CDB pledges $16.67 million loan for Rubber Forest Plantation Project (Linked to Record ID#70518 and ID#73574)

Project narrative

In 2005, Sabah State Government granted Bornion Timber Sdn Bhd a 100-year sustainable forest management license for a 100,000 hectare rubber forest. Then, on September 13, 2008, Bornion Timber Sdn Bhd and Guangdong Guangken Rubber Group (also known as 广东省农垦集团公司 or 广东农垦) signed a 50-year, joint venture agreement for the Rubber Forest Plantation Project. The special purpose vehicle that they established is called Bornion Guangken Rubber Sdn Bhd [BGR or 广垦橡胶（沙捞越）有限公司] and it is 50% owned by Bornion Timber and 50% owned by Guangdong Guangken Rubber Group. Then, in late 2009, Guangdong Guangken Rubber Group applied for two loans on behalf of BGR to support the $71.44 million Rubber Forest Plantation Project: a $16.67 million loan from the Guangdong Branch of China Development Bank (CDB) and a loan (with an unknown face value) from China Eximbank. In late 2009, the China Eximbank loan was approved. Then, in Q1 of 2010, $1.5 million was disbursed through the China Eximbank loan. Record ID#73574 captures the China Eximbank loan and Record ID#62385 captures the CDB loan (as a pledge). Guangdong Guangken Rubber Group also invested $9.05 million of its own funding to cover 50% of the total project cost (as captured in via Record ID#70518). The purpose of the project was to construct and operate a 30,000 hectare rubber forest plantation in the Ulu Milan Forest Reserve (Forest Management Unit 11 or FMU11) near the village of Kg Alab Lanas within Keningau District and Sabah State. The project involved the acquisition of agricultural equipment, the planting of rubber trees, and the installation of production facilities and supporting infrastructure. The project was originally expected to be implemented between 2009 and 2021. A formal groundbreaking ceremony took place on July 6, 2009. Then on November 14, 2009, a trial production ceremony was held. BGR recruited more than 1,000 employees to work on the rubber plantation, of which over 90 percent were local hires. However, this project encountered local resistance to implementation. On January 4, 2012, 50 villagers marched into the FMU11 licensed area of Bornion Timber Sdn Bhd (BTSB) and set fire to the workers’ dwellings. The villagers claimed that BTSB had encroached on Native Customary Rights (NCR) land. Then, on January 5, 2012, the villagers lodged a report, accusing BTSB of bulldozing their ancestral burial grounds. They claimed that more than 10,000 acres around the village had been invaded by BTSB, which included rubber plantations, vegetable, rice and other crops. They also claimed that 638 people in the village feared that their native land would be confiscated. BGR reportedly planted more than four million rubber trees in FMU11 between 2009 and 2016. Then, on August 23, 2016, the plantation was officially opened and a rubber tapping ceremony took place.