KUCHING: Jaya Tiasa Holdings Bhd’s efforts to revive its downstream timber processing activities will hinge on the supply of logs from its planted forest.

       Chief executive officer Datuk Jin Kee Mou said the group temporarily shut down its loss-making wood manufacturing plants last year due to several factors, including the decline in log production and supply from natural forests.

       The other factors were the high costs of operation and volatile global market demand for timber products.

       Jaya Tiasa group owns plywood mills with annual production capacity of 420,000 cubic meters (cu m) and sawn timber mills with annual production capacity of 112,800 cu m.

       Jin said the closure of the wood manufacturing factories had sharply cut the timber segment’s pre-tax loss and impairment loss to RM8.7mil in the financial year ended June 30, 2021 (FY21) from RM68.8mil in FY20.

       “Our priority was to sell logs before processing them in order to maximise our revenue and retain existing markets,” he said in the group’s 2021 annual report.

       Year-on-year, Jaya Tiasa’s log production fell to 188,843 cu m from 244,511 cu m in FY20, or a decline of about 23%, while its log sales dropped to 162,228 cu m from 168,465 cu m.

       The average log export prices were maintained relatively consistent at US$191 (RM798.72) per cu m, and 75% of the group’s log volume was exported to India while the other main buyers are South Korea, Japan and Taiwan.

       The logging and timber manufacturing activities, which have been the traditional core business of Jaya Tiasa for decades, only contributed 18% to group revenue of RM723.4mil in FY21.

       The oil palm business, which the group diversified into in 2002, has emerged as the key revenue earner – accounting for 82% of revenue.

       On the group’s forest plantation, Jin said they are being established as a long-term solution to the shortage in the supply of natural logs.

       The group has cultivated more than 35,000 hectares of forest plantations, comprising fast-growing commercial tree species like eucalyptus deglupta, eucalyptus pelita, albizia falcataria and kelampayang.

       Based on the group’s records, more than 26,000 ha were cultivated in 2009 and only 144 ha were planted in FY21, as the progress of planting and maintenance work has been affected by the shortage of workers.

       He said despite the Covid-19 pandemic, the group is committed to expanding its forest planted area.

       “We are committed to managing the forest plantation sustainably in accordance with the Malaysian Certification Standard.

       “Although the (reforestation) division is not expected to contribute to earnings in the short term, given that the planted forest has a gestation period of 12 to 15 years before it can be ready for commercial harvesting, we look beyond reaping merely the economic values and continue to strive on promoting sustainable utilisation of forest resources, improving forest management practices and maintaining our Licences for Planted Forest (LPF) for long-term business plan.

       “Bolstered by this long-term plan and the significance of the timber industry towards the country’s economy, the group remains cautiously optimistic on the revival of the wood-based manufacturing segment in the future if our forest plantation could provide us a solution to the depleting natural log supply issue,” he added.

       Jaya Tiasa group owns three LPFs covering 235,859 ha in the Kapit region in the upper Rajang Basin of central Sarawak. The plantable area is estimated at 141,308 ha.