The Sarawak government’s decision on April 15, 2026, to approve a 50 percent reduction in royalty rates and selected statutory charges for natural forest timber across all Forest Timber Licences and Forest Plantation Licences represents a deliberate and carefully calibrated intervention in the state’s forestry sector.<\/p>\n\n\n\n
Announced by the Sarawak Forest Department and endorsed personally by Premier Datuk Patinggi Tan Sri (Dr) Abang Haji Abdul Rahman Zohari bin Tun Datuk Abang Haji Openg, this temporary measure will remain in effect for one (1) year, subject to review, and excludes the Timber Industry Tariff H0272502.<\/p>\n\n\n\n
From the government’s vantage point, this policy is neither a retreat from sustainability commitments nor a concession to industry lobbying.<\/p>\n\n\n\n
It is, rather, a pragmatic and responsive mechanism to preserve a sector in acute distress while the broader strategic transformation envisioned under the Post COVID-19 Development Strategy 2030 continues to take hold.<\/p>\n\n\n\n
The Timber Industry and Sarawak’s Economic Evolution Since 1963<\/strong><\/p>\n\n\n\n Understanding the government’s contemporary stance requires an appreciation of the timber sector’s historical arc.<\/p>\n\n\n\n When Sarawak joined the Malaysian Federation in 1963, it retained constitutional autonomy over its forest resources, a governance arrangement that would profoundly shape the state’s economic trajectory.<\/p>\n\n\n\n For the first decade and a half after independence, Sarawak’s timber industry remained relatively modest.<\/p>\n\n\n\n Sawmills established in the late 1940s and 1950s processed mainly ramin logs from peat swamp forests, and the hill forests yielded less exportable timber per hectare than the more commercially attractive stands in the Philippines, Sabah, and East Kalimantan.<\/p>\n\n\n\n The turning point arrived in the late 1970s, when declining log exports from the Philippines and Indonesia created a supply vacuum that East Asian plywood manufacturers in Japan, South Korea, and Taiwan urgently sought to fill.<\/p>\n\n\n\n Sarawak’s previously undervalued forests became commercially viable almost overnight.<\/p>\n\n\n\n By the year 2000, the timber sector contributed RM6.5 billion in external earnings, representing 21 percent of Sarawak’s total state external earnings of RM31.0 billion and approximately 37 percent of Malaysia’s entire timber export earnings.<\/p>\n\n\n\n Over two (2) decades, the wood-based industry transformed in sophistication, diversity, and production capacity, with increased automation, enhanced quality control, and the development of value-added timber products.<\/p>\n\n\n\n Yet the government has been candid in acknowledging that this period of timber-driven prosperity has given way to a new era.<\/p>\n\n\n\n The Sarawak Forest Department director, Datu Haji Hamden bin Haji Mohammad, observed that 50 years ago, forest resources were the main contributor to the region’s economic development.<\/p>\n\n\n\n However, under the Premier’s leadership, the government has succeeded in creating alternative income sources beyond forestry, allowing the state to focus on transforming the sector towards conservation.<\/p>\n\n\n\n This shift is not merely aspirational; it is reflected in fiscal reality.<\/p>\n\n\n\n Forest royalty, timber premium, and tariffs are projected to contribute RM287 million to state coffers, a fraction of the over RM1 billion the sector once generated annually at its peak.<\/p>\n\n\n\n Meanwhile, the state has successfully reduced the volume of timber harvested by approximately two (2) million cubic metres per year through compliance with forest management certification conditions for both natural and plantation forests.<\/p>\n\n\n\n Despite this deliberate contraction, the timber industry remains an important economic contributor.<\/p>\n\n\n\n The export value for timber products in 2025 reached RM2.5 billion, with plywood products leading at RM317 million in the first quarter of 2025 alone, an increase of four percent compared to the same period in 2024.<\/p>\n\n\n\n Japan remains the largest market with an import value of RM359 million, followed by India, Middle Eastern countries, China, and the Philippines.<\/p>\n\n\n\n However, the industry faces unprecedented pressures.<\/p>\n\n\n\n Rising fuel prices, global market volatility, supply chain disruptions, and increasing operational costs have created conditions where domestic processing activities have declined as operators pivot toward export-oriented production due to higher margins.<\/p>\n\n\n\n From Timber Extraction to Sustainable Stewardship<\/strong><\/p>\n\n\n\n Premier Sarawak Datuk Patinggi Tan Sri (Dr) Abang Haji Abdul Rahman Zohari\u2019s engagement with the timber industry reveals a leader navigating a deliberate transition from resource extraction to sustainable stewardship.<\/p>\n\n\n\n His vision is anchored in the Post COVID-19 Development Strategy 2030, which identifies the timber industry as one of the important economic sectors to transform Sarawak into a developed and high-income state by 2030, with a target of generating annual export earnings of RM8 billion by 2030.<\/p>\n\n\n\n This is not a vision of expanded logging but of value addition, innovation, and reduced dependence on natural forests.<\/p>\n\n\n\n The Premier recalled that when he took the helm of Sarawak in 2017, he put the timber and forestry sector close to his heart to be further developed for mutual benefits, emphasising that it is crucial to continue developing this industry in a sustainable manner.<\/p>\n\n\n\n His approach encompasses several interconnected pillars.<\/p>\n\n\n\n The first is strict compliance with forest management requirements.<\/p>\n\n\n\n All long-term forest timber licences must be certified under the Malaysian Criteria and Indicators for Sustainable Forest Management, and the development of planted forests must be enhanced to produce high-yielding and good-quality logs to accelerate growth for the domestic timber downstream industry.<\/p>\n\n\n\n The potential of fast-growing bamboo is to be capitalised as a new material to support and sustain the industry.<\/p>\n\n\n\n The second pillar involves diversifying into high-value bio-based products.<\/p>\n\n\n\n Premier Sarawak Datuk Patinggi Tan Sri (Dr) Abang Haji Abdul Rahman Zohari has consistently highlighted Sarawak’s rich renewable biomass resources, including rubber wood, bamboo, sago, oil palm trunk, and acacia mangium.<\/p>\n\n\n\n These resources are suitable for producing high-value products, particularly solid biofuels such as charcoal, pellets, and activated carbon, which can substitute energy sources from petroleum while mitigating greenhouse gas emissions.<\/p>\n\n\n\n He has declared that the market for solid biofuels and activated carbon is huge and these products have the potential to go global, and that ultimately, the industry will grow into a sustainable industry without relying on natural forests for raw material supply.<\/p>\n\n\n\n The third pillar involves technological innovation and material substitution.<\/p>\n\n\n\n In November 2025, the Premier urged building contractors in the state to explore the use of synthetic timber as part of Sarawak’s transition towards a green economy and its long-term strategy for sustainable forest management.<\/p>\n\n\n\n He acknowledged that while synthetic timber does emit some carbon, the carbon production can be mitigated, and carbon can still be absorbed by natural processes and scientific methods, such as through artificial intelligence and other technological means.<\/p>\n\n\n\n This pragmatic recognition of trade-offs is characteristic of the Premier’s approach, which balances environmental ideals with economic realities.<\/p>\n\n\n\n The Premier has also emphasised the importance of market alignment with global sustainability standards.<\/p>\n\n\n\n Sarawak must ensure its timber industry products meet global standards in the fight against climate change, as being a supplier of tropical timber to global markets carries the responsibility of aligning with consumer demand for eco-friendly products with a low carbon footprint from sustainable and legal sources.<\/p>\n\n\n\n This commitment is operationalised through the Malaysian Timber Certification Scheme, globally recognised under the Programme for the Endorsement of Forest Certification, which has certified 1.6 million hectares of forest in Sarawak.<\/p>\n\n\n\n A Targeted and Time-Bound Intervention<\/strong><\/p>\n\n\n\n Against this backdrop of long-term strategic transformation, the 2026 royalty reduction must be understood as a tactical intervention, not a strategic pivot.<\/p>\n\n\n\n The Sarawak Forest Department’s statement was unambiguous in framing the measure as a temporary response to acute industry pressures.<\/p>\n\n\n\n The reduction aims to provide immediate cost relief, improve operational viability, stabilise profit margins, strengthen domestic timber processing, and ensure continued industry participation and supply stability.<\/p>\n\n\n\n The government projects that timber production will stabilise at around 1.73 million cubic metres annually, reflecting improved industry confidence.<\/p>\n\n\n\n Crucially, the government has been at pains to emphasise that this relief does not signal a relaxation of environmental commitments.<\/p>\n\n\n\n The statement quoted Premier Sarawak Datuk Patinggi Tan Sri (Dr) Abang Haji Abdul Rahman Zohari as saying that the decision reflects a pragmatic and responsive approach to current economic challenges, while ensuring the forestry sector remains resilient, competitive, and sustainable for the future.<\/p>\n\n\n\n Despite the targeted support measures, the state government remains committed to sustainable forest management and responsible resource use.<\/p>\n\n\n\n The government’s simultaneous announcement of its environmental achievements underscores this point.<\/p>\n\n\n\n Between 2021 and 2025, more than 57 million trees have been planted across Sarawak, marking the highest tree-planting achievement in Malaysia.<\/p>\n\n\n\n These efforts contribute to restoring degraded forest landscapes, conserving biodiversity, enhancing carbon sequestration, protecting water catchment areas, and ensuring the long-term sustainability of forest resources.<\/p>\n\n\n\n The state is also intensifying the development of large-scale forest plantations to reduce reliance on natural forest timber, while supporting renewable energy production through wood pellets and biochar.<\/p>\n\n\n\n A waste-to-energy approach is being promoted to convert wood waste and by-products into valuable energy sources, improving resource efficiency and creating new economic opportunities.<\/p>\n\n\n\n The government’s conservation achievements extend beyond reforestation.<\/p>\n\n\n\n Sarawak has gazetted a total of 2.1 million hectares as Totally Protected Areas under its sustainable forest management agenda, surpassing the initial target of one (1) million hectares.<\/p>\n\n\n\n The state maintains 62 percent of its landmass, or approximately 7.65 million hectares, under forest cover, of which 3.95 million hectares are gazetted as permanent forest estates, and more than 874,000 hectares of land, along with 1.2 million hectares of marine areas, are designated as Totally Protected Areas.<\/p>\n\n\n\n These are not the statistics of a government indifferent to environmental stewardship.<\/p>\n\n\n\n Alignment with Sustainable Development Goals and ESG Principles<\/strong><\/p>\n\n\n\n From the government’s perspective, the royalty reduction policy exists within, not in opposition to, a comprehensive framework of sustainable development commitments aligned with the United Nations Sustainable Development Goals and environmental, social, and governance principles.<\/p>\n\n\n\n The certification of 1.6 million hectares of forest under the Malaysian Timber Certification System provides independent verification that timber from these areas is managed sustainably.<\/p>\n\n\n\n This directly supports SDG 12, responsible consumption and production, and SDG 15, life on land.<\/p>\n\n\n\n The state has pioneered the nation’s first forest carbon permit, creating a new framework for valuing forests in the fight against climate change, directly advancing SDG 13 on climate action.<\/p>\n\n\n\n Digital transformation has been a major driver of this progress.<\/p>\n\n\n\n The implementation of sophisticated systems like the Integrated Forest Information Management System and the Sarawak Timber Tracking and Forest Revenue System has enhanced transparency and operational efficiency.<\/p>\n\n\n\n Deputy Premier Datuk Amar Awang Tengah Ali Hasan stated that through technology and data-driven management, Sarawak has become one of the leading states in the country in sustainable forest management, which is in line with Sarawak’s green development agenda.<\/p>\n\n\n\n The government’s Sustainable Forest Management policy aims to ensure a balance between economic needs, environmental protection, and the socio-economic needs of communities.<\/p>\n\n\n\n The department’s influence extends beyond regional borders through strategic collaborations with prestigious international bodies.<\/p>\n\n\n\n Partnerships with institutions such as the Smithsonian Institution, Harvard University, and Japan’s National Institute for Environmental Studies are bolstering Sarawak’s expertise in tropical forest science and global climate change mitigation.<\/p>\n\n\n\n In August 2025, Deputy Premier Awang Tengah reaffirmed the importance of green integrity and good governance as pillars in safeguarding Sarawak’s natural heritage.<\/p>\n\n\n\n He highlighted that the Sarawak Forest Landscape Restoration Programme, launched in 2019, has set a target to restore 200,000 hectares of degraded forest by 2030, with 137,178.75 hectares successfully restored to date, achieving 68.6 percent of the target.<\/p>\n\n\n\n Between 2021 and August 2025, Sarawak planted 50.04 million trees, surpassing its original target of 35 million by over 15 million trees.<\/p>\n\n\n\n These achievements have enhanced Sarawak’s reputation in sustainable forest management and boosted the competitiveness of timber products in the global market.<\/p>\n\n\n\n The government is also actively developing alternative industries to reduce long-term dependence on timber.<\/p>\n\n\n\n The bamboo industry is being expanded with a target of 30,000 hectares by 2030, with 4,900 hectares already planted as of April 2025 by 17 commercial companies and 200 community participants.<\/p>\n\n\n\n Several local and international companies have already shown interest in investing in the downstream industry to produce high-value bamboo-based products such as tissue paper, packaging materials, textiles, and biochar.<\/p>\n\n\n\n Government’s Commitment to Managed Transition<\/strong><\/p>\n\n\n\n From the Sarawak government’s perspective, the 50 percent reduction in royalty rates and selected statutory charges for timber licences is a necessary, temporary, and responsible intervention.<\/p>\n\n\n\n It provides immediate cost relief to an industry facing genuine financial distress while the broader strategic transformation envisioned under PCDS 2030 continues to unfold.<\/p>\n\n\n\n The government has been unequivocal that this relief does not signal any dilution of its commitment to sustainable forest management, environmental conservation, or alignment with global ESG standards.<\/p>\n\n\n\n The Premier’s vision of a Sarawak that increasingly relies on brainpower, renewable energy, carbon trading, and high-value bio-based products rather than primary timber extraction represents an ambitious reimagining of the state’s economic identity.<\/p>\n\n\n\n The 2026 royalty reduction is best understood as a bridging measure, one that preserves industrial capacity and employment while the state accelerates its transition toward a more diversified, sustainable, and resilient economic future.<\/p>\n\n\n\n The one-year review mechanism ensures that this relief remains a temporary support rather than a permanent subsidy, and the government’s continued emphasis on certification, reforestation, and conservation provides assurance that the long-term trajectory remains firmly oriented toward sustainability.<\/p>\n\n\n\n In this framing, the royalty reduction is not a contradiction of the government’s green agenda but a pragmatic recognition that strategic transformations require time, and that industries in transition sometimes need support to reach the future that the government has so carefully planned.<\/p>\n\n\n\n References<\/strong><\/p>\n\n\n\n Abang Johari encourages use of synthetic timber for sustainable construction. (2025, November 18). Bernama<\/em>. https:\/\/bernama.com\/en\/general\/news.php?id=2492018<\/a><\/p>\n\n\n\n Awang Tengah: Sarawak’s Q1 2025 timber exports reach RM625 mln, plywood leads. (2025, May 28). Borneo Post<\/em>. https:\/\/www.theborneopost.com\/2026\/05\/28\/awang-tengah-sarawaks-q1-2025-timber-exports-reach-rm625-mln-plywood-leads\/<\/a><\/p>\n\n\n\n Premier: Timber industry among important sectors to transform S’wak into developed state by 2030. (2023, May 17). Premier of Sarawak<\/em>. https:\/\/premier.sarawak.gov.my\/web\/subpage\/news_view\/5446<\/a><\/p>\n\n\n\n Sarawak cuts forest timber royalties by 50% in major relief move to strengthen industry. (2026, April 15). DayakDaily<\/em>. https:\/\/dayakdaily.com\/sarawak-cuts-forest-timber-royalties-by-50-in-major-relief-move-to-strengthen-industry\/<\/a><\/p>\n\n\n\n Sarawak forestry drives state’s green agenda. (2025, October 21). Sarawak Daily<\/em>. https:\/\/sarawakdaily.com\/sarawak-forestry-green-agenda\/<\/a><\/p>\n\n\n\n Sarawak govt halves timber royalty rates, statutory charges to support forestry sector. (2026, April 15). Borneo Post<\/em>. https:\/\/www.theborneopost.com\/2026\/04\/15\/sarawak-govt-halves-timber-royalty-rates-statutory-charges-to-support-forestry-sector\/<\/a><\/p>\n\n\n\n Sarawak Premier’s initiative reduces reliance on forest resources as economic driver. (2025, April 15). Premier Department Sarawak<\/em>. https:\/\/premierdept.sarawak.gov.my\/web\/subpage\/news_view\/16291\/UKAS<\/a><\/p>\n\n\n\n Sarawak reaffirms green integrity as pillar of natural resource management, urban development. (2025, August 23). Borneo Post<\/em>. https:\/\/www.theborneopost.com\/2025\/08\/23\/sarawak-reaffirms-green-integrity-as-pillar-of-natural-resource-management-urban-development\/<\/a><\/p>\n\n\n\n Sarawak timber industry exports reach RM625 mln in first quarter of 2025. (2025, May 28). Bernama<\/em>. https:\/\/bernama.com\/en\/region\/news.php\/world\/news.php?id=2428329<\/a><\/p>\n\n\n\n S’wak tops 1mil target for totally protected areas with 2.1mil ha, 2025 timber exports reach RM2.5bil. (2026, March 31). DayakDaily<\/em>. https:\/\/dayakdaily.com\/swak-tops-1mil-target-for-totally-protected-areas-with-2-1mil-ha-2025-timber-exports-reach-rm2-5bil\/<\/a><\/p>\n\n\n\n Wood-based industries and timber trade. (n.d.). Sarawak Forest Department<\/em>. https:\/\/forestry.sarawak.gov.my\/web\/subpage\/webpage_view\/803<\/a><\/p>\n