Agarwood - Lucrative business

Lucrative business
By HILARY CHIEW
Shops selling aromatic gaharu oils and woodchips are sprouting in Kuala Lumpur to cater to Middle Eastern tourists. The business, however, is depleting a species of trees in the forest.
IT’S that time of the year that has come to be recognised as “Arab season”, where hordes of Middle Eastern tourists throng shopping malls and streets in Kuala Lumpur’s Golden Triangle.

Gaharu, or agarwood, is essentially the resin extracted from the infected part of gaharu-producing Aquilaria trees. – Picture by S.S. KANESANRestaurants featuring Arabic cuisine have sprouted in the main boulevard of the Bukit Bintang area but a far more lucrative business catering to these tourists is the many outlets selling a type of fragrance in wood form or oil.
Billboards in Arabic, English and Bahasa Malaysia featuring incense burners, woodchips and perfume bottles advertise the goods – gaharu or agarwood.
A recent phenomenon, these outlets are targeting Arabs with a penchant for the aromatic products that come from forests in this part of the world. The fragrant wood is essentially the resin extracted from the infected part of gaharu-producing Aquilaria trees.

Retailer Abu Mishaal says his best quality agarwood comes from Cambodian and Malaysian forests. – Picture by DARRAN TANRetailer Abu Mishaal says the gaharu retail business began four years ago and the number of shops has increased lately. A random count showed at least a dozen such shops, including two new ones operating from a hotel lobby.
The business partner of Al-Anood says his best quality agarwood came from Cambodian and Malaysian forests. “We buy from many places but mostly from Malaysia and Indonesia. We get an average of 6kg a month from Malaysia but 50kg from Indonesia in the wood form.”
The black, aromatic oil in bottles is extracted from woodchips at a distillation plant in Kajang. Arriving in Malaysia seven years ago, the Yemeni businessman saw the potential of the business and supplied the perfumed oil to the Middle East before setting up shops in the city. The plant produces 2kg of oil each month and these are bottled in 3mg, 6mg and 12mg glass containers.
Like other gaharu outlets at Jalan Bukit Bintang, Al-Anood sells woodchips, oil and powder. “Tourists buy these as souvenirs for their friends and relatives back home,” he explains.
Woodchips range from RM100 to RM500 per kg for the average grades. The superior quality grade can fetch no less than RM5,000 per kg while a 12mg bottle of oil ranges from RM50 to RM200. However, prices for the best quality are determined by the buyers’ knowledge and bargaining skills.

Gaharu can be ground into powder form and used as incense. – Pictures by DARRAN TANOther nationalities like Cambodians and Thais have also joined the business. One outlet in a hotel lobby is helmed by a Bangladeshi who professes to have dabbled in gaharu and the Arabic perfumery industry since 1976. Differing from other perfume producers, the Muslim-Arab perfume industry relies on the alcohol-free gaharu oil extracts.
“We might set up a distillation plant here to ease supply flows,” says the trader. “Currently, we depend on our two Jakarta factories for the oil extracts. It all depends on the supply of woodchips and market demand. It’s a bit too soon to tell as my shop is not officially open yet,” he says, adding that he is in the process of obtaining the required business licences.
He points out that local supply of the woodchips is shrinking and high quality resin is a rarity these days. The best quality gaharu is burned directly as incense by wealthy Arabs during important functions. Due to declining quality, traders are turning to distillation to add value to an otherwise low quality yield.
The traders claim that it is not an offence for tourists to carry a few bottles or packets of the woodchips home as these are for personal use.
“They don’t need any Cites certificate. Our raw materials are acquired legally hence the end products are also legal,” assures Abu Mishaal. Harvest of the woodchips is supposedly regulated by the respective state Forestry Department.
The entire genus of Aquilaria was listed under Appendix II of the Convention on International Trade in Endangered Species (Cites) in late 2004 with mounting concerns over the sustainability of the trade. International trade of the species is regulated by a permit system to show that the specimen was acquired with no detrimental effect to its survival in the wild.
Both traders say their businesses are registered with the Malaysian Timber Industrial Board (MTIB) – the management authority for Peninsular Malaysia and Sabah on timber-related Cites species.
But enquiries to MTIB – on regulating the growing gaharu trade and closing Custom loopholes which do not cover gaharu oil – went unanswered. It is learnt that MTIB has not issued any Cites import certificates or re-export permits for gaharu products made from imported woodchips or resin, indicating that the bulk of the Bukit Bintang trade is effectively illegal.

Like other gaharu outlets at Jalan Bukit Bintang, Al-Anood sells woodchips, oil and powder. Some of the oil is mixed to create fragrances to the liking of Middle East tourists.At a workshop organised by Traffic (a WWF-IUCN trade monitoring group) in March, an official from MTIB said stringent checks were needed at airports as there have been cases of gaharu woodchips being declared as other products. He said it was difficult to control the trade and suggested monitoring at the harvesting stage and commercial plantation to meet market demand.
Previously, MTIB’s director of licensing and enforcement Norchahaya Hashim said exporters must produce the respective state extraction permit, the licence number of the processors and receipt of the royalty payment before applications were processed. She noted then that MTIB needed the support of the Customs and Excise Department to curb smuggling at entry and exit points, adding that awareness of the issue has to be raised among relevant agencies.

Gaharu containing woodchips are displayed according to grade and country of origin in the outlets at Jalan Bukit Bintang.Kelantan implemented a licensing scheme on gaharu collection, processing and trading last year but other states have been slow in recognising the value of the resin.
Stringent licensing at the state level and licensing of traders like those at Bukit Bintang would curtail uncontrolled harvest.