Timber | Malaysia

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Salient Themes

Areas of Most Severe Impacts

  • Labour
  • Culture & Indigenous Peoples
  • Land & Natural Resources

Early Warning

Signs of Increasing Risk

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Under DevelopmentPrograms to address adverse impacts

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In Malaysia, wood-based processed materials and goods fall into four major sub-sectors: 1) sawn timber; 2) veneer and panel products (i.e. plywood); 3) mouldings and builders’ joinery and carpentry (i.e. doors, windows, etc.); and 4) furniture and associated components. Sawn timber is produced mainly in Peninsular Malaysia, the majority of plywood is produced in Sarawak. The industry is predominantly owned by Malaysian companies and roughly 80-90% of these businesses are small and medium enterprises. Asia is the major export market destination for Malaysia’s timber products. The US and the EU are other important markets, importing predominantly from Peninsular Malaysia. The Netherlands is not listed in the top-10 export countries and accounts for less than 4% of Malaysia’s wood export value in 2018.

Dutch Context

For the Netherlands Malaysia is in third place with respect to the import of semi-finished and finished tropical timber products. At the same time, there are members of the VVNH that do business with Malaysian companies.


Potential and actual adverse impacts have been reported regarding:
– Decent Work
– Occupational Safety and Health
– Freedom of Association & Collective Bargaining

Reports indicate that:
• The right to freedom of association and collective bargaining is not upheld; Malaysia is ranked in Category 4 of the ITUC Global Rights Index 2016 which stands for systematic violation of the right to freedom of association, collective bargaining and strike; see also information mentioned in previous points.
• There is evidence confirming compulsory and/or forced labour in Malaysia: Most estimates suggest that there are 3–4 million migrants currently employed in Malaysia, which would constitute approximately 20–30 per cent of the country’s workforce. As much as half of the migrant workforce is now thought to be undocumented, while during the last several years, an increasing number of reports have documented serious labour rights abuses against migrant workers in Malaysia, including cases of forced labour and human trafficking. Since January 2016, the Malaysian Trades Union Congress (MTUC), and the General Federation of Nepalese Trade Unions (GEFONT), have documented hundreds of cases of employer abuse of migrant workers in Malaysia, often rising to the level of forced labor.
• There is evidence confirming discrimination in respect of employment and/or occupation: Although the New Economic Policy (NEP) technically expired in 1990, many of the NEP’s race-based policies continue to be enforced and even expanded. Discrimination based on ethnicity in education, health care, finance, workforce and welfare has been increasing in the Malaysian society in recent years; Besides facing threats to their livelihoods associated directly with land, the indigenous peoples of Malaysia have also faced discrimination in other avenues of employment.
• Malaysia is signatory to 6 fundamental ILO Conventions of which 5 in force; C105 – Abolition of Forced Labour Convention, 1957 (No. 105) was denounced on 10 Jan 1990. Malaysia did not ratify C87 Freedom of Association and Protection of the Right to Organise Convention, 1948 and C111 Discrimination (Employment and Occupation) Convention, 1958.
• There is evidence that certain groups do not feel adequately protected related to their rights.
• Violations of labour rights are not limited to specific sectors: Examples of violations were found in relation to a wide variety of sectors.

On-site workers seldom wear personal protective equipment; first aid kits are lacking; and there is no strict enforcement of these requirements. accidents are often not reported by the FME and there is a lack of knowledge of accident statistics. There is still a lack of awareness of health and safety requirements amongst forest enterprises, particularly by small business owners/private land owners. Exposure of workers to hazardous chemicals and substances (glue, paint), lack of awareness on such hazardous substances/chemicals, high levels of dust in sawmills, hearing damage, harmful exhaust fumes and lack of PPEs are reported as risks in OSH. Lack of emergency preparedness and response, lack of hygiene were also reported as risks in this regard.

There is a risk that wages are below the minimum prescribed level. They reported examples of wages being lower than minimum pay, which often occurs through the contractor providing housing, water and electricity and deducting this from the minimum cost. This is an illegal practice, as housing and medical care cannot be used as an equivalent to wages. There is also a risk that migrant workers are not afforded the correct legal working conditions. One estimate indicates that there were or are more than 800,000 illegal workers in Malaysia. The presence of illegal workers often signifies that other labor-related laws are ignored. Other common treatment of foreign workers includes passport retention, contract violations, restricted movement, wage fraud, poor housing conditions and lack of H&S training

In Sabah and Sarawak, issues with sub-contractors have been found in relation to FMEs illegally employing short-term workers, without documentation and contracts (forest pass, immigration papers, employment contract).

The government did not effectively enforce applicable laws: The length of proceedings for the recognition of trade unions can still be excessively long; Labour unions ITUC and the MTUC allege continued difficulties to ensure the recognition of trade unions, anti-union discrimination practices, and backlog of cases in the Industrial Courts in Penang and Kuala Lumpur;

Environment & Public Health

Potential and actual adverse impacts on the Environment & Public Health have been reported regarding:
– Healthy Environment
– Climate Change

Reports indicate that:
A risk has been identified of GHG emissions and it was added that compared to other industries, the timber processing industry is relatively not performing poorly. for example sawmills use wood waste and sawdust to make energy for their own use. Along with the carbon emissions, particles are being emitted as usually no filters are installed, so this poses a risk of discharge of hazardous substances into the environment.

On communities’ health and safety few data was available. But due to chemical impregnating of wood (chrome, copper), there is a risk these substances end up in the environment (for example through leaching during usage, storage and waste phases) and harm the environment.


Potential and actual adverse impacts on Land have been reported regarding:
– Land and Natural Resources
– Displacement

Reports indicate that:
– There is a risk of political bias (nepotism and/or corruption) in the issuing grants for privatization of land
– There is a risk of conflict with native peoples in relation to the alienation of land. There is a risk of excising land title from customary land owners illegally or through an undue process.
– As there exist significant economic incentive for the State authority to sell large areas of land to private developers, the indigenous group are forced to relocate

In Malaysia, the access to secure land tenure seems to be contingent upon by socioeconomic status or ethnicity and some level of discrimination, especially against the indigenous population.

Region of Sabah
There is a risk of insecure land tenure, especially related to community and indigenous land rights. The risk relates to land right disputes between communities and state/private sector for timber regardless of source. Land conflict in Sabah is common. Native communities are often unaware of their rights under the legal framework and are unfamiliar with the legal process of claiming land, often leading to conflict with the State. Land disputes in Sabah exists when indigenous communities fail to register and claim their traditional lands and the State gazettes this land for other purposes, such as designating it as a forest reserve or alienating it for development purposes.There are examples where indigenous peoples wanting to register land have been wrongfully informed by the Lands and Survey Department about the procedure. The wrong forms have instead been provided, with the result that communities have given up their land. In Sabah, a great risk in land tenure appears to be fraud in the issuance of licenses.

Region of Sarawak
There is a risk of corruption and nepotism in the allocation of ownership rights:
– Much of Sarawak’s land has been in private hands for decades. Alienated Land is land that has been transferred from Government to private ownership, with reports of companies getting the land cheaply due to corruption/nepotism.
There is a risk of insecure land tenure related to the allocation of Native Customary Rights (NCR):
– Allegations of NCR breaches in the allocation of leases over forestland have been the most contentious issue in plantation development in Malaysia for the last decades. Though federal and state laws enshrine the rights of local people to the land on which they have traditionally depended, affected communities and no governmental organizations claim that these rights have been almost universally abused in the issuance of logging and plantation licenses. The complex nature of land tenure in Sarawak and the high level of corruption has made NCR breaches one of the most prominent issues in Malaysia for many years. The apparently wide gap between customary rights as conceived by the native peoples and the ‘Native Customary Rights’ as interpreted by the Government regarding the Land Code, has led to numerous land disputes many of which have been referred to the courts.

Culture & Indigenous Peoples

Potential and actual adverse impacts on Culture & Indigenous Peoples have been reported regarding:
– Indigenous Peoples Lands, Territories, Resources and FPIC
– Indigenous Peoples Cultural Rights
– Cultural Heritage & Practice

Reports indicate that:
As of 2015, the indigenous peoples of Malaysia are estimated to account for around 13.9% of the 31 million population. They are collectively called Orang Asal. The Orang Asli are the indigenous peoples of Peninsular Malaysia. The 18 Orang Asli subgroups within the Negrito (Semang), Senoi and Aboriginal-Malay groups account for 205,000 or 0.84% of the population in Peninsular Malaysia (24,457,300). In Sarawak, the indigenous peoples are collectively called Orang Ulu and Dayak. They include the Iban, Bidayuh.

There is significant evidence of violations of legal and customary rights of IPs as is well recorded by SUHAKAM, The United Nations, indigenous peoples organizations, NGOs and others. Deforestation and large-scale developments have robbed Malaysia’s forest peoples of access to forest lands and resources and polluted their watercourses. Land pressure has sometimes forced them to use forests unsustainably, sell land to outsiders or abandon age-old practices. Local food sovereignty, health, knowledge and traditions have suffered, while communities have experienced forced evictions, police harassment, attacks, sexual violence and denial of redress. Rules, restrictions and sanctions are relatively flexible for business interests, but the authorities inflict heavy penalties on communities for alleged misdeeds.

Grievance & Redress

Reports indicate that:
There are recognized laws and/or regulations and/or processes in place to resolve conflicts of substantial magnitude pertaining to TP or IP rights and/or communities with traditional rights, but these are not recognized by affected stakeholders as being fair and equitable; Although Malaysian courts have essentially accorded native title to indigenous peoples’ traditional lands, territories and resources, state governments continue to refuse to recognize decisions by the highest court in Malaysia. At the same time, court cases take a long time to be heard and in the meantime evidence on the ground can be destroyed especially if a company or a development agency is not ordered to stop work through a court injunction. IPs may not always have presence on their claimed territories due to forced removal in the past. It is not always clearly identifiable due to lack of or difficult access to clear maps and lack of recognized, agreed boundaries.


IRBC agreement ‘Promotion of sustainable Forestry’ (2020). International responsible business conduct in tropical timber value chains.

The report is based on international research and three sources that covered (parts of) the risks associated with tropical timber production in Malaysia. Specifically, the following subsectors and processes were covered: sawmills, finger joinery and laminating, mouldings, doors & windows fabrication and furniture manufacturing.

FSC (2018). Centralized National Risk Assessment for Malaysia


Company data provided by SPOTT. This data assesses multiple timber and pulp producers and traders on the public disclosure of their corporate commitments to environmental, social and governance (ESG) best practice. Each company receives a percentage score as a measure of its transparency in relation to ESG risks.

Latest update: July 2020 | Next scheduled: July 2021