Why is Sarawak reducing timber royalties and charges?

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Sarawak Reduces Timber Royalties and Charges to Support Forestry Sector

The Sarawak government has implemented a 50 per cent reduction in royalty rates and selected statutory charges for natural forest timber under all Forest Timber Licences (FTL) and Forest Plantation Licences (LPF). This temporary measure, effective for one year subject to review, aims to provide immediate cost relief and enhance the operational viability of the forestry and timber industry. The reduction excludes the Timber Industry Tariff H0272502 and will be implemented within two weeks.
Addressing Industry Pressures

This initiative reflects the state government's commitment to support an industry grappling with significant challenges. Rising fuel prices, global market uncertainties, supply chain disruptions, and increasing operational costs have placed considerable strain on timber businesses. The royalty and charge reduction is designed to offer direct financial relief, helping to stabilise profit margins and ensure the continued participation of industry players.
Rebalancing Domestic Processing and Exports

Current industry trends indicate a shift towards export-oriented production due to higher margins, leading to a decline in domestic timber processing activities. The implemented measure is expected to help rebalance the sector by making local processing more competitive and strengthening the overall timber value chain. This aims to ensure a more stable supply for domestic needs while also supporting the export market.
Promoting Sustainability and Future Growth

Alongside these immediate support measures, Sarawak remains committed to forest restoration and environmental sustainability. Initiatives such as the Sarawak Greening Campaign and Forest Landscape Restoration (FLR) have seen over 57 million trees planted between 2021 and 2025. The state is also intensifying the development of large-scale forest plantations to reduce reliance on natural forest timber and promoting a ‘waste-to-energy’ approach to convert wood waste into valuable energy sources, thereby improving resource efficiency and creating new economic opportunities.

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Why is Sarawak reducing timber royalties and charges?

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