The forest sector is a significant contributor to the country's economy. Asia is the major export market for the country’s timber products, notably Japan. The EU and US are also important markets.
Illegal logging has long been a problem in Malaysia, and Chatham House research in 2010 estimated that illegal logging accounted for between 14% and 25% of production (Chatham House, 2010).
Malaysia was one of the first countries to begin negotiating a voluntary partnership agreement (VPA) with the EU in 2007. However progress with the negotiations has been slow. A number of governance challenges remain to be resolved. This is particularly the case in Sarawak, although an intensified focus on combating illegal logging here since 2014 could signal a turning point for the state’s forest sector. Concerns remain among stakeholders about the limited recognition of indigenous peoples’ rights by the government, as well as about corruption and a lack of transparency (Chatham House, 2015).