Malaysian timber laundering racket exposed

Posted: 9 February 2004

Thousands of tonnes of illegal and endangered Indonesian ramin wood worth tens of millions of dollars are being laundered through Malaysia and on to world markets, warns a new report.

Ramin air-drying outside a warehouse in Johor Port, 4 November 2003
Ramin air-drying outside a warehouse in Johor Port, 4 November 2003
Ramin air-drying outside a warehouse in Johor Port, 4 November 2003© EIA

The report, Profiting From Plunder, by the Environmental Investigation Agency (EIA) and the Indonesian environmental group, Telapak, details how endangered ramin wood from Indonesia, which is banned from international trade, is smuggled from Indonesia by sea to the Malaysian port of Pasir Gudang. There the sawn timber is dried and given false certificates stating "Origin Malaysia", before being loaded into containers and shipped to Hong Kong and Shanghai. Once in China most of the ramin is manufactured into finished products such as picture frames and pool cues and exported to markets including Europe and the US.

Port officials told the investigators that every month around 4,500 m³ of illegal Indonesian sawn ramin passes through Pasir Gudang en route to China. This amount of stolen Indonesian sawn ramin exceeds Malaysia's "legal" domestic production. With illegal ramin logs selling in Sumatra for as little as $20 per cubic metre, compared with a price of around $700 for sawn ramin in Peninsular Malaysia, the profits run into tens of millions of dollars.

The Indonesian government recently revealed that illegal logging across the country has pushed the rate of deforestation up to 3.8 million hectares a year, the worst in the world. This has had dire implications for ecological security and Indonesia's priceless biodiversity. Tanjung Puting National Park in Indonesia, home to Asia's only Great Ape, the endangered orangutan, is being devastated by illegally logging for commercial timber species including ramin.

The vast majority of illegal ramin coming out of Sumatra is believed to be controlled by one man, nicknamed "Jambi Lee", who like other timber barons across the country can operate with impunity due to endemic corruption.

Yet the problem is being exacerbated by the key role played by neighbouring Malaysia in laundering stolen Indonesian timber, not just ramin, onto international markets. Evidence contained in the report shows how the logging town of Sibu in Sarawak (Malaysia) relies on illegal ramin from Indonesia to manufacture products for the markets of the US and Europe. The ramin trail is symbolic of a huge illegal trade in timber from Indonesia to Malaysia, with the connivance of the authorities on both sides of the border.

EIA director, Dave Currey said: "EIA and Telapak have been documenting the flow of illegal timber into Malaysia since 2000, yet despite the introduction of new regulations the country's wood industry has not cleaned up its act. Malaysia's attempt to show itself as a producer of sustainable timber is exposed as a sham and the timber industry and governments must insist that Malaysia stops stealing Indonesian timber and join in efforts to fight the social, economic and environmental tragedy of illegal logging."

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