Malaysia Profile

Forest Conversion for Commercial Agriculture and Associated Exports

In Malaysia, most conversion of natural forests for timber plantations in the last ten years has occurred in Malaysian Borneo (Sabah and Sarawak). The majority of recent deforestation in Malaysia has been in the large state of Sarawak in Malaysian Borneo. A study published in 2011 found that Sarawak was losing its forests at a rate of more than 2 percent per year in the late 2000s, a rate faster than any major tropical forest nation during the same period. Analysis by Forest Trends published in 2014 suggests that of the roughly 900,000 ha of forest lost in Sarawak between 2006 and 2010, 43 percent was converted to oil palm and 21 percent was converted to timber plantations.

Oil palm plantations have been the main driver of forest conversion in Malaysia in recent decades. Initially, much of the expansion of oil palm took place at the expense of rubber and coconut plantations rather than natural forest. By the early 2000s, however, most such areas had been repurposed, and most new oil palm developments since have been on newly deforested land. Grieg-Gran et al. (2007) concluded that of about 1.1 Mha deforested in Malaysia between 1995 and 2005, 70 percent was cleared to make way for oil palm plantations. Malaysia exports 90 percent of the palm oil it produces.

Since 2000, conversion of forests to industrial timber plantations has been another important driver of deforestation. In Sarawak, timber plantation development did not begin in earnest until 2004 (Sarawak Forest Department 2011), so few plantations are mature and production remains low. In Sabah, most plantation wood is used for pulp and paper production, the vast majority of which is exported. Available data suggest that Malaysia as a whole exports at least 70 percent of the timber it produces. Comparison of export and production figures for Sarawak in Malaysian Borneo suggests that it exports nearly 100 percent of the timber it produces. As in Indonesia, the proportion of conversion wood exported is most probably similar to the total.

There are no official published figures for the volume of conversion timber produced in Malaysia (the world’s largest tropical wood exporter) or how much this represents of total tropical wood production in the country. However, analysis published by Forest Trends (2014) suggests that two-thirds of timber production in Sarawak (the state responsible for the majority of Malaysian production) in 2010 may have originated from conversion, an increase from a little over half compared to four years earlier.

Illegalities in Conversion

Agricultural and timber plantations being developed in natural forest areas in Malaysia generally have the requisite licenses from the forestry authorities, are in compliance with land laws, and pay all due taxes on timber harvested during conversion. Environmental Impact Assessments are also normally obtained where this is required (though the requirement is sometimes circumvented via legal loopholes). Regulations on peat depth and forest fire prevention are also less stringent than in Indonesia, so there are fewer laws available to be broken.

However, there is a wealth of evidence to suggest that many plantations are developed in violation of indigenous land rights (known as Native Customary Rights (NCR) in Malaysia). There are also many cases of alleged corruption in the issuance of relevant licenses, although—unlike in Indonesia—no cases have actually been successfully prosecuted. There is also evidence to suggest that breaches of regulations during plantation development are common across the country.

A study commissioned by Forest Trends identified separate documented case studies from the last ten years of alleged illegalities in forest conversion for commercial plantations in Malaysia. This included case studies from every major forested state in the country. The majority of the case studies relate to oil palm plantations, though there are also multiple case studies relating to rubber and industrial timber plantations. In East Malaysia (Sabah and Sarawak) all of the cases relate to corruption and/or violations of NCR in the issuance of plantation concessions. Most of the cases in Peninsular Malaysia relate to alleged breaches of environmental and planning laws in permitting and during development, though there are also cases involving NCR and corruption.

Native Customary Rights

Allegations of NCR breaches in the allocation of leases over forestland have been the most contentious issue in plantation development in Malaysia for the last 20 years. Though federal and state laws enshrine the rights of local people to the land on which they have traditionally depended, affected communities and nongovernmental organizations claim that these rights have been almost universally abused in the issuance of logging and plantation licenses. NCR conflicts are a feature in almost every new plantation project in Malaysia, with the situation being particularly serious in the states of Kelantan and Sarawak (Lim 2013). In the face of federal and state governments that insist that all of the leases are legal, communities have turned to the courts to seek redress. There are presently around 200 NCR land cases pending in the Sarawak courts alone (SACCESS 2012), and new cases are being filed every year at a faster rate than old cases are resolved. Some unresolved cases are more than a decade old. Though a number of cases also relate to selective logging concessions and construction of roads and dams, most cases relate to plantation development. Of 139 relevant NCR cases in Sarawak filed between 1995 and 2009, at least half involve plantations, and most of these involve oil palm plantations.

Of the four NCR cases involving oil palm and timber plantations that had been concluded by the end of 2009, all had ruled in favour of the plaintiffs. Since then, a number of additional court decisions have been made in favor of local communities in NCR cases involving logging and plantation companies (Yong 2010). For example, in one recent case involving an oil palm plantation development controlled by Ta Ann, one of Sarawak’s largest logging and plantation companies, the Sarawak Court of Appeal ruled that a large part of the oil palm plantation was NCR land and that the lease over it was illegal (Maliasikini 2013; Tawie 2013). One particularly high-profile oil palm-related case that ruled in favor of the community in 2010 was later overturned by a higher court, however (Borneo Post 2013).


Three-quarters of the cases of alleged illegalities in agro-conversion in Malaysia documented by Forest Trends (2014) include allegations of corruption. Almost all of these cases relate to political patronage, cronyism, and nepotism in the issuance of licenses, usually at a very high level. The most serious evidence of corruption comes from the states of Sabah and Sarawak in Malaysian Borneo (which together account for two-thirds of Malaysia’s remaining forests). The Chief Ministers of both states have been the subject of investigations by the Malaysian Anti-Corruption Commission for alleged corruption related to the issuance of logging and plantation licenses (Malaysiakini 2012).

In 2011, NGOs released official documents that showed 200,000 ha of land in the Sarawak had been leased for oil palm development to companies with family connections to the former Chief Minister, Abdul Taib, in exchange for payments which appeared to be far below the real value (Sarawak Report 2011). The following year, an investigation by the NGO Global Witness supported these allegations. An undercover investigator posing as an investor seeking land in Sarawak for a plantation approached the relevant government authority and was offered four plots of land. Members of Taib’s family were “direct shareholders in or beneficial owners of three of these land leases, while the fourth deal was, according to an intermediary, proposed on [sic] the understanding that Taib would receive a multimillion dollar kickback from the selling party.” Global Witness was also told by a senior government official and a timber industry executive that companies seeking plantation licenses needed to make “unofficial payments” to the Chief Minister. Taib and other individuals investigated have vigorously denied the allegations made by Global Witness (Global Witness 2013).

Other Illegalities and Irregularities

Malaysia’s National Auditor General, reviewing the performance of State Forestry Departments in 2008, noted that many of Peninsular Malaysia’s forest reserves had been encroached by oil palm and rubber plantations. Concerns were raised by the Auditor General about the extent to which regulations had been properly followed when the licenses for these plantations were issued. In one forest reserve in Johor state, for instance, the Forestry Department had issued licenses in excess of the maximum permitted size and in areas of intact forest (Wakker 2010). A joint government and donor study found that the procedures followed for de-gazetting protected areas for conversion were “clearly not according to legal principles” (ibid.).

In addition to problems related to license issuance, the Auditor General also found many cases where conversion for plantation development had taken place without required Environmental Impact Assessments; either the requirement had simply not been followed, or it had been circumvented in a legally questionable manner. Field investigations also uncovered a number of cases where illegal clearance had taken place in river buffers and on steep slopes, and where clearance had extended beyond licensed boundaries (ibid.).

The relative paucity of information on compliance with environmental and other regulations during forest conversion in Sarawak and Sabah is due to a lack of interest in documenting such matters amongst NGOs and local communities, and cannot be taken to imply that compliance is good. NGOs, local communities, and activists in Sarawak and Sabah are focused on the overarching legality of the concessions themselves, in terms of customary rights and corruption, and view compliance issues during conversion as being secondary if (as they allege) the concession was illegally issued and therefore its entire operations are illegal. The state governments, on the other hand, do not provide any information on their own monitoring and assessments of compliance. On the few occasions where such issues have been investigated, apparent illegalities have been documented. Illegal clearance on steep slopes was recorded in one industrial timber plantation in Sarawak in 2009 (Norwegian Council on Ethics 2010), while illegal clearance of steep slopes and along river banks was documented in an oil palm concession in the same state in 2011 (Global Witness 2012). Given the welldocumented close and allegedly corrupt relationships between the major oil palm and timber plantation companies in Sarawak and senior officials in government, it is unlikely that there is significant enforcement of regulations. This interpretation is supported by the much more extensive independent information available related to compliance by some of the same companies with regulations governing selective logging (Norwegian Council on Ethics 2012a; 2012b).



Borneo Post. 2013. “Government, IOI_LCDA Win Appeal.” Borneo Post, February 5. 

Forest Trends. 2014. “Consumer Goods and Deforestation”. Washington DC.

Global Witness. 2012. “In the Future, There Will Be No Forests Left.” Global Witness, London. 

Global Witness. 2013. “Inside Malaysia’s Shadow State: Backroom Deals Driving the Destruction of Sarawak.” Global Witness, London. 

Grieg-Gran, Maryanne, Myrthe Haase, Jan Joost Kessler, Sonja Vermeulen, and Erik Wakker. 2007. “The Dutch Economic Contribution to Worldwide Deforestation and Forest Degradation.” Aidenvironment, Amsterdam, and International Institute for Environment and Development (IIED), London.

Lim, Teck Wyn. 2013. “Malaysia: Illegalities in Forest Clearance for Large-Scale Commercial Plantations.” Forest Trends, Washington, DC. 

Malaysiakini. 2012. “Probes against Taib, Musa ‘Yet to be Resolved.’” Malaysiakini, May 31. 

Malaysiakini. 2013. “Court Orders Return of Land to Evicted Natives.” Malaysiakini, October 10. 

Norwegian Council on Ethics. 2010. Recommendation of 22 February 2010. 

Norwegian Council on Ethics. 2012a. Recommendation to Exclude WTK Berhad Holdings from the Investment Universe of the Government Pension Fund Global. 

Norwegian Council on Ethics. 2012b. Recommendation to Exclude Ta Ann Berhad Holdings from the Investment Universe of the Government Pension Fund Global. 

SACCESS. 2012. “Guidebook on Reclaiming Sarawak NCR Lands in Courts: Practical Information for Communities on Resorting to the Court Process to Reclaim Native Customary Rights Lands.” SACCESS, Sarawak, Malaysia.

Sarawak Forest Department. 2011. Annual Report 2011.

Sarawak Report. 2011. “We Release the Land Grab Data.” Sarawak Report, March 19. 

Tawie, Joseph. 2013. “S’Wak Loses Appeal Over NCR Land Decision.” Free Malaysia Today, June 22. 

Wakker, Eric. 2010. “Rubbery Certification: A Critical Review of the Endorsement of the Malaysian Timber Certification System (MTCS) by the Dutch Timber Procurement Assessment Committee (TPAC).” Aidenvironment, Amsterdam.

Yong, Carol. 2010. “Logging in Sarawak and the Rights of Sarawak’s Indigenous Communities: A Report produced for JOANGOHUTAN by IDEAL.”

This summary was last updated in September 2016. For more recent information, please see individual news stories.