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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 15189
PROJECT COMPLETION REPORT
MALAYSIA
SARAH LAND SETTLEMENT AND ENVIRONKENTAL MANAGEMENT PROJECT(LOAN
3039-MA)
DECEMBER 22, 1995
Agriculture and Environment Operations DivisionCountry
Department 1East Asia and Pacific Regional Office
This document has a restricted distribution and may be used by
recipients only in the performance oftheir official duties. Its
contents may not otherwise be disclosed without World Bank
authorization.
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CURRENCY EQUIVALENT
Malaysian Ringgit per US$
Year Exchange Rate
1988 (Appraisal) 2.60
1989 2.71
1990 2.70
1991 2.75
1992 2.55
1993 (Completion) 2.57
ABBREVIATIONS
BINA - Felda Construction Corporation
DOE - Federal Department of the Environment
EMP - Environmental Management Plan for the Dent Peninsula
FELDA - Federal Land Development Authority
ffb - Fresh Fruit Bunches of Oil Palm
GOM - Government of Malaysia
GOS - Government of the State of Sabah
KWR - Kulamba Wildlife Reserve
MTED - Sabah Ministry of Tourism and Environmental
Development
PWD - Public Works Department
SCS - Sabah Conservation Strategy
SWD - Sabah Wildlife Department
TWR - Tabin Wildlife Reserve
UNDP - United Nations Development Program
WWFM - World Wide Fund for Nature, Malaysia
WEIGHTS AND MEASURES
Metric System
FISCAL YEAR
January 1 - December 31
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FOR OFFICIAL USE ONLYThe World Bank
Washington, D.C. 20433U.S A
Office of the Director-General December 22, 1995Operations
Evaluation
MEMORANDUJM TO THE EXECUTIVE DIRECTORY AND THE PRESIDENT
SUBJECT: Project Completion Report on MalaysiaSabah Land
Settlement an(d Env'ironmental Man:-gement Project (Loan
3039-MA)
Attaclhed is the Project Completion Report (PCR) on the Malaysia
Sabalb Land Settlement andEnvironmental Managemenit project (Loan
3039-MA, approved in FY89). Parts I and Ill were prepared bythe
East Asia and Pacific Regional Office and Part 11 by the
Borrower.
The pro.ject area consists of about 400,000 hia on the Dent
Peninisula. a remote and sparselvpopulated part of the State of
Sabah. Both the Federal and Saball State Governments wished to
promotesome economic development and poverty alleviation in thie
area, mucIh of which remilainis forest covxered. butsubject to
logging. About 100,000 lha suitable for oil palm cultivation was
earmaraked for development illland settlement schiemes by the
Federal Land Developmenlt AutIlolrity (FEIDA). A furtiler 170,000
ha wasset aside as wildlife and forest reserves. The project was to
finance a folur-year time slice ( 1988-92) ofFELDA's agricultural
developmenit program. including inifrastrluctuile for settlemenit
villages. aiid to providesupport to the newly establislhed Sabali
Department of Tourisimi and Envir-onimilental Developmeit.
Thelatter included technical assistance and staff training ancl the
lincremeinital staffing and infrastructLiralrequirements related to
the wildlife reserves in thle peninsuila.
The agricultural development program was carried out on
sclhedule, and about 61.000 lha wasplanted. Yields are in line with
forecasts. lHowever, little interest was shown by the rural
populationi ofSaball in the settlement scieme. Only 925 families
were settled during the project period, compared to aplanned 3,500.
The bulk of the land developed is being operated as an estate by
FEL DA using hirecd labor.Performance of the environmental
component was fully satisfactory. Relevalit legislation was
passed,infrastructure for the forest and wildlife reser-ves on the
peniisuIla constricted, a managemalernt plan prepared,and t'ie
staff of the Wildlife Department increased and ti-ained. Local NGOs
were closely involved in theseactivities and provided some
techinical assistance. Institutional development is rated as
substantial. Thieproject fully net all its phiysical objectives
but, because of the decline in the price of palm oil
sinceappraisal, the re-estimated ERR is only 7 percent, compared to
25 percent estimated at appraisal. I-owever,the ERR does not take
the regional developmenit benefits into account. Sustainability is
rated as likely, andproject outcome as marginially satisfactory. In
its Part 11, the Borrower supports the findings of the PCR
andemphiasizes the contribLtioln of local NGOs in planning aicl
iinpleelineitiig the environimilenltal component.The completion
report provides an aclequiate accoulit of project
implementation.
An audit is planined.
CcCAttacliment
This document has a restricted distribution and may be used by
recipients only in the performance of theirofficial duties. Its
contents may not otherwise be disclosed without World Bank
authorization.
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FOR OFFCIAL USE ONLY
PROJECT COMPLETION REPORT
MALAYSIA
Sabah Land Settlement and Environmental Management Project (Loan
3039-MA)
Table of Contents
Preface . . . . . . . . .
Evaluation Summary . . . . . . . . . . . . . . . . . . . . . . .
. . . . iii
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE . . . . . . .
. . . . . 1
Project Identity . . . . . . . . . . . . . . . . . . . . . . . .
. . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 1
Project Objectives and Brief Description . . . . . . . . . . . .
. . 4
Sahabat Settlement Complex . . . . . . . . . . . . . . . . . . .
4Dent Peninsula Environmental Management Plan . . . . . . . . . .
4
Project Design and Organization . . . . . . . . . . . . . . . .
. . . 6
Project Implementation . . . . . . . . . . . . . . . . . . . . .
. . 7Project Results . . . . . . . . . . . . . . . . . . . . . . .
. . . . 13
Project Sustainability . . . . . . . . . . . . . . . . . . . . .
. . 15
Bank Performance . . . . . . . . . . . . . . . . . . . . . . . .
. . 15
Borrower Performance . . . . . . . . . . . . . . . . . . . . . .
. . 15
Project Relationship . . . . . . . . . . . . . . . . . . . . . .
. . 15
Consulting Services . . . . . . . . . . . . . . . . . . . . . .
. . . 16
Project Documentation and Data . . . . . . . . . . . . . . . . .
. . 16
PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . .
. . . . . . 17
Review of the Environmental Component by the Government of Sabah
. . 17Comments from FELDA . . . . . . . . . . . . . . . . . . . . .
. . . . 21
PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . .
. . . . . . 24
Related Bank Loans . . . . . . . . . . . . . . . . . . . . . . .
. . 24
Project Timetable . . . . . . . . . . . . . . . . . . . . . . .
. . . 25
Cumulative Estimated and Actual Loan Disbursements . . . . . . .
. . 26
Project Implementation . . . . . . . . . . . . . . . . . . . . .
. . 27
Project Cost and Financing . . . . . . . . . . . . . . . . . . .
. . 29
Project Results . . . . . . . . . . . . . . . . . . . . . . . .
. . . 30
Status of Covenants . . . . . . . . . . . . . . . . . . . . . .
. . . 31
Use of Bank Resources . . . . . . . . . . . . . . . . . . . . .
. . . 33
MAPS IBRD 20966 and 27173
Ths document has a restricted distribution and may be used by
recipients only in the performance of theirI official duties. Its
contents may not otherwise be disclosed without World Banlk
authorization.
-
Project ComPletion Report
MALAYSIA
Sabah Land Settlement and Environmental Management Project (Loan
3039-MA)
Preface
This Project Completion Report (PCR) reviews implementation of
the Sabah
Land Settlement and Environmental Management Project in
Malaysia, for whichLoan 3039-MA in the amount of US$71.5 million
was approved on April 25, 1989.
The Loan closed on June 30, 1994, six months behind schedule.
The last
disbursement was made on July 19, 1994, and the undisbursed
balance of US$0.53
million was cancelled on that date.
The Evaluation Summary and Parts I and III of the PCR were
prepared by
the Agriculture and Environment Operations Division of the
Country Department
I, East Asia and Pacific Region. Preparation of Parts I and III
by the Bank
was based, inter alia, on the findings of a PCR mission carried
out in October
1993 and a follow-up PCR mission in February 1995 to review the
environmental
component of the project; data on land settlement and
agricultural developmentfurnished by the Federal Land Development
Authority (FELDA) and that on the
environmental component by the Ministry of Tourism and
Environmental
Development (MTED) of the Government of Sabah, Malaysia; the
Staff Appraisal
Report No 7381-MA dated March 30, 1989; the Loan and Project
Agreements datedJuly 18, 1989; correspondence between the Bank and
the Borrower; and Bank
supervision reports and project files. Part II of the PCR was
prepared by the
MTED, Sabah, and FELDA, the main implementing agencies for the
project.
The Bank wishes to thank the officials of the MTED and the
management
and staff of FELDA and Sabah Public Works Department for their
cooperation and
assistance in preparing this PCR.
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PROJECT COMPLETION REPORT
MALAYSIA
SABAH LAND SETTLEMENT AND ENVIRONMENTAL MANAGEMENT PROJECT (LOAN
3039-MA)
Evaluation Summary
Project Obiectives
1. The project, located in the eastern part of Sabah, called the
DentPeninsula, involved consolidation of agricultural development
and settlementof some 61,000 ha, and implementation of an
Environmental Management Plan. Theproject envisaged a four-year
time-slice financing (from January 1989 throughDecember 1992) and
included support to the following components in progress in1989 or
to be initiated during the project period: (a) for the
SahabatSettlement Complex, crop development and early maintenance
of about 51,150 haof oil palm and coffee; construction and
rehabilitation of agricultural andaccess roads; development of four
settlement villages; construction of onepalm oil mill; and
provision of vehicles and equipment; (b) for the DentPeninsula
Environmental Management Plan, implementation of actions to
enhanceconservation and management of the Tabin and Kulamba
Wildlife Reserves,including provision of staff and other resources
to the Sabah WildlifeDepartment (SWD); provision of infrastructure
facilities and equipment for thewildlife reserves; provision of
technical assistance, including: (i) twotechnical advisors for the
SWD; and (ii) consulting services for thepreparation of a Sabah
Conservation Strategy; and establishment of anEnvironmental
Coordination Unit in FELDA to ensure enhancement ofenvironmental
protection practices during agricultural development of theSahabat
area and in future FELDA land settlement projects. About 8,600
settlerfamilies in the long term and 3,560 families during the
project period were tobenefit from the project.
Implementation Experience
2. Project implementation was generally problem-free. However,
settleremplacement was disappointing (para. .) and progress of the
environmentalcomponent was slower than expected at appraisal, given
the weakness of theSahab Wildlife Department at that time and the
significant legislative andadministrative changes involved. The
Bank loan closing date was extended byonly six months to June 30,
1994, and the loan was almost fully disbursed.
3. A. Sahabat Settlement Complex. Agricultural and
infrastructuredevelopment targets were substantially achieved.
Compared to 61,000 haexpected at appraisal, about 65,000 ha had
been planted through 1993,including cocoa areas (later converted to
oil palm) and plantings before 1984not financed by the Bank loan.
The Bakapit-Tungku access road rehabilitationcommenced in June 1992
and was completed in November 1994. The internalaccess road network
was also completed as envisaged at appraisal (exceptmetalling of
about 20 km linking Village C to Tungku, which is expected to
becompleted by mid-1995). The targets for the village
infrastructure were met,except for settler houses, which were
greatly reduced in numbers due to the
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limited emplacement of settlers (para. 5). The palm oil mill was
completed
and commissioned in early 1992 and has already reached its 60
ton of ffb/hour
design throughput.
4. B. Dent Peninsula Environmental Management Plan.
Overall,implementation of the Plan was satisfactory, although
delays were experienced
in technical assistance recruitment, and legislative and
administrative
reforms. The UNDP funding of the TA component was very helpful
and World Wide
Fund for Nature, Malaysia (WWFM), a local NGO, played a key role
in
preparation and implementation of the EMP.
Results
5. Overall project results were satisfactory. As regards the
Sahabat
Settlement Complex, the economic development objective of
increasing
agricultural production and exports of Sabah was achieved. The
rehabilitation
of the Bakapit-Tungku access road has cut down by two-thirds the
travel time
from Bakapit to Sahabat. However, achievement of the project's
social
objective of rural poverty alleviation by providing land to poor
farmers was
disappointing, as only 925 settlers were emplaced (on about
5,700 ha),
compared to 3,560 expected at appraisal. About 90% of the
Sahabat area isbeing managed by a FELDA subsidiary as a commercial
plantation utilizingimmigrant labor and hired Sabahan workers.
Given the relatively small
population of Sabah, the remoteness of the Sahabat area, and the
perceived
reluctance of poor Sabahans (mostly shifting cultivators and
fisherfolk) to
adopt permanent settlement and farming conditions, the risk was
specifically
recognized at project appraisal that there may not be a
sufficient number of
families willing to settle in the project area. To ensure
settler
availability, FELDA, in close cooperation with the Sabah State
Government, was
to carry out an aggressive promotion and recruitment campaign.
However, those
efforts did not prove very successful.
6. As regards the Dent Peninsula EMP, the project results
were
unquestionably significant and the institutional impact was
substantial. Key
objectives have been attained or are about to be attained: (a)
full-time
staff of the Sabah Wildlife Department are now based at Tabin
Wildlife Reserve
with responsibilities covering the Kulamba Wildlife Reserve. A
management
plan has been completed for Tabin. Licensed logging in Tabin
ceased in 1992
and illegal logging has been reduced to occasional incursions.
Illegalhunting is also much better controlled. Aerial and other
surveys in 1994 show
significant regeneration of logged-over areas and an abundance
of wildlife;
(b) an amendment to strengthen existing legislation for wildlife
sanctuaries
was transformed into a more comprehensive and functional
Wildlife Conservation
Enactment, which is ready for consideration by the Sabah Cabinet
prior to its
being tabled at the State Legislative Assembly later this year.
The Enactment
is very comprehensive and is generally regarded as a model for
conservation
legislation in developing countries; and (c) the Sabah
Conservation Strategy
has provided guidelines and an operational framework for the
sustainable
management of Sabah's natural resources and is now being
implemented at the
sectoral level.
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7. The experience with FELDA's Environmental Coordination Unit
was notsuccessful. The Unit was never very active and it has now
been dissolvedsince FELDA's new land development has come to a stop
and no role for the Unit
was envisaged for the mature phase of plantations.
8. Project Benefits. The project's main benefits are increased
production
and exports of palm oil and kernels and improved environmental
management inSabah. The total production of ffb in schemes 1 to 35
in 1994 was estimatedat about 884,000 tons (equivalent to about
185,650 tons of crude palm oil and31,000 tons of palm kernels).
Peak yields of 24 tons ffb/ha projected atappraisal are unlikely to
be attained, except in about 10% of the area. Forover 90% of the
area, peak yields are likely to be about 21 tons ffb/ha. Thislower
yield is partly a reflection of the problems on about 10-12,000
ha
(about 20% of the total project area) of calcareous (coral)
soils in theeastern part of Sahabat, where the peak yields are
unlikely to exceed 18 tons
ffb/ha. These calcareous forests and swamps should have been
preserved for
environmental reasons. The number of settler beneficiari-s (925)
is much less
than that expected at appraisal (3,560) due to the problems
encountered in
settler recruitment (para. 5). With the high palm oil prices
prevailing in1994, net monthly settler incomes in Sahabat schemes
averaged RM1,450
(US$580), which is higher than the appraisal estimate of RM1,320
for 1994(RM1,035 in 1988 constant terms).
9. Economic Rate of Return. The economic rate of return (ERR) of
the project
at completion is estimated at 7%. The ERR is lower than that at
appraisal
(25W) principally due to a steep decline in projected palm oil
prices: the
Bank's projected prices in years 2000 and 2005 (in 1994 constant
terms) are
27% and 35% lower than the price assumed at appraisal. The other
relatively
minor reasons are the lower expected yields of oil palm (para.
8) and a one-
year lag in production benefits. If the prices projected at
appraisal had
materialised, the ERR at completion would have been about
21%.
Sustainabilitv
10. Although FELDA and its subsidiaries are well-established and
relativelystrong institutions and their management, production and
marketing systemshave proven to be successful, the sustainability
of the Sahabat SettlementComplex in financial terms will mainly
depend on the level of world palm oilprices. If the current high
prices continue for a few years, there should beno problem in
ensuring the profitability of the Complex. However, if theprices
quickly decline to the levels projected by the Bank for the long
term,
serious financial problems might surface. With the strengthening
of the Sabah
Wildlife Department under the project and the continuing strong
commitment ofthe MTED to environmental improvement in Sabah, the
results obtained under theenvironmental component of the project
are expected to be sustained.
Findings and Lessons Learned
11. The main findings and lessons learned are as follows:
(a) Employment of local NGOs, who have a proven track recordand
who are acceptable to the Government, can be the
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-vi-
ideal way to prepare and implement environmental projects(PCR,
para. 5.4).
(b) Adequate environmental safeguards should be ensured inland
development operations: the clearing of calcareousforests and
swamps in the eastern part of Sahabat shouldhave been avoided (PCR,
paras. 5.23 and 6.4).
(c) Settler emplacement problems should not be underestimatedand
land development activities in settlement projectsshould be
consistent with settler availability (PCR,para. 6.1).
(d) A well-prepared environmental management plan with
adequateGovernment commitment and technical support can have a
significantimpact within a relatively short period of time (PCR,
para. 6.2).
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PROJECT COMPLETION REPORT
MALAYSIA
SABAH LAND SETTLEMENT AND ENVIRONMENTAL MANAGEMENT PROJECT (LOAN
3039-MA)
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE
1. Project Identitv
Name Sabah Land Settlement and Environmental Management
Project
Loan Number 3039-MARVP Unit East Asia and Pacific Regional
Office
Country MalaysiaSector Agriculture, Infrastructure and
Environment
2. Background
2.1 Acariculture in Sabah. Sabah is one of the two East
Malaysian
States. It accounts for about 22% of the total area of the
country, but the
population is only 1.3 million, or 8% of the country's total. In
the late
1980s, forestry, agriculture and fisheries contributed about 40%
of theState's GDP and 50% of exports, with forestry being the
largest contributor.
About 2.15 million ha or 30t was suitable for agriculture, but
less than one-
third (600,000 ha) was under cultivation in 1986. As in
Peninsular Malaysia,Sabah's climate and soil conditions provide a
strong comparative advantage for
tree crops, in particular oil palm and cocoa. About 75% of
Sabah's population
lives in rural areas, and they are mostly indigenous peoples.
Traditionally,they have been shifting cultivators, hunters and
fishermen. In 1984, it was
officially estimated that about 33% of the whole Sabah
population was below
the poverty level. There is a continuous influx of labor from
neighboringIndonesia and Philippines, most of which is employed in
tree crop plantations
on the East Coast.
2.2 FELDA. The Federal Land Development Authority (FELDA)
was
established in 1956 as a Statutory Body attached to the Ministry
of Lands.
Since its inception, FELDA played a mdjor role in addressing the
Government's
poverty alleviation program through the development and planting
of Statelands principally with rubber and oil palm for settlement
by poor rural
families. FELDA's integrated program involved land development
andsmallholder settlement in group farming schemes that included
community
organization, management, roads, village infrastructure, water
supply
facilities, agricultural extension, inputs, credit, processing,
marketing and
other services. For its development services and downstream
activities (suchas palm oil fruit processing, transport and
marketing) FELDA established
several subsidiary corporations and entered into joint venture
arrangementswith the private sector. To construct access roads and
village
infrastructure, which are financed by Federal grants, FELDA
relied on thePublic Works Department (PWD).
2.3 As of December 31, 1988, FELDA had settled 111,728 families
in 441settlement schemes comprising about 752,000 ha, with a total
area in
production of about 540,000 ha. Until 1978, FELDA's program was
limited to
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Peninsular (West) Malaysia. However, with increasing scarcity of
suitable
land in the peninsula, FELDA began operations in Sabah in 1979
and in Sarawakin 1987. Under the Fifth Malaysia Plan (1986-90),
FELDA intended to develop
175,000 ha and emplace 30,000 settler families, with a total
investment of M$
2.7 billion (US$ 1.06 billion), about one-third of which would
be in Sabah.
However, during the first three years of the Plan, budget
allocations and
government outlays were lower than projected and implementation
had fallen
behind target.
2.4 FELDA's long-term Sabah program consisted of three projects
with a
gross target area of 119,600 ha: Umas (9,700 ha), Kalabakan
(6,900 ha) and
Sahabat (103,000 ha). Land development and planting of the first
two
complexes had been substantially completed. Agricultural
development andinfrastructure works in the larger Sahabat program
were still in progress, and
settler emplacement was starting in 1988.
2.5 Pro-ect Area. The project area comprised the Sahabat
Land
Development and Settlement Complex and the Tabin (TWR) and
Kulamba (KWR)Wildlife Reserves, located at the eastern end of the
Dent Peninsula in the
State of Sabah. A 65-km gravel road from Lahad Datu to Tungku,
of which a 35
- km section between Bakapit and Tungku was in poor condition,
provided accessto the Sahabat area.
2.6 A. The Sahabat Settlement Complex. FELDA's long-term program
forSahabat (gross area of 103,000 ha) included development and
planting of about90,000 ha and settlement of about 12,700 families.
The Sahabat Complex was
divided into 54 schemes, which in turn were to be grouped into
13 villages (A
through M), with an average production area of 7,000 ha per
village. The
long-term program included construction of roads, water supply
works, housing,
offices and other buildings, palm oil mills, an "industrial
complex" including
palm oil bulking installations and a jetty, and a palm oil
refinery at a laterstage. By end - 1988, some 61,000 ha had been
cleared in schemes 1 to 35 and39,300 ha planted. Although
considerable infrastructure had been completed in
the area, harvesting and transport of oil palm on about 13,700
ha already inproduction was seriously hampered by an almost total
lack of agricultural
roads and an incomplete access road network.
2.7 B. Wildlife Reserves. The Tabin Wildlife Reserve(TWR)
(120,000
ha) is the largest forest area in Sabah (and in Borneo)
established
specifically for the protection of wild breeding populations of
the Asian
elephant (Elephas maximus), the Asian two-horned rhinoceros
(Dicerorhinus
sumatrensis) and the wild cattle (Bos iavanicus), known locally
as banteng or
tembadau. Gazetted in March 1984 under forest legislation, TWR
had previouslybeen commercial forest reserve selectively logged for
large dipterocarp trees
for export. After gazettement, commercial logging had continued
in all parts
of the Reserve except in a "Core Area" of 8,616 hectares, which
had no special
legal status but was retained as a sanctuary for rhinos and
other mammalsdisplaced by logging in surrounding areas, as well as
a source of plants and
animals to regenerate neighboring forest after logging. With the
development
of the adjacent Sahabat area, the importance of TWR had
increased, since itwould have to provide sanctuary to wildlife
displaced by land clearing and
agricultural development within the Sahabat scheme. Also located
in the Dent
-
Peninsula north of Tabin are the Kulamba Wildlife Reserve (KWR)
(20,682 ha),
the Kuala Segama and Kuala Maruap Forest Reserve (24,000 ha),
and the nipa
swamp state land set aside for fisheries. Tabin and Kulamba are
the only
wildlife reserves in the State of Sabah.
2.8 Until 1987, wildlife conservation and management was the
responsibility of the Sabah Forestry Department, through its
Wildlife Section.
In 1987, this Section was transferred to operace as a Department
under the
State Ministry of Tourism and Environmental Development (MTED).
The new
Department was still weak and needed considerable strengthening
to be able to
develop and implement the required management and conservation
policies and
programs.
2.9 The transfer of the Wildlife Section had led to ambiguity
in
responsibility for management of the wildlife reserves. Since
the reserves
were gazetted under forest legislation, responsibility for
management of the
fauna and flora within them rested with the Forestry Depa-tment.
Under State
legislation, there were no conditions attached to the status of
the Tabin
Wildlife Reserve--logging could, therefore, continue without
reference to the
new Sabah Wildlife Department (SWD). An amendment to the Fauna
Conservation
Ordinance (Sabah's wildlife) conservation/management
legislation) had placed
responsibility relating to wild animals (except fish) with the
Wildlife
Department. However, as the distribution and abundance of wild
animals
depends primarily on habitat, the Forestry Department
effectively retained
control over all wildlife in the reserves. Furthermore, forest
legislation
existing in the late 1980s was such that any kind of management
activity
prescribed by SWD for animals required the support of the
Forestry Department.
Thus, additional amendments to the then existing provisions were
necessary to
ensure that wildlife habitat was protected and the SWD was
empowered to
enforce its protection. The Government of Sabah (GOS) had
indicated its
commitment to pursue these amendments and to strengthen the
newly-established
SWD. The proposed project was to support this endeavor.
2.10 Bank Involvement and Project Origin. Bank staff first
reviewed the
Sahabat settlement complex development program in 1985 during
preparation of
the Palm Oil Mills Project (Loan 2530-MA), which included two
mills in
Sahabat. At that time it was determined that the Federal and
State
Governments were committed to implementing this project. It was
also felt
that since the project involved land clearance of some 100,000
ha of secondary
rain forest and wildlife would be lost or displaced, Bank
involvement could be
instrumental in bringing about wildlife and other natural
resource protection
measures. Thus, after initial discussions with FELDA and the
central
agencies, a preparation mission visited Malaysia in July 1986
and agreed with
FELDA on the scope and timetable for a Preparation Report (PR)
and terms of
reference for an environmental impact assessment (EIA). FELDA
issued the PR
in June 1987 and the ETA was completed in February 1988. A
follow-up
Environmental Management Plan for the Dent Peninsula (EMP) was
completed in
May 1988 by the World Wide Fund for Nature, Malaysia (WWFM),
which was
contracted for this assignment. Project appraisal took place in
May 1988.
Sahabat's progress and future implementation targets were
updated in February
1989.
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3. Project Obiectives and Brief Description
3.1 Proiect Obiectives. The project aimed to assist the
Government inthe implementation of the Sahabat settlement program
in the eastern part ofSabah, called the Dent Peninsula, thereby
contributing to rural povertyalleviation and economic development
of the State of Sabah, and at the sametime to implement an
Environmental Management Plan for the Dent Peninsula,with emphasis
on strengthening management and protection of the Tabin andKulamba
wildlife reserves, and on institution-building. The project
involvedconsolidation of agricultural development and settlement of
some 61,000 ha, byproviding infrastructure and agricultural inputs
and services. This wasexpected to raise incomes and living
standards of about 8,600 families in thelong term and 3,560
families during the project period, increase agriculturalproduction
and exports, and contribute to the creation of employment
inproject-related services and processing industries.
3.2 Project Description. The project was to consis- of a four
yeartime-slice financing (from January 1989 through December 1992)
of the Sahabatprogram (para 2.6) and the Dent Peninsula
Environmental Management Plan andwas to include support to the
following components in progress in 1989 or tobe initiated during
the project period:
A. Sahabat Settlement Complex
(a) Crop development and early maintenance of oil palm and
coffee andconstruction of about 5,000 km of agricultural roads;
(b) Rehabilitation of 35 km of the project area main access
road,bituminous treatment of 36 km and construction of 44 km of
internalaccess roads;
(c) Development of four settlement villages (A to D),
includingconstruction of village roads, water mains and
reticulation works,settler houses, offices and staff houses;
(d) Construction of one palm oil mill; and
(e) Provision of vehicles and equipment, salaries and other
operatingexpenditures for field management and operation of the
schemes.
B. Dent Peninsula Environmental Management Plan
(a) Implementation of actions to enhance conservation and
management ofthe Tabin and Kulamba Wildlife Reserves, including
provision ofstaff and other resources to the Sabah Wildlife
Department,
(b) Provision of infrastructure facilities and equipment for
thewildlife reserves;
(c) Provision of technical assistance, including: (i) two
technicaladvisors for the SWD; and (ii) consulting services to
assist GOS in
-
the preparation of a Conservation Strategy for the State of
Sabah;
and
(d) Establishment of an Environmental Coordination Unit in FELDA
toensure enhancement of environmental protection practices
during
agricultural development of the Sahabat area and in future
FELDA
land settlement projects.
3.3 Crop Development and Maintenance. Excluding the areas
developed
with cocoa, the project was to support: (i) completion of
planting of 18,300
ha of oil palm and 300 ha of coffee in 1989 and 1990; and (ii)
early
maintenance of 51,155 ha, including 32,555 ha of oil palm and
coffee planted
from 1984 through 1988 and 18,600 ha to be planted in 1989 and
1990.
3.4 Agricultural Roads. The project included realignment,
regrading
and 100% graveling of existing road tracks and construction of
bridges and
culverts in schemes 1 to 35. Average agricultural road density
was to be 90
m/ha.
3.5 Access Roads. The project was to support completion of the
Sahabat
area main access road, and schemes 1 to 35 internal access road
network,
including: (a) rehabilitation of the Bakapit-Tungku 35 km main
access road,
and construction of a weighbridge; (b) asphalt pavement of 36 km
of the
Tungku-Village D road; and (c) ongoing works (8 km) and
additionalconstruction (26 km) of the eastern ring to village I and
10 km of the
diagonal road (to scheme 13).
3.6 Village Infrastructure. The project was to include
infrastructure
development of four villages (A through D). Each village would
group on
average four settlement schemes. Basic village infrastructure
included in the
project consisted of roads, water mains and household
connections, settler
houses and office buildings. Each village was to require about
24 km of
roads, for a total of 96 km for the four villages in the
project.
3.7 Palm Oil Mill. The project included construction of one palm
oil
mill at scheme 22. This was to be the third palm oil mill in the
Sahabat
Complex and was to be ready for opera'ion by late 1992. The mill
was to
consist of two lines of production, each of 30 tons of fresh oil
palm fruit
bunches per hour (ffb/hour) nominal throughput.
3.8 Vehicles, Equipment and Operating Costs. The project
included
first time purchases and replacement of vehicles and equipment,
and management
and operating expenditures of the schemes during the first six
years after
planting. Some 21 vehicles and 9 tractor/trailers were to be
purchased during
the project period.
3.9 Dent Peninsula Environmental Management Plan (EMP).
Environmental
actions under the project included:
(a) Legislative and Administrative Actions. To enhance
conservationand management of Tabin and Kulamba wildlife reserves,
the project
was to support GOS plans to: (a) amend existing legislation so
as
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to define wildlife reserves as areas set aside for the
conservation
of wildlife and wildlife habitat and to eliminate commercial
forest
exploitation therein, and give responsibility for the management
ofwildlife reserves to SWD; and (b) provide the SWD with the
staff
and resources necessary to carry out its responsibilities,
in
particular, the management and protection of TWR and KWR.
(b) Infrastructure and Equipment. The project was to provide for
the
construction of a TWR Headquarters building. Access to
theHeadquarters was to be through 30 km of existing plantation
roads
which were to be upgraded to the agricultural roads standards
ofthe Sahabat area. The project also provided for vehicles and
equipment for operation of the Reserve.
(c) Technical Assistance. The project provided for two
technicaladvisors who were to assists SWD, each for a period of 30
months
starting not later than September 30, 1989. One of the
advisorswas to be attached to the office of the Director of SWD and
was to
assist in developing objectives, policies and programs, and
inassessing staffing, staff training and other resource
requirements
for the operation of the Department. The second advisor was
to
assist the manager of the Tabin and Kulamba wildlife reserves,
andwas to assist the SWD in developing a long-term operational
and
research program, in staff training, and in the initial
operation
of the reserves. Also, some 18 person-months of consulting
services were provided under the project to assist GOS in
the
preparation of a Conservation Strategy for the State of
Sabah.
Funding for all TA was to be by UNDP, with counterpart funds
provided by the Government of Sabah (GOS).
4. Project Design and Organization
4.1 Overall, the project concept and objectives were clear, and
thedesign and scope of project components were appropriate to the
conditions
prevailing in Sabah in the late 1980s. For the component
relating to the
Sahabat Settlement Complex, as Bank experience with FELDA's
development
approach had been very satisfactory i: the past, the project did
not attempt
to introduce major planning, technical or managerial changes.
From the
planning perspective, it was designed to accelerate the
construction of basic
infrastructure required to bring about agricultural benefits and
provide
suitable conditions for settler emplacement. Technically, the
project focused
on enhancing design and construction standards for
infrastructure andencouraging land development practices which
alleviate environmental damage,
particularly through the establishment of an Environmental
Coordination Unit
in FELDA (which was to be established by September 30, 1989).
For the
component relating to the Dent Peninsula Environmental
Management Plan,
project design appropriately provided for technical assistance
and significant
legislative and administrative changes, considering the weakness
of the Sabah
wildlife Department at that stage. Prior to loan negotiations,
the GOS
furnished to the Government of Malaysia and the Bank a letter
dated March 15,
1989 outlining its environmental policies and confirming its
intentions and
timetable to implement the Dent Peninsula EMP. Project
preparation, which
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spanned a period of two years, was adequate. Project processing
took somewhatlonger than anticipated to allow for more detailed
preparation of theenvironmental management component. Bank staff
and consultants were involved
in project preparation and appraisal.
4.2 Organization. The project implementation responsibility
was
divided among FELDA, Sabah Public Works Department (PWD), and
the Government
of Sabah.
(a) Development of the Sahabat Settlement Complex was the
responsibility of FELDA and its subsidiary corporations in
linewith the long-established land development and settlement
approach.
Planning, design and construction of internal access
andagricultural roads and buildings were the responsibility of
FELDA'sEngineering Department assisted by FELDA Construction
Corporation(BINA). Agricultural roads maintenance was to be carried
out by
BINA under contract. Access and village roads after
constructionwere to be gazetted as Federal roads and maintained by
PWD-Sabah
with annual Federal budget allocations specifically earmarked
for
this purpose.
(b) Engineering design and construction of the Bakapit-Tungku
mainaccess road was to be carried out by PWD-Sabah with the help
of
consultants and contractors. After construction, the road was
tobe gazetted as a Federal road and maintenance funds were co be
made
available from the Federal Government to PWD-Sabah for
thispurpose.
(c) Primary responsibility for implementation of the EMP was to
rest
with the Sabah Ministry of Tourism and Environmental
Development
(MTED). The main State executing agency was to be the Sabah
Wildlife Department (SWD) of MTED.
The above organizational arrangements were maintained over the
life of theproject and worked well. The road maintenance
arrangements have also beenimplemented.
5. Project Implementation
5.1 Project implementation was generally problem-free.
However,settler emplacement was disappointing (see further para.
6.1) and progress ofthe environmental component was slower than
expected at appraisal, given theweakness of the Sabah Wildlife
Department at that time and the significantlegislative and
administrative changes involved. Compared to RM583.3
million(US$216.0 million equivalent) estimated at appraisal, actual
project cost wasRM765.8 million (US$287.1 million equivalent), with
the Sahabat time-sliceexpenditure amounting to RM760.2 million and
the EMP expenditure to RM5.6million (including the UNDP TA of about
US$0.98 million or RM2.6 million).The increase in total costs was
due mainly to the inclusion of 1993expenditures, whereas the
appraisal estimates were for 1989-92. Excluding1993, project costs
would be RM629.8 million (US$234.2 million equivalent).The cost
overrun over 1989-92 was due primarily to land development and
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-8-
infrastructure costs being higher than those anticipated at
appraisal. There
was a minor amendment in the Project Agreement between FELDA and
the Bank in
June 1991, and an amendment in the Loan Agreement between
Malaysia and theBank in October 1992 (reflecting changes in the
Subsidiary Loan Agreement
between the Government of Malaysia and FELDA). The Bank loan
closing date wasextended by only six months to June 30, 1994 and
the loan was almost fully
disbursed.
5.2 A. Sahabat Settlement Complex. Project time-slice financing
of the
Sahabat Settlement Complex was completed in 1992, at which time
agricultural
and infrastructure development targets had been substantially
achieved. Crop
development and maintenance were largely in line with appraisal
expectations.
Compared to 61,000 ha expected at appraisal for schemes 1 to 35
in the SahabatComplex (schemes 36 to 54 had not been cleared at
that stage), about 65,000 hahad been planted through 1993. This
included cocoa areas (later converted to
oil palm) and plantings before 1984 not financed by the Bank
loan. Planting
and maintenance financed by the Bank loan is estimated at 18,800
ha of oilpalm and 350 ha of coffee, compared to 50,350 ha and 800
ha, respectively,
expected at appraisal. Changes in crop composition in the
Sahabat Complexafter the start of the project included the clearing
and replanting of
virtually all the original cocoa areas (not financed by the
Bank) of about3,500 ha with oil palm due to the gloomy price
prospects for cocoa, the
conversion of 1,290 ha of oil palm inter-cropped with cocoa into
oil palm mono
crop, and the replanting to oil palm of about 200 ha of coconut
on sandysoils. Of the total 65,000 ha planted in schemes 1 to 35,
only about 5,700 ha
(less than 10% of the total area) has been allocated for
settlers under the
block ownership system (block land titles rather than individual
titles) andthe rest is operated as an estate by FELDA Plantations
Sdn. Bhd. (a FELDA
subsidiary incorporated in early 1992) through contractors
making use of
immigrant labor and hired Sabahan workers. About 4,550 km of
agricultural
roads to serve the crop areas were also completed, compared to
the appraisal
estimate of 5,000 km.
5.3 The Bakapit-Tungku access road rehabilitation commenced in
June
1992 and was completed in November 1994, at an estimated cost of
RM50 million
(including detailed engineering, survey and construction
supervision costs).
The internal access road network was also completed as envisaged
at appraisal(except metalling of about 20 km linking Village C to
Tungku, which is
expected to be completed by mid-1995). The targets for the
village
infrastructure were met, except for settler houses, which were
greatly reduced
in numbers due to the limited emplacement of settlers (para.
6.1). The palm
oil mill at scheme 22 was completed and commissioned in early
1992 and hasalready reached its 60 ton of ffb/hour design
throughput. The extraction rates
are about 21% for crude palm oil and 3.5% for palm kernels, the
highest among
the four mills in operation in Sahabat as of February 1995.
5.4 B. Dent Peninsula Environmental Management Plan.
Overall,implementation of the Plan was satisfactory, although
delays were experienced
in technical assistance recruitment, and legislative and
administrative
reforms. The UNDP funding of the TA component was very helpful
and a key
contributor to the success of the EMP. WWFM, a local NGO, played
a valuable
role in preparation and implementation of the EMP.
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5.5 (i) TWR and KWR: (a) Management. A 5-year Management Plan
forTabin Wildlife Reserve was completed in October 1994 by the
Chief TechnicalAdvisor to the project and officers of the Wildlife
Department. It reviews
the regional context of the Reserve and its resources and
socio-economic
pressures and details management objectives, including
administration and
maintenance. Many protection actions have been initiated,
including
systematic patrolling, boundary demarcation, and twice monthly
aerialreconnaissance to monitor illegal logging. Research,
surveying and monitoringactivities have been started and it is
expected they will be consolidated andgiven better direction with
the establishment of a new laboratory and the
implementation of a Memorandum of Understanding on a 10-year
cooperative
program of research and training signed by the SWD and the
University
Kebangsaan, Malaysia. An Ecotourism Plan for Malaysia under the
7th Plan,
being developed by WWF-Malaysia, proposes to introduce tourism
into the Tabin
Wildlife Reserve in 1997 following establishment of
appropriate
infrastructure.
5.6 Completion of boundary demarcation has not been completed
along the
southern portion of Tabin but there is financial provision for
this under the7th Plan. Patrolling has been enhanced through the
use of two guard houseswith a third to be sited in the northwest
corner of the Reserve. Since the
threat of poaching and illegal logging is greatest in the
northeast corner, a
boat has been purchased to step up the effectiveness of
patrolling in thisarea and the Kulamba Wildlife Reserve.
5.7 Using the experience of work on the Tabin Wildlife Reserve,
a WWF-
Malaysia Advisor and Trainee Scientific Officer to the Wildlife
Department are
preparing a Management Plan for the Kulamba Wildlife Reserve.
The final
report is expected in June 1995. This will investigate
arrangements to makethe Tabin and Kulamba reserves contiguous over
State nipa swamp forest andthereby to manage such land as a unit.
In parallel, the Land Survey andForest Departments will survey the
proposed contiguous area. However, itshould be noted that
investigations and management of much of this area arelikely to
prove daunting as the area has a high security risk.
5.8 Staffing of the Tabin Wildlife Reserve currently consists of
a
Manager (graduate level), eight range:s and three laborers; an
additionalposition has been approved by the Public Services
Commission. The TechnicalAdvisor to the Tabin and Kulamba Reserves
was not replaced after completion ofa 15-month assignment, his
duties being entrusted to the Chief TechnicalAdvisor to the
Wildlife Department. This meant delayed preparation of
themanagement plan and reduced level of support to on-site
management andtraining. In addition to formal courses, on-the-job
training has taken placeon such topics as: survey and habitat
analysis of arboreal animals; fieldresearch; and telemetry. A
course on surveying large animals is anticipatedfor 1995 and a
"Wildlife Field Research Conservation Training Manual" used
forinstruction at Tabin is currently being translated into Bhasa
Malaysia forcountry-wide application. Visits by government officers
were made to Kenyaand India to review protected areas management,
including revenue sharing.
5.9 Despite these training initiatives, more needs to be
done,especially at the ranger level. As a beginning, a clear
training program
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should be established targeting staff (officers and rangers in
MTED andrelevant sectors), categorizing types of training, and
stipulating budgets andresource persons. The program should be
linked to university curricula, andDanum Valley and other research
activities. In this context, it is
encouraging that a co-operative program of research and training
has beenagreed between the SWD and University Kebangsan, Malaysia.
The WildlifeDepartment should take full advantage of scholars
visiting Sabah; indeed,training of Reserve staff should become a
condition of permitting the
scholars' research.
5.10 The current practice of maintaining confiscated caged
animals at
Tabin headquarters is consuming valuable time and budget and not
contributing
significantly to the management of the Tabin Wildlife Reserve.
This activityshould be phased out as soon as possible (it was
reported that these animalshave to be kept as evidence as long as
the court cases are pending) and the
animals released before they become too domesticated.
5.11 (b) Infrastructure. Construction of 10 km of the access
road from
the southwest corner gate of the Tabin Wildlife Reserve to the
headquarter
building was completed in September 1993 and, save for 3 or 4
local spots
suffering landslides and slippage, is in good condition.
However, as urged by
Bank missions, the MTED should approach the Public Works
Department (JKR) to
ensure necessary long-term maintenance. Construction of an
additional 20 kmfrom the Lahad Datu-Tungku road to the southwest
gate of the TWR, envisaged at
appraisal, was not considered necessary during implementation
because good
access had been arranged through private plantation roads.
5.12 Construction of the office building, and houses for the
manager andfour senior staff have been completed. Initial design
oversights have beencorrected by Sabah Parks, which was contracted
to supervise construction.
5.13 Actions recommended to improve the management of Tabin and
Kulamba
Wildlife Reserves are the following: (i) ensure adequate funding
of the nextphase of management of the new Wildlife Sanctuaries,
giving priority to the
implementation of the management plans for Tabin and the Lower
Kinabatangan;(ii) complete boundary demarcation promised under the
7th Plan and establish
and stock a third guard post in the ncrthwest corner of Tabin
Wildlife
Reserve; (iii) complete and implement a management plan for the
KulambaWildlife Reserve, including arrangements for contiguity with
the TabinWildlife Reserve; (iv) develop a suitable training program
to ensure long-term
conservation management of Sabah's biological resources; this
should betargeted at field staff and integrated with courses run
byuniversity/research institutions; (v) develop staff skills in
conservation
planning and management by phased increase in specific
positions; and (vi)
consolidate a wildlife research program with a balance between
the
conservation of habitats and ecosystems and globally endangered
species.
5.14 (ii) TA to the Wildlife Department. The UNDP's TA project
was
amended twice and financing increased from US$0.50 million at
appraisal to
US$0.98 million eventually. While the contract for the
advisor/manager forTabin was not extended after the initial
15-month period and thus fell short
of the 30 months envisaged at appraisal, the services of the
Chief Technical
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Advisor (CTA) to the Wildlife Department were very much
appreciated and he
continued in his job for almost 45 months until October 1994. He
assisted in
drafting policies, management plans and field training.
Principal outputs
include: "Wildlife Research in Sabah"; and "A Management Plan
for TabinWildlife Reserve". Many of the actions outlined in these
outputs have been
initiated during the project. However, some await funding or
legislative
action. The CTA also helped develop in-situ wildlife management
techniquesand procedures, provided some training, and gave support
to the drafting ofconservation legislation.
5.15 Recommendations on research activities were submitted by
the CTA to
the Wildlife Department in a report "Wildlife Research in Sabah"
in December,
1993. Following this, a proposal for "Sabah Wildlife Research
and Monitoring"
is before the State Development Office, the Federal EPU and the
FAO having
agreed in principle to its funding. The proposal envisages the
return of the
former Chief Technical Advisor to the Wildlife Department to
further developand implement its objectives which include: (i)
establishing a research and
monitoring capability within the Wildlife Department; and (ii)
strengtheningthe conservation of globally endangered species in
Sabah.
5.16 The TA for the preparation of the Sabah Conservation
Strategy
(financed by the UNDP) was satisfactorily completed (18 months
as envisaged at
appraisal). The Wildlife Department increased its staff from 48
to more than
124 envisaged at appraisal, but has only eight graduate officers
to manage71,000 km2 of land under its jurisdiction. This is likely
to prove a
management constraint in the future.
5.17 (iii) Legislation. Substantial progress is being made
in
strengthening wildlife conservation through enactment of new
State laws. In1992, the State Assembly approved Enactment No. 1 of
1992 amending theForestry Enactment of 1968. This included
provisions that: (i) re-defined
Class VII Wildlife Reserve (such as Tabin) for protection of
wildlife; (ii)
classified the Tabin core area as Class I Protection Forests;
and, (iii)
banned forest concessions in Forest Reserves Class I, VI and VII
(which
includes Tabin and its core area).
5.18 A legal consultant has prepared a draft Bill for
Wildlife
Conservation Enactment. The Bill would: (i) strengthen the
authority of the
Wildlife Department; (ii) establish two categories of protected
areas underthe Department's authority, i.e, State Conservation
Areas and Wildlife
Sanctuaries (Tabin, Kulamba and Kinabatangan); and (iii) enhance
protection ofplants and animals. A Steering Committee comprising
the MTED, Wildlife and
Forestry Departments, the State Attorney General and the State
Department ofNatural Resources has reviewed the draft and a paper
recommending enactment of
legislation is ready for the Cabinet. The Attorney General has
already
cleared the draft and it is expected that the Bill will go
before the StateLegislative Assembly in August 1995. In the
meantime, a Legal EnforcementUnit of some 23 staff has been
established to ensure enforcement of wildlifelegislation,
particularly related to poaching.
5.19 (iv) Sabah Conservation Strategy (SCS). The SCS was
satisfactorily
completed by WWFM in March 1992 and a number of actions have
been taken by GOS
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to implement its recommendations. The SCS makes comprehensive
recommendations
covering multi-sectoral, sustainable use of Sabah's natural
resources and the
protection of its biodiversity, including scheduled species. The
committee
responsible for preparation of the SCS became the SCS
Implementation and
Monitoring Committee. Later, the State Development Planning
Committee,chaired by the Chief Minister, approved the conceptual
framework of the SCSand established a subcommittee under the Chief
of State Natural ResourcesDivision to draft a statement adopting
the Strategy and a paper based on this
statement is currently before the Cabinet.
5.20 As a start to implementing the SCS, a land potential map is
being
prepared and the Natural Resources Division has completed a
State Water
Resources Study. The Ministry of Tourism and Environmental
Development (MTED)has retained the services of WWF-Malaysia to
assist the Environmental
Development Division in SCS coordination and implementation, and
bilateral
support is being sought, including funding for a national
coastal zone
management plan and a biodiversity conservation project.
5.21 Actions recommended to support conservation efforts in
Sabah are
the following: (i) approval of the SCS by the Sabah State
Cabinet; (ii)implementation of specific recommendations of the SCS;
(iii) development of
Sabah's protected area network, the passing of relevant
legislation,
gazettement of Tabin, Kulamba and the Lower Kinabatangan
Wildlife Reserves and
existing Bird Sanctuaries as State Wildlife Sanctuaries, and
assignment ofprotection status to the Danum Valley Conservation
Area and the Maliau Basin;
(iv) preparation of land use base maps for the processing of
land
applications; and (v) upgrading of the Environmental Development
Division of
the MTED to an Environmental Conservation and Development
Unit.
5.22 (v) FELDA Environmental Coordination Unit and
Environmental
Practices. The Unit, originally established under the Department
of Budget
and Planning, was transferred to the Engineering Department
halfway through
the project. It was staffed with non-specialists who, despite
repeatedrequests by the Bank, were never given adequate authority
or encouragement to
promote environmental protection practices in FELDA's
operations. "Guidelines
for Reduction of Adverse Environmental Impacts" were developed
by the Planning
Department but no training or follow-up actions were undertaken
at the field
level. Early in 1995, the Unit was disbanded in the process of
overall down-
sizing of FELDA since new land development by FELDA has now been
completely
stopped and no role for the Unit was envisaged for the mature
phase of
plantations.
5.23 Regarding FELDA's environmental practices, Bank missions
repeatedly
drew attention to the felling of trees in very hilly areas and
poor clearing
activities near rivers or their banks--often in contravention of
the Drainage
and Irrigation Department regulations. Concerns were also
expressed by the
Bank regarding the felling of the calcareous forests in the
eastern part of
the project area and in the Sahabat River catchment. In a move
to protect the
upper and middle Sahabat River catchment (especially the
forests), the MTED
has approached the District government to stop issuing
development permits on
government land within the catchment. Aquaculture has now been
proposed for
some 200 ha of calcareous area in Sahabat schemes 23 and 24 but
after an EIA
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and cost estimates are prepared, it is unlikely that the scheme
will be foundviable. The establishment of a bird sanctuary is
proposed as an alternativefor the area. The only remaining swamps
in the Sahabat occur in schemes6,7,11 and 35. On the positive side,
an electric fence and trench along theeastern boundary of the Tabin
Wildlife Reserve has prevented elephantincursions into Sahabat and
FELDA's pest management practices haveincorporated a number of
environmental safeguards. Moreover, learning fromthe experience of
the earlier Jengka projects where elephant entrapmentoccurred as a
result of land clearing, FELDA maintained a land clearingpattern in
Sahabat from the coast inland in a northwesterly direction toensure
the movement of animals to the adjacent wildlife reserves.
5.24 Actions recommended to improve the environment in the
Sahabat areaare the following: (i) revision of "Guidelines for
Reduction of AdverseEnvironmental Impacts" after a workshop
recommended to be held in Kuala Lumpurwith the participation of
agricultural agencies, Department of Environment and
relevant NGOs in the next 9-12 months; (ii) action by the
Sahabat DistrictGovernment to protect the Sahabat River catchment
through control of permits
on government land; and (iii) adequate protection of natural
habitat,
especially the remaining calcareous forests and swamps.
6. Project Results
6.1 Overall project results were satisfactory. As regards the
Sahabat
Settlement Complex, the economic development objective of
increasing
agricultural production and exports of Sabah was achieved. The
rehabilitation
of the Bakapit-Tungku access road has cut down by two-thirds the
travel timefrom Bakapit to Sahabat. However, the achievement of the
project's social
objective of rural poverty alleviation by providing land to poor
farmers was
disappointing, as only 925 settlers were emplaced, compared to
3,560 expected
during the project period and 8,600 in the long term. About 90%
of the
Sahabat area is being managed as a commercial plantation
utilizing immigrant
labor and hired Sabahan workers. Given the relatively small
population of
Sabah, the remoteness of the Sahabat area, and the perceived
reluctance of
poor Sabahans (mostly shifting cultivators and fisherfolk) to
adopt permanent
settlement and farming conditions, the risk was specifically
recognised at
project appraisal that there may not be a sufficient number of
families
willing to settle in the project area at an average rate of
about 950 per
year, although the FELDA package offered a proven and
sustainable economic
option. To ensure settler availability, FELDA, in close
cooperation with the
Sabah State Government, was to carry out an aggressive promotion
and
recruitment campaign, particularly in the western part of Sabah,
where the
majority of the poor, shifting cultivators lived. However, those
efforts did
not prove very successful and the bulk of the Sahabat area is,
therefore,
likely to continue as a commercial plantation.
6.2 As regards the Dent Peninsula EMP, the project results
were
unquestionably significant and the institutional impact was
substantial. Key
objectives have been attained or are about to be attained: (a)
full-time staff
of the Sabah Wildlife Department are now based at Tabin Wildlife
Reserve with
responsibilities covering the Kulamba Wildlife Reserve. A
management plan has
been completed for Tabin. Licensed logging in Tabin ceased in
1992 and illegal
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logging has been reduced to occasional incursions. Illegal
hunting is alsomuch better controlled. Aerial and other surveys in
1994 show significantregeneration of logged-over areas and an
abundance of wildlife; (b) anamendment to strengthen existing
legislation for wildlife sanctuaries wastransformed into a more
comprehensive and functional Wildlife ConservationEnactment, which
is ready for consideration by the Sabah Cabinet prior to itsbeing
tabled at the State Legislative Assembly later this year. The
Enactment
is very comprehensive and is generally regarded as a model for
conservationlegislation in developing countries; and (c) the Sabah
Conservation Strategyhas provided guidelines and an operational
framework for the sustainablemanagement of Sabah's natural
resources and is now being implemented at the
sectoral level.
6.3 The experience with FELDA's Environmental Coordination Unit
was notsuccessful. The Unit was never very active and it has now
been dissolved(para. 5.22).
6.4 Project Benefits. The project's main benefits are
increasedproduction and exports of palm oil and kernels and
improved environmental
management in Sabah. The total production of ffb in schemes 1 to
35 in 1994was estimated at about 884,000 tons (equivalent to about
185,650 tons of crudepalm oil and 31,000 tons of palm kernels).
Peak yields of 24 tons ffb/haprojected at appraisal are unlikely to
be attained in large areas under FELDAPlantations, but are
attainable in settler areas, which usually consist
ofbetter-yielding farms allocated by FELDA. The peak yields in
FELDA Plantationsarea are likely to be about 21 tons ffb/ha. This
lower yield is partly a
reflection of the problems on about 10-12,000 ha (about 20% of
the totalproject area) of calcareous (coral) soils in the eastern
part of Sahabat,where the peak yields are unlikely to exceed 18
tons ffb/ha (see para. 5.23for further discussion of calcareous
soils). The number of settlerbeneficiaries (925) is much less than
that expected at appraisal (3,560) dueto the problems encountered
in settler recruitment (para. 6.1). With the highpalm oil prices
prevailing in 1994, net monthly settler incomes in Sahabatschemes
averaged RM1,450 (US$580), which is higher than the appraisal
estimateof RM1,320 for 1994 (RM1,035 in 1988 constant terms).
6.5 Cost Recovery. No direct recovery of investments in
basicinfrastructure, including roads, water supply, staff houses
and publicbuildings was envisaged under the project. However,
agricultural developmentexpenditures, including land development,
planting and crop maintenance, andsettler houses would be fully
repaid by the settlers and FELDA PlantationsSdn.Bhd. over a period
of 25 years. Since FELDA carries out crop processingand marketing
through its subsidiaries, repayments due from settlers arededucted
from sales revenues.
6.6 Economic Rate of Return. The economic rate of return (ERR)
of theproject at completion is estimated at 7%, compared to 25%
expected atappraisal. Since project plantings are almost entirely
with oil palm, costsand benefits of only oil palm were included in
the economic analysis. Theanalysis excluded the costs of
construction and maintenance of access roads,village roads and
waterworks, since these infrastructure works generate manyeconomic
and social benefits which could not be identified and included in
the
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analysis. If these costs are included (as at appraisal), the ERR
would benegative. The ERR is lower than that at appraisal,
principally due to a steep
decline in projected palm oil prices: the Bank's projected world
prices inyears 2000 and 2005 (in 1994 constant terms) are US$350
and 310/ton,
respectively, which are 27% and 35% lower, respectively, than
the price of
US$478/ton (US$416 in 1988 constant terms) assumed at appraisal.
Translated
into millgate terms, the currently projected price in year 2000
in 1994
constant terms is 48% lower than that projected at appraisal
(RM114/ton of ffbcompared to RM219). The other relatively minor
reasons for the lower ERR at
completion are the lower expected yields of oil palm (para. 6.4)
and a lag inproduction benefits by one year. If the prices and
exchange rates assumed at
appraisal had materialised, the ERR at project completion would
be about 21%,
including the cost of infrastructure works.
7. Project Sustainability
7.1 Although FELDA and its subsidiaries are well-established
andrelatively strong institutions and their management, production
and marketing
systems have proven to be successful, the sustainability of the
Sahabat
Settlement Complex in financial terms will depend on the level
of palm oilprices. If the current high prices continue for a few
years, there should be
no problem in ensuring the profitability of the Complex.
However, if the
prices quickly decline to the levels projected by the Bank for
the long term,
serious financial problems might surface. With the strengthening
of the SabahWildlife Department under the project and the
continuing strong commitment ofthe MTED to environmental
improvement in Sabah, the results obtained under the
environmental component of the project are expected to be
sustained.
8. Bank Performance
8.1 Bank performance and contribution to the project were, in
general,satisfactory. The Bank devoted special attention to the
environmental
component of the project and kept close cooperation and
coordination with theUNDP to ensure implementation of the technical
assistance for the
environmental improvement measures envisaged under the
project.
9. Borrower Performance
9.1 Both FELDA and Sabah-PWD are strong organizations and
theirperformance under the project was satisfactory. The MTED also
gave its full
support to the environmental component of the project and
undertook thenecessary legislative and administrative actions.
10. Project Relationship
10.1 Working relations among Bank and UNDP staff on the one hand
andstaff from the Federal Treasury, Government of Sabah, FELDA, and
PWD werealways very positive and cordial. Differences of opinion
were dealt with in aprofessional manner, and agreements
satisfactory to the various parties wereusually reached.
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11. Consulting Services
11.1 Sabah PWD employed local surveyors and engineering
consulting firmsto design and supervise construction of project
works, includingrehabilitation of the Bakapit-Tungku road. The
consultants and contractorsperformed satisfactorily.
11.2 Of the two technical advisors employed by SWD (para.
3.9(c), theChief Technical Advisor made important contributions in
drafting policies,procedures and management plans, and assisting in
the formulation of the SabahConservation Strategy.
12. Project Documentation and Data
12.1 The SAR and legal documents provided an adequate framework
for theproject. Project reporting by the MTED, FELDA and Sabah PWD
includedcomprehensive information on the project's physical and
financial progress.The information provided by the MTED, Sabah PWD
and FELDA for this report wasadequate.
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PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE
A. REVIEW OF THE ENVIRONMENTAL COMPONENT BY THE GOVERNMENT OF
SABAH 1/
1. Evaluation Summary. Overall, implementation of the
EnvironmentalManagement Plan for the Dent Peninsula (EMP) is rated
as a success. All keygoals have either been achieved or are clearly
on the way to being implementedthrough actions that have been
initiated. Several lessons have been learned,amongst which the most
notable are the following:
(a) Selection of an ideal organizational arrangement for
projectimplementation is inherently difficult because of the
diversity ofsectors and governmental agencies involved in
environmental issues.A pragmatic, case-by-case approach is
recommended. In the case ofMalaysia, for example, the State
Government must play a key rolebecause the State has power over
land and forest matters.
(b) In the EMP, there was some indication that a powerful
andsuccessful organization which has been long-established was
lessamenable to innovations suggested in the EMP than were
newer,smaller organizations.
(c) The roster of experts capable of undertaking
environmentalconservation work still appears to be limited on
United Nationslists. Although there was no constraint during this
project onrelevant local Government agencies seeking for themselves
theirpreferred technical advisors, it would possibly be useful in
futureprojects to invite host governments to propose specific
names, ifavailable, and subject to World Bank endorsement, and to
cast awider net in seeking possible candidates (e.g. through the
WorldConservation Union, IUCN).
(d) Employment of local non-governmental organizations (NGOs),
whichpossess a proven track-record and which are acceptable
togovernment, can be an ideal way to implement
environmentalconservation. Apart from providing consultancy
services ofadequate standard, local NGOs may possess other
advantages whichcan contribute to the smooth running and success of
projects. Forexample, local NGOs may have an intimate knowledge of
localconditions in general, and may feel freer than outside
consultantsto suggest innovative ways to enhance output as the
projectproceeds. It is also possible, as was the case in the EMP,
that asa result of working on a project, a competent local NGO will
beable to continue follow-up work which will contribute to the
longterm success of projects. However, careful examination is
requiredat the earliest stages to ensure that potential NGOs do
possessadequate and competent manpower.
i/ Prepared by the Ministry of Tourism and
EnvironmentalDevelopment (MTED), Government of Sabah, Malaysia, in
May1994.
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(e) Expectations of success in environmental projects tend to be
toohigh, especially in terms of speed of implementation. This does
notapply to infrastructure development, but is most pertinent
wherepolicy changes and legal amendments are proposed. However,
thisshould not be taken to imply that recommendations in
futureprojects are to be more modest. On the contrary, it is
veryimportant that, if justifiable, recommendations concerning
theenvironment should be stringent and, where appropriate,
bold.Environmental conservation needs all the support it can get,
mostespecially from organizations such as development banks. This
isimportant because, even in present times of
heightenedenvironmental awareness, there remains a strong tendency
to dismissenvironmental concerns as exaggerated if they are voiced
only byenvironmental departments or NGOs.
(f) In the EMP, the Steering Committee for the Sabah
ConservationStrategy was found to be an active, useful and
EAccessful tool, interms of guiding the work of consultants and
getting inputs fromgovernment agencies for the final product. A
similar arrangement isrecommended, where appropriate, for future
projects involving thedrawing up of environmental plans by
consultants for government.
2. Background. The project concerned a Federal Land
DevelopmentAuthority (FELDA) settlement scheme at Sahabat on the
end of the DentPeninsula in eastern Sabah, involving the clearance
of more than 100,000hectares of logged natural forest adjacent to a
Wildlife Reserve. Developmentof the settlement scheme started in
the early 1980s. In 1987, FELDAcommissioned an environmental impact
assessment (EIA), which identifiedseveral environmental concerns in
relation to the scheme. However,implementation of the EIA
recommendations required the identification ofspecific actions and
an investment plan. Subsequently, the World Bank (WB)contracted the
World Wide Fund for Nature, Malaysia (WWFM), to assess
allenvironmental aspects of the FELDA scheme and provide the Bank
with specificrecommendations in the form of an "environmental
management plan". Theserecommendations were taken up by WB as
components of a loan agreement withFELDA, for the development of
infrastructure in the Sahabat scheme.
3. Organizational Arrangements. Overall, the organizational
aspectsof the project proved to be satisfactory. Matters relating
to land and forestscome under the purview of the State Government.
Hence, aspects of the EMPoutside the FELDA settlement area were
left to GOS. On the other hand, once aspecific land area has been
allocated to a specific party for agriculturaldevelopment, it is
conventional practice in Malaysia for that party to carryout the
development accordingly. Monitoring and enforcing the laws on
theirdevelopment is difficult due to lack of manpower. Thus,
decisions on EMPrecommendations relating to land inside the scheme
were made by FELDA in somecases with input from GOS.
4. In the context of the established Malaysian
governmentorganization, the selection of a senior civil servant in
GOS as NationalProject Director for the EMP was appropriate.
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5. The arrangements proposed or implied in the EMP were followed
inall essentials, yet the project was characterized by sensible
flexibility. Oneexample was the use of Sabah Parks, a
financially-autonomous agency underMTED, to select consultants for
construction of infrastructure at TabinWildlife Reserve and to
disburse payments for that work. This procedureallowed MTED to run
the project on behalf of GOS, without the need tointroduce
additional agencies.
6. Implementation. Tabin Reserve infrastructure and vehicles
werefinanced by grant by GOM from part of the WB loan for the
Sahabat LandSettlement Scheme. The technical advisor to the
Wildlife Department (45months), Tabin manager (15 months) and
preparation of the Sabah ConservationStrategy (18 months) were
funded by UNDP. Local staff salaries and generalmaintenance
expenses for Tabin were borne by the GOS.
7. Implementation of the EMP started about one year after
thecommencement time originally envisaged and took somewhat longer
than expected.There were various causes of delays in commencing,
including the fact that theproject's environmental measures were
new to all parties concerned, and thatthe project contained aspects
requiring the approval of State and FederalGovernments.
8. The contractors selected for construction of infrastructure
atTabin Wildlife Reserve performed significantly slower than
expected due tomany agencies involved in implementing and
monitoring the project
9. Project components funded by UNDP started late for a
combination ofreasons, including time needed to select technical
staff and to processdisbursement of funds. On the decision of GOS,
the initial 15-month contractwith the Tabin manager was not
extended and, instead, the Department technicaladvisor took over
this role as part of his duties. The SCS took 18 months tocomplete,
longer than the period envisaged, but reasonable in view of
thecomprehensive product which emerged. The component with the
fastestimplementation was the increase in Wildlife Department
staffing, which was thesole responsibility of GOS and the proosed
Kinabatangan Wildlife Sanctuary.
10. Viewed simply, some recommei,dations of the EMP were
implementedwhile others were not. An alternative, more positive and
accurateinterpretation, however, is that part of the value of the
EMP was to initiatea series of actions which cannot necessarily be
expected to be achieved withina rather short time frame. A good
example was the strengthening of thestatutory protection of the
Tabin Wildlife Reserve.
11. Results. The Sabah Wildlife Department staff number,
recommendedto increase to 124, has not only been achieved but
exceeded through creationof new posts by the Sabah government. The
technical advisor to the WildlifeDepartment assisted in drafting
policies, species and area management plans,and wildlife
translocation techniques.
12. Full-time Wildlife Department staff are now based at Tabin
WildlifeReserve, led by a graduate-level officer. The Reserve
management plan has beencompleted and incorporated into the overall
Wildlife Department Management
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Plan. Licensed logging in the Reserve ceased in 1992, and
illegal logging has
been greatly reduced to occasional incursions. Illegal hunting
has also been
greatly reduced. Aerial surveys in 1994 show that the
logged-over areas withinthe Reserve are regenerating well, and that
wildlife is abundant.
13. A necessary legal amendment to prohibit logging in
WildlifeReserves was achieved in 1992. A proposed amendment to
strengthen the relevant
existing legislation in relation to wildlife sanctuaries was not
achieved;
instead, and more usefully, a new wildlife conservation law has
been draftedby a legal consultant under the UNDP component of the
EMP. The draft law is
being reviewed by a Government working committee. That GOS has
publiclyreferred to the draft is an indication of good prospects
that it will betabled at the State Legislative Assembly.
14. The Sabah Conservation Strategy (SCS) was completed in March
1992
and adopted by the Sabah Development Planning Committee (the
major policy-making agency of GOS other than the Cabinet) in the
same rear, subject to a
detailed review by a working committee under the Natural
Resources Office of
the Chief Minister's Department. The review was completed and
the SCS, with
some amendments, was submitted to the Cabinet for final
approval. In the
meantime, some aspects of the SCS, which fall under the purview
of MTED, havebeen taken up, while WWF Malaysia has provided the
services of a senior staff
member to MTED, to assist in implementation of the SCS pending
the Cabinetapproval.
15. EMP Sustainability. Prospects for continued implementation
of theEMP appear good. In particular, activities needed to ensure
the passage of newwildlife legislation and implementation of the
SCS are ongoing. Manpower and
infrastructure needed to ensure protection of Tabin are in
place.
16. Bank Performance. The Bank's performance has been
entirelysatisfactory throughout the project period. Where actions
were not taken by
the GOS, and where implementation was slow, the Bank was
encouraging ratherthan critical. This made for a good working
relationship which, ultimately,
was effective. In response to changing priorities, the Bank was
flexible inagreeing to the changes in the specific purpose for
which money was allocatedfor infrastructure development at
TabLn.
17. UNDP Performance. The initial process of selection
and"processing" of the technical advisor and Tabin manager seemed
to be rathercumbersome. Thereafter, however, UNDP performance was
entirely satisfactory
throughout the project period. The periodic presence of a UNDP
representativeat the SCS Steering Committee meetings was a welcome
sign that the progress of
the EMP was being followed closely. UNDP responded positively to
requests that
both the period of service of the technical advisor and his
scope of work be
extended. As a result, the advisor worked with the Wildlife
Department for
nearly four years. UNDP also responded positively to a request
for additional
funding to provide a 6-months of legal drafting consultancy.
18. Sabah and Federal Government Performance. Overall reporting
was
satisfactory. However, reporting to the World Bank should have
been better.
This could not be achieved as too many agencies and authorities
were involved
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in approving and monitoring of the project, including FELDA,
AttorneyGeneral's Office, Federal EPU, State Development
Department, Public WorksDepartment, State Treasury, State Forestry
Department, Audit Department,Federal Ministry of Finance, Federal
Treasury, Federal Development Department,Federal Ministry of Rural
and Land Development, and the State Cabinet.
19. Consulting Services. Consulting services for the EMP may
bedivided into three categories: UNDP, WWF Malaysia and consultants
for civilworks at Tabin. As noted above, there was some delay in
acquiring the servicesof UNDP technical experts but, once underway,
no serious problems wereencountered. At the request of GOS, the
services of the Tabin manager were notextended beyond the initial
15 months due to unsatisfactory performance.
20. The civil works were barely satisfactory in quality and
slower thanexpected. It may be beneficial in future projects to
investigate possiblealternative means of employing consultants and
contractors in order tomaximize quality and speed.
21. EMP Documentation and Data. The major single document to
emergefrom the EMP is the 3-volume Sabah Conservation Strategy. A
new wildlifeconservation enactment for Sabah was drafted by a UNDP
legal consultant inassociation with relevant government agencies
and the UNDP technical advisorto the Wildlife Department. Various
other documents have been produced by thetechnical advisor (e.g.
Wildlife Department Policies, Tabin Wildlife ReserveManagement
Plan, etc.). Data collected under the EMP is available in the
SCSand with the Sabah Wildlife Department.
B. COMMENTS FROM FELDA 2/
22. Agricultural Development. Agricultural development had
proceededsatisfactorily. A total of 65,300 hectares of land has
been developed inSahabat 1-35 comprising 64,950 hectares of oil
palm (99.5%) and 350 hectaresof coffee (0.5%). The area under oil
palm included some 2,040 hectares ofland which had earlier been
planted with cocoa and later had to be replantedwith oil palm due
to prolonged unfavorable market for cocoa products. To-date, a
total of 55,227 hectares or 84.6% of the oil palm and
coffeeplantations are in production.
23. Infrastructure Development. The construction of 58 km of
accessroads (excluding Bakapit-Tungku improvement) and 71 km of
village roads wascompleted as scheduled. The construction of
treatment plants and the layingof reticulation pipes for villages
A, B, C and D were completed in time. Theproblem of insufficient
surface water source for villages A, B and C wasovercome by
constructing a bunded reservoir whilst the same problem forvillage
D was solved by constructing tube-wells.
27 Received from FELDA in May 1995.
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24. Four palm oil mills are currently operating, located in
Sahabat 4,11, 21 and 26 schemes. The combined milling capacity is
240 tons per hour.
25. Basic infrastructure like roads and water supply system for
FELDAprojects in Peninsular Malaysia was usually implemented by the
Public WorksDepartment (PWD) of the Ministry of Public Works.
However, for FELDA projectsin Sabah, the provision of these
amenitiLes was being handled by FELDA throughits subsidiary (FELDA
Engineering Services Sdn. Bhd. or FESSB, formerly knownas BINA), as
the state PWD was unable to provide the necessary services.
26. Settler/Worker Emplacement. To-date a total of 925
settlerfamilies and 5 workers are settled in villages A to D. Total
settlers andworkers target was reduced from about 8,600 families to
6,600 families becauseof the implementation of the estate system in
January 1990. Workers'recruitment is based on man:land ratio of 1
family to 12 hectares compared tothe previous system of 1 family to
4 hectares. Experience with workers'recruitment has not been
encouraging. However, efforts ar- still being madeto bring in
workers.
27. Environmental Component. As a part of the Bank's
requirement,FELDA appointed a consulting firm, Minconsult Sdn.
Bhd., to undertake theEnvironmental Impact Assessment (EIA) for the
Sahabat Complex. The EIA reporthelped FELDA to develop its own
conservation strategy. The report recommendedthe establishment of
Environmental Co-ordination Unit within FELDA to beresponsible for
co-ordinating the implementation of the EnvironmentalManagement
Plan (EMP) in Sahabat and monitoring all environmental matters
inFELDA. However, the Unit played a passive role because no new
landdevelopment was carried out during the Sixth Plan (1991 -
1995).
28. As proposed by the Bank, FELDA requested the Sabah State
Governmentto protect the Sahabat river catchment area to ensure a
continuous supply ofquality water to the bunded reservoir in
Sahabat 4 scheme. However, nopositive response was received from
the State Government.
29. Evaluation of Bank's Performance. The Bank made
positivecontributions which led to the successful completion of the
project. Thefollowing observations sum up the Bank's
performance:
(i) The time-slice concept of this loan provided flexibility
inproject implementation and greatly expedited loan
disbursement.
(ii) The Bank supervision missions extended valuable assistance
inimproving project implementation in Sahabat through
discussionswith FELDA.
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30. Assessment of Effectiveness of Relationship Between the Bank
andGovernment. The relationship between the Bank and the Government
has alwaysbeen excellent. The Government was committed to the
implementation of theenvironmental and other components for which
funds were made available, whilethe Bank was very supportive
towar