Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia

Chain of Custody (CoC) certification has influenced the market of forestproducts since the establishment of forest certification in early the 1990s. CoC certification is one way for companies to promote and market their forest products from a sustainably managed forest. Furthermore, the supply and d...

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Main Author:	Ab Ghani, Nor Suryani
Format:	Thesis
Language:	English English
Published:	2010
Subjects:	Forest management - Standards - Malaysia Forest products - Certification - Malaysia Sawmills - Malaysia
Online Access:	http://psasir.upm.edu.my/id/eprint/19479/1/FEP_2010_3_F.pdf
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spelling	my-upm-ir.194792013-03-28T06:58:02Z Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia 2010-08 Ab Ghani, Nor Suryani Chain of Custody (CoC) certification has influenced the market of forestproducts since the establishment of forest certification in early the 1990s. CoC certification is one way for companies to promote and market their forest products from a sustainably managed forest. Furthermore, the supply and demand of certified forest products have also grown significantly corresponding to the increase in the numbers of certified companies. However, the costs of CoC certification are perceived to be crucial for the companies to become certified. The main objective of this study is to determine the costs of obtaining a CoC certification from the MTCC for sawmills and to estimate the economic impact of CoC certification in sawmilling in Malaysia. A survey was conducted on sawmilling companies with CoC certificate from the MTCC. The results from thedata analysis indicate that there exist three types of cost in obtaining the MTCCCoC certificates namely (i) cost to meet CoC standard or requirement, (ii) auditing cost and (iii) surveillance visit cost. Cost to meet the CoC standard is categorized as an indirect cost and was the major certification cost (95% of the total cost of certification) whereas auditing cost and surveillance visit cost are direct costs for the firms. It is argued that, these costs mainly depend on the size of the companies. However, the chi squares test has found that the relationship between costs of CoC certification with the size of companies, as measured by total workforce and annual sales turnover is not significant in the case of sawmills. Estimations of econometric relationships also shows that the cost in obtaining CoC certification for sawmills is not related to annual sales turnover,number of years in operation. But there was a statistically significant relationship between surveillance visit cost and the level of annual production. The second objective of this study is to ascertain the economic impact of CoC certification in the sawmilling industry in Malaysia. The input-output analysis showed that certified sawntimber has led to significant impacts on total output,income and employment to the Malaysia. These economic impacts were distributed in many sectors that helped to stimulate the nation’s economic growth. CoC certification can play an important role in the development of the Malaysian forest sector. Hence, effort should be made by relevant agencies to improve the certification process in order to minimize the costs and to enhance the benefits to sawmillers. Promotion should be enhanced to raise the adoption of CoC certification among timber industry. Ways and means have to be provided to support the holders of CoC certification to reap the benefits from certification. Forest management - Standards - Malaysia Forest products - Certification - Malaysia Sawmills - Malaysia 2010-08 Thesis http://psasir.upm.edu.my/id/eprint/19479/ http://psasir.upm.edu.my/id/eprint/19479/1/FEP_2010_3_F.pdf application/pdf en public masters Universiti Putra Malaysia Forest management - Standards - Malaysia Forest products - Certification - Malaysia Sawmills - Malaysia Faculty of Economics and Management English
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English English
topic	Forest management - Standards - Malaysia Forest products - Certification - Malaysia Sawmills - Malaysia
spellingShingle	Forest management - Standards - Malaysia Forest products - Certification - Malaysia Sawmills - Malaysia Ab Ghani, Nor Suryani Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia
description	Chain of Custody (CoC) certification has influenced the market of forestproducts since the establishment of forest certification in early the 1990s. CoC certification is one way for companies to promote and market their forest products from a sustainably managed forest. Furthermore, the supply and demand of certified forest products have also grown significantly corresponding to the increase in the numbers of certified companies. However, the costs of CoC certification are perceived to be crucial for the companies to become certified. The main objective of this study is to determine the costs of obtaining a CoC certification from the MTCC for sawmills and to estimate the economic impact of CoC certification in sawmilling in Malaysia. A survey was conducted on sawmilling companies with CoC certificate from the MTCC. The results from thedata analysis indicate that there exist three types of cost in obtaining the MTCCCoC certificates namely (i) cost to meet CoC standard or requirement, (ii) auditing cost and (iii) surveillance visit cost. Cost to meet the CoC standard is categorized as an indirect cost and was the major certification cost (95% of the total cost of certification) whereas auditing cost and surveillance visit cost are direct costs for the firms. It is argued that, these costs mainly depend on the size of the companies. However, the chi squares test has found that the relationship between costs of CoC certification with the size of companies, as measured by total workforce and annual sales turnover is not significant in the case of sawmills. Estimations of econometric relationships also shows that the cost in obtaining CoC certification for sawmills is not related to annual sales turnover,number of years in operation. But there was a statistically significant relationship between surveillance visit cost and the level of annual production. The second objective of this study is to ascertain the economic impact of CoC certification in the sawmilling industry in Malaysia. The input-output analysis showed that certified sawntimber has led to significant impacts on total output,income and employment to the Malaysia. These economic impacts were distributed in many sectors that helped to stimulate the nation’s economic growth. CoC certification can play an important role in the development of the Malaysian forest sector. Hence, effort should be made by relevant agencies to improve the certification process in order to minimize the costs and to enhance the benefits to sawmillers. Promotion should be enhanced to raise the adoption of CoC certification among timber industry. Ways and means have to be provided to support the holders of CoC certification to reap the benefits from certification.
format	Thesis
qualification_level	Master's degree
author	Ab Ghani, Nor Suryani
author_facet	Ab Ghani, Nor Suryani
author_sort	Ab Ghani, Nor Suryani
title	Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia
title_short	Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia
title_full	Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia
title_fullStr	Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia
title_full_unstemmed	Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia
title_sort	economic impact of the implementation of chain of custody (coc) certification in sawmilling in malaysia
granting_institution	Universiti Putra Malaysia
granting_department	Faculty of Economics and Management
publishDate	2010
url	http://psasir.upm.edu.my/id/eprint/19479/1/FEP_2010_3_F.pdf
_version_	1747811391811616768

Economic Impact of the Implementation of Chain of Custody (CoC) Certification in Sawmilling in Malaysia

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