being assessed to comply with the MTCC scheme and is due to receive the certificate soon.
32 Rengah Web site, Higher profits for logger big losses for indigenous people, a collective of Malaysian indigenous communities and NGOs on forest issues; JOANGOHutan (a social NGO) poster. Available at http://www.rengah.c2o.org/assets/pdf/de0091a.pdf; Greenpeace Position Paper, MTCC does not guarantee legality or sustainability.
33 Greenpeace. 2005. Missing links.
34 The tribunal decision of Keurhout in early May 2007 in response to Greenpeace's appeal filed in March 2006. Information available at http://www.rengah.c2o.org/news/article.php?identifer=de0520t
35 Lohmann. 2003: 103.
36 FLEGT Briefing Note No. 07.
37 Legality is generally defined as being in accordance with the laws of the producing country. The FLEGT action plan proposes that forestry is subjected to many legal requirements, including legislation and regulations governing forestry practices, environmental protection, tenure and use rights, workers' rights, health and safety (FLEGT Briefing Note
Number 03).
38 Multistakeholder consultation on Malaysia-EU FLEGT VPA on 22 June 2007 at Kota Kinabalu, Sabah.
39 JOANGOHutan drafted a memorandum to call for an acceptable multistakeholder process.
40 See www.loggingoff.info/ for more details.
41 Malaysia has been condemned for issuing export permits for ramin from illegal sources in Indonesia (Thornton et al. 2003: 8).
42 Illegal logging, available at http://www.mtc.com.my/illegal _logging.htm
43 Berita Harian 11 June 2003, 53 logs confiscated, and 18 September 2003, 390 tonnes of logs confiscated, available at http://www.mtc.com.my/coverage33.htm and http://www.mtc.com.my/coverage43.htm
44 The land code of Sarawak does not recognize the Penan land claims because they did not farm before 1958 (SUHAKAM 2007).
45 Malaysiakini online. A deadly battle over land in Sarawak. 24 October 2005 www.malaysiakini.com
46 Such as Adong bin Kuvau & Ors v Kerajaan Negeri Johor & Anor and Sagong bin Tasi & Ors v Kerajaan Negeri Selangor & Ors against the state and developers.
47 Official Statement of Penan Representatives to the Representatives from the European Union for the Forest Law Enforcement, Governance and Trade. 17 January 2007.
48 NGOs and UNDP have been working on this kind of initiative for the last two decades.
49 Assessment available at http://www.transparency.org/news_room/in _focus/cpi_2006/cpi_table
50 FERN, Greenpeace and WWF. 2005. Principles for FLEGT partnership agreement.
51 Malaysian forest workers, especially frontier loggers, are not unionized. Foreign migrant workers are particularly vulnerable as they are not allowed to join a union.

Web sites

http://www.biodiv.org/world/parties.asp
http://www.chathamhouse.org.uk/eedp
http://europa.eu.int/comm/development/body /theme/forest/initiative/
http://www.forestry.gov.my/
http://www.forestry.sarawak.gov.my/
http://www.itto.or.jp/
http://www.loggingoff.info/
http://www.malaysiakini.com/
http://www.mtc.my/
http://www.mtcc.my/
http://www.rengah.c2o.org/news/article
http://www.sabah.gov.my/
http://www.sfc-watch.org/
http://www.transparency.org/news
http://www.unpri.org/principles/
http://www.wildasia.net/
http://www.wrm.org.uy/
http://www.wri.org/

Appendix 1. Malaysian forest policies

Peninsular Malaysia (endorsed in 1978 and revised in 1992)
Mission: To sustainably manage and develop forest resources and optimize their contributions
to national socio-economic development.
Objectives (extracts):

(Available at http://www.forestry.gov.my accessed on 28 March 2006.)

Sabah

To achieve sustainable management of the state's forest resources, as adopted in 2005, some of the goals are as follows (extracts):

(Available at http://www.forest.sabah.gov.my/english/PoliciesLegislation/SabahForestryPolicy/tabid/64/Default.aspx accessed on 27 November 2006.)

Sarawak (approved by the Governor-in-Council, 1954)

To reserve permanently for the benefit of the present and future inhabitants of the country
sufficient forest land (extracts):

(Available at http://www.forestry.sarawak.gov.my/forweb/ourfor/policy/policy1.htm. accessed on 27 November 2006.)

Appendix 2. Comments on the paper "Prospects for Malaysian forest governance: an NGO perspective"

(Representatives of the Forestry Department Peninsular Malaysia requested an opportunity to respond to some issues raised by the author.)

  1. Most of the data, figures or information are misleading because some of the sources quoted are questionable and outdated. The author seemed to source most of his information from NGOs without counterchecking with the right authorities and adding to confusion. The following interventions are in response to some of the issues raised by the author.
  2. On "Malaysian forest policies": I do not deny that Malaysia comprises three regions (the Peninsula, Sabah and Sarawak) and each has its own policies but all aim towards sustainable forest management. The most pertinent evidence of sustainable forest management in Malaysia is the statistic that more than 50 percent of the land area is still under forest and the forests are intact. ITTO, in its latest report entitled Review of progress towards the year 2000 objective re-affirmed that Malaysia is one of six countries that is managing some of its forests sustainably at the forest management unit level. Thus, ITTO's recognition of Malaysia's sustainable forest management, in itself is a manifestation of our good forest practice.
  3. On "Forest loss and degradation": Land development is one of Malaysia's strategies to develop its economy. Malaysia's development is based on sustainable development principles where among others environmental interest is always given proper attention. The earlier statistic of 50 percent of forested land is evidence that environmental interests are high in the Malaysian development agenda. At the end of 2005, the total area of forest in Malaysia was 19.52 million hectares or 59.5 percent of the country land area.
  4. With regard to "Uncertainties in conservation", the author claimed that the total protected area is 5 percent of the total land area; this is not correct; the official figure I quote is based on Malaysia's APFSOS report as of 2005 — 15.7 percent of the total land area or 28.2 percent of the total forested land. On the issue of encroachment on national parks in Sarawak, actions have been taken to ensure no further encroachment.
  5. With regard to "Ill-conceived tree plantation", the author mentioned that it is rather misleading to call tree plantations "forest". I am unaware whether the author realized that there is a definition given by FAO (refer to State of the world's forests, 2001), which is internationally accepted and widely used: "Forest includes natural forests and forest plantations. The term is used to refer to land with a tree canopy cover of more than 10 percent and area of more than 0.5 ha. Forests are determined both by the presence of trees and the absence of other predominant land uses. The trees should be able to reach a minimum height of 5 m". Who is trying to mislead?
  6. All forested areas in Malaysia belong to the government except those lands that by law are alienated lands or private lands. The inhabitants' proprietary rights to forest land (if any) are limited only to the area that forms their settlement but not to the forest at large. In other words, forest lands do not belong to any ethnic group hence revenue generated from timber goes to the government for the benefit of the country and the people. Malaysia's government is always concerned about ensuring that all people benefit from the country's development programme. Malaysia views education as fundamental for improving the living standard of the people. A special government agency has been formed to assist indigenous people to excel in education and economic activities so that they will be as successful as other ethnic groups of the country.
  7. On "Environmental threats and social costs", the figure quoted by the author on royalty collected by state governments or rent capture is barely 1 percent, is not true. Studies on rent capture in Malaysia by Repetto (1990) in Sabah reported 70 to 93 percent (1979– 1983) and 29 percent in Sarawak while Vincent (1990) in Peninsular Malaysia, Sabah and Sarawak reported 21.85, 46.25 and 18.4 percent respectively. In addition, Azmi (2001) in the State of Pahang found that rent capture was 54.3 percent. My advice to the author is to kindly check his figure with the right sources.
  8. Questioning a few entrepreneurs in the timber industry who become rich while indigenous people remain poor, is not logical. It is normal that the source of wealth is business. That is why the Malaysian Government has formed a special agency to assist indigenous people to excel in education and economic activities so that they will also be successful economically as other citizens. In the District of Rompin, in the State of Pahang, there are a few indigenous people who are involved in the logging business and have become rich. Another example: In the State of Kelantan the concession for indigenous people is 300 hectares per year. It is disappointing there are movements or people who want indigenous people to be continuously pampered and living at their current standard, which is far behind development thrusts and economically backward. This is not the vision of the Malaysian Government and the Malaysian people.
  9. Issues on "Malaysia's certification scheme in question", I received some intervention remarks from the MTCC to inform the meeting of the real facts. The interventions are as follows:

a) On the statement "Unfortunately, the MTCC scheme has been heavily criticized in that it does not guarantee legality neither does it respect customary tenure and the usufruct rights of indigenous people", I would like to inform the meeting that the MTCC scheme has been recognized as providing assurance of either sustainable or legal timber products in the timber procurement policies of a number of countries, such as the United Kingdom, the Netherlands, France, Denmark and Japan. In addition the city of Hamburg in Germany has granted a conditional recognition of the MTCC scheme for a two-year period beginning from June 2006.

b) With regard to the "The scheme's Chain of Custody (CoC) procedures and standards allow for up to 30 percent uncertified wood with no adequate requirements on the uncertified material, which could come from controversial sources", I would like to notify the author that mixed products containing certified and uncertified material are allowed under all certification schemes, including the FSC. The MTCC standard for COC i.e. the "Requirements for Chain-of-Custody Certification (RCOC)" has stipulated the requirement for the client's top management to document as well as to avoid the use of wood materials from controversial sources, such as from illegal or unauthorized harvesting and trading operations. This requirement is verified by the independent assessor during the site visit to the mill at the time of assessment.

c) With regard to the decision of Keurhout to nullify the admittance of Lionex to the Keurhout legal system, the MTCC issued a statement to clarify this matter on 15 May 2007 which is available on the MTCC Web site. I would like to inform the meeting that this involves only one of the MTCC Certificate for Chain of Custody holders and the nullification was actually a result of the shortcomings of the Keurhout system and not that of the MTCC. Currently, the Keurhout has accepted a total of 26 MTCC certificates as providing assurance of timber from legal sources. I would like to urge the author to access the MTCC Web site to gain greater clarity on this subject and not to make a prejudged statement.

d) As for the remark "MTCC's criteria and indicators for certification of ‘tree plantation' were adopted in March 2007. However, they do not seem to fit in the Forest Stewardship Council's (FSC) standard cut-off date of November 1994 for tree plantation certification (areas converted from natural forests after this date would not be certified)", the information is incorrect as the standard, i.e. the "Malaysian Criteria and Indicators for Forest Management Certification (Forest Plantations)" or in short the MC&I (Forest Plantations) has yet to be adopted as it is still in its draft form and waiting to be field-tested in the three regions of Malaysia, i.e. Sabah, Sarawak and Peninsular Malaysia. Please be informed that in drafting the MC&I (Forest Plantations), Malaysian stakeholders have agreed to use the FSC P&C as a template and whatever decisions with regard to the "form" of the standard are achieved through a multistakeholder consultative process that takes into account the decisions made by the multistakeholder Technical Working Group (TWG) and the National Steering Committee (NSC), as well as consultations held at regional and national levels. The MTCC merely plays a coordinating and facilitating role in all these processes.

  1. On "Prospects for Malaysian forest governance", the author proposed some recommendations for consideration without looking into the reality of the issues. Here are responses to some of the recommendations.

a) The remark "Define legality through a multistakeholder consultation process" in which the author claimed adoption of the definition in a one-day consultation. In fact, this is an ongoing process; the next venue will be Sarawak in November 2007. The consultations will proceed until an agreed definition is formulated. It is a tedious task in which the authority has been trying to involve as many stakeholders as possible; however everything cannot be concluded in one session. The one-day consultation is a starting point for further consultations.

b) With regard to "Bind with international laws", actions have been taken to further amend the National Forestry Act 1984 (1992) to address issues on CBD and CITES.

c) With regard to "Improve enforcement" in the peninsula, in which the author claimed that between 1987 and 2003 no one was ever prosecuted — this is wrong. In fact from 2000 to 2006, 35 people involved in illegal logging were arrested and brought to court. In addition, on forest law enforcement receptivity in Peninsular Malaysia and East Malaysia, in 2001 WWF Malaysia and the World Bank concluded that in Peninsular Malaysia, "Offences such as illegal logging and forest encroachment are treated seriously by the law. Due to the efforts, the incidences of forest crimes over the last several years show a declining trend. The average number of illegal logging cases dropped from 223 for the period 1987–1993 to about 28 for the 1994–1999 period". Since then Malaysia has increased its efforts to combat illegal logging through more patrolling on the ground and air surveillance using modern technology viz. remote sensing/hyperspectral tools to mention some activities.

d) The issue on "Respect land tenure and access rights of the indigenous community" has been debated and deliberated in many fora but the author seems to misunderstand the crux of the issue. As mentioned in paragraph 6, all forested areas in Malaysia belong to the government. In this respect, timber licences are issued according to law. In Malaysia, as long as the licences comply with the laws, the timber of the licences is legal. The law in Malaysia also provides any dispute to be brought to the court. There are many cases where indigenous people have brought timber licence issues to court and they have won their cases.

e) With regard to "Provide support to community initiatives", the Government of Malaysia has given much financial and social aid as mentioned in paragraph 6. In fact in the peninsula, the indigenous people or orang asli as stated in the Aborigine Law 1954, have the right to room for forest products for their own use as long as they are not used for commercial purposes; they can stay in the forest, including permanent forest reserves, as long as they wish.

f) On "Legal reform and native customary rights (NCR)", as mentioned earlier all forested land belongs to the government except areas that by law are alienated and private lands. Any dispute will be treated according to law. For example the case of Selaan Limau FMU in Sarawak; the FMU was given a harvesting licence and an approved Forest Management Plan (FMP) thus, the MTCC had no objection to award certification as the case was related to Native Customary Right. However, the MTCC will respect the outcome of the court's decision.

g) On "Increase transparency and reduce corruption", not all information can be made available to the public for security reasons but steps have been taken to declassify certain information for public awareness as stipulated in the FMP prepared every ten years. With regard to open tenders, this is not a new issue but has been practised previously and is an ongoing process depending on time and the situation.

h) With regard to "Strengthen participation and capacity building", under the new MC&I (2002), under Principle 8, steps have been taken to consult the local community affected by logging before forest harvesting commences. In fact, in preparing country reports on APFSOS, many major stakeholders were invited to multistakeholder dialogue but few turned up.

i) On "Protect forest workers' rights", guidelines on logging operation have been formulated by the Occupation, Safety and Health Authority (OSHA) and are currently being tested on implementation practicality.

j) With regard to "Rationalize forest policy", under the Federal constitution, forest is a state matter. Thus, a platform known as the National Forestry Council (NFC) was established in 1971 to act as the forum where issues on forest administration and management could be discussed and a common stand taken to harmonize forest policy for state benefits. In this context, the annual allowable cut for a five-yearly period was discussed and decided.

In conclusion, it is sad to see that some people still question Malaysia's commitment and achievement in practising good forest governance and protecting the environment. Concerning social equity, as explained earlier, Malaysia wants all citizens to benefit from the development of the country. Providing assistance for all citizens to excel in education and economic activities — as demonstrated thus far — Malaysia has shouldered its responsibility in providing social equity to everybody. We strongly feel that the speaker in future should act more responsibly and contribute positively for the betterment of sustainable forest management practices in Malaysia.

Azmi Nordin
National Focal Point for Malaysia's APFSOS report.

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