The preceding two parts of this document are meant to give the basis for the indicative development plan of Malaysian fisheries. The analysis of the present catch and state of the industry indicates that no further increase in catch may be expected from the areas exploited so far and at the present level of capital investment in fisheries and particularly in shore-based facilities. The demand projections, based primarily on the anticipated population growth, indicate that by 1995 the production will have to be more than doubled, as compared with the present figures, in order to meet fully the nutrition needs of the population. The main fisheries development effort will have to be orientated toward new fishing grounds, basically in the South China Sea, and toward the introduction of more modern, new types of boats capable of harvesting resources beyond the present range of operations. This will constitute a meaningful qualitative change in the structure of Malaysian fisheries, both in terms of technical progress and social development of the fishermen's community. The investment programme and its implementation has to warrant a harmonized development of both fleet and shore-based infrastructure facilities to gain the maximum benefits from the capital input. Equally important will be the preparation of adequately trained personnel both at operative and management levels.
The 1973 fish production reached a total of 410 000 t, according to estimates in March 1974. Before the end of the SMP period, i.e. before the end of 1975, the Majuikan1 is going to introduce a significant number of vessels of considerable total catch capacity. Details of the anticipated number of vessels to be introduced and their catch capacity are given below:
| Type of vessels | No. vessels | Catch capacity (t) | Investment cost '000 M.$ | |
| Per vessel | Total | |||
| Trawlers of 30 GRT | 159 | 180 | 28 620 | 11 130 |
| Various boats (multipurpose and purse seiners) | 76 | - | 4 400 | 7 100 |
| TOTAL | 235 | 33 020 | 18 230 | |
1 Majuikan = abbrev. for Laubaga Kemajuan Ikan, i.e. Fisheries Development Authority
The total fish production in 1975 can therefore be assumed as 443 000 t and falls short of the projected demand for 1975 by approximately 100 000 t. In other words, the production falls two years behind the growth in demand with unfavourable repercussions on the foreign trade in fish, i.e., increased imports of fish meal and reduced exports of fish for direct consumption. The gap between demand and production will be widening unless immediate steps are taken to fill it. The steps to be taken include primarily introduction of more modern boats and construction of harbours capable of accommodating the boats. It would be unrealistic to assume that within the short time remaining until the end of 1975 any meaningful efforts could be made to meet projected demand. Thorough, detailed studies on the feasibility of the new vessels, designing, and last but not least important, the capacity of the local shipbuilding yards or possibility of placing orders for new vessels abroad, are factors which would not permit within this extremely short period of time further intensification of the increase in catch capacity of the Malaysian fishing fleet. Two sectors of the national economy may temporarily be affected by this slower than would be desired increase in catch, i.e. exports and fish meal production. The 1975 catch will be sufficient to fully meet the domestic demand for direct human consumption and only some 80 000 t of fish will remain for exports and fish meal instead of the projected 120 000 t. The possible increase of landings by the private sector will be insignificant, if any at all. There may occur some minor fluctuations resulting from natural seasonal variations but it would be difficult to expect the private sector to invest in fleets for two reasons:
Over-exploitation of the coastal resources. As has been discussed earlier, the traditional fishing grounds are now virtually over-exploited and, furthermore, the Fisheries Division has restricted the issuing of new licences in order to protect the resources.
Lack of adequate harbour facilities, which prevents both the private and public sectors from investing in larger, offshore vessels.
As a result of the 1975 total production being below the demand figure and in order to balance these two figures at a certain point in the future, the increase in catch will have to be phased in order to avoid any imbalance between the increasing fleet and development of shore-based facilities, as well as to accumulate funds needed for the projected investment and prepare qualified manpower. The phasing of the fisheries development reflected in production is given below in two alternatives, the first of which is based on a more rapid progress during the first period, the second representing a slightly slower initial development which would be accelerated after 1985.
| Alternative I | Alternative II | |||
| Period | Catch in the last year (t) | Increment (t) | Catch in the last year (t) | Increment (t) |
| 1974–1975 | 443 000 | 33 000 | 443 000 | 33 000 |
| 1976–1980 | 550 000 | 107 000 | 520 000 | 77 000 |
| 1981–1985 | 680 000 | 130 000 | 640 000 | 120 000 |
| 1986–1990 | 790 000 | 110 000 | 770 000 | 130 000 |
| 1991–1995 | 900 000 | 110 000 | 900 000 | 130 000 |
Both alternatives have as an ultimate target the 1995 production of 900 000 t, the difference being in the rate of growth for the particular five-year periods. The ultimate funds required to finance either of the alternatives are the same in terms of present investment cost. The additional critical factor affecting the choice between the two alternatives will be the pace at which the infrastructure will be developed. The term infrastructure in this case refers to harbour facilities, cold storage, processing plants and marketing complexes, as well as roads and means of transportation.
The resources on which the increase in production will have to be based and the strategy for development would be as follows:
| Period | Alternative I (t) | Alternative II (t) | ||||||
| Increase total | Inshore | Offshore | Aquaculture | Increase total | Inshore | Offshore | Aquaculture | |
| 1974–1975 | 33 000 | 30 000 | 3 000 | - | 33 000 | 30 000 | 3 000 | - |
| 1976–1980 | 107 000 | 20 000 | 83 000 | 4 000 | 77 000 | 20 000 | 53 000 | 4 000 |
| 1981–1985 | 130 000 | 20 000 | 104 000 | 6 000 | 120 000 | 20 000 | 94 000 | 6 000 |
| 1986–1990 | 110 000 | 20 000 | 80 000 | 10 000 | 130 000 | 20 000 | 100 000 | 10 000 |
| 1991–1995 | 110 000 | - | 100 000 | 10 000 | 130 000 | - | 120 000 | 10 000 |
| TOTAL | 490 000 | 90 000 | 370 000 | 30 000 | 490 000 | 90 000 | 370 000 | 30 000 |
In both alternatives the basic increase in catch in the consecutive five-year periods will have to come from offshore operations, i.e. fishing grounds beyond 50 miles. At the same time, gradual development of the fisheries within the 50-mile limit will have to follow. It is stressed that the development of Malaysian fisheries has to be implemented parallel with offshore operations (i.e. up to 50 miles from the coastline) and deep sea operations (beyond 50 miles). The necessity of going quickly into the so-called deep sea operations lies in the following facts:
It makes it possible to increase production more rapidly in order to fully meet the demand as soon as possible
Neighbouring countries have already started developing this type of operation
The activities of the SCS Programme Phase II, starting in 1974, will be continued for five years and concentrate on the development of the pelagic fishery, falling into the category called deep sea operations locally, and it is therefore imperative to make full use of the services offered by the Programme.
In further considerations, Alternative II will be taken as the basis for planning, since even a very general analysis of the figures shows that the implementation of Alternative I would be an overambitious task particularly for the Third Malaysia Plan period, the preparational stage for which should be the months remaining until the end of 1975. Furthermore, all the figures have to be considered as indicative, subject to further detailed studies and feasibility analysis.
The number of vessels required to achieve the production target figures for particular five-year periods is given below. The offshore fleet for the purpose of this document are vessels of 150 GRT (both trawlers and purse seiners) with an assumed catch of 750 t/a and the average value of fish of M.$460.-/t (M.$0.27/katty). The inshore fleet after 1975 are vessels larger than 30 GRT with 250 t/a catch capacity and of a unit cost of M.$200 000. The number of fishermen needed to crew the projected fleet is 15 persons for a 150 tonner and 12 persons per boat for the inshore fleet.
| Investment in vessels | ||||||
| 1974–1975 | 1976–1980 | 1981–1985 | 1986–1990 | 1991–1996 | Total | |
| Inshore Boats: | ||||||
| No. of vessels | 235 | 80 | 80 | 80 | - | 469 |
| Investment total* | 19 230 | 16 000 | 16 000 | 16 000 | - | 61 230 |
| Total catch | 33 000 | 20 000 | 20 000 | 20 000 | - | 90 000 |
| Offshore Boats: | ||||||
| No. of vessels | - | 71 | 125 | 133 | 160 | 495 |
| Investment total * | - | 71 000 | 125 000 | 133 000 | 160 000 | 495 000 |
| Total catch | - | 53 000 | 94 000 | 100 000 | 120 000 | 370 000 |
| GRAND TOTAL: | ||||||
| Investment* | 19 230 | 87 000 | 141 000 | 149 000 | 160 000 | 556 230 |
| Catch (t) | 33 000 | 73 000 | 114 000 | 120 000 | 120 000 | 460 000 |
| Value of catch ('000 M.$) | 15 180 | 33 580 | 52 440 | 55 200 | 55 200 | 211 600 |
The average rate of growth in fish production over the next 20 years (1976–1995) is, according to the projections, on the order of 3.5 percent. However, the rate of growth is not even over the whole period, being for 1976–1980 3.2 percent, for 1981–1985 4 percent and for the last ten years of the projections 3.5 percent. The annual average increase in catch for the particular periods is as follows:
| 1976–1980 | - | 15 000 t/a |
| 1981–1985 | - | 24 000 t/a |
| 1986–1995 | - | 26 000 t/a |
The time intervals correspond with the five-year planning cycle for the Malaysian economy as a whole and, therefore, can be easily identified with the consecutive Malaysia Plans. The projected growth of fish production is very high, both by international standards and in comparison with the developments in the Malaysian fisheries, as discussed in previous sections. In order to achieve the target figure for 1995, based on demand projections, these very high rates of growth will have to be attained but modifications regarding figures for the individual five-year periods are possible.
It is assumed that operating costs will constitute 50 percent of the value of fish, while the remaining half will be the return to cover depreciation and profits. It is also assumed that, out of the operating costs, 40 percent (or 20 percent of the value of fish) should be the renumeration of the crew. Under these assumptions the benefits accruing from the fleet development will be as follows:
Benefits to the investor
The pay-back period for the whole fleet investment programme is 5.3 years while the economically useful life of the vessels is anticipated as 15 years.
The benefit/cost ratio over the period of 15 years, where the future cash inflow has been discounted at a rate of 6 percent, is 1.851 and the internal rate of return is 15.7 percent.
The projected development of the fishing fleet, although not particularly labourintensive, is going to create some 11 500 jobs for fishermen, broken down by periods as follows:
| Jobs | ||
| 1974–1975 | - | 1 225 |
| 1976–1980 | - | 2 025 |
| 1981–1985 | - | 2 835 |
| 1986–1990 | - | 2 955 |
| 1991–1995 | - | 2 400 |
| Total: | 11 470 |
Benefits to the fishermen
It is a well known fact that a significant part of the present artisanal fishermen have a monthly average income of M.$40–60 during the monsoon period and M.$60–80 during the non-monsoon period. This is very low when compared with the other sectors of the economy and indicates that mass poverty exists among the fishermen, particularly on the east coast of peninsular Malaysia. The introduction of modern boats will bring a substantial improvement to the economic situation of these fishermen. It is calculated that the average monthly income of those employed on board the new vessels should be on the order of M.$380.
The Fisheries Division is at present preoccupied with the problem of low standards of living of the small-scale fishermen in general and those on the east coast in particular. Various steps have already been taken to improve the socio-economic situation of these fishermen. The programme for construction of small trawlers (30 GRT) started by Majuikan and harbour development on the east coast are the two most important and meaningful elements of the remedial action so far undertaken.
It must be emphasized that the implementation of the comprehensive fisheries development plan will result in further improvement in the socio-economic position of the east coast fishermen and ultimately will bring about complete restructuring of the fishing community from its present artisanal type to a modern industrialized type. The process of restructuring the fishing community should be viewed as the socio-economic result of the implementation of the capital investment programme, as proposed in this document, without other specific development actions regarding small-scale fisheries. Needless to say, that the manpower for the new vessels, harbours and other shore-based facilities constituting the fisheries infrastructure will have to be drawn from the existing community, which now suffers from underemployment or disguised unemployment, not to speak of low income because of very low productivity of labour and capital.
The summary of manpower requirements for the implementation of this plan, as shown above, seems to indicate that, in the last years of the plan, there may even occur a shortage of labour, because other industries will also develop on the east coast and will attract part of the labour force. The benefits accruing to fishermen from the implementation of this development plan are obviously measurable as an increase in their income but, what is equally important, these benefits also entail social upgrading for the fishermen through the acquisition of new and higher skills, a higher average level of education and thus higher social position in the Malaysian society.
Areas for development
From the resource surveys conducted so far and the documentation at present available, it is clear that the main development effort must be concentrated on the east coast of peninsular Malaysia and on East Malaysia. The South China Sea is the only area from which the bulk of the increase in catch can come. The fishing grounds off the west coast are at present already near overexploitation and only little scope is left for further expansion of the fisheries, except of possible deep-sea operations.
The concentration of development effort on the east coast of peninsular Malaysia is also of primary importance from the socio-economic point of view, since the fishing communities there are among the poorest in the whole country.
Both factors, proximity to the fishery resources and socio-economic conditions, indicate the importance of developing fisheries in the eastern areas of the country.
A number of activities will have to be carried out in order to make possible the implementation of the fleet development programme. The most important are the following: selection and construction of the optimum vessels, training of adequately prepared crews, construction of harbours and ascertaining efficient marketing of the fish caught.
Vessels
As has been pointed out earlier, the selection of the right type of vessels to be introduced under the development plan is of utmost importance to its success. It is impossible at this stage to accurately define the type and size of vessels, since it is a job for specialists who will have to thoroughly examine the conditions under which the vessels will work and design them accordingly. In order to introduce the first of the vessels to come in the first years of the Third Malaysia Plan, the preparatory work, including feasibility studies, should start immediately and at least before the end of 1974. The other problem connected with fleet development is the capacity of existing shipbuilding yards to build vessels to design specification, larger in size and more sophisticated than ever built by any of the shipbuilding yards.
There is also the problem of capacity of the shipbuilding yards as to the number of vessels of a given size that could be built, say, within a year, and the prospects for increasing the shipbuilding capacity of the yards.
The other possibility of increasing the number of boats is acquisition abroad but, also in this case, because of the size of the orders, the preparatory work would have to be started immediately.
Crews
Once the vessels are purchased they will have to be manned with adequately trained and skilled crews. The main source of ordinary crew members (deckhands) may be for some time the existing fishermen community. According to a recent survey carried out by the Fisheries Division, there is a surplus of 6 400 fishermen on the east coast and 12 900 fishermen on the west coast of peninsular Malaysia.
The key posts, such as skippers, deck officers and engineers, on the new vessels will have to be filled with people who have adequate qualifications to operate them - qualifications, which are not typical of the present inshore fishermen. On the basis of the projected number of boats to be introduced and assuming that three men per boat should have qualifications higher than the present average, the number of people to be trained is as follows:
| 1976–1980 | 450 |
| 1981–1985 | 620 |
| 1986–1990 | 640 |
| 1991–1995 | 500 |
The average annual demand for qualified crews will then be between 90 and 125. The fishermen Training Institute at Penang, with its capacity to train approximately 80 persons annually both as skippers and engineers, is ideally suitable for this purpose. It is emphasized that training of crews is, in a sense, more difficult than acquisition of boats. It is, therefore, recommended that the needs for qualified crews be analysed and the Institute directed toward training this personnel. A major problem the Institute's graduates are facing at present, which does not help to attract people to the fisheries profession, is lack of employment opportunities.
The first vessels commissioned by Majuikan have been crewed with traditional untrained but experienced fishermen recruited from the existing community and to a lesser degree only with the Institute's graduates. Majuikan, as the Government's development agency, should employ graduates of the Government's Institute on a priority basis, in order to give employment to the newly trained people and to form Majuikan's own reserve of experienced skippers and engineers as a nucleus of crews for the future, more modern vessels.
Harbours
Neither the east coast of peninsular Malaysia nor East Malaysia have harbours capable of accommodating fishing vessels of approximately 150 GRT. Since preparations for the Kuantan and Trengganu fishing harbours are underway, it is strongly recommended to analyse the requirements of the harbours from the viewpoint of the future fleet and at the same time to carry out studies on the types of vessels to be employed in order to coordinate these two efforts and prepare the harbour facilities for the fleet to be shortly introduced.
Lack of adequate harbours where the new vessels could be accommodated will certainly jeopardize or at least significantly delay the possibilities of developing offshore operations.
Marketing
Infrastructures for marketing will also have to be developed parallel to the increase in landings. This initially involves marketing complexes in the landing places, means of transportation, retail outlets, ice production, etc. Introduction of quality standards and their implementation, together with quality inspection, instituted by the Fisheries Division, is another element to be introduced, together with the overall development programme.
The South China Sea Programme is due to start its Phase II-operations by the middle of 1974 for a five-year period. The top priority objective of the Programme is “to accelerate the commercial development of pelagic fisheries” including determination of species, school locations and seasonality, as well as preparation of feasibility studies to promote programme of investment. The Programme will also assist the participating countries in the development of other types of fisheries, like trawling and bottom longlining. Furthermore, the Programme will be of assistance to the countries concerned in the analysis of training needs and streamlining their training activities. Finally, one of the Programme objectives is to assist the countries in setting up their marketing structures.
In addition to the SCS Programme, Malaysia now has a number of consulting agencies operating in the country under bilateral arrangements, whose activities are aimed toward achieving the same development policy objectives.
It is, therefore, extremely important to make full use of the assistance potential available to the country and properly coordinate the efforts of the various agencies to avoid overlapping, waste of funds and perhaps unbalanced sectorial development.
The other source of the fish production to be achieved is aquaculture. The potential for developing aquaculture, particularly in the mangrove swamp areas, is estimated at 150 000 ha. Aquaculture can contribute significantly toward increasing the production of valuable species of prawns, fish and shellfish (bivalves and oysters) in the country. At present only 335 ha are under this type of aquaculture.
It would be impossible to immediately fully utilize the existing potential of 150 000 ha for aquaculture purposes. The production projected to come from this source is 30 000 t of fish by 1995. It has been assumed that the production from one hectare is 1 200 kg and the investment input needed to construct the farming facilities is M.$7 500/ha. The value of fish has been assumed as M.$3.50/kg (M.$2.00/katty) on the basis of current wholesale prices for premium grade fish. The basic figures for the consecutive five-year periods are as follows:
| Year | Production (t) | Area (ha) | Investment cost ('000 M.$) | Value of production ('000 M.$) | Return ('000 M.$) | Employment (No. persons) |
| 1976–1980 | 4 000 | 3 350 | 25 125 | 14 000 | 8 400 | 5 025 |
| 1981–1985 | 6 000 | 5 000 | 37 500 | 21 000 | 12 600 | 7 500 |
| 1986–1990 | 10 000 | 8 325 | 62 438 | 35 000 | 21 000 | 12 500 |
| 1991–1995 | 10 000 | 8 325 | 62 438 | 35 000 | 21 000 | 12 500 |
| TOTAL | 30 000 | 25 000 | 187 500 | 105 000 | 63 000 | 37 525 |
For the purpose of calculating employment opportunities, it has been assumed that 15 persons are needed to service 10 ha under aquaculture.
The aquaculture development programme provides very favourable results as far as employment opportunities are concerned. The return that can be expected from this source is also very high, provided the farms are properly operated by skilled personnel.
The pay-back period for the projected programme is only three years, the internal rate of return being 33 percent and social benefit/cost ratio 3.83.
Also in this case, before the development programme can be launched, detailed feasibility studies for particular projects will have to be carried out. Assistance may be sought from the South China Sea Programme in determination of particular aquaculture systems most likely to be profitable and in preparation of pre-investment or feasibility studies for aquaculture expansion and development. The Programme will also be capable of assisting the country in other fields related to aquaculture, as well as in training of technical personnel.
During the remaining period of the Second Malaysia Plan (1974–1975), the construction of three harbours on the west coast (Kuala Kedah, Batu Maung and Lumut) will be completed and two harbour complexes at Kuantan and Kuala Trengganu on the east coast will be in the pipeline. The harbour facilities on the east coast are to cater to the operational requirements of the existing fishing fleet and fleet expansion resulting from the trawl, purse seine and multipurpose fishing programmes to be launched by Majuikan. At this point it has to be stressed again that the harbour construction programme for the east coast should take into consideration the requirements of the new offshore fleet to be introduced in the near future and particularly during the Third Malaysia Plan (1976–1980). It is strongly recommended that at least one of the two-harbour projects in the pipeline (Kuantan or Trengganu) should be designed and constructed to cater to the needs of the new, larger boats. This also points out the need for immediate feasibility studies on the vessels and a complex project, including harbours, fleet and related facilities. Unless these studies are carried out in the course of the next twelve months, the whole development programme will immediately be considerably behind schedule and the shortage of fish to meet the demand will become an accomplished fact. In terms of volume the gap between production and demand may rise to some 150 000 t of fish by 1985. It is easier to purchase larger boats or introduce them through a joint venture company with a foreign partner than to quickly construct a harbour, and lack of adequate harbours may hamper the expansion of operations beyond the present range.
The basic harbour development proposal will entail the completion of harbours already in the pipeline plus construction of four additional ones, two of which should be built on the east coast of peninsular Malaysia and the other two for Sabah and Sarawak - one harbour for each province.
The estimated capital requirements for the harbour construction programme and employment opportunities resulting from it are as follows:
| Year | No. of harbours | Investment ('000 M.$) | Employment |
| 1974–1975 | - | 7 000 | 300 |
| 1976–1980 | 1 + continuation | 60 000 | 300 |
| 1981–1985 | 1 | 30 000 | 300 |
| 1986–1990 | 1 | 30 000 | 300 |
| 1991–1995 | 1 | 30 000 | 300 |
| TOTAL | 157 000 | 1 500 | |
No returns have been anticipated from the harbour development programme, which will be implemented by the Government as the essential element of the infrastructure to be created, in order to facilitate the fish production development. However, the investment input required will be included in the assessment of the overall benefits accruing to the economy from fisheries development.
The present production of ice in the country is very limited and so is its use for preservation of fish. In order to improve the quality of fish delivered to the market and eliminate waste resulting from improper handling techniques, the production of ice will have to be increased to cater for the landings of fish. It is assumed that, in order to preserve the fish, 1 kg of ice is needed for 1 kg of fish. The production of ice, investment needs, returns and employment opportunities will, therefore, be as follows:
| Year | Increase in fish production (t) | Demand for ice (t) | Daily production at 350 days/year | Investment ('000 M.$) | Return ('000 M.$) | Employment |
| 1974–1975 | 33 000 | - | - | - | - | - |
| 1976–1980 | 77 000 | 110 000 | 315 | 7 900 | 1 650 | 50 |
| 1981–1985 | 120 000 | 120 000 | 340 | 8 500 | 1 800 | 55 |
| 1986–1990 | 130 000 | 130 000 | 370 | 9 250 | 1 950 | 60 |
| 1991–1995 | 130 000 | 130 000 | 370 | 9 250 | 1 950 | 60 |
| TOTAL | 490 000 | 490 000 | 1 400 | 34 900 | 7 350 | 225 |
The price of ice has been taken as M.$30/t. On the basis of the above figures, the pay-back period is 4.7 years, the internal rate of return 18 percent, and the benefit/cost ratio at 6 percent over 15 years is 2.04.
The required cold storage capacity has been assessed as 7 percent of the increment in annual landings. It is natural that, because the Malaysian population prefers to eat fresh fish, which is the result of traditional consumption patterns, the majority of the incremental landings will also be marketed fresh. On the other hand, seasonal fluctuations in landings will have to be offset by freezing a part of the fish and marketing it whenever it may be needed in frozen form. Also the ever-improving standard of living of the people may contribute to the gradual shift in demand toward convenience food (food requiring minimum preparation at home) and this will result in growing demand for frozen processed or semi-processed fish. The projected cold storage capacity and its phased introduction would be as follows:
| Year | Cold storage capacity (t) | Investment ('000 M.$) | Return ('000 M.$) | Employment |
| 1976–1980 | 8 000 | 12 000 | 1 540 | 70 |
| 1981–1985 | 8 000 | 12 000 | 1 540 | 70 |
| 1986–1990 | 9 000 | 14 000 | 1 720 | 80 |
| 1991–1995 | 10 000 | 15 000 | 1 900 | 90 |
| TOTAL | 35 000 | 53 000 | 6 700 | 310 |
The price of storing one ton of fish per month has been assumed at M.$40 which is slightly lower than prices charged at present by the private sector.
The pay-back period is eight years and the economically useful life of the cold storages is 20 years. The internal rate of return is 11 percent and the social benefit/ cost ratio is 1.45.
The present fish canning potential of the country is insignificant. There is one processing plant under construction and it is due to be completed by the end of 1975.
The estimated production over the next 22 years and elements related to it are given below:
| Year | Canned product (t) | Investment ('000 M.$) | Return ('000 M.$) | Employment |
| 1974–1975 | 2 000 | 4 000 | 1 600 | 300 |
| 1976–1980 | 2 000 | 4 000 | 1 600 | 300 |
| 1981–1985 | 2 000 | 4 000 | 1 600 | 300 |
| 1986–1990 | 3 000 | 6 000 | 2 400 | 400 |
| 1991–1995 | 3 000 | 6 000 | 2 400 | 400 |
| TOTAL | 12 000 | 24 000 | 9 600 | 1 800 |
The value of production has been assumed as M.$3 000/t, which corresponds to 0.63 M.$/can of 200 g. The costs of production have been taken as 73 percent of the value, on the basis of the cost element estimates. The cost of raw material has been taken as M.$460/t - exactly the same as the value of catch.
Under the above conditions, the pay-back period of the investment is 2.5 years, the internal rate of return 34 percent and the benefit/cost ratio 3.89.
The demand for fish meal in 1995, according to the projections, will be 21 400 t, the present production being in the order of 2 400 t/year. Recent estimates (March 1974) worked out by the Ministry of Agriculture, show the total demand by 1995 as 22 200 t. The difference between both projections is insignificant and, in further projections, the increment to be achieved will be taken as 19 000 t in 1995. The following Table shows the respective details.
| Year | Fish meal product (t) (increment) | Raw material required (t) | Daily capacity at 300 days/year | Investment ('000 M.$) | Return ('000 M.$) | Employment |
| 1974–1975 | 2 400 | 12 000 | 40 | 2 400 | 468 | 15 |
| 1976–1980 | 9 000 | 45 000 | 160 | 9 000 | 1 755 | 50 |
| 1981–1985 | 2 800 | 14 000 | 50 | 2 800 | 546 | 15 |
| 1986–1990 | 2 400 | 12 000 | 40 | 2 400 | 468 | 15 |
| 1991–1995 | 2 400 | 12 000 | 40 | 2 400 | 468 | 15 |
| TOTAL | 19 000 | 95 000 | 330 | 19 000 | 3 705 | 110 |
The above Table presents the modified (more realistic) version of the production potential, which is different from the original demand projections. Below is the comparison of the figures:
| Year | Demand projections | Investment projection | ||||
| Total | Increment | Capacity required/ day | Total | Increment | Capacity required/ day | |
| 1974–1975 | 12 500 | 10 100 | 170 | 4 800 | 2 400 | 40 |
| 1976–1980 | 14 500 | 2 000 | 35 | 13 800 | 9 000 | 160 |
| 1981–1985 | 16 700 | 2 300 | 40 | 16 600 | 2 800 | 50 |
| 1986–1990 | 19 000 | 2 300 | 40 | 19 000 | 2 400 | 40 |
| 1991–1995 | 21 400 | 2 400 | 40 | 21 400 | 2 400 | 40 |
The basis of the investment projection is that it would not be possible to construct any additional reduction plants before the end of 1975 but, by the end of 1980, the country should be already self-sufficient in fish meal.
The demand for raw material, according to the investment projections, is 95 000 t by 1995, out of which 12 000 t would come from the canning plants and the remaining 83 000 t will have to be supplied by the vessels and most likely it will be trash fish. The cost of raw material has been assessed at M.$75/t (5 cents/katty) and the price of fish meal as M.$670/t, according to the present wholesale price.
The pay-back period, under the above assumption, is 5.3 years. The internal rate of return 16 percent and the benefit/cost ratio 1.82 over a period of 15 years.
Table 31
Summary of investment, return and employment 1974 – 1995
| Investment and Return = Million M.$ | |
| Employment = Number of persons | |
| * Return per year |
| Total 1974 – 1995 | 1974 – 1975 | 1976 – 1980 | 1981 – 1985 | 1986 – 1990 | 1991 – 1995 | |||||||||||||
| INV. | *RET. | EMPL. | INV. | *RET. | EMPL. | INV. | *RET. | EMPL. | INV. | *RET. | EMPL. | INV. | *RET. | EMPL. | INV. | *RET. | EMPL. | |
| Fishing fleet | 556.23 | 105.8 | 11 470 | 19.23 | 7.6 | 1 255 | 87.0 | 16.8 | 2 025 | 141.0 | 26.2 | 2 835 | 149.0 | 27.6 | 2 955 | 160.0 | 27.6 | 2 400 |
| Aquaculture | 197.5 | 63.0 | 37 525 | - | - | - | 25.1 | 8.4 | 5 025 | 37.5 | 12.6 | 7 500 | 62.4 | 21.0 | 12 500 | 62.5 | 21.0 | 12 500 |
| Ice plants | 34.9 | 7.5 | 225 | - | - | - | 7.9 | 1.7 | 50 | 8.5 | 1.8 | 55 | 9.25 | 2.0 | 60 | 9.25 | 2.0 | 60 |
| Cold storage | 53.0 | 6.7 | 310 | - | - | - | 12.0 | 1.5 | 70 | 12.0 | 1.5 | 70 | 14.0 | 1.8 | 80 | 15.0 | 1.9 | 90 |
| Harbours | 157.0 | - | 1 500 | 7.0 | - | 300 | 60.0 | - | 300 | 30.0 | - | 300 | 30.0 | - | 300 | 30.0 | - | 300 |
| Canning | 24.0 | 9.6 | 1 800 | 4.0 | 1.6 | 300 | 4.0 | 1.6 | 300 | 4.0 | 1.6 | 300 | 6.0 | 2.4 | 450 | 6.0 | 2.4 | 450 |
| Fish meal | ||||||||||||||||||
| plants | 19.8 | 3.7 | 110 | 2.4 | 0.5 | 15 | 9.6 | 1.7 | 50 | 3.0 | 0.5 | 15 | 2.4 | 0.5 | 15 | 2.4 | 0.5 | 15 |
| GRAND TOTAL | 1 032.43 | 196.3 | 52 940 | 32.63 | 9.7 | 1 870 | 205.6 | 31.7 | 7 820 | 236.0 | 44.2 | 11 075 | 273.05 | 55.3 | 16 360 | 285.15 | 55.4 | 15 815 |
| Pay back period for the total investment | = | 5.25 years |
| Internal rate of return | = | 16% (over 15 year period) |
| Social benefit/cost ratio at 6% interest | = | 1.85 |
| Investment per ton of fish produced (live weight) over 15 years | = | M.$ 140 |
Table 31 summarizes the quantifiable benefits the national economy will derive from the implementation of the development plan. The increment in catch over the years 1974–1995 is 490 000 t, which is also the target figure for the 1995 total demand for fish for direct human consumption, exports and fish meal. The implementation of the plan will make the country self-sufficient in fish and allow for a moderate increase in exports above the present level.
The basis for the computation of the economic indicators shown in the Table are the specific calculations presented with regard to particular spheres of activity, with the only exception being that the indicators in the Table have been calculated on a 15 year basis, although some of the elements will have a useful economic life of 20 years or more.
The direct effects have been computed on a global basis, which includes both investment and return. However, no return has been projected on the investment in harbours, which is based on the assumption that harbour facilities will be provided by the Government either free of charge or at low charges. The investment cost in harbours has been included in the summary since it has to be included in a benefit/ cost analysis from the national economy point of view.
The pay-back period for the total investment is 5.25 years, and the internal rate of return is 16 percent.
The social benefit/cost ratio over a period of 15 years, discounted at a rate of 6 percent, is 1.85. In other words, the returns to accrue over 15 years, discounted at a rate of 6 percent will total approximately M.$1 900 million.
The employment effect of the plan will total approximately 53 000 new jobs. The average investment cost to create one job is therefore M.$19 500. It should be noted that in fisheries, technological requirements often determine the balance between labour and capital. For certain types of fishing, one must use certain types or sizes of equipment to be able to fish at all. For example, the recently introduced 30 GRT trawlers are not suitable for operations in the South China Sea beyond 30 miles off shore.
The implementation of the plan should have its positive net foreign exchange effect, which is the amount of foreign currency freed by import substitution and increased exports. However, this effect may be partly diminished by possible imports essential for constructing vessels, harbours, etc. It is not possible to quantify the possible imports at this stage because of lack of essential information.
Another sphere of positive effects of the fisheries development are social factors, which have to be taken into account. One of the most important factors in this respect is the impact of increased fish supplies in nutrition of the population. This has been discussed earlier and the quantifiable expression of it is the total demand for fish and fish products. Fish, one of the most important diet components of the population, is also the cheapest source of animal protein. The growth in population requires that the total supply of animal protein keep pace with the demand, in order to at least meet the present ratio of basic food demand and further improve the nutrition level.
The average income of the population deriving its livelihood from fisheries will increase and contribute to a higher economic standard of living of the population.
Fisheries development will also have its positive effect on skill formation, both through direct employment in fisheries and through employment in sectors related to fisheries. This social factor will result in upgrading the general education and skill of the people.
Finally, one has to point out the multiplier effect of fisheries development, which will be felt both in industries directly related to fisheries, such as boatbuilding and repairing yards, transport, constructions, etc., and in industries producing goods for general consumption, mainly durables (TV sets, radios, furniture, cars, etc.).
The implementation of the overall development programme will require substantial funds, averaging some M.$47 million/year, over the period of 22 years. A major portion of the funds required will have to come directly from the Government's budget, but all other sources of funds will have to be utilized.
The unquestionable responsibility of the Government is to create the infrastructure essential for fisheries development and this embodies harbours, research, training, transportation facilities, etc. Due to the insufficient capital formation capacity of the fishermen's community and the commonly accepted need for accelerated fisheries development as an element of the Government's policy aimed at restructuring the society (as spelled out in the New Economic Policy of the country), Government policy is to allocate substantial funds from its budget for investment in the fisheries sector through semi-governmental organizations such as Majuikan. In practical terms, this means indirect Government involvement in financing the development programme as far as purely commercial activities are concerned, i.e., fishing, processing, cold storage and marketing.
Irrespective of Government involvement, both direct and indirect, in the financing of investment, the overall policy of the country is to create a favourable institutional climate and facilitate participation of the local pricate sector, as well as joint ventures with foreign capital, in the implementation of the fisheries development plan, etc.
The capital formation capability of the fishermen in the areas to be developed, i.e., east coast of peninsular Malaysia and East Malaysia, is negligible. Therefore, the artisanal fishermen cannot be expected to participate financially in the investment programme, in spite of the fact that they are the ones to benefit as far as the socio-economic aspect is concerned. The Government must decide how far the private sector in general is to be involved in the implementation of the programme and to reap the benefits of their financial and enterpreneural involvement. The advantages of the private sector's participation in the investment programme have to be seen mainly as a source of funds which may be attracted to fisheries. The private sector is also very flexible as far as the introduction of new technologies is concerned and in marketing the products. This would also resolve a part of the business management problems.
In order to attract the private sector to fisheries, the Government would have to create a favourable climate for private investment in fisheries, including the availability of credits, taxation policy, direct Government investment in harbours and infrastructure, training of fishermen, licensing policy, etc.
The other possibility of fairly quick implementation of the development plans are joint venture companies with foreign partners.
The advantage of having foreign companies entering into joint ventures with local capital, whether private or public, is as a source of funds, immediate import of knowhow, skilled management provided by the foreign partner, easy acquisition of vessels and gear and access to foreign markets. In this case the Government would also have to create a favourable institutional climate for foreign capital participation in fisheries, as well as the physical facilities, the same as for the private sectors.
There is no doubt that the Government's direct involvement in funding will be the only major thrust toward commercial fishery development for some years to come. The Government's executing agency is the Majuikan, which, together with the Fisheries Division, will have to shoulder the main load of development activities. Since Majuikan, according to its statutes, is allowed to enter into joint ventures with local and foreign capital, this seems to be one of the important avenues for the plan's implementation. However, the structure and functions of Majuikan would have to be further clarified and its staff strengthened to comply with its future functions as the Government's development authority and the main channel through which the Government funds will be directed.
In addition to all possible sources of international bilateral assistance, the Government now has at its disposal the services which the South China Sea Programme will provide to its member countries. The SCS Programme proposals concentrate on four primary action-oriented programmes:
Pelagic fisheries development
Demersal fisheries development
An expansion of crustacea and mollusc output
An expansion of the production of aquaculture, particularly of the marine and brackish waters
In addition to the above, a series of supporting activities are included in the SCS Programme, among which the most important for commercial fisheries development are: research on stocks; design of controls to limit overcapitalization and overfishing, and to maximize net returns; clarification of legal and institutional requirements to ensure rapid commercial development; the determination of the vessels and fishing gear required in commercial activity and service facilities (harbours, markets, ice).
The activities of the SCS Programme will result in preinvestment feasibility studies of the recommended development projects. Phase II of the Programme, with a five year duration, is due to start in mid-1974. Thus, the assistance the Programme will be able to render to the member countries is very timely for Malaysia. Details of the activities can be found in the respective document submitted by the SCS Programme to the Government.
The very complex activities that will have to be pursued require extremely good coordination at the Fisheries Division level. This, as well as other crucial factors affecting the fisheries development, are discussed below.
Training requirements
As stated earlier, the implementation of the development plan will require a considerable number of adequately trained vessel operators. Malaysia is in a very advantageous position, having the Fishermen Training Institute in Penang and two Marine Fisheries Training Centres in Kuala Trengganu and Penang. Those trained at these institutes will require at least another two years of practical work at sea to become fully reliable skippers or engineers.
It can be assumed that three fully qualified officers (skipper, engineer and one more officer) will need to be employed on board the vessels to meet the required safety standards and for full efficiency of the vessels. It is absolutely essential that a detailed staff development plan be prepared and the training of officers started early enough (almost immediately) to meet the future demand for adequately qualified officers. The number of persons trained, divided by specializations needed, should be geared to the needs of the fleet to be introduced. The ordinary crew members (deck hands) may be found among the present artisanal fishermen, but they may also require some training to upgrade their qualifications and fit them for the requirements of the fleet to be introduced.
One problem must be solved immediately and this is the employment of graduates of the Penang institute. As has been pointed out by the Joint UNDP/FAO Review Mission, out of the first 51 graduates, eight have yet to be employed, the Penang Training Institute has absorbed ten of them, ten have been employed in East Malaysia, and only 12 have been employed by Majuikan. The remaining 11 are employed with other government agencies. A substantial part of the graduates has thus not been employed according to their qualifications and they may be lost for fisheries. The problem of employing these newly trained people requires urgent attention. It is worth considering that the graduates be employed by Majuikan on a priority basis as a nucleus of its future “officer corps”. The Penang Training Institute could also be used (possibly jointly with MARA) to train boatbuilding technicians up to a level proficient enough to reach the lines and further certain special principles involved in the construction of fishing vessels in conformity to the layout.
Another important problem is the lack of qualified business managers for the Majuikan's operations. An attempt has been made to resolve the problem through the assistance requested from the Asian Development Bank. This may help in the immediate future, but also in this respect a plan for upgrading the qualifications of managerial staff should be worked out and implemented. One of the possible ways would be specific business management courses organized by the local universities as a normal post-graduate training routine, as well as fellowships abroad. The programme of the courses should cover management techniques, business administration, economics, etc. The Government may also wish to reinstate the UNDP technical assistance request for Majuikan which it had submitted earlier, consisting of key advisory positions. There is no doubt that Majuikan will be the only major thrust toward commercial fishery development for some years to come, and its success or failure will have a profound repercussion on the whole fishery development programme.
Research
Malaysia has a well equipped Marine Fisheries Research Institute at Penang. Research in freshwater fish culture is the responsibility of the Malaysian Agriculture and Development Institute (MARDI), an agency under the Ministry of Agriculture. So far the Penang, MFRI, has been concentrating its work on applied research in biology, monitoring of the resources and partly on fishing techniques. The results of the research are conveyed to the fishermen through the extension officers of the Fisheries Division.
The implementation of the fisheries development programme requires further strengthening of the MFRI activities in applied research being done so far, but it also requires that new activities be taken up by the institute for the benefit of the developing fisheries industry. These activities are applied research in fish processing technology, further development of research in fishing techniques and techno-economic studies of marketing problems.
It is emphasized that all the research activities should be truly applied research in close collaboration with the fishing industry. The broadening of the research activities of the institute will require substantial strengthening of the institute's staff in terms of both numbers and qualifications. A fish processing research station is now operating at Kuala Trengganu assisting the State Economic Development Corporation and Majuikan in the implementation of a fish canning project. This station is virtually a pilot plant demonstrating to the potential Malay enterpreneur the type of production which may be taken up and the type of technology best suited for the country's needs. There is also a Food Technology Institute in Malaysia whose responsibility is also to do research in processing of fish. The MFRI at Penang could collaborate with the two institutions in public tests of the products meant for the Malaysian market.
Some of the techno-economic studies on fish marketing are presently the responsibility of Majuikan. It would appear that, for the sake of economy, coordinating and facilitating the implementation of the research findings of these activities should be attached to and carried out by the MFRI at Penang.
The MFRI activities in the specific fields should be concentrated on:
Biology - monitoring of the resources, stock assessment and localization of abundant resources to be harvested by the fishing fleet. Current analysis of the productivity of the resources should be carried out at the same time, in order to protect them from overfishing.
Fish processing technology - orientated toward establishing the type of products which can be produced for the domestic market from locally available fish (both canned and preserved products) through carrying out public tests.
Fishing techniques - orientated toward finding the most suitable and efficient type of gear to be used in particular types of fishing.
Marketing - studies should be concentrated on the acceptability of specific fish and fish products by the consumers, price levels for particular products and income/price elasticity of demand studies, and technical aspects of marketing, e.g., packing, transportation, storage.
Research in brackish water and marine aquaculture.
The above modifications in the institute's activities, as well as the improvement in the availability of research findings for the industry would require minor changes in the structure of fisheries administration, which will be discussed in the following section.
Coordination of development
In order to have smooth and undisturbed development of the particular sectors constituting the fisheries industry of the country, special attention will have to be given to coordination both within the Fisheries Division and with other sectors of the national economy.
Inter-Divisional coordination:
Several parties will be involved, as at present, in the implementation of the development programmes. These would include the Fisheries Division, Majuikan, UNDP/FAO, bilateral assistance agencies and possibly joint ventures.
Some of the parties involved may be dealing, for example, with vessels, while others with harbours, cold storage facilities, etc.
Uncoordinated or inadequately coordinated activities of the parties concerned may lead to imbalanced development and create bottlenecks difficult to remove. It may also happen that one area may become over-invested, while the money and effort would have been needed in another area.
It is therefore recommended that a new service be created within the Fisheries Division, which would be responsible for:
The head of the service should be a very senior officer both in rank and qualifications, and it is recommended that he be responsible directly to the Director General - Fisheries. The proposed title of the post would be: Assistant Director General - Special Duties - Development Planning and Coordination. He should have under him a group of economists and engineers capable of evaluating the investment proposals, controlling the implementation of projects, providing efficient liaison with foreign assistance agencies and supervising the research and extension work. The head of the service should be in close contact with the Economic Planning Unit, Treasury and other government bodies responsible for planning, financing and supervising the development activities.
The present structure of the Fisheries Division, which is adequate for the traditional scope of activities, would not be adequate for the implementation of the development plan and should be modified.
It would also be worthwhile to consider entire fisheries complexes entailing fleet, harbour and other shore-based facilities as a method for implementation of the plan.
Inter-agency coordination:
The direct responsibility for the implementation of the development plan will rest with the Fisheries Division, but the Division must be given the means to implement the plan. Besides the financial means required for the implementation of the development plan, many other basic problems will have to be resolved. These are inter alia:
The traditional small boatbuilding yards would not be capable of constructing boats suited for offshore operations. It must be clarified at the government level as to whether Malaysian boatbuilding yards will be able to construct vessels for these fisheries. Should the present boatyards not be able to produce such boats, either new yards have to be constructed or the fishing boats will have to be purchased abroad.
The introduction of the projected fleet will call for substantial supplies of netting material and net producing capacity. Further in-depth studies are recommended to assess the demand for nets and ways of meeting the demand, either through Malaysian net factories or through imports.
Construction capacity for harbours, cold storages and marketing complexes would also have to be analysed.
Training of officers and managers for the fishing industry will have to be organized.
Gearing up the institutional structure of the country and particularly the institutions dealing with fisheries to the implementation of large scale development programmes in fisheries will have to take place.
The above mentioned problems and numerous others which will come out in more detailed studies are not the direct responsibility of the Fisheries Division but are important for the implementation of the development plan and will have to be resolved. It is recommended that studies on elements vital to fisheries development be started as soon as possible and be continued parallel to more detailed studies on the specific development projects.
It would be unwise to increase catches without carefully considering practical methods for preservation of the catch at sea, at the landings, during transport, and at the markets and processing plants. Fishing is only the first operation in the chain linking producer and consumer, and the catch must reach the consumer in an acceptable form. Even where an existing fishery is being enlarged this may cause problems. The market in the adjacent coastal region may already be saturated and wider distribution will not be practical without improvements in preservation techniques. Where an entirely new fishery is being established, unexpected problems may be encountered, such as lack of skill and equipment, unacceptability of the product and deficiencies in storage, processing and transport facilities.
Technical expertise will be needed, for example, to specify efficient methods for chilling and/or freezing at sea, for handling and refrigerating bulk fish from seiners, for processing and packaging at the plants and for refrigerating the products during overland transport. Extension of fishing efforts into the South China Sea will require larger boats and more sophisticated methods for catch preservation, which will be needed to effectively utilize the new fisheries resources. The continuing development of a rationalized and efficient industry will require government intervention and the support of international agencies, not only to initiate resource surveys, exploratory fishing operations and fleet development, but also to ensure that handling and preservation of the catches is carried out efficiently to provide maximum benefits to the industry.
In terms of market potential, there are several types of catches, each of which must be handled somewhat differently, depending on the eventual method of utilization. The most important of these are:
Export quality fish and shellfish - This category includes tuna, shrimp, lobster and select species of fish. Foreign investment, usually in the form of joint ventures, is readily available for this type of enterprise, which also can attract local capital. Products of this type or class must be chilled and frozen soon after capture, and equipment for freezing at sea is often required at an early stage in the development of an industry. Beyond a certain distance from the home port, it may no longer be economical to stow fish in ice, and freezing at sea becomes increasingly attractive technologically, although not necessarily economically.
High quality fish - For restaurants, and export to neighbouring countries. Growth of tourism and the increase in numbers of international hotels and restaurants in the area must increase the demand for high quality seafood. The introduction of modern retail outlets (supermarkets) will also require supplies of frozen, packaged fish. For a fresh fish marketing operation, the technological requirements are much more demanding in warm climates than elsewhere. The use of ice, insulated and refrigerated transport facilities, and rapid methods of distribution are essential for success. Two basic requirements for a fresh fish industry are rapid transport and fairly large centres of population.
Fish for local canning - The availability of such species as tuna, sardines and mackerel, which are suitable for canning, favours the early development of domestic canning industries producing for export markets as well as for the immediate region.
Fish for local consumption - This industry is usually well developed to handle the production from artisanal fisheries and from inland fisheries. Increased landings by expanded fleets will augment the artisanal catches of fish unsuitable for the other markets. This bulk fish can present new problems, as has been demonstrated in other developing countries.
Any enlargement of the existing activity involves a change in the marketing pattern. The success of any fresh fish handling operation depends upon rapid distribution or adequate temperature control and preferably both.
The various methods of catching and the associated fisheries require a varied approach in the formulation of a plan of operation. It is useful to note that in recent years the amount of fish used in world markets for freezing and canning has been steadily rising, while the weight used for marketing fresh and for curing has remained almost constant. Operations based solely on export quality frozen fish require a high degree of expertise and sophisticated equipment but the markets for shrimp and tuna seem to be insatiable, and profits can be high due to low production costs in the region, compared with competitors with well established world markets and prices. This type of operation is not difficult to start. The principal requirements, including vessels, equipment, refrigerated carriers, refrigerated stores and freezers are of standard design and are readily available.
The market for high quality table fish for the “luxury market” should expand with the growth of tourism in the area. There is also an established export market (for certain species) in neighbouring cities such as Singapore and Tokyo. The development and expansion of these markets in conjunction with expansion of fishing fleets and extension of fishing efforts to more remote areas will require improved facilities for preservation of the catch at sea. This will require the introduction of mechanical refrigeration systems on fishing vessels or carriers. Modern facilities for handling the catches are lacking in Malaysia as well as modern processing and fish handling equipment, and new freezing and cold storage plants for fish are needed.
Both the export and local markets are potential outlets for canned fish. It would probably be safer to produce initially for the local market because of the rigid standards of uniformity of product in competitive world markets, together with the fixed price levels which prevail. Rather high degrees of experience, efficiency and marketing ability are required to deal in the world markets for canned fisheries products and these abilities will take time to acquire. Although local markets may appear limited at first, these are capable of enormous expansion as development proceeds. It will be necessary to maintain low production costs, since consumer incomes are generally low, but the success of such enterprises in other developing countries demonstrates the feasibility of this approach, e.g., Indonesia, Costa Rica, Venezuela and Ghana.
The establishment or expansion of canning industries will require stable supplies of fresh fish and efficient organization of fish production, together with technical expertise to provide guidance in the planning, design and layout of plants and in the operation of cannery machinery, because canning is technically demanding. High standards of hygiene must be maintained and, if the product is for export, factors such as size grading become extremely important.
Capital cost of a canning plant will depend on the size of the operation, but costs are such that it may not be economic to operate the cannery for only a short period of the year.
There remains an urgent need for low cost protein food for low income population groups. It has been demonstrated in Thailand that increased production of low cost fish resulting from fleet expansion can be effectively utilized for animal and fish feeding. It is evident that plans must be made to absorb the production of expanded fleets through refinement and expansion of the distribution system so as to utilize as much as possible of this new production for human food, and also to encourage diversion of excess quantities into products such as fish meal and animal feed which will also result in increased supplies of protein food for the country. A major requirement will be the effective means for preserving and handling large quantities of bulk fish at sea and ashore in order to avoid waste and also to avoid upsetting the existing artisanal fisheries and markets by depressing prices through glutting them with low cost fish.
Boatbuilding capacity
There is only one boatbuilding yard capable of building vessels to design specifications, the Government-owned MARA dockyard. It probably could only build about 20 30-ton trawlers in addition to other work it must perform. In addition, in November 1973, the construction of a new shipyard in Jahore Bahru was officially begun and it is due to start building small ships by January 1976. This does not necessarily mean that the first vessels constructed may be fishing vessels, because of the rather specific skill and experience required to build them. The capacity of the MARA dockyard must be found out, what size of vessels can be constructed and whether the workmen of the yard are sufficiently experienced to build relatively modern vessels for the future Malaysian fishing fleet. If these vessels are going to be constructed locally, steps have to be taken soon to ascertain the required boatyard capacity to build them and, if needed, to acquire the technology and up-grade the skill of the craftsmen.
In addition to the boatbuilding capacity, ship repairs also have to be taken care of. With the introduction of more modern and larger vessels, the present methods of repairs would most likely be inadequate.
Pollution control
In the last few decades industrialization has increased tremendously. In combination with a high population increase and intensified efforts in agricultural production, this has turned out to be a threat in many areas, particularly to inland fisheries and aquaculture. Adverse effects on the aquatic living resources have already been recorded in many areas, resulting from domestic sewage, industrial waste, siltation, pesticides and oil pollution. Estuaries and coastal waters have been reported to be affected by siltation due to deforestation and mining operations. Important tanker routes, in particular in the Malacca Strait, are affected by several major oil spills every year.
In Malaysia there is a growing awareness of aquatic pollution problems, not only with regard to the sanitary and other public health aspects, but also to the protection of living resources and fisheries.
The country has started investigations on water pollution but the knowledge about the actual state of aquatic pollution is still inadequate. This lack of information hampers efforts to strengthen the water laws and to take adequate measures to cope with the increasing pollution. The fisheries development taking place in the country must also take care of the pollution problems simultaneously.
Fishermen's organizations
There are almost no well-organized and functioning fishermen's organizations capable of participating in any effective way in advising the Government on matters affecting the fisherman. Fishermen's cooperatives have not been successful and in most cases have become dominated by the middlemen they were meant to replace. There are few Malay fishermen capable of participating effectively in any consultative machinery between the Government and the fishermen. The Government is attempting to establish organizations and is participating directly by providing the new associations with management capability. Even if this experiment is successful, it will be a long time before the benefits will be felt. The Majuikan expects to involve the fishermen in the ownership of assets, either individually or through the new organizations. To develop such organizations will require a tremendous input of extension workers and technical supervisors. The qualifications of the people required should be of a business management type with knowledge of cooperatives and small fishermen community problems in addition. The present staff of the Fisheries Division and the Lembaga will have to be expanded considerably to perform this task. It is recommended that the Government should carefully study the number of such persons required and develop a training programme as soon as possible.
Taxation policy
On the west coast of East Malaysia, nearly all of the development of the industry has resulted from aggresive private entrepreneurs who have invested their own funds or borrowed from the commercial banks. On the east coast of West Malaysia, this is not expected to happen. The Government is prepared to make direct investment. Under the circumstances, it is rather surprising how many governmental programmes, regulations and administrative arrangements discriminate against the development of the industry. For example, import duties on fuel, on nets, on salt; regulations concerning licensing of vessels, of crew, etc; all seem to deter rather than encourage investment in the fishing industry. The cost of ice and its availability are further deterrents. As a prerequisite to development, the Government should examine all these obstacles and analyse their effect on the proposed programme.
Majuikan has an important role to play in fisheries development. As a relatively young institution, it is now going through numerous problems, including inadequate staffing in numbers and qualifications and lack of experience in the activities attached to it by law. Hopefully, these difficulties will be gradually overcome but it appears that its structure and terms of reference will have to be thoroughly reviewed, modified and properly orientated toward the future development needs. The Majuikan is expected to initiate, promote and encourage fishery development projects. It is also expected to become directly involved in the marketing system but, at the same time, is expected to regulate the whole marketing process. The Lembaga is expected to operate as a business enterprise, but it does not appear to have a sufficient number of people on the Board or on the staff with adequate business experience. It already has large sums of money to spend on facilities and vessels but does not have any people with experience in financial control and management. Unless the situation is remedied, it is impossible for the Lembaga to avoid financial disaster.
It seems essential to further clarify the responsibilities and functions of Majuikan versus the Fisheries Division, with a view to eliminating overlapping of authority between the two institutions and strengthening the functions of Majuikan as a public commercial fisheries corporation.
Generally, in other countries in recent years the public corporations have become a form of a public enterprise. Administrative authority to conduct a specific public enterprise or group of related enterprises is given to a corporate body appointed by the government, employing its own staff and with virtually complete freedom from governmental control in its day-to-day operations. Governments see advantages in the public corporation because it has initiative, flexibility and operating freedom, and relieves Ministers of direct administrative responsibility. The public corporations do not have any regulatory powers in the field of fisheries administration, since these powers belong to the Fisheries Department, as the government administrative body directly responsible for fisheries matters.
As far as the element of coordination of functions between the fisheries administration and a public corporation is concerned, there are two possible solutions:
Both institutions are subordinate to one minister who is in charge of fisheries, or
The director general of fisheries is in charge of both institutions but in day-to-day work he has two assistants, one of whom is in charge of administration, the other being the top executive of the public corporation.
The primary consideration given to the “division of labour” between the two institutions is to have good coordination of their activities, aimed at achieving the same government policy objectives but at the same time avoiding overlapping of functions. It should also be sure that there are no conflicts of interests between the overall policy objectives and their implementation.
In other words, the public corporation is one of the elements in the business structure of the country. The overall economic interest of the country is to supply the population with food of highest possible quality standards and in the cheapest way. The public corporation, being directly involved in the production and sales of the goods, should not be allowed to lay down quality standards, which have to be met by the producers, because it may be the interest of the producer that the standards not be too high because of profit seasons. In situations where there are several production sectors, i.e. private, cooperatives and public corporation, the business principles for all the sectors should be the same. Regulatory powers in the hands of the public corporation would mean an unhealthy competition whereby the public corporation would be at a great advantage as compared with other sectors. This in turn might create serious problems of a political nature, since the other sectors would feel oppressed by the public corporation and would find themselves in a situation of an unequal, weaker partner in the national economy's development.
On the basis of the above general consideration, it would seem advisable to define the functions of the Fisheries Division and the Majuikan, respectively, as follows:
Fisheries Division:
The Fisheries Division is the government's administrative agency in charge of fisheries matters and, as such, it has the prime responsibility for the formulation and implementation of the policy related to fisheries development. Furthermore, the Fisheries Division has to provide the infrastructure essential for smooth development of this sector of the national economy, and has to coordinate and control the activities of the three sectors operating in the fishing industry, i.e., private, cooperative and public. Some of its functions the Fisheries Division may discharge through the Majuikan, to the extent approved by the Minister of Agriculture and Fisheries. In particular, the Fisheries Division should have the following functions:
Development planning and coordination of investment projects
Licensing of fishing boats, processing plants, and all other activities related to the industry
Institute statutory schemes, requiring the approval of the Minister, for quality control of fishery products
Management of fishery resources with the view to obtain the optimum yield from the resources
Carry out research and make the results available to the industry
Training of skilled manpower for the industry and research
Extension work aimed at assisting the artisanal fishermen to increase their productivity and income
Promote expansion of job opportunities in the fishing industry through coordinated development, particularly in the cooperative and public sectors
Aquaculture development.
Majuikan:
The Fisheries Development Authority should be a quasi-commercial organization clearly responsible to the Ministry of Agriculture and Fisheries. Its principal officers should be appointed by and removable by order of the minister. It should have power to retain its profits and its losses and to engage in any activities within its terms of reference, subject at all times to directives from the minister or the government official in charge of fisheries matters.
To engage in commercial fishing operations on its own behalf and to take equity participation in other companies
To engage in the creation and management of fishing terminals, processing plants and other share-based facilities
To undertake the marketing of fishery products, both for export and on the domestic market
To create purely operational subsidiary companies, without privileges, in association with private investors, both local and foreign.
It should not have any direct powers in relation to control of fishing effort, or private investment in fisheries.
One more element has to be included in the functions of either the Fisheries Division or Majuikan and this is providing and supervising credit facilities for fish production. Majuikan, being a public corporation with purely commercial functions, may not be the most suitable channel for extending credit to fishermen. However, this function, in a proper organizational structure of Majuikan, could be successfully carried out. It is rather a matter of the government's policy to charge either of these institutions with this function.
Finally, the problem of “Powers relating to enforcement”, i.e., Part III (and Part IV as a consequence of Part III) of the Lembaga Kemajuan Ikan Malaysia Act, 1971 (with amendments) calls for some comments. The powers under consideration are usually executed by the agency authorized to set up respective regulations. It is, however, difficult to run a public corporation of a commercial type, having both commercial and regulatory functions, and this is because of putting the agency in a position of “super-power” vis-a-vis the private and cooperative sectors. As has been said earlier, regulatory functions vested in a public commercial agency may have unfavourable political implications and create unfair competition between the public corporation and the two other sectors. It would, therefore, be advisable to consider one of the two following solutions:
The enforcement powers to be vested in the Fisheries Division as the government body in charge of fisheries matters
The enforcement powers to be vested in a government agency in charge of enforcement of all other regulatory measures relating to the food industry or the implementation of tax regulations.
In connexion with the implementation of marketing schemes and particularly fish auctions, in order to improve the quality of the fish sold, it would be worth considering the introduction of independent quality inspection services under the Fisheries Division. All fish presented by fishermen (including private, cooperative and Majuikan) should be subject to inspection and only fish of a minimum quality standard should be admitted for auction sale. This could eliminate selling in the auction of substandard fish and would help to eliminate unsound practices in this respect. Furthermore, it may be worth considering that all fish landed be auctioned in order to eliminate unhealthy system of auctioning.
