FAQ

Signing CA is an internal process, MFF does not impose anyone to sign the Conservation Agreement however Donors are required to submit proof of authorization behalf of the company. Per Section 3.2 under Terms of Reference: Financial Input, Monitoring, Reporting and Disbursement of the FCC Protocol:

A Donor shall submit their documents that identify the following:

1. Legal identity;
2. Core activities;
3. Representative capacity of the person acting on the entity’s behalf; and
4. Legal ownership.

The FCC protocol allows participation from landowners or entities with a clear legal title to the land or public land, as well as non-government or private entities with written approval from the state government to apply for and hold a certificate under the FCC protocol for conservation activities on the specified area of public land. 

Companies are allowed to donate to its own land as long as the donation is made through Malaysia Forest Fund (MFF) and the Forest Conservation Certificate (FCC) program.

Per RFFAC Meeting No.4/2023 and in accordance with Section 245(1) of the Companies Act 2016, it is mandated that every expense must serve legitimate purposes. Consequently, the FCC doesn’t allow the collection of donations without a corresponding project.

‘Ahli-ahli mesyuarat mengambil maklum dan bersetuju bahawa pembayaran dana FCC perlu dihubungkan dengan aktiviti-aktiviti yang tertentu selaras dengan peraturan/ perundangan di bawah Seksyen 245 (1) Akta Syarikat 2016 [Akta 777] dan Seksyen 19 (4) Akta Pencegahan Pengubahan Wang Haram, Pencegahan Pembiayaan Keganasan dan Hasil daripada Aktiviti Haram 2001 [Akta 613].’

The FCC is a living document and continuously undergoes refinement, and hence may include more activities in the future. The current eligible activities are as follows:

No. All activities of FCC projects are equally important as they are part of a larger project objective. There are no added benefits other than Tax Deduction for Donors that contribute to any specific activities under the FCC, and the prioritizing activities will be up to the Donors’ own objectives.

The FCC has received approval to grant tax deductions for cash donations contributed by Individuals and Companies starting from a minimum of RM1,000. Nevertheless, the FCC process necessitates involvement from both the Donor and Proponent through matching the funds with activities to be implemented. Consequently, individuals intending to contribute must adhere to the formalities of signing a CA with the Proponents. It is important to note that the FCC exclusively acknowledges monetary contributions in the form of cash only.

FCC emphasizes transparency and accountability throughout the certification process. All information related to application, approval, project status, validation, verification, and disbursement shall be made available in the Registry, which is publicly accessible. The Registry contains information on Participants, the project, the project’s conformity to Cancun Safeguards, location of the project, project activities, documentation, verification reports, records of serialized certificate issuance, certificate cancellation, and transfer data. 

Any public entity relevant community or group, including Indigenous Peoples and Local Communities, may submit comments and/or feedback to MFF on any project at any time. Comment(s) received shall be published in the Project Record on the Registry, and where necessary the Participants shall be responsible for addressing the comments.

The integrity of the FCC process is upheld through the involvement of various third parties, namely the REDD Plus Unit, National REDD Plus Steering and Technical Committees, REDD Plus Financial Framework Advisory Committee (RFFAC), and Registered Auditors within its internal processes. The MFF is also subject to annual financial audits and is bound by regulations set by the Federal Government on its activities.

The FCC protocol emphasizes the importance of transparency and accountability throughout the certification process. The Registry, which is a central repository for all information and documentation relating to the FCC, is publicly accessible and contains information on project status, verification and certification progress, disbursement, and project progress. The protocol also requires that participants provide documentation to verify their legal identity and ownership of the land. 

Additionally, any public entity relevant community or group, including Indigenous Peoples and Local Communities, may submit comments and/or feedback to MFF on any project at any time. Comment(s) received shall be published in the Project Record on the Registry, and where necessary the Participants shall be responsible for addressing the comments. 

The FCC does not directly contribute to state revenue. The contributions received by the state are aimed at reducing the financial burden on the state government for forest conservation, protection, restoration, and sustainable management efforts. For example, according to Section 11 of the Forest Act, the State Authority may release land areas from permanent reserve forests and shall replace the land areas released from permanent reserve forests. Therefore, restoration or conservation work for the replaced land can be funded through the FCC.

All project Proponents and Donors that participate in the FCC program must become parties to a Conservation Agreement (CA) and therefore must adhere to commitments outlined in the FCC as agreed upon in the CA.

The FCC provides a mechanism for companies/individuals to contribute to forest conservation, protection, restoration and sustainable management efforts and enjoy tax incentives in the form of tax deductions of up to 10% of aggregate income. 

Companies and individuals can also see the results of their contributions in terms of additional benefits as the FCC recognizes non-carbon benefits, such as biodiversity or conservation indices, as part of the formula to reward investments and incentivize conservation actions. 

The FCC also provides a platform for companies and individuals to demonstrate their commitment to Corporate Social Responsibility (CSR), Environment, Social and Governance (ESG), or Sustainable Development Goals (SDG) objectives. 

Donors can be assured of their contribution making impactful difference as the FCC provides a mechanism that is transparent and accountable. 

Additionally, the FCC’s reporting denomination in hectares conserved or restored is valuable for companies in the value chain of Roundtable on Sustainable Palm Oil (RSPO) to meet their conservation and restoration requirements through the FCC program.

Aside from this, the FCC is expected to become a program that can assist Public Listed Companies in improving their ranking in programs such as the FTSE4Good with indices for ESG compliance.

FCC protocol recognizes non-carbon benefits, such as biodiversity or conservation indices, as part of the formula to reward investments and incentivize conservation actions. These non-carbon benefits are additional benefits that can result from successful implementation of REDD Plus activities. 

On the other hand, SDG/ESG are sustainability reporting programs that refer to the broader social, environmental, and governance benefits that can result from sustainable forest management and conservation efforts. These benefits can include poverty reduction, improved livelihoods, biodiversity conservation, climate change mitigation and adaptation, and sustainable development. Activities and additional benefits from the FCC can be reported as part of SDG/ESG reporting.

FCC can be used as a platform to demonstrate the commitment to Corporate Social Responsibility (CSR), Environment, Social and Governance (ESG), or Sustainable Development Goals (SDG) objectives. By contributing to the FCC, companies can support sustainable forest management and conservation efforts and enjoy tax incentives in the form of tax deductions of up to 10% of aggregate income. 

Additionally, the FCC recognizes non-carbon benefits, such as biodiversity or conservation indices, as part of the formula to reward investments and incentivize conservation actions. These indices can be used in other sustainability reporting programs such as ESG and SDG.

According to the Food and Agriculture Organization (FAO), a forest is defined as a land area with a minimum size of 0.5 hectares, covered by trees at least five meters tall, and with a tree canopy cover of at least 10%. If an area does not meet these criteria, it is not eligible to participate in the FCC.

The usage of the term “Forest” in the FCC Protocol is in line with Food and Agriculture Organization (FAO) definition. The FAO defines forest as “land spanning more than 0.5 hectares with trees higher than 5 meters and a canopy cover of more than 10 percent, or trees able to reach these thresholds in situ.” Therefore, it can be inferred that forests meeting this definition would be eligible for the FCC. However, the eligibility of specific forests would depend on a range of factors, including their location, ownership, and management status.

Yes, privately owned lands can go for FCC. Participation in the FCC protocol is open to landowners or entities with a clear legal title to the land or public land, as well as non-government or private entities with written approval from the state government allowing them to apply for and hold a certificate under the FCC protocol for conservation activities on the specified area of public land.

There is no minimum scale for cash contributions; however, the FCC was approved by the Ministry of Finance (MOF) on March 27, 2023, to provide tax incentives to Contributors under the Program Dana Pembangunan Teknologi Hijau dan Pemuliharaan Alam Sekitar. Under this provision, companies or individuals contributing to forest conservation through the FCC can have tax incentives in the form of tax deductions of up to 10% of aggregate income for contributions of RM1,000 and above only as below: 

‘Sumbangan merujuk kepada sumbangan tunai RM1,000 dan ke atas, dan tertakluk kepada peruntukan yang ditetapkan dalam subseksyen 44(11C) Akta Cukai Pendapatan 1967.

Yes, the FCC protocol is an integral component of the REDD Plus finance framework, overseen by the Ministry of Natural Resources and Environmental Sustainability (NRES) through the National REDD Plus Steering Committee. Under the guidance of the RFFAC, the FCC Protocol shall periodically be updated in line with evolving requirements and developments in the field.

The selection of appropriate species for an FCC project hinges on diverse considerations, including but not limited to the project’s location, climate, soil type, and conservation objectives. It is crucial to prioritize native species to avoid changing of the ecosystem.

Projects developed under the FCC program may produce carbon results, however these do not generate offset rights under the program. However, the MFF is actively reviewing the incorporation of carbon mitigation outcomes as part of the instruments under the RFF with the overarching goal of supporting the attainment of Nationally Determined Contributions (NDC).

The FCC instrument under the RFF ultimately belongs to the Ministry of NRES. In the event of any issues or if the MFF ceases operations, the instrument will revert to the NRES.

The Approved VB evaluates and decides whether to approve or reject audit findings conformances presented by the Proponent. This process may involve multiple reviews, including requesting additional evidence, seeking clarifications, and possibly conducting a site visit. If a non-conformance is identified, the Proponent is given the opportunity to rectify it, with the timeframe and actions determined by MFF. Failure to rectify the non-conformance may lead to it being treated as non-compliance, as per Section 2.9.2 of Terms of Reference: Verification and Certification for FCC / Clause 14.1 and above as per the Conservation Agreement’s non-compliance clause as below:

14.0 SUSPENSION 

14.1 The FCC Project shall be suspended in the occurrence of the following events: 

(a) non-compliance to any of the terms of the Agreement; 

(b) non-compliance to any of the terms or conditions within the FCC Protocol and/or any of its related appendices and annexes together with any and all its amended versions; 

(c) an ongoing dispute case between the Parties that the Grievance Committee/MFF deems necessary  

14.2 In the event that any one of the events in 12.1 above occurs, MFF shall issue a notice to the relevant Party requesting for the issue to be rectified within fourteen (14) days from the date of the notice by MFF. 

14.3 Upon failure to rectify the issue as per Section 14.2 above, a suspension notice shall be issued to the relevant Party for a duration that shall be determined on a case-by-case basis. 

14.3 During the suspension, the relevant Party shall in its best endeavor identify possible solutions and shall exercise the necessary to rectify the cause of the suspension within twenty (20) days from the notice of suspension. 

14.4 The relevant Party may request for an extension of time to rectify the issue, upon which the MFF reserve the right to accept or reject the request.

FCC emphasizes transparency and accountability throughout the certification process. All information related to application, approval, project status, validation, verification, and disbursement shall be made available in the Registry, which is publicly accessible. The Registry contains information on Participants, the project, the project’s conformity to Cancun Safeguards, location of the project, project activities, documentation, verification reports, records of serialized certificate issuance, certificate cancellation, and transfer data. 

Any public entity relevant community or group, including Indigenous Peoples and Local Communities, may submit comments and/or feedback to MFF on any project at any time. Comment(s) received shall be published in the Project Record on the Registry, and where necessary the Participants shall be responsible for addressing the comments.

At present, the FCC does not have such a requirement. The intention behind the FCC as an instrument is to enables swift action for forest conservation and restoration, as well as to allow smaller and specific activities to be funded. The integrity of the instrument is reinforced through the scrutiny of project proposals by the REDD Plus Finance Framework Advisory Committee (RFFAC) panel, as well as audits by third parties.

The FCC protocol ensures that all activities are monitored and audited by third parties to maintain integrity. The results obtained from the successful implementation of FCC projects are nominal, non-transferable, and do not generate any rights to carbon credits or offsets. Therefore, the results cannot be used to meet compliance or voluntary targets under any emissions reduction schemes.

Yes, the FCC funds activities that promote sustainable forest management (SFM). We recognize that as a developing country, there is still need for utilization of resources from the forest for development and infrastructure. The FCC helps encourage that these activities be done sustainably to ensure the long-term health of the forest and the protection of ecosystems in balance with economic development.

Infrastructure refers to the basic facilities and systems serving an area, including communication networks, water supply, and energy distribution.

In this case, offices and residential areas are spaces or buildings used for professional or business activities, such as administration, management, and daily operations; and residences, especially those provided by employers to employees, such as staff housing or accommodations.

The eligibility for each cost element and other elements in the project proposal will be subject to assessment by the RFFAC.