Leaders in the Malaysian state of Sabah on the island of Borneo have begun to share more about a murky arrangement in which the rights to carbon and other ecosystem services from the state’s forests were sold to a foreign company.

On Oct. 30, state authorities signed a “nature conservation agreement” with a Singaporean firm, Hoch Standard Pte. Ltd., and involving an Australian management consultancy called Tierra Australia. The deal ostensibly gave Hoch Standard the right to sell credits for carbon and other natural capital, such as clean water, from “over 2 million hectares (4.9 million acres)” of forested land for the next 100-200 years, according to Peter Burgess, Tierra Australia’s CEO.

Mongabay learned of the agreement from several anonymously shared documents and first reported its signing on Nov. 9.

The news arrived in Sabah against the backdrop of the U.N. climate conference held in early November in Glasgow, Scotland. Governments and companies at the conference, known as COP26, announced their intentions to funnel billions of dollars toward ending deforestation, boosting forest restoration, and supporting Indigenous-led land management to offset carbon emissions. Burgess also said his business partner, Stan Golokin, a Sabahan, was at the conference raising funds for the agreement. At the same time, rights organizations and watchdog groups such as Amnesty International cautioned that the development of carbon markets and other climate change mitigation measures must not come at the expense of Indigenous rights or livelihoods.

Mongabay’s reporting revealed the agreement was almost entirely unknown outside the companies involved and a few select leaders in Sabah. Many civil society leaders hadn’t heard about it, and Burgess said that communities by and large didn’t know “their jungles have been conserved.” (He later said this wasn’t true and that every “Indigenous person that needs to be consulted” had been consulted in the multiyear negotiation of the agreement.)

“It was like something exploding in your face,” Anne Lasimbang said of learning about the deal. Lasimbang is the executive director and one of the founding members of Partners of Community Organizations in Sabah (PACOS) Trust, an Indigenous rights organization in Sabah. She is also a member of the Indigenous Kadazan-Dusun ethnic group.

Lasimbang said she was “unhappy” with the opacity of the process behind the agreement, especially because it excluded Indigenous people like herself.

“I live in the village. I have a forest — a very small forest, but still very important to me,” she said, adding that she didn’t understand why forest communities were not made aware of the agreement. “What we are very upset about [is] how it was done.”

The issue of consent

Jeffrey Kitingan, Sabah’s second deputy chief minister, is one of the agreement’s strongest proponents. In response to a flurry of attention from Malaysian media and organizations in Sabah, Kitingan held a public meeting and press conference on Nov. 18 to discuss the deal.

During the meeting, he confirmed the agreement had been signed and was “legally binding,” though he also said that moving to the 2-million-hectare size in the terms of the deal was contingent upon the success of a pilot project in an area of 600,000 hectares (about 1.5 million acres).

Kitingan said free, prior and informed consent — what’s known as FPIC, a globally recognized principle — wasn’t necessary in this case. He said forests classified as Class I, or “totally protected,” under the state’s forest reserve system would comprise the 2 million hectares at the center of the agreement. Legally, Sabah’s Indigenous or “native” peoples had already been consulted when these forests were classified, Kitingan said. As such, they had already been informed that these forests were protected, a status that the agreement won’t change, he added, and therefore, there was no obligation to include these groups in working out the deal.

Under Malaysian law, Sabah’s state government controls much of what happens to its forests, and Sabah’s 1968 Forest Enactment allows Indigenous use of the forests.

“It’s also in the Forest Enactment to ensure that the natives [are] informed,” Kitingan said. “I have been also advocating to ensure that native rights are not affected.”

Later in the meeting, in response to a questions about FPIC, Kitingan suggested that the framers of the agreement were open to outside input.

“Whatever the shortcomings, like the FPIC, we will rectify from your feedback,” he said.

He did not specify to whom or how he was advocating on behalf of Indigenous communities, or how the signed agreement could be modified. Kitingan said that Hoch Standard and the state had not yet identified which of Sabah’s forests would fall under the terms of the agreement, only that they would fall under the Class I designation.

Indeed, the agreement itself has yet to be made public, and people potentially affected by it, such as Lasimbang, have called for more transparency around its “terms and conditions.”

“If this agreement has a positive impact on the state’s economy, why is it not made public before being signed?” members of Pangrok Sulap, an Indigenous artists’ collective in Sabah, told Mongabay via WhatsApp.

Human rights, environmental and scientific organizations in Sabah have also raised questions about whether the deal will provide the far-reaching benefits to both the state’s forests and its people that it promises.

Kitingan said during the meeting that 70% of the revenues — not the profits, as Mongabay originally reported — would go to Sabah. Burgess told Mongabay this money would be earmarked to fund housing construction, health care, education and employment in conservation and restoration in the state. The remaining 30% would go to Hoch Standard.

Kitingan did not respond to a request from Mongabay for an interview after news of the agreement became public.

The issue of Indigenous customary rights was just one of the issues that had to be resolved in an addendum to the agreement, an anonymous source told the Malay Mail newspaper.

“[F]or now, and until those issues are solved, the Sabah government has no legal commitment since the signed framework is not legally binding,” the source said, according to the Nov. 11 article.

‘The process’

An organization called Monigolig Pogun Tokou (MOPOT), which represents the Dusun ethnic group in Sabah, defended the signing of the agreement in a response to Mongabay’s Nov. 9 article. The authors of the statement noted the project’s potential benefits for conservation, as well as the promise of 3,000 to 5,000 jobs for people in Sabah. They also acknowledged the role of Sabah’s leaders in negotiating on behalf of the state’s residents, saying the government “is the sole conservator of all jungles and mangroves, rivers, mountains and plains, and ecological beings.”

MOPOT did not respond to requests for an interview with Mongabay, and Peter Burgess declined to identify the Indigenous leaders involved in negotiating the agreement before its signing.

According to an unsigned fact sheet on the agreement shared through social media, the agreement does not acknowledge the rights of the array of Indigenous groups that people Sabah, nor the obligation to obtain their free, prior and informed consent as set forth in the U.N. Declaration on the Rights of Indigenous Peoples.

“The jurisdiction of indigenous communities must be recognised in the governance of their communities,” members of the Pangrok Sulap collective said.

The fact sheet also reveals an apparent imbalance in the control of rights to Sabah’s natural capital laid out in the agreement. While Hoch Standard retains the ability to sell its control of these rights and effectively exit the agreement, for example, the state of Sabah does not have that option, according to the fact sheet’s authors: The terms dictate that the agreement cannot be changed and will remain in force irrespective of whether the current government remains or is replaced in a future election.

Several NGOs in Sabah, including PACOS Trust, put out a statement of their own on Nov. 11 seeking more transparency around the agreement.

“Any such agreement involving major public assets of state heritage, which the government holds in trust, must be entered into with the prior knowledge of its society and stakeholders,” the organizations wrote. “Decisions today will impact many generations.”

The public conversation since Nov. 9 has revealed that support exists in Sabah for the principles put forth by the project and the need to safeguard forests for Sabah and the world as a whole, if not the process by which the agreement came about.

“Adding another layer of protection to our invaluable forests through carbon trading is a step in the right direction,” Henry Chan, conservation director of WWF-Malaysia, said in a Nov. 16 statement. “But this step must be taken properly through appropriate channels.”

Lasimbang agreed with that analysis. She said Indigenous communities want to know their responsibilities under the terms of any agreement that could boost both conservation and the economy.

“We would be very happy if there are investors or people who want to support that kind of endeavor,” she said. Because many Indigenous communities rely on healthy forests, she added, “If it is done properly, it will actually benefit us.”

Sabah-based WWF-Malaysia was among the signatories of the statement sent out by advocacy groups on Nov. 11. In its follow-up release, WWF highlighted the need to find out critical details before the agreement comes into force.

“The need for a transparent proposal and clearly negotiated social and environmental safeguards is nowhere as pivotal as it is here, as we potentially hold the key to an emergent global commodity that will likely empower our fight against climate change,” Chan said. “However, we need to ensure that we are not locked into an agreement that will adversely impact nature or its people.”

Banner image: A proboscis monkey (Nasalis larvatus) in the forests along the Kinabatangan River in Sabah. Image by John C. Cannon/Mongabay.

John Cannon is a staff features writer with Mongabay. Find him on Twitter: @johnccannon

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