KOTA KINABALU: Sabah  Timber Industries Association (STIA) President Chua Yeong Perng applauds the Sabah State Government for decisive moves to protect the citizens of Sabah from the Coronavirus epidemic.

In a statement  he said the Association supports the government in the difficult task of finding the right balance between ensuring the survival of industry while ensuring the safety of the population during such an unprecedented crisis.

Chua also takes the opportunity to thank all front-liners who have sacrificed so much for the State.

He emphasized that there are several looming issues that will further weaken the timber industry’s ability to pay worker wages for the coming months.

” If remedial action is not taken during and after MCO, the repercussions would be irreversible. The association would like to present suggestions to the Government that would increase employers’ ability to cover wages for the upcoming critical months,”he said.

The timber sector currently has approximately 30,000 fulltime employees and between 5000 – 10,000 piecemeal or part-time workers, according to him.

” Liquidity within the Forest and Timber industry is of the utmost concern for the next few months. Majority of the players in the industry would struggle to sustain existing payroll commitments.”

At least 50% of the workforce in the upstream and downstream sector will be facing job security risks.

Due to the inherent remote location of timber factories and logging camps, most companies have 30-40% of its workforce residing in living quarters within factory premises or logging camps, he said.

“By default, workers quarters act as a quarantined area since entry and exit is restricted and controlled by security personnel, he said adding that since implementation of MCO, companies have proven to have successfully controlled and monitored the welfare conditions of workers staying in company quarters.

” With companies executing additional safety measures (PPE distribution, temperature check and personnel medical monitoring) the risk of infection for this segment of the workforce is extremely low,” he opined.

Consideration should be given for these workers to be allowed to commence work immediately.

” Social distancing within tight confines of worker quarters has no additional advantage over factory or camp operational areas. ”

The economic impact of losing 4 weeks (and potentially more if MCO is extended) of productivity however in March – April will have far reaching consequences on the forest and timber industry. STIA has serious concerns on industry’s capacity to cover wages in May, June and July.

Shipment of ready goods, controlled movement of perishable raw material (felled logs) and systematic re-starting of manufacturing will go a long way in improving the industry’s ability to maintain and pay its workforce, he elaborated.

“STIA estimates that there are approximately 120 containers, worth RM9-10 million of products at Port and at various factory locations that that have been held back. ”

There  is approximately 100,000 -120,000 m3 of felled logs, valued between RM35 -45 million, currently sitting idle due to the MCO. The value and quality of the logs continue to deteriorate each week.

” We expect, overall, these felled logs would have lost at least 15-20% of its inherent value. Certain non-durable species have lost nearly all its commercial value by now. ”

” In addition to this, downstream mills are now faced with the critical problem of wood adhesives expiring. If partial production is not permitted over the next few days, it is estimated 964 MT (963,000 kgs) of plywood and woodworking adhesives will need to be disposed of. ”

The value of adhesives and the disposal cost will come to between RM5 to 8 million . There is the concern also that Sabah may not have the facilities to dispose of such quantities in such a short time frame.

STIA is extremely concerned that the combination of the above factors will ultimately impact the industry’s short term ability to cover employee wages for April and the months after, he stressed.

As such, STIA appeals that government to grant special permission during the current MCO period for ready shipments to be exported,  To avoid massive adhesive disposal problems, selected factories with expiring adhesives to be also given restricted production days in order to utilize their adhesive stock.

Chua said  if MCO is extended beyond 14th of April, STIA suggests that the government allows for certain upstream and downstream activities to commence operation.

“It is recommended that authorities take reference to other states in Malaysia like Sarawak and Johor which have permitted scaled down manufacturing operations to commence.

“It is understood that manufacturing in these states are limited within specific timber industrial clusters and a cap has been placed on the number of workers allowed to return to work. ”

Authorities could take the initiative to allow movement of raw material and manufacturing to progressively startup within timber clusters (Keningau, KKIP, Ladalam, Kimanis) that are not deemed a high risk area (hot/red zone).

As highlighted by various other SME associations, STIA is also of the opinion that the recently announced Federal Government Stimulus Package lacks focus on SMEs.

” It is apparent at majority of the SMEs feel that the recently announced wage subsidy will fall short in its desired intent of saving jobs. As such, any quick action in the coming days to mitigate the impending short term cash flow problems will go far in reducing any large scale worker redundancy.”

STIA feels that it is necessary that the State Government considers making minor changes to the current MCO. This will at least allow the industry to help itself in the interim. -pr/BNN