The Sarawak government has cut royalty rates and selected statutory charges for natural forest timber by 50 per cent across all Forest Timber Licences and Forest Plantation Licences. That is according to the Sarawak Forest Department (SFD), which confirmed that the one-year emergency measure will take effect within two weeks, pending system updates, targeting a structural shift from domestic processing to export-oriented production.
Higher fuel costs, global market volatility, and supply chain disruptions have compressed domestic processing margins to the point that operators are systematically redirecting timber flows to export markets, where returns are higher. And the SFD warned that, left unchecked, this shift threatens the state’s domestic processing base and its ability to maintain a stable, integrated timber value chain.
“The reduction aims to provide immediate cost relief, improve operational viability, stabilise profit margins, strengthen domestic timber processing and ensure continued industry participation and supply stability,” the SFD said, projecting timber production will stabilise at approximately 1.73 million cubic metres annually as the measure restores operator confidence.
Approved under the leadership of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg, the relief package is a direct economic response rather than a structural subsidy. A one-year time limit and mandatory review are built in to prevent the measure from becoming permanent without fresh justification. The cut excludes the Timber Industry Tariff H0272502.
Sarawak’s Greening Campaign and Forest Landscape Restoration program have seen more than 57 million trees planted between 2021 and 2025 — the highest tree-planting achievement recorded in Malaysia. The state is simultaneously accelerating large-scale plantation development to reduce long-term dependence on natural forest timber, whilst redirecting wood waste into wood pellets, biochar and waste-to-energy conversion streams.
With production forecast to hold at 1.73 million cubic metres as the royalty relief takes effect within a fortnight, Abang Johari said the measure reflects a determination to keep Sarawak’s forestry sector competitive against current economic headwinds — “ensuring the forestry sector remains resilient, competitive and sustainable for the future,” he said.
