KOTA KINABALU: The Singapore-based private equity firm backed by Hoch Standard that signed a carbon trading agreement with the Sabah government is a reliable one involved in monetising natural assets, says Deputy Chief Minister Datuk Seri Dr Jeffrey Kitingan.

       He said the state government had confidence in the company, and had done its due diligence with background checks prior to signing.

       "It is a non-issue," he told reporters on Thursday (Nov 18) after meeting local NGOs to explain the state's controversial Nature Conservation Agreement with Hoch Standard amid questions about the company and a purported lack of transparency in the deal.

       He also said there was no need to bring up the deal in the state assembly meeting scheduled for early December, as it does not involve the amendment of any laws but rather the implementation of what already exists under the law.

       "But members of the House are welcome to ask questions and get the answers they want on this matter," Kitingan said.

       Earlier, he said he was informed that the company has been involved in monetising nature capital in Australia, Indonesia and South America.

       On claims that the company had only US$1,000 in paid capital, he said it was not true and explained that many companies in the new era did not need a lot of office space and large numbers of employees.

       Kitingan said Hoch Standard approached the previous state government about four years ago, and as part of the agreement would provide the trading platform that will connect offtakers, auditors, asset verifiers and the United Nations body involved in carbon trading.

       The company will earn 30% of the carbon sale, he added.

       He said delaying the implementation of the deal would cause revenue losses for the state.

       It was estimated that at least 20 tonnes of carbon could be extracted per hectare, with each tonne worth about US$20 (RM83) or more, fetching revenue of US$400 (RM1,671) or more per hectare of forest.

       However, Kitingan said there were provisions within the deal to allow the state government to revoke it if conditions were not met within two years.

       The state could also terminate the deal for non-performance, he added.

       "If there is a dispute, they will mediate and if necessary go to court," he said, adding "we don't want to be taken for a ride."

       He also explained that the pilot project involved 600,000ha of gazetted forest reserve under Sabah's Totally Protected Areas, which would in time be expanded to two million ha if all goes well.

       "These areas are already gazetted, and due process of discussions with the natives has been completed," Kitingan said, explaining that there was no need for free, prior and informed consent in the deal.

       He also explained that there was a need to secure the areas for the long term as the reason why the deal covered a 100-year period.

       He said whatever shortcomings the agreement had would be rectified before it is implemented.

       On other matters, Kitingan pointed out that apart from forest carbon, Sabah also has the potential to generate income from blue carbon derived from mangrove areas as well as corals.

       He said the value of blue carbon was at least six times higher than forest carbon.

       Over 24 NGOs including WWF Malaysia and Sabah Environmental Protection Association attended the briefing with Kitingan, who explained that some of the details were still being ironed out.

       A number of these NGOs are calling for another forum to be held together with local communities on this matter, with the participation of more government officials involved in the agreement, as they were not satisfied with many of the answers to the questions they raised.