1. INTRODUCTION

1.1 The overall development policy of the country

The Second Malaysia Plan (1971–1975) incorporates a two-pronged New Economic Policy for development:

1. to reduce and eventually eliminate poverty by raising income levels and increasing employment opportunities for all Malaysians irrespective of race;

2. to accelerate the process of restructuring Malaysian society to correct economic balance, so as to reduce and eventually eliminate the identification of race with economic function.

This process involves the modernization of rural life, a rapid and balanced growth of urban activities and the creation of a Malay commercial and industrial community in all categories and at all levels of operation, so that Malays and other indigenous people will become full partners in all aspects of the economic life of the nation.

(Source: Second Malaysia Plan 1971–1975; Govt. Press, K.L. 1971)

It is also stated in the same document that to fully achieve the above objectives may require a generation or more. Progress toward these objectives will be made during the Second Malaysia Plan (SMP) period; and, at the same time, the plan will establish the means and processes by which the transformation of the economy, already underway, can be accelerated. Therefore, the above objectives in their essence will remain valid for a long period of time and can be assumed as policy objectives for the whole period covered by this study, i.e. until 1995.

The basic elements of the New Economic Policy of Malaysia are in fact social goals in the broadest sense, which should be achieved by economic means. In other words the economic development policy is subordinated to the social goals of the overall New Economic Policy of the country. In quantitative terms it is projected that GNP will increase at 6.5 percent a year during the period 1971–75. Per caput income will thus grow at 3.7 percent annually, with the result that the average Malaysian will be receiving about one fifth more income in 1975 than in 1970, i.e. $1 300, as compared to $1 080¹.

¹ All currency figures in this document are Malaysian dollars, unless otherwise stated.

Despite the significant increases in production for the domestic market, the Malaysian economy is still heavily oriented toward exports. Income and employment are highly dependent on the trends in export volume and prices. In most years exports constitute about 45 percent of GNP. International trade has been of significant benefit to the nation's economy, permitting Malaysia to become the world's largest producer and exporter of natural rubber, tin and palm oil. Along with these benefits, however, the economy faces the risk of sharp fluctuations in world prices affecting the incomes.

As far as foreign trade is concerned, the policy objectives are to further increase exports at an annual increase in value of 4.6 percent and with an emphasis on diversification of export commodities. There are no specific targets for exports of fishery commodities, but the category “other merchandise exports” is projected to grow at least at 4.5 percent per year.

Total development expenditure by the public and private sectors under the Second Malaysia Plan is targeted at $14 350 million, out of which the private sector's share is estimated at $7 101 million. The estimated capital formation by the public and private sectors is estimated at $4 307 million and $7 843 million respectively, totalling $12 150 million.

1.2 Fisheries development policy

The development policy for the fisheries sector follows that of the whole national economy and translates the general policy objectives into more specific ones related to this sector.

The objectives of the fisheries development policy, as spelled out in an internal document, are as follows:

The objectives of fisheries development policy are:

1. to develop and exploit to the maximum the fisheries resources of the country in accordance with sound fisheries management practices;

2. to generate employment opportunities in the fisheries sector by expanding and modernizing fish production and processing and related secondary industries, such as boatbuilding, net making, etc., and

3. to raise the economic status and social conditions of fishermen by increasing their output and income;

4. to restructure and consolidate the fishing community;

5. to enable the fishermen to actively participate in the fishery enterprises through equity participation.

One of the main specific objectives is to correct the imbalance between the underdeveloped fisheries on the east coast of peninsular Malaysia, as compared with the relatively well developed west coast. Furthermore, the west coast catch has reached the maximum level the fishery resources can sustain within the present limits of operations, while the east coast fishery takes only approximately one third of the potential resources available within the present range of operations. Moreover, the east coast fishery exploits mainly pelagic resources of the coastal zone, the demersal resources being relatively untouched.

The availability of underexploited fishery resources off the east coast of peninsular Malaysia, being able to support a substantial development programme, coincides with the Government's objective to concentrate development efforts on the east coast in order to improve the economic situation of the area.

1.2.1 Development of fisheries 1971–75 as envisaged by the Second Malaysia Plan

The Second Malaysia Plan (1971–75) sets up targets for the development of the particular sectors of the national economy, including fisheries. The following figures of relevance to this study have been extracted from Table 9–1 (Page 121) of the Plan:

The 1970 annual landings of fish, according to the Fisheries Division statistics, totalled:

Taking the above total landings in 1970 as the basis for projections for the 1971–75 plan the figures in the individual years would be as follows:

The results of the first two years of the current five-year plan indicate, however, that the actual landings fall short of the above target, since, for 1971 and 1972, the figures are 365 324 and 355 715 t respectively. In fact, landings reached a peak in 1968 of 395 000 t, fell in 1969 to 337 000 t and after that year the average rate of growth is in the order of 1.4 percent. One can safely say that the high rate of growth in landings over the preceding ten years has been arrested after 1970 and the production has reached its maximum level at the present capital investment in fisheries. The relatively high rate of growth over the years 1966–70 is attributable mainly to the rapid development of the trawl fishery on the west coast of peninsular Malaysia. Since there was no significant investment in the past few years in vessels mainly but also in ancillary facilities, the present level of landings can be considered as the maximum output obtainable from the actual level of capital investment in the means of production. Any further growth in landings will have to be supported by substantial capital investment in both vessels and processing facilities and infrastructure. It should also be noted that the target of 11 percent growth rate in landings for the current five-year plan, in all likelihood, will not be achieved.

1.2.2 Public investment expenditure in the fisheries sector

The Government, in its efforts to develop the fisheries sector of the national economy, was allocating considerable amounts of money for public investment expenditure. For the years 1966–70 the funds allocated totalled $23.3 million, while the estimated actual expenditure for the same period was $9.0 million.

It is worth noting that the share of fisheries in the gross domestic product over the period of the First Malaysia Plan (1966–70) was growing faster than those of other agricultural sectors, e.g. the annual growth rate in the contribution to GDP of agriculture and livestock was 5.9 percent, rubber planting 6.0 percent, while fisheries was 13.3 percent.

The Government, fully aware of the important role fisheries play in the national economy, allocated in every five-year plan substantial funds for public investment in this sector. The second Malaysia Plan provides on the one hand that the average annual growth rate in fisheries output should be in the order of 11 percent and on the other hand allocates the following funds for public investment/animal husbandry, shown for comparison.

As can be noted from the above figures, the 1971–75 funds allocated for fisheries are higher than those for animal husbandry - another producer of animal protein in the country.

The funds allocated to agricultural credit are supposed to be used also for financing fisheries investment needs. However, at the present time, there is no evidence that the fisheries sector obtained any credits from this source. There are some discussions on acquiring an ice plant financed from this credit but, as yet, nothing has materialised.

1.3 Review of past progress in the national economy

During the decade 1960–70 the GNP grew at 6.1 percent per annum, which was higher than planned, and also higher than the 5 percent target set for the developing countries during the UN Development Decade.

The main industries in the country's economy are rubber, oil palm, timber and tin. Output from fisheries expanded at 7.3 percent annually during 1961–65 and about 8 percent during 1966–70. A major fact accounting for the increase was the expansion in trawl fishing. Fish exports also grew gradually in importance. In 1970 exports of fish amounted to about $95 million.

Increases in output of pigs and poultry were sufficient to meet rapidly growing consumption.

Diversification was pursued, not only in agriculture but also in other sectors, particularly industry. The economy was strengthened by a rapid growth in manufacturing production during the decade 1961–70. Net manufacturing output in West Malaysia rose at 9.9 percent annually during 1961–65 and at 10.4 percent during 1966–70. In consequence, the share of manufacturing in the Gross Domestic Product (GDP) rose from 8.5 percent in 1960 to 10.4 percent in 1965 and about 13 percent in 1970. Exports of manufactured goods, though small, grew steadily at an average of 14.2 percent per year during the decade.

Gross national savings during the period averaged 17.8 percent of the GNP. The net foreign trade and payment balance was favourable, with the balance of payment showing a surplus of $1 064 million for the five-year period 1965–70. Capital inflows, both private and official, played an important role in augmenting the pool of resources for development. Private long-term capital, including re-invested earnings of foreign companies, maintained a net inflow of around $155 million a year. Official capital receipts from project and market loans averaged about $76 million net a year.

As a positive result of the above discussed development, the average per caput income rose from $806 to $1 080 (over 30 percent during the decade) despite the increase in the population at about 3 percent per year during the same period.

In the employment sector it is estimated that the West Malaysian labour force in 1970 was 3 150 000 persons, while the actual employment was only 2 900 000 persons resulting in an unemployment figure of 250 000 (approximately 7.5 percent rate of unemployment). During the period 1966–70 it is estimated that the labour force grew by an average of 2.9 percent a year, while employment by 2.6 percent. However, as a result of the overall Government policy, unemployment declined from 7.5 percent of the labour force in 1970, to 7.3 percent in 1973. Successive rounds of the labour force sample surveys have clearly indicated a downward trend in the unemployment position since 1970.

The increase of output and income on a national basis, with particular reference to fisheries, is illustrated by Table 1.

As can be seen from Table 1, the fisheries production grew faster over the past six years than the GNP. This is due to the introduction of modern trawling techniques on the west coast of peninsular Malaysia. The same factor, i.e. the introduction of trawling, contributed to a 5.8 percent average annual increase in labour productivity in fisheries, expressed in tons per fisherman and to a 4.3 percent increase in terms of value. The difference in the productivity increment between volume and value per fisherman is the result of growing share of trash fish in the total landings.

1.4 The place of fisheries in the national economy

Fisheries plays an important part in three main aspects of the Malaysian national economy: supplies of food, earning foreign currency, and employment of the population. The supplies of protein rich food from fisheries was always vital to the indigenous population, at the same time providing employment and income to purchase other essential goods. The role of fisheries as a foreign currency earner has commenced some ten years ago and is continuously gaining in importance. All the three aspects of fisheries contribution to the national economy will remain valid for the period up to 1995, covered by the development plan.

1.4.1 Role of fisheries in food supply

The main sources of protein of animal origin in Malaysia are the following: meat of warm-blooded animals (in the order of importance, pork, poultry, beef and mutton), fish, eggs and milk. It is difficult to obtain reliable statistics on eggs and milk consumption, partly because of household production and consumption, but from the figures available, it appears that these two sources do not contribute more than approximately 15 percent to the average daily protein intake of the population. Fish and meat remain therefore the two most important sources of animal protein in the population's diet. In the absence of data for Sabah and Sarawak the analysis has to be limited to peninsular Malaysia. Table 2 gives data on meat and fish consumption over the period 1960–71. Percentage-wise, fish is almost two thirds of the total meat and fish consumption. It is also worth noting that the increase in fish supplies over the period 1960–71 was 97.3 percent, while that of meat supplies was 84.7 percent for the same period.

Table 1

Selected development indicators, 1965–71

(Source: The Second Malaysia Plan and Annual
Fisheries Statistics - Fisheries Division)

Note: ¹ Without East Malaysia
² Estimates for East Malaysia

Another important element is the cost of production of various types of meat. According to information obtained from the Veterinary Department, the costs of production of particular types of meat are as given below. For a general comparison, retail prices at Kuala Lumpur in November 1973 have been shown.

At the same time the retail prices for particular fish species have been recorded:

On the other hand, the average retail price for fish in 1972 was $2.27 per katty of Grade I fish, which includes white and black pomphrets, threadfin and prawns; $1.80 per katty for Grade II fish including Spanish mackerel and wolf harring (Chirocentrus dorab); and $0.65 per katty for Grade III fish including trevally (Megalaspri's cordyla), chub mackerel (Rastrelliger kanagasta), scads and red snappers.

It is obvious that the retail prices of fish include a profit margin both for the producers and dealers, therefore the costs of production have to be lower than market prices and therefore lower than the production costs of meat.

1.4.2 Role of fisheries as foreign currency earner

Substantial quantities of fish are exported annually from Malaysia, the main export commodities being fresh and frozen finfish, crustacea and salted and smoked fish. In terms of value, crustacea are the most important export commodity of ever-growing significance. The 1972 net exports of crustacea reached 13 200 t, worth almost $80 million. At the same time exports of fresh, salted and smoked fish are declining.

There are, however, two groups of commodities, Malaysia is a net importer of canned fish products and fish meal. The imports of canned fish vary from 3 000 to 4 000 t/a, while imports of fish meal oscillate around 5 000 t/a. The value of net imports of these two commodities has declined from $11 million in 1968 to $4.5 million in 1972. The reason for imports of fish meal is that Malaysia does not have any substantial surplus of trash fish to be converted into fish meal nor does it have plants of a sufficient capacity and adequate technological standards to produce it.

Imports of popular canned fish are a necessary evil for the economy which does not have any processing plants of commercial significance.

Table 3 shows the net exports and net imports (imports for re-exportation have been compensated) over the years 1968–72.

It should be stressed that the share, in terms of value of fish products in total export of the country, is gradually growing. For the year 1965–67 it was one percent, 1968–70 two percent and had reached three percent in 1971. The imports are at a constant level of two percent in the country's total imports.

Quantities in metric ton
Values in '000 M.$
(-) indicates net imports
(+) indicates net exports

(Source: External Trade and Fisheries Statistics)

1.4.3 Employment in fisheries

According to the 1970 population census there were altogether 90 604 fishermen in the country. The following table shows the employment in fisheries in comparison with the total and economically active population.

The above figures have been taken from the Statistics Department and are the product of the 1970 population census. The Economic Planning Unit (EPU), however, has a different estimate of the economically active population totalling 3 328 000 persons, i.e. 31.9 percent of the total population. The EPU figure seems to be more realistic but, in the absence of a breakdown by regions, the census figures have been shown in the above table. It is estimated by the EPU that, in addition to the economically active population, there are 250 thousand persons at present unemployed but looking for jobs.

The percentage of employed in fishing, as compared with the economically active population, is very high and, after the Philippines with a comparable figure of 5 percent, the second in Southeast Asia. It is even higher than that of the Republic of Vietnam (3.4 percent) with its total landings of almost 600 000 tons of fish.

However, the relatively high employment in fisheries and low level of investment reflected, e.g. in the east coast of peninsular Malaysia by traditional, simple boats and gear, are the crucial factors of low productivity per fisherman and their low income rates.

1.5 Major developments in the fishery sector over the last decade

The world total catch in 1971 had reached 69 400 000 t which is an increase of 73 percent over the 1960 catch. The average annual rate of growth of the world catch was 4.4 percent over the period 1965–71 and 5.1 percent over 1960–71. In fact, the 1969 total catch shows a decline, in comparison with the previous year, and the results in 1971 were only 100 000 t better than those of 1970. In other words, the annual growth rate shows a declining trend, as compared with the years before 1965, one of the reasons for it being that some of the traditional fishing grounds are already exploited up to the maximum sustainable yield and others are in fact over-exploited. An example of the latter situation is the North Sea, where the herring catches have sharply declined due to over-exploitation of the resources.

Note: * denotes provisional figures

(Source: FAO Yearbook of Fisheries Statistics, Vol. 30, 1970 for catch data, and The Demand for Fish to 1980, FAO, FIEF/C131 for consumption per caput)

Table 5 shows the total catch of the world and some selected countries for the period 1948–70 with additional information on the 1970 average per caput consumption of fish in those countries. The table has been arranged in such a way as to enable comparison of the Malaysian catches with those of neighbouring countries often operating on the same fishing grounds, as well as with some other countries of the world.

1.5.1 Catch

The growth rate of Malaysian catch over the decade 1960–70 is fourth in order of magnitude after Thailand, Republic of Vietnam and Taiwan. The two latter countries have percentage-wise a similar growth rate of approximately 240 percent with 215 percent for Malaysia. The catch of Thailand, however, was growing extremely rapidly and the country had reached a seven-fold increase in its 1970 catch over that of 1960. The very spectacular growth of the Thai catch took place in fact after 1965 at an average annual rate of 21 percent, as compared with the respective rate for Malaysia of 8.3 percent. Malaysia, on the other hand, has one of the highest figures in the whole region for per caput average annual fish consumption of 25.1 kg (1970) and is outdistanced only by Singapore and Taiwan with 41.5 kg/caput and 34.8 kg/caput respectively.

An analysis of fish landings 1961–72 in Table A-1 (Appendix 2) shows that the catch of peninsular Malaysia was continuously increasing up to 1968 at a high rate of 12.5 percent over 1961–68 with a very high rate of 19.6 percent over the three last years of the period, i.e. 1966–68. After 1968, however, the landings were declining at an average rate of 2.3 percent during 1969–72. The same trends occurred with respect to Sabah and Sarawak. This is one of the strongest indications that the resources within the present range of operations have, generally speaking, already been over-exploited and are in need of protection through introduction of appropriate resource management means. There are, however, some exceptions from the general situation, as for example the resource potential off the east coast of peninsular Malaysia, and these exceptions are dealt with in this document in a separate section on fishery resources.

Another indication of over-exploitation of the resources are declining catches per unit of fishing gear in operation, as presented in Table A-5 (Appendix 2). An extract from this table, covering only four of the west coast states and two types of gear is presented below:

It should be stressed that the above figures give merely an illustration of the declining catches per unit of gear employed and do not pretend to show the catch per unit of fishing effort developments, since too many factors might affect the above shown figures to use them as a firm support for fully justified conclusions. The main problem and potential margin of error involved in the figures is that many boats have licences to operate various types of gear and, therefore, their operators might have switched their effort to other types of gear or other types of fisheries, which could be revealed only in a very thorough analysis of the problem. On the other hand, however, if the operators really had shifted their efforts toward more productive types of gear, they had good reasons for doing so, and the main one is exactly the catch per unit of gear employed. Therefore, the above table, being only an illustration of the trends, is very informative and may support a general conclusion of declining catches within the present range of operations and at the present level of capital investment. In fact it would be desirable and worth doing a more detailed analysis of the problem, which may prove that the present coastal fisheries is already overcapitalized or, in other words, it employs too many vessels and people to harvest the available resources. This seems to be true particularly for the west coast of peninsular Malaysia.

As can be seen in Table 1, the production per fisherman, both in terms of tons and value, had reached its peak in 1968, sharply fell in 1969, which was a poor year for the Malaysian fishery, and was growing in 1970 and 1971 but it still is below the 1968 level. These figures also are an indication of overcapitalization in Malaysian fisheries in its present state and range of operations.

To sum up, it should be reiterated that the future increase in catch can be achieved only through the extension of the present range of operations. The exception in the general rule is the east coast fisheries and the fisheries of east Malaysia which at present exploits resources capable of sustaining a much higher fishing effort.

It should be stressed that any development of fishing operations has to be implemented gradually, step by step, and followed by continuous, through analysis of fishing effort and outputs in order to avoid both overcapitalization of fisheries and over-exploitation of resources.

1.5.2 Disposition of catch

The majority of the catch is marketed fresh, both in the domestic and export markets. Freezing of fish, still very insignificant (only 1 percent) as compared with total landings, is gaining in importance. Fish is frozen mainly for exports and is confined almost exclusively to shrimp. Table 7 shows the disposition of the catch 1966–71 broken down by major uses.

A substantial portion of the total landings is used for curing, which includes the production of Belachan, salted fish and dried fish. The most common cured product by far is salted/dried fish, occupying about one third of the fish (live weight) used for preserved marine fish products, the next in order of importance being dried fish (27 percent) and Belachan (19 percent).

The fish used for canning constitutes only approximately 2 percent of the total landings and this covers mainly small tuna species and mackerel. A part of the canned tuna is exported, mainly to Canada and the U.S.A.

The item “miscellaneous purposes” reflect fish used mainly as fertilizer, amounting to some 18 000 t live weight a year and another 8 000 to 10 000 t used for reduction to fish meal. The use of fish as fertilizer and for fish meal had taken place with the advent of trawling off the west coast of peninsular Malaysia and substantial landings of trash fish as a by-catch in the trawler fishery. Fish used for fertilizer and fish meal presently constitutes a substantial amount of about 20 percent of the total landings. The use of fish as fertilizer is at present considered very important from the viewpoint of soil improvement for agriculture purpose but, on the other hand, there is no firm evidence that fish so used cannot be replaced by other fertilizers. On the basis of an analysis of fish utilization, one can presuppose that, since the use of fish as fertilizer is only a recent development which follows the increased landings of fish from trawlers, including trash fish, the fish that is spoiled is used as fertilizer in the absence of adequate fish meal production capacity, where the excessive landings of low grade fish could find an outlet. So far as fish meal is concerned, the country is in a great need of this animal feed because of the extremely high importance of pork in the diet of almost half of the population and the resulting increase in production of livestock and poultry. The country at present imports significant quantities of fish meal.

(Source: Fisheries Division)

1.5.3 The state of the fishing industry

Harbours and Infrastructure

Since the large scale adoption of inboard engines in the fifties, fishing boats had by necessity gravitated toward the available natural harbour sites, for example estuaries and bays, in search of sheltered anchorage and deep water. Under the earlier plan periods, the Government constructed numerous jetties and wharves at the major fishing centres to facilitate fish landing by the larger boats. In addition, the Government also installed navigation lights to mark the channel approaches for fishing boats returning at night to base.

Under the current plan (1971–75), the Government has embarked on a programme to construct several fishing harbour complexes, including the full range of support facilities to cater to the large fishing boats. On the west coast of peninsular Malaysia, funds for three harbours have been approved by the Government. Construction of two of these complexes in Kuala Kedah and Lumut (Perak) has already passed the half way mark toward completion. The third complex at Penang is currently on the drawing board but construction is scheduled for completion by 1975. In addition, the Government has completed a fisheries complex in Kuala Trengganu on the east coast of peninsular Malaysia, whilst a similar project is under construction at Kuching in East Malaysia. The five harbour projects are expected to cost approximately $10 million when completed.

For the immediate future, i.e. in the coming Third Malaysia Plan (1976–80), two other fishing harbours will be built on the east coast of peninsular Malaysia (at Chendering and Kuantan) which will be equipped with sophisticated shore support facilities for fishing vessels of up to 200 tons displacement. Predesign investigations have already begun, with the expectancy of their construction being completed by 1977. These two harbours are expected to cost approximately $30 million. The location of the harbours has been selected with an eye to developing the South China Sea fisheries, for which a quasi-government fishing authority has been established to construct and operate a large fleet of vessels.

Cold storage and ice producing capacity

The total cold storage capacity of the Malaysian peninsula as of 31 December 1973 was 13 400 t of fish and approximately 4 000 t of ice. Details regarding the number of plants and their location by states are given in Table 8. It is noted that the cold storage and ice producing capacity is concentrated on the west coast as the result of a relatively well developed fisheries there. The share of the east coast in the total landings is on the order of 26 percent, while only 20 percent of ice production capacity and 3 percent of cold storage capacity is located on the east coast, including the whole state of Johor.

The cold storage plants serve mainly for use for raw material for canning plants and frozen fish (shrimp, tuna) for export.

Fish freezing facilities

The total number of shrimp freezing plants in Malaysia is 40 and they are located in the following states: Penang, 12; Perak, 6; Selangor, 6; Sabah, 7 and Sarawak, 9. The capacity of these plants is not known. In addition, there are a few plants freezing other fish as well as shrimp, however, their number and freezing capacity are not shown in the statistics available. The average annual tonnage of fish frozen in the country is 5 000 t, and this most probably represents the total freezing capacity of the facilities utilized on one shift (8 h/d).

Fish meal plants

The fish meal producing capacity, according to the available statistics, totals approximately 84 t/d, the equivalent of about 420 t of raw material. The number of plants and their capacity by states is as follows:

In addition to the above, there are also two plants in Trengganu State but their capacity or production is not known. All the plants but one are reported to be working on trash fish. The only exception is a plant at Penang which works on tuna offal from a canning plant.

The utilization of the plant's capacity is extremely low and could be expressed as 50 to 80 d/a production at full nominal capacity. This results from several factors, among which the most important are the low unit capacity of the plants and their average old age, contributing to frequent breakdowns and maintenance problems.

It is also worth noting that Malaysia has three animal feed mills with a total daily capacity of 100 t. Two of these, with 90 t/d capacity, are located in the Kuala Lumpur complex (P. Jaya) and produce compound feeding stuffs, using fish meal as one of the raw materials.

Summing up, it should be stated that the fish meal plants operated at present are rather obsolete, dispersed all over the country and unable to increase their output to a nominal capacity capable of meeting even a part of the growing demand for fish meal.

Main domestic and export outlets

Domestic Markets - The urban centres on the west coast of peninsular Malaysia are the main market outlets for fresh fish originating from both the west and east coasts of the peninsula as well as from Thailand and Indonesia. Townships with a population of 50 000 and over, for example Alor Star, Georgetown, Taiping, Ipoh, Kuala Lumpur, Seremban and Malacca, Johor Baharu, Kuantan, Kuala Trengganu and Kota Baharu, Kuching, etc. are the most important traditional markets for fish.

Since none of the urban consuming centres is more than 10 hours by road to the fishing centres, the turnover in the fish transaction is extremely rapid. There are few holding facilities in the wholesale and even retail marketing chain, mainly because of the consumer preference for fresh fish as opposed to frozen fish. On an average day, a particular consignment of fish will have been cleared at daybreak at the wholesale markets and at the retail markets by the evening of the same day, at the latest. Also, as a rule, it may be generalized that whilst the high-priced fish are consumed in the more affluent urban centres, the rural markets absorb the low-priced fish. Thus, at the large urban centres fish are regraded according to their suitability for immediate disposal or for re-consignment to the rural hinterland.

Export Markets - Singapore remains Malaysia's largest customer for ice-packed fresh fish. The market, however, is highly selective and only those products in good condition find acceptance. It is largely true that the Singapore market absorbs the bulk of the Malaysia's export of high-priced fish.

Thailand is a traditional market for the low-priced fish and fish products exported from Malaysia. Indonesia is also a fairly important importer of low-priced salted fish from Malaysia. All in all, the volume and value of the exports are inconsequential.

Exports of frozen shrimp to Europe, North America and Japan are a new phenomenon. In recent years the export of shrimps from Malaysia has increased to 1 168.9 t, valued at $5 698 696 annually. Because of the obvious attractiveness of the trade, a large number of shrimp freezing factories have mushroomed in many areas dealing direct with importers overseas. To date, the Government has not as yet established a mandatory standard for health and quality as well as the inspectorate to exercise strict control over the export items. As a result, product quality is not uniform and the trade is reportedly suffering a serious setback. However, the Government is working toward setting standards and control measures, which will go a long way to safeguard the reputation of the shrimp exports and ensure the orderly growth of the industry. In the meantime, the Government has placed a 5 percent tax on the frozen shrimp exported, the immediate result of which is a further depression in the export trade.

1.6 Tendencies for future development

The present fishery of Malaysia is virtually a coastal one, with its maximum range of operations of 30 miles. Within this limit there are two fairly distinct types of fishery, i.e. the inshore one operating small boats powered with outboard engines and the coastal fishery using boats of a size between 50 and 100 GRT.

The present landings cover the domestic demand for fish at a high per caput annual consumption of 26.6 kg, allowing also for substantial exports of fish and thus contributing to the earnings of foreign exchange for the country. The growth rate of population is, however, very high and should remain relatively high over the next 25 years despite the Government's efforts to arrest it. It is anticipated that the present growth rate of population of over 3 percent will decline over the planned period to below 2.5 percent, as a result of the Government's policy aimed at introducing family planning schemes in the country. As will be seen in the following sections of the study, the population will double over the period of the next 25 years. The, at least, parallel growth of food production is therefore an imperative. Fish is the most important and the cheapest source of animal protein for the population and will maintain its place in the people's diet in the foreseable future, however, thanks to the overall economic development policy of the Government. The per caput income will grow significantly as well. From this point of view alone, the fish landings have to be at least doubled by 1995 to meet the domestic demand.

So far as the resources are concerned, the prospects are optimistic, primarily for fisheries based on the east coast of peninsular Malaysia and in East Malaysia (Sabah and Sarawak). These are the regions with direct access to the South China Sea, where the resources are known to exist and the Phase II of the South China Sea Development and Coordinating Programme should be of valuable assistance in locating the most productive fishing grounds and rendering assistance and advice on the most suitable fishing techniques to harvest the resources. It appears from the analysis of the present state of Malaysian fisheries, that future development of fisheries off the west coast of peninsular Malaysia will be possible only through an extension of the radius of operations up to approximately 1 000 miles, which is a completely new type of operation for both the Malaysian boat owners and fishermen. The development of the east coast fisheries and fisheries of East Malaysia will most likely require two fairly distinct approaches, i.e. (1) the full utilization of underexploited resources within the present range of operations, and (2) extension of operations to the South China Sea beyond the present limits of operations, which is also a new type of operation for the country's fisheries. It has to be stressed that, in view of the rapid development of fisheries in the countries bordering the South China Sea, the time factor is the crucial one in achieving the national fisheries development policy goals of Malaysia. The time factor is of foremost importance because the resources are in fact limited and some of the neighbouring countries have a head start in harvesting them. A substantial delay in the commencement of offshore operations in the South China Sea may jeopardize the whole development programme.

As stated elsewhere in this document, any substantial increase in catch can come only from new vessels capable of exploiting the offshore resources, extended radius of operations and adequately developed harbours and infrastructure facilities.