BY :

NICHOLAS ANDREW LISSEM

SARAWAK TIMBER INDUSTRY DEVELOPMENT CORPORATION (STIDC)

(20TH JULY 2009)

Perbadanan Kemajuan Perusahaan Kayu Sarawak (PUSAKA)Perbadanan Kemajuan Perusahaan Kayu Sarawak (PUSAKA)Sarawak Timber Industry Development Corporation (STIDC)Sarawak Timber Industry Development Corporation (STIDC)

How it happen!

• July 2007 - Sub-prime mortgage• August 07 to end 2008 – Fuel prices • September 2008 – Collapse of Lehman Brothers• October 2008 – Big 3 Automobile crisis• December 2008 – Ponzi Scheme• August 2008 – Political crisis in Thailand• A (H1N1) Pandemic

Many viewed this as one of the worst economic crisis after the Great Depression in 1929/30

How it happened ! - Sub-prime Mortgage

Source : ITTO Tropical Timber Market Report, Vol. 13 Number 23, 1-15 December 2008

Source : ITTO Tropical Timber Market Report, Vol. 13 Number 23, 1-15 December 2008

How it happened – Increase in Crude Oil Prices

AVERAGE WEIGHTED AVERAGE PRICE OF CRUDE OIL, USD/BARREL

Collapse of Lehman Brothers

• Bank debt of US$613 billion

• Bond debt of US$155 billion

• Asset of US$639 billion

Ponzi Scheme

• Started @ 10 Dec 2008, announces to pay US$2 million bonuses, months earleir

• Investment worth RM65 billion

• Involving big investors corporate and individuals

How it happened ! - A (H1N1) PANDEMIC

Cases Death

World 94,500 430

Malaysia 835 -

As of 17 July 2009

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

Valu

e(RM

)Previous Experiences :

Export Trend of Timber and Timber Products Sarawak

Source : STIDC

PRODUK/TAHUN 2007 2008

M3 RM (‘000) M3 RM (‘000)

LOGS 3,745,848 1,757,238 3,482,599 1,702,196

PLYWOOD 2,814,215 4,066,287 3,172,868 4,406,576

SAWN TIMBER 1,084,470 997,222 1,027,706 970,961

VENEER 320,337 319,309 321,399 304,480

MDF/FIBREBOARD 195,104 197,683 176,548 206,554

PARTICLE BOARD 108,806 48,690 110,071 53,336

LAMINATED BOARD /FLOORING

21,008 54,412 12,872 35,219

MOULDINGS 23,524 51,584 9,905 24,009

DOWELS 4,870 11,791 3,339 10,415

BLOCKBOARD 6,213 6,776 16,566 16,639

WOODCHIPS (Tonne) 303,700 36,517 232,700 27,381

OTHERS 162,062 142,836

JUMLAH 7,709,571 7,900,601

SARAWAK: EKSPORT OF TIMBER PRODUCTS

SARAWAK: EKSPORT OF TIMBER PRODUCTS

7,900, 9%

40,721, 45%

7,604, 8%

28,332, 31%

1,002, 1%5,588, 6%

LNG UREA AGRICULTURAL

TIMBER PRODUCTS PETROLEUM OTHERS

VALUE (RM MILLION)

SARAWAK: EXPORT EARNINGS OF MAJOR COMMODITIES- 2008

SARAWAK: EXPORT EARNINGS OF MAJOR COMMODITIES- 2008

RM11,702 (51%)

RM3,546 (15%)

RM7,710 (34%)

PEN MALAYSIA SABAH SARAWAK

MALAYSIA TOTAL EXPORT: RM22.96 BILION

MALAYSIA: NATIONAL EXPORT VALUE OF TIMBER PRODUCTS - 2008

MALAYSIA: NATIONAL EXPORT VALUE OF TIMBER PRODUCTS - 2008

VALUE (RM MILLION)

256 (3%)304 (4%)

1,701 (22%)53 (1%)207 (3%)

971 (12%)4,407 (55%)

LOGS SAWN TIMBER PLYWOOD

VENEER MDF PARTICLE BOARD

OTHERS

EKSPORT 2008 – RM7.9 BILLION

SARAWAK: EXPORT VALUE OF TIMBER PRODUCTS BY TYPES - 2008

SARAWAK: EXPORT VALUE OF TIMBER PRODUCTS BY TYPES - 2008

VALUE (RM MILLION)

36,218 (1%)

537,442 (15%)406,281 (12%)

65,462 (2%)284,269 ( 8%)

1,674,931 (48%)

477,995 (14%)

CHINA INDIA JAPAN TAIWAN VIETNAM KOREA OTHERS

Volume (M3)

SARAWAK: LOG EXPORT BY DESTINATION- 2008SARAWAK: LOG EXPORT BY DESTINATION- 2008

37,712, 4%

164,015, 16%

69,542, 7%

83,074, 8%

77,835, 8%85,942, 8% 104,549, 10%

122,470, 12%

282,567, 27%

THAILAND TAIWAN UAE YEMEN CHINA

PHILIPPINES SINGAPORE KOREA OTHERS

Volume (m3)

SARAWAK: SAWN TIMBER EXPORT DESTINATION - 2008SARAWAK: SAWN TIMBER EXPORT DESTINATION - 2008

M3

SARAWAK: PLYWOOD EXPORT BY DESTINATION - 2008SARAWAK: PLYWOOD EXPORT BY DESTINATION - 2008

Mitigation Measures

• Stimulus pacakge #1• Stimulus package #2 – RM67 billion• Reduction of royalty rate from RM65 to RM50 per cubic metre• Relaxation of payment for royalty from 2 weeks to 3 months• Continuous market promotions (visits, timber selling mission,

exhibitions, etc)

0

200000

400000

600000

800000

1000000

1200000Vo

lum

e (m

3)Monthly volume of logs utilized by mills

Source : STIDC

0

50000

100000

150000

200000

250000

300000

350000

Jan-0

7

Mar-0

7

May-0

7Ju

l-07

Sep-07

Nov-07

Jan-0

8

Mar-0

8

May-0

8Ju

l-08

Sep-08

Nov-08

Jan-0

9

Mar-0

9

May-0

9

Sawntimber Plywood Veneer

Monthly production trend of sawn timber, plywood & veneer

Source : STIDC

0

5000

10000

15000

20000

25000

30000

Jan-0

7

Mar-0

7

May-0

7Ju

l-07

Sep-07

Nov-07

Jan-0

8

Mar-0

8

May-0

8Ju

l-08

Sep-08

Nov-08

Jan-0

9

Mar-0

9

May-0

9

Woodchips Particle board MDF

Poly. (Particle board) Poly. (MDF) Poly. (Woodchips)

Monthly production trend of MDF, Particleboard & Woodchips

Source : STIDC

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Jan-0

7

Mar-0

7

May-0

7Ju

l-07

Sep-07

Nov-07

Jan-0

8

Mar-0

8

May-0

8Ju

l-08

Sep-08

Nov-08

Jan-0

9

Mar-0

9

May-0

9

Mouldings Dowel Poly. (Dowel) Poly. (Mouldings)

Monthly production trend of dowel and moulding

Source : STIDC

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Valu

e (R

M'0

00)

Monthly export value of timber products

Source : STIDC

0

10000

20000

30000

40000

50000

60000

Worke

rsNUMBER OF WORKERS IN THE TIMBER INDUSTRY

Source : STIDC

WHERE ARE WE HEADING !

REAL GDP OF ADVANCED ECONOMIES

Country Real GDP

2007 2008 2009 2010

USA 2.0 1.1 -2.8 0.0

Germany 2.5 1.3 -5.6 -1.0

France 2.1 0.7 -3.0 0.4

Netherlands 3.5 2.0 -4.8 -0.7

Belgium 2.6 1.1 -3.8 0.3

United Kingdom 3.0 0.7 -4.1 -0.4

Canada 2.7 0.5 -2.5 1.2

Australia 4.0 2.1 -1.4 0.6

Denmark 1.6 -1.1 -4.0 0.4

Source : World Economic Outlook April 2009 Crisis and Recovery, International Monetary Fund

REAL GDP OF SELECTED ECONOMIES

Country Real GDP

2007 2008 2009 2010

China 13.0 9.0 6.5 7.5

India 9.3 7.3 4.5 5.6

Indonesia 6.3 6.1 2.5 3.5

Thailand 4.9 2.6 -3.0 1.0

Philippines 7.2 4.6 -3.5 1.3

Malaysia 6.3 4.6 -3.5 1.3

Singapore 7.8 1.1 -10.0 -0.1

Vietnam 8.5 6.2 3.3 4.0

Korea 5.1 2.2 -4.0 1.5

Taiwan 5.7 0.1 -7.5 0.0

Hong Kong 6.4 2.5 -4.5 0.5

Source : World Economic Outlook April 2009 Crisis and Recovery, International Monetary Fund

Where are we heading : Take-off to recovery