Malaysian forestry sector – advancing towards mechanisation, automation and sustainability

Malaysia's forestry industry is rapidly advancing towards mechanisation, automation, and sustainability, creating an array of market opportunities for Finnish companies. With a focus on the palm oil industry and smart forestry, advanced technologies such as satellites, precision agriculture, sensors, and monitoring systems are being implemented to enhance efficiency, productivity, and environmental sustainability. The need for smaller and more agile energy grip in forestry industry provides another opportunity for Finnish companies to participate in this rapidly growing industry. Additionally, Malaysia's commitment to sustainable forestry practices creates a welcoming market for Finnish companies specialising in smart forestry and sustainability.

Picture: Sakari Piippo

Malaysia is the regional leader in sustainable forestry

Malaysia is committed to enhancing effective management, conservation, and sustainable development of forest biodiversity as it is recognized by FAO as one of the 12 mega-diversity countries in the world. The Malaysian government aims to ensure at least 50% of its land area is under forests and tree cover. The government continues to seek ways to reduce deforestation, implement sustainable forest management, conserve carbon stocks, and explore opportunities in the agriculture and forest bio-economy and biomass to energy/value sector.


If it gets it right, Malaysia has the potential to act an example also for other Asian countries on how to maintain a balance between conservation and forestry sector development. For example, the Malaysian Timber Certification Scheme (MTCS), managed by the Malaysian Timber Certification Council (MTCC), became the first certification scheme for tropical forests in the Asia Pacific to be endorsed by the Programme for the Endorsement of Forest Certification (PEFC), the world’s largest forest certification system.


Malaysia's commitment to sustainable forestry practices provides an ideal market for Finnish companies specialising in smart forestry. Sustainable forestry practices are essential for ensuring the long-term viability of the industry while protecting the environment. The Malaysian government has implemented various policies and regulations to promote sustainable forest management and conservation. For example, some of the key objectives in The National Forestry Policy (1978) are to conserve and enhance forest resources, to promote sustainable forest management and to promote sustainable forest-based industries. Malaysia also aims to develop green economy by, for example, establishing emissions trading systems and has developed a national strategy to reduce deforestation through the UN’s REDD+ program. The REDD+ strategy involves a range of measures, including the development of sustainable forest-based industries, investment in forest conservation and restoration, the establishment of protected areas and conservation corridors, and the development of incentive mechanisms, such as payments for ecosystem services and tax incentives. Additionally, partnerships with international organisations and research and development initiatives have further advanced sustainable practices.


While Malaysia does have an ambitious climate strategy, many details are still in the works and sustainable forestry practices are generally complicated by the fact that states are responsible for forests and land use, which makes it difficult to influence them at the national level. As a result, Malaysia's forestry industry offers promising opportunities for companies specialising in sustainable forestry from technical solutions to consulting.

Mechanisation and automation in the growing sector

Forestry sector contributes significantly to Malaysia’s economy. For example, timber exports continued to grow to over RM 23 billion (EUR 4.7 bn) in 2022, marking a continuous growth since 2020 and an increase of 3% from 2021. Crude palm oil production is also expected to rise 3% to 19 million tonnes in 2023, up from 18.45 million tonnes in 2022.


At the same time, Malaysia’s commitment to maintain extensive primary forest cover requires further steps towards more sustainable forest management. One of the key areas of desired development in the Malaysian forestry industry is the use of advanced technologies, such as satellites, precision agriculture, sensors, and monitoring systems. In the Malaysian forestry sector, these technologies could be employed to enhance crop yield, improve soil health, and reduce the negative impact on the environment. The use of precision agriculture techniques would allow for more precise application of fertilisers and pesticides, reducing waste and minimising the impact on surrounding ecosystems. Satellites and drones could be used to monitor the health and growth of crops, providing valuable data that could be used to optimise yield and reduce costs. Another significant opportunity for Finnish companies in the Malaysian forestry industry is, for example, the development of small, light and agile energy grip, which could improve harvesting efficiency, reduce labour costs, and enhance worker safety.


Text: Noora Isomäki, EDUFI-trainee
More information: Embassy of Finland, Kuala Lumpur