Malaysia launches Forest Conservation Certificate to fund conservation activities


Forest in Sabah, Malaysia. (Photo: CIFOR-ICRAF / Flickr)

The Malaysia Forest Fund (MFF) introduced its Forest Conservation Certificate (FCC) on May 27, aimed at redirecting funds from the private sector to back forest conservation initiatives in the country, serving as a non-market mechanism.

Tax deduction encourages FCC participation

Minister of Natural Resources and Environmental Sustainability Nik Nazmi highlighted during the launch that FCC projects, verified by independent bodies, could assist companies in fulfilling environmental, social, and governance (ESG) reporting requirements under biodiversity.

Furthermore, the Ministry of Finance (MOF) sanctioned a 10% income tax deduction for companies engaged in FCC activities, aiming to encourage participation.

Nik Nazmi emphasized the urgency of forest conservation, attributing recent natural disasters and human-wildlife conflicts to environmental degradation. He stressed the crucial role of forests in moderating temperatures and mitigating such challenges.

The FCC Protocol operates under Malaysia's REDD Plus Financial Framework (RFF), led by the MFF. It collaborates with policymakers, industry stakeholders, and NGOs, intending to enhance forest conservation efforts.

The FCC will complement the Ecological Fiscal Transfer (EFT), which directs funds to state governments for biodiversity and forest preservation. The federal government allocated RM200 million for EFT this year.

Nik Nazmi stressed the significance of external funding to bolster conservation initiatives, noting that FCCs cover both public and private lands.

The Malaysia Forest Fund introduced its Forest Conservation Certificate (FCC) on May 27. (Photo: MFF)

FCCs focus on conservation, not carbon offsets

While FCCs facilitate smaller-scale conservation efforts, they do not generate carbon credits or support offset activities. Another instrument under the RFF, the Forest Carbon Offset (FCO), is earmarked for these purposes.

The minister outlined plans for the FCO to align with international standards such as Verra and Gold Standard, emphasizing the importance of transparency and accountability to ensure credibility.

The FCC Protocol outlines eligible programs, application processes, and accountability standards, including forest protection, expanding Permanent Reserved Forests, and restoring degraded ecosystems.

To bolster forest carbon projects, the MOF approved a RM5 million grant for the Forest Carbon Project Development Fund, targeting capacity building and technical support.

During the launch, MFF inked memorandums of understanding with Angkatan Koperasi Malaysia Bhd and Layang Kaji Sdn Bhd to collaborate on FCC projects, signifying a commitment to advancing forest conservation in Malaysia.

Source: The EdgeThe Sun Malaysia

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