New Forests and Sabah State Government Announce Biodiversity Program in Borneo

11/2007

SYDNEY AND KOTA KINABALU – New Forests Pty Limited announces it has entered into a Memorandum of Understanding (MOU) with the Sabah State Government of Malaysia regarding the joint development of a wildlife habitat conservation bank to be implemented in the Malua Forest Reserve, covering a total area of approximately 34,000 hectares on the island of Borneo. The event marks the first time that the Government has entered into an agreement designed to deliver conservation outcomes on a commercial basis.

The MOU was signed between David Brand, Managing Director, New Forests and Tan Sri Datuk Seri Panglima Datu Khalil bin Datu Hj.Jamalul, Director, Sabah Foundation, a major forest concessionaire owned by the State Government. Under this agreement, New Forests and the Sabah State Government have agreed to undertake a detailed feasibility study, marketing plan, and business plan to support the creation of a commercially operated conservation bank.

The Government will allow New Forests to sell the conservation values associated with the protection of the Malua Forest Reserve. Via investment from its asset management business, New Forests has agreed to fund rehabilitation and protection of this particular forest, home to a large population of orangutans and other endangered species. The Government has announced that it will terminate logging in the forest by the end of the year and support the future management of the area for wildlife and biodiversity conservation. To generate a competitive return on investment, New Forests will seek to sell the value of the forest conservation outcomes as units or credits of biodiversity protection. New Forests intends for the credits to be purchased by palm oil developers, energy companies, and other businesses to support their commitment to providing consumers with environmentally sustainable bio-diesel. The initiative would be a first- of-its-kind biodiversity program in Borneo, modeled after the U.S. endangered species banking market.

“The objective of the Sabah Government and New Forests is to create a winning situation for all: palm oil companies can help protect rainforest, private investment can make a return from rainforest rehabilitation and conservation, and the Government can offer a solution to current concerns around oil palm plantation,” says David Brand, Managing Director of New Forests. “We hope that via a commercial approach to conservation, we may be able to contribute to a sustainable landscape on Borneo that includes palm oil, timber production and wildlife conservation all being managed on a commercial basis in harmony.”

Malaysia has experienced rapid expansion of palm oil plantation development in the last five years, a boom supported by rising demand for bio-diesel. Much of the palm oil development has occurred in areas of tropical rainforest. As the palm oil industry grows, it is recognizing that it must take responsibility for the conservation of orangutans, rhinos, and other important species in rainforest habitat.

The Malua Forest Reserve is an integral part of the Ulu Segama-Malua (USM) Forest Reserves, one of the largest and most biodiversity-rich blocks of natural forest remaining in Sabah. USM is the last stronghold of lowland dipterocarp forests, a fast disappearing ecosystem in Sabah, and home to the largest, unfragmented population of orangutans in Malaysia and possibly the most viable population in the entire island of Borneo. Malua is also a crucial habitat for the endemic pygmy elephant, tembadau, Sumatran rhino, sunbear, gibbon, and clouded leopard.

Sabah Foundation

The Sabah Foundation works to assist the Sabah State Government in strategic development initiatives. The Sabah Foundation is the largest forest concessionaire in Sabah, wholly owned by the State Government. It is responsible for the management of approximately 1 million hectares of forest in Borneo, including forests in the Danum Valley, Maliau Basin and Imbak Canyon. This area is home to the highest biodiversity in Sabah. For more information, please see www.ysnet.org.my.

New Forests Pty Limited

New Forests Pty Limited is a forestry investment management and advisory services firm with offices in Sydney, Australia, and Washington D.C. The company’s investment thesis is unique in seeking assets that deliver traditional timber returns, as well as returns from emerging environmental markets and preferences, such as certified timber, carbon, biodiversity and water. In addition to world-leading forestry investment expertise in the areas of acquisitions, modeling, operations, silviculture and ecosystem services, New Forests is at the forefront of developing and commercializing environmental products and evaluating opportunities from emerging environmental markets. The company holds an Australian Financial Services License. For more information, please see www.newforests.com.au.

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