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0 BACKGROUND OF STUDY 1 2-3 4 5-6 7 7 7 7 8 9 10 10 11 11 11 11 11







The Sarawak Timber Industry Development Corporation (STIDC) is a company which the function would be to stimulate by all possible means the planned expansion of wood-based industries throughout Sarawak at a role consistent with the overall interest of the economy, the availability of capital and the technical expertise and effective management of the forest resources. STIDC vision is to be The Leader and Catalyst of the Timber Industry and their mission is to plan, coordinate and develop the wood-based industries in Sarawak towards optimum and efficient utilization of timber resources by encouraging downstream processing and product diversification. This case study is mainly on analyzing the sales performance of STIDC for the year 2004 until 2008. The source of sales that determine the level of sales for STIDC is basically from their timber premium which they collect every year, the registration fees where all new set up factory must pay certain sum of payment in order to get licensed by STIDC, the dividends receive from their 13 other subsidiaries especially from their top subsidiaries which are Harwood Timber Sdn. Bhd, STIDC Belian Holdings Sdn Bhd, Hillog Sdn Bhd and also dividends receive from other investment such as on equity fund, fixed assets, ASSAR and also on their housing projects.




As this study is on analyzing the sales performance, ratio analysis and also comparative index analysis are used as the tools to show the differences over the years by using ratio such as asset utilization ratio and also profitability ratio. The trends are analyzed and relevant comments are given in order to identify the problems that affect the level of sales for STIDC. The chart below shows the financial performance of STIDC for the last five (5) consecutive years, 2004 until 2008. The trends to be focused are on the level of Sales (Blue label).


YEAR 2004 2005

90,000,000 Revenue 80,000,000 Year 70,000,000 Revenue 60,000,000 Year50,000,000 Revenue 40,000,000 Year30,000,000 20,000,000 Revenu e 10,000,000 0

46,493,661 72,701,289

72,701,289 2006
65,479,525 48,578,934

2005 72,701,289 2006 2007

2007 2008

48,578,934 83,075,380

83,075,380 65,479,525








Based on the chart, the company sales in 2004 was RM46, 493,661 and the amount increased by 36.05% in the year 2005. Meanwhile in the year 2006 the sales dropped to 49.66% before it doubled their revenue where it increased by 41.52% in the year 2007. Again the sales dropped by 26.87% making the revenue RM65, 479,525 in the year 2008. The downward and upward trends of STIDC revenue are shown in the findings of the study. This chart somehow clearly shows a sign of problems for this case study to be carried out as the graphs shows the revenue (sales) for STIDC fluctuated over the years. Perhaps, by identifying the problems and issues related might increase the amount and revenue (sales) that might generate the company in terms of profitability in the future. 3




The level of sales generated by STIDC in this 5 years analysis had shown an upward and downward trend over the years. As this paper only focuses on the STIDC Corporation income statement and balance sheet, the sources of revenue or income for STIDC are mainly from the timber premium, interest income from fixed deposits, registration fees, management fees, services and the dividends that they receive from their subsidiaries especially from Harwood Timber Sdn. Bhd, STIDC Belian Holdings Sdn Bhd and Hillog Sdn Bhd. As timber resources are limited, the amount received on timber premium were also decreasing as the number of timber available continue to diminishing year by year and this might affect their level of revenue for each year. Due to this matter, STIDC might face problems for them to sustain in the future and this lead them to be involved in projects such as developing houses in order to generate revenue for the company in order to increase their interest income on fixed deposits. However, as STIDC make an investment on project such as building houses, the investment still does not generate a lot to the level of sales for the company as they have to use their interest income on fixed deposits to finance their projects while waiting for the government to give them grant for the project that they involved in. The amounts of grant given by the government are usually not paid in full amount of their investment value and due to this it will eventually affect their cash flow and level of sales. Other source that affects the level of sales is on overestimated budget on the registration fees that is on the renewal of license and fees for new set up factory who involves in manufacturing timber products. For example, STIDC aim to achieve a target of RM10 million on registration fees for the year 2005 in order to increase sales but in the end it only turn up to be RM5 million. When the amount of fees collected for the year did not meet the target it will directly reflect the sales amount for the year as registration fees is known to be one of the sources that can affect the level of sales for the STIDC.




Objectives 1) To determine the ability of the STIDC to control costs of inventories and to pass along prices increases through sales. 2) To determine the overall operating efficiency of the STIDC. 3) To determine the level of profitability after consideration of all revenues and expenses of STIDC. 4) To determine the efficiency with which STIDC uses all its assets to generate sales. 5) To determine the efficiency with which STIDC has been using its fixed assets to generate sales. Study Question 1) How capable does STIDC control both of its cost of inventories and to pass along prices increases through sales? 2) What is the overall operating efficiency of STIDC? 3) What is STIDC level of profitability after taking consideration of all its revenues and expenses? 4) How efficient does STIDC uses its assets to generate their sales? 5) How efficient is STIDC uses its fixed assets to generate sales? Scope of Study


The scope of this study is focusing on the sales performance of Sarawak Timber Industry Development Corporation (STIDC) headquarters Kuching.

3.0 3.1



Firms Financial Position

Financial ratio analysis can help investors in making investment decision and predicting firm’s future performance. It can also give early warning about the slowdown of firm’s financial condition (Ohlson, 1980).


Factors Affecting Sales

(Lee, 2010) noted that a poor economy, such as a recession, can cause a dramatic drop in sales. It is possible that in a severe downturn that no amount of effort will offset the fact that many customers simply do not have the money to buy. Organizations caught in this situation may have no choice but to scale back operations or change pricing models and product lines until the economy recovers. Poor sales forecasting might have been tied to a splashy marketing campaign that failed, or consumers simply did not take to a new product offering the way management expected. Or senior management, in a desperate attempt to increase revenues, may have simply placed unrealistic expectations on the sales team when compared with past performance. Poor individual performance can also affect sales. Sales people and sales management must be held accountable for meeting aggressive yet reasonable goals. The company should go to great lengths to motivate and retain producers, while placing others on performance-improvement plans with regular reviews and mentoring. A poor sales pipeline can also negatively impact sales performance. Sales organizations pressured to show immediate sales often focus on the back end of the sales pipeline--where the deals are closed. However, that can lead to too little prospecting for new customers. In July 2010, Microsoft cited a survey of sales managers that said that only one in three of the managers felt that their sales teams were making enough sales calls to meet revenue goals.


The role of sales is “to stimulate, rather than satisfy, demand for products” (Weitz and Bradford, 1999, p. 243). Williams (1998) found that customer-oriented selling strategy leads to the successful development of relationships with customers and positive impact on sales performance. Some exploratory work (Beverland et al., 2006; Guenzi and Troilo, 2006; Le Meunier-FitzHugh and Piercy, 2007b) supports the view that the smooth operation of the sales and marketing interface is a critical success factor and also established the importance of the relationship to performance. Homburg and Jensen (2007) suggest that sales staff should play the role of customers’ advocate, while marketing promote the interests of products/brand, which could result in market performance being enhanced as each side strives to improve its position.


Performance of Sales

During the last two decades, the performance measurement literature underscored some relevant features and characteristics of performance measures and measurement systems, which are, must reflect relevant non-financial information, based on key success factors of each organization (Clarke, 1995); should be implemented as means of articulating strategy and monitoring organization results (Grady, 1991); should be based on organizational objectives, critical success factors and customer needs and monitoring both financial and non-financial aspects (Manoochehri, 1999); must accordingly change dynamically with the strategy (Bhimani, 1993); must meet the needs of specific situations in relevant manufacturing operations, and should be long-term oriented, as well as simple to understand and implement (Santori and Anderson, 1987); must make a link to the reward systems (Tsang et al., 1999); financial and non-financial measures must be aligned, and used within a strategic framework (McNair and Mosconi, 1987; Drucker, 1990); should stimulate the continuous improvement processes (Kaplan and Norton, 1992, 1993; Flapper et al., 1996; Neely et al., 1997; Medori and Steeple, 2000); must be easy to understand and to use (Kaplan and Norton, 1996; Ghalayini et al., 1997); must be clearly defined and have a very explicit purpose (Flapper et al., 1996; Neely et 9

al., 1997); and should allow a fast and rigorous response to changes in the organizational environment (Bititici et al., 1997; Medori and Steeple, 2000).

 All journals are available on Appendix 1 4.0 CASE STUDY METHODOLOGY This chapter discusses the sources of data and the methods of obtaining the relevant information regarding to the research. It is also provides the information and the manner in which data are collected could make any difference and generalized the problem. 10

4.1 PRIMARY DATA 4.1.1 Face-to-face Interview The information of this report is gathered through the interviews with the staff who mainly from the Account and Investment section in STIDC. Among them are Mr. Abang Luqman Alhakim (Accountant), Mr. Abdul Hatta Sharkawi (Assistant Acountant) who in-charge in formulate and forecast the annual expected revenue and expenses or known as budget for STIDC, Mdm. Roslelawati M. Amin who manage the investment activities for STIDC, and Mr. Juaini Hj Sa’ee (Administrative assistant). Not to forget, the interviews also held with other workers in the Account section that have been working in STIDC for more than 10 years period. All the information is gathered direct and indirect interview.

4.2 SECONDARY DATA 4.2.1 Journals

Sources of journals those are available in the online database as well as Google search engine. Such journals have been used are from emerald insight database. E.g. Ghazaleh Moghareh Abed, Mohammad Haghighi, (2009) "The effect of selling strategies on sales performance", Business Strategy Series, Vol. 10 Iss: 5, pp.266 – 282.


Annual Reports

From the company annual reports, the changes and possible problems that might occur from year to year can be detected. For this issue, the annual reports of STIDC for the year 2004 to year 2008 are used. 11



Other than the company’s annual reports, the information and data on the company background and relevant to the issue can be gathered from www.sarawak,, and also 4.2.4 Books

The other sources usually used are books on financial statement analysis. E.g. Wild, K.R. (2009). Financial Statement Analysis, Asia: McGraw Hill Higher Education.

5.0 FINDINGS AND ANALYSIS This chapter discusses on the data that have been collected from the organization mainly from annual reports and through face to face interview with the workers in Account & Investment


Section in STIDC. The results or findings were obtained through the interpretation of the data gathered. Table 5.1 : Comparative Index Analysis of STIDC For The Year 2004, 2005, 2006,2007 & 2008

Formula: % = of Changes Year(b)-Year(a) Year(a) 13 x 100%


Year 2004 46,493,661 Year 2005 72,701,289

Year 2005 72,701,289 Year 2006 48,578,934

Changes (RM) 26,207,628 Changes (RM) (24,122,355)

(%) Changes 56.37% (%) Changes (33.18%)



Year 2006 48,578,934

Year 2007 83,075,350

Changes (RM) 34,496,416

(%) Changes 71.01%


Year 2007 83,075,350

Year 2008 65,479,525

Changes (RM) (17,595,825)

(%) Changes (21.18%)

 Financial statements for STIDC level of revenue are available on Appendix 2. As for the findings, comparative index analysis is used to show the differences of revenue that STIDC had recorded for the 5 years period. The increase and decrease amount of revenue that experienced by STIDC are due to several items that affect the level of revenue for each year.

(tell what affect the most to the level of revenue.mainly from timber premium and disposal of investment) As to show the revenue of STIDC for the year 2005,2005,2006,2007 and 2008, table 5.2 are used to highlight the major item that contributed to STIDC source of revenue. Table 5.2: Source of Revenue for the Year 2007 and 2008 (RM) Revenue 2008 2007 14 2006 2005 2004

Timber Premium Interest Income Registration Fees Services Management Fees Dividen income subsidiaries Other investment Other Operating Income Gain On Disposal of Other Investment/ Sales of TMPTZ Lots - Overtaken up in prior years Admin Fees On Incentive Claims Total Revenue

25,471,523 9,104,166 962,577 920,883 866,726 378,000 10,697,344 17,078,306

24,356,675 9,996,005 703,414 683,652 972,734 2,808,000 9,048,785 13,760,887

25,386,744 10,414,943 664,065 665,430 1,118,623 2,942,375 6,149,199 1,237,555

39,994,737 8,460,572 615,639 648,744 1,427,803 2,233,000 9,699,584 12,086,673

15,321,585 9,295,694 704,778 653,789 1,218,748 1,472,760 8,829,682 2,026,311







- (2,465,463)

3,831,327 2,206,593 46,493,661





Table 5.3: Source of Revenue for the Year 2004, 2005,2006,2007,2008. (%). Revenue Timber Premium Interest Income Registration Fees 2008 38.90% 13.90% 1.47% 2007 29.32% 12.03% 0.85% 15 2006 52.26% 21.44% 1.37% 2005 55.01% 11.64% 0.85% 2004 32.95% 19.99% 1.52%

Services Management Fees Dividen income subsidiaries Other investment Other Operating Income Gain On Disposal of Other Investment Sales of TMPTZ Lots - Overtaken up in prior years Admin Fees On Incentive Claims Total Revenue

1.41% 1.32% 0.58% 16.34% 26.08%

0.82% 1.17% 3.38% 10.89% 16.56%

1.37% 2.30% 6.06% 12.66% 2.55%

0.89% 1.96% 3.07% 13.34% 16.63%

1.41% 2.62% 3.17% 18.99% 4.36%









8.24% 4.75% 100%






Timber Premium

The major contributor for STIDC source of revenue is the amount on collection of timber premium. For the year 2004 STIDC had recorded 32.95% from the overall total revenue and for the year 2005 STIDC managed to increase their timber premium received to 55.01% by making it the largest source of revenue that contributed to STIDC within the 5 years period analysis. However for the year 2006 and 2007, their timber premium received had dropped to 52.26% and 29.32% in the year 2007. While for 2008, the timber premium received had slightly increased to 38.90%. The premiums are collected from the amount of timber trees that are being cut off by the licensed and registered company who had register themselves under STIDC. Basically, the prices of the trees are range from RM15 – RM20 per tonne. The factors that affect the number of premium collected are usually due to the economic factors. As for example, if the economic condition is not good, any company or businesses who engage in the timber products are force to close down their operation if their production costs are higher than the operating cost. Thus, 16

this will eventually affect the amount of revenue for those years. Those businesses are forced to shut down in order to help STIDC from incurring more losses in the year which eventually may affect the collection on timber premiums. Normally the premiums are collected more at the 3rd and 4th quarter of the year due to good whether if compared to the 1st and 2nd quarter of the year due to heavy rains that slow down the timber activity. In other words, the more trees are being cut, the more premium will be received. 5.5 Interest Income

STIDC interest income are mainly from their fixed deposits which normally matures 1 to 3 months and only focuses in short term interest income which is less than one year period. The factors that normally affect the interest income of STIDC are basically because of the economy factor which relatively relates to the changes of rates that are offered by the banks. Other than that fixed deposits are also from the grant given by the government, premiums received from timber premium and sells of land lots. When the premium and sells of land lots increase, this will also increase the amount of interest income received by STIDC. Most of the interest incomes are received from the sell of lots such as houses, and the grant that received from the government. As for example, the furniture and fittings at the Dewan Undangan Negeri Sarawak (DUN) where they have to use their own fixed deposits to pay the contractor on behalf of the government. STIDC will get the amount of fixed deposit back in term of grant that will be pay by the Sarawak state government from year to year. As for the year 2004, STIDC managed to received better income by 19.99% of the total revenue as compared to only 11.64% in the year 2005 for their interest income. While for 2006, STIDC had recorded the highest interest income in fixed deposit for the 5 years period which was 21.44%. Despite from the increase in 2006, the total of interest income dropped again to 12.03% before it increased to 13.90% of the overall total revenue for the year 2008. This shows an increase in the collection of interest income that


due to maturity of fixed deposits by their depositor, grant that paid by the government and also interest that they received from the sell of lots especially on their housing projects. 5.6 Registration Fees

As for the registration fees, 2004 had recorded 1.52% from the overall total revenue for the year as compared to only 0.85% that they received in the year 2005. The registration fees did not contributed must to the corporation. As for the year 2006, STIDC managed to received 1.37% for their registration fees, 0.85 for the year 2007 and 1.47% for the year 2008. The revenue received in the registration fees vary from year to year as its revenue may increase due to the new number of registration of new companies, new factory, domestic trade, including export and import activities from all of the business that registered and license themselves under STIDC. Since stricter rules were imposed, more businesses that involves in timber product registered themselves legally and the annual fee that they paid every year became the source of revenue for STIDC every year. Any unregistered companies or factory that did not register themselves under STIDC will be fine RM300, 000 and additional RM3,000 if they failed to register themselves with STIDC in the following days.



In the year 2004, STIDC managed to receive 1.41% of the overall total revenue compared to only 0.89% in the year 2005. There was a slight increase in the year 2006 which was 1.37% before it dropped again to only 0.82%. However, STIDC managed to increase their income on services to 1.41% in the year 2008. The factor that contributed to the changes of revenue earned every year are from the type of services that they organized such as Industrial training, 18

Vendorship Programme which helps to increase and encourage the participant of Bumiputra in wood based industries, Registration and Licensing which its function is to register and license every person involved in establishment, manage or operate any mills, manufacturing, sale, distribution or marketing of timber and timber products, Grading, Export License and also Resource Development. The revenue from these services was mainly obtained from the fees that they received from the participant who joined and of the programmed that STDIC had offer under Section 5A of “The Sarawak Timber Industry Development Corporation Ordinance, 1973. 5.8 Management Fees

STIDC also involve in managing any businesses that engage in timber products. Management fees that are received by STIDC mainly from their management assistance such as providing guidelines in order to meet the quality standard (MS ISO 9001-2000) in terms of their operating activities and the standards of their final products. For the year 2004, STIDC had recorded better revenue on management fees which was 2.62% compared to 1.96% in the year 2005. For the year 2006, STIDC had contributed 2.30% of the revenue from their management fees compared to 1.17% in the year 2007. The income from management fees continue to increase by 1.32% for the year 2008. Part of the revenue of this management fees are then to be contributed to Sarawak statutory bodies as STIDC are only given the responsibilities by the Sarawak Government to act on behalf of the timber industry to manage, monitor coordinate and develop the wood-based industries in Sarawak. The factors that affect the upward and downward trend of management fees revenue are all depends on the number of business who need the management assistance and also the number of the programs such as seminars that are provide by STIDC every year.


As to show the differences of 2007 and 2008, ration analysis are uses to show the differences between the two years performance in terms of gross profit, net profit margin, operating profit margin, total assets turnover and fixed asset turnover. Table 5.9: Ratio Analysis for the Year 2004, 2005, 2006, 2007 and 2008. Ratios Gross Profit Margin Net Profit Margin Operating Profit Margin Total Asset Turnover Fixed Asset Turnover 2004 97.26% (5.24%) 8.97% 0.06X 1.28X 2005 100% 31.28% 53.09% 0.09X 1.08X 2006 100% 10.68% 22.45% 0.06X 0.74X 2007 96.88% 31.13% 42.22% 0.09X 0.93X 2008 98.69% (9.52%) 18.20% 0.07X 0.81X


 Detail information on the calculation of ratio are available on Appendix 2. STIDC had recorded 100% gross profit margin in the year 2005 and 2006 where for those year STIDC did not incurred any cost of goods sold for those year. However in the 2004, STIDC had recorded 97.26% of gross profit margin due to their cost of sales which cost RM1,275,787. However in the year 2007, the gross profit margin recorded 96.88% since there was cost of sales of RM2,594,733. This goes the same with the year 2007 and 2008 where the gross profit margin for those 2 years was 96.88% and 98.69% respectively mainly from their cost of sales on industrial land and lots sold for the year. On the overall performance, STIDC did show that they have better control over its cost of inventories in order to increase their revenue from year to year. The Net profit margin for the corporation can be analyzed by measuring their overall operating efficiency. The net profit or loss for the year was mainly affected by the corporation operating expenditure, finance cost which includes interest expense and also after taking consideration of taxation from corporation and subsidiaries. Every year, the increase and decrease in percentage recorded by STIDC usually due to their high cost of operating expenditure. Since STIDC had incurred net loss of RM2,434,644 in the year 2004, it directly affected their net profit margin to be negative 5.24%. However, in the year 2005 STIDC had recorded the highest net profit margin which was 31.28% compared to the year 2006 which only recorded 10.68%.

Due to those matter, STIDC has shown a decrease in their level of profitability which is (9.52%) of compared to 31.13% in the year 2007. Due to high spending on the operating expenditure 21

which was RM51,708,046 in the year 2008, this figure directly affected the profit for the year by making the corporation to incur net loss of RM6,237,386 for the year 2008 if compared to the year 1007 which was rm25,859,334. The Operating profit margin of the corporation can be measure by analyzing the level of profitability after consideration of all revenues and expenses. From the huge spending on the operating expenditure, it is clearly that the figure had created an impact to the profits from operation of the corporation. Due to the increase of its operating expenditure, the level of profitability for STIDC in the year 2008 directly dropped to 16.67% compared to 38.03% in the year 2007. In term of total asset turnover, the corporation has shown a decrease in their total asset turnover which was 0.9 times in the year 2008 and 0.7 in the year 2008. This indicate that STIDC might have problem in their inventories such as holding obsolete inventory , too long collection period that affects their account receivables and not fully utilize their assets in order to generate revenue for STIDC may results in lower asset turnover. However in term of fixed asset turnover, STIDC has been less efficient in using their fixed assets to generate sales for the corporation which was only 0.81 times in 2008 compared to 0.93 times in the year 2007. This shows that the corporation has not fully utilized its fixed asset in the year 2008. Their fixed assets are include land and buildings, transportation such as motor vehicles and aircraft, plant and machine, leasehold of lands that includes short term and long term leasing.




The following recommendations are based on the sources of revenue that affect performance of STIDC. It is suggested that STIDC should implement new strategies to have better management on the forest in order to protect their timber resources from diminishing in the future. It is suggested that STIDC should apply the enzyme technology especially in the pulp and paper manufacture. This can be done by starting to plant on tree genetics or known as biotechnology that will offers the possibility to resolve the increased demands on forest resources through the development of trees in order to protect from diseases, pests, and chemicals, which have a negative impact on forest health. In order to increase the number of timber premiums every year, planting of trees such as Paulownia trees, Empress trees is advisable since it takes shorter time to mature which is 6 years if compared to local timber trees such as Meranti, Nibong, Belian which normally matures in 10 to 15 years. By having trees that mature in shorter time period, this will directly increase the volume of timber resources and eventually will result in smaller volume of trees to be cut in a year. The use of advance technology such as GLOBAL POSITIONING SYSTEM (GPS) & geographic information system (GIS) also plays important roles for the corporation to manage their timber resources and at the same time to increase to efficiency and the effectiveness of their workers especially those who involve in the timber inspection. This can be done by having handheld device such as an Ipad which can help them to access the data and send the information directly to headquarters for reports or checking. By doing this, it might help the employees to accurately plot location data (latitude, longitude, and altitude) for use in calculating timber volume, surveying timber plots and mapping roads and features in the forest. This data also combined with other geographic data that might helps officers to accurately manage modern forests by monitoring activities that are done in the field. 23

Meanwhile in term of operating expenditure, every section in STIDC should control and monitor their budget rather than only depending on the Account section to do so. This can be done by having the same budget system that is use in the Account section. Furthermore, budget should be allocate properly by giving priority to those sections who contribute the most to the operating income such as the Industrial Planning, Project development, Registration & Licensing , Account & Investment, North Region and Middle region.




This study is on analyzing the sales performance of Sarawak Timber Industry Development Corporation. Primary data were collected by doing face to face interview with the employees from the Finance and Investment Section. Secondary data such as annual report of STIDC and information on their website are also used in other to gather the information especially on the financial reports. This study is also highlighted on what are the items that affect the level of revenue of STIDC for each year. Other than that, this study also investigate on the reasons and factors that contributed to the changes of revenue in the timber premiums, interest income received for each year, management fees, registration fees and also services that they offered in order to increase the level of performance in term of sales or revenue for the corporation. Financial ratios are used to measure the profitability of the corporation. This is in line with (Ohlson, 1980) “Financial ratio analysis can help investors in making investment decision and predicting firm’s future performance. It can also give early warning about the slowdown of firm’s financial condition “. The conclusion of this study can be drawn based on the findings of the study. As shown from the findings, the timber premium is known as the major contributor for STIDC as it contribute the most to the total overall revenue for STIDC every year. However, the collections on the timber premiums are easily vary in amount every year since timber resources are limited from time to time and also might get affected by other factors such as economy factors such as exchange rates that can change the value of timber price per tonne. This also goes the same to the interest income that the corporation received where it is also affected by the economic factor such as interest rates offer by banks. Other than that, the services and fees are all depends on the activities and programs that STIDC organized to all of the registered businesses that involve 25

in timber industry such as companies, factories and other export and import activities that pay their fees every year that help to generate STIDC source of revenue. As for the conclusion, STIDC should take consideration to all of its sources or revenue and all the factors that might affect their timber industry. The backup plans other than only depending on their timber premium were also needed due to the concern of timber resources might become limited in the future. Other than that, a good long term relation in investment with their subsidiaries and continuation on development projects are also important in order to help STIDC to maintain or increase their level of performance of sales in the future rather to only depend on their timber premium that they received every year.