2 Marine Fisheries Policy Planning in West Malaysia

Marine Fisheries Policy Planning in West Malaysia
Author(s): Leo J. Fredericks and Raymond J. G. Wells

Source: The Journal of Developing Areas, Vol. 15, No. 1 (Oct., 1980), pp. 3-20
Published by: College of Business, Tennessee State University
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The Journal of Developing Areas 15 (Oct. 1980): 3-20
Marine Fisheries Policy Planning

in West Malaysia
LEO J. FREDERICKS and

RAYMOND J. G. WELLS
Although a less "political" crop than rice, fish as a commodity has

assumed an increasing degree of political and economic importance in the
postindependence period in West Malaysia. This is largely due to the
ethnically dualistic structure of the fisheries sector: a traditional subsector
using low productivity technology for harvesting pelagic resources and a
relatively newer subsector employing capital-intensive production tech-
niques to ex ploit demersal resources.' Policy manipulation of the fisheries
sector began in 1957, and an assessment of the range of policy objectives
and instruments related to its development is timely. Briefly, four areas are
examined in this paper: (1) the significance of the fisheries sector in the West
Malaysian economy; (2) the policy objectives relevant to fisheries develop-
ment; (3) assessment of these objectives in terms of their attainment,
consistency, and constraints; (4) policy strategies.
Significance of the Fishing Industry
During the term of the Second Malaysia Plan (1970-75), the fishing
industry supplied 8 percent of the agricultural output and 3 percent of the
Gross Domestic Product (GDP) of Malaysia. The industry is significant to
the economy for other reasons: (1) as a source of food and protein; (2) as a
source of employment; (3) as a generator of foreign exchange earnings; and
(4) in a negative sense, as a sector with a high incidence of poverty and
income inequalities among the two major ethnic groups in West Malaysia.
Leo J. Fredericks is Associate Professor and Deputy Vice-Chancellor, University of Malaya;
and Raymond J. G. Wells is Lecturer, Division of Rural Development, Faculty of Economics
and Administration, University of Malaya.
'In West Malaysia, 53.1 percent of the population are Malays, 35.5 percent are Chinese, 10.6
percent are Indians, and 0.8 percent are ofoth er races. There are substantial interethnic income
disparities. See Third Malaysia Plan: 1976-80 (Kuala Lumpur: Malaysia, Government Printers,
1976), pp. 178-79.
C 1981 by Westem Illinois University.
4 Leo 1. Fredericks and Raymond J. C. Wells
Protein Source. Fish is a traditional and significant source of food and

protein and a major factor in West Malaysia's relatively high nutritional
level. The per capita daily energy supply in West Malaysia is estimated to be
2,460 calories which, as table 1 shows, is a quantum higher than in most
other developing countries of Asia.
TABLE 1
D)IETARY ENERGY SUPPLY, 1969-71
FOR SFLECTED ASIAN COUNTRIES
CALORI ES/PER
COUNTRY CAPITA/J)AY
Afghanistani 1,970
Bangladesh 1, 840
Burma 2,210
Korea 2,520
India 2,070
Indonesia 1,790
West Malaysia 2,460
Nepal 2,080
Pakistall 2,160
Philippines 1,940
Sri Lanka 2,170
Thailand 2,560
SOURCE: Derived from the Asiaii l)evelop-
ment Bank's Quarterly Review (Ju1lV-Au1-
gtust 1977), p. 2.
TABLE 2
MEAT AND FISH CONSUMPTION, PENINSULAR MIALAYSLA, 1960-71
1960 1963 1969 1970 1971
Animal meat (tons)

Beef 13,419 13,4.51 13,483 13,480 16,035
Muttoni 3,699 3,666 6,749) 4,493 4,229)
Pork 34,666 39,236 44,026 46,434 ?54,553
Poultry 23,593 42,968 57,849 61,253 64,421
Total animals 73,377 99 ,:321 122,107 123,660 139,238
Fish (tons)
Marine 72,617 131,211 176,566 139,318 167,283
Marine (processed) 36,779 26,913 53,302 69,903 61,006
Freshwater .20,000 23,000 23, 00( 26,000 27,000
Total fish 129,396 181,124 25-4,868 235,223 235,289
Per capita consump-
tion (kg/capita)
Animal 10.5 12. 1 13.3 13.0 14.4
Fish 18.1 22.2 27.9 25.1 26.6
Total 28.6 34.3 41.2 38.1 41.0
Per capita consump-
tion (percentage)
Animal 36.7 '32.2 33 . 2
34.1 33.2
Fish 63.3. 67.8 64.8 65.9 64.8
SOURCE: Arkadiusz Labon, Malaysian Long-Term Fisheries Development Plan rntil19865
(Rome; FAO, 1974), table 2, p. 7.
Marine Fisheries Policy Planning in West Malaysia 5
Within Malaysia itself, as Labon points out, the main sources of animal
protein are meat (in order of importance, pork, poultry, beef, mutton), fish,
eggs, and milk.2 Table 2 indicates that fish contributes almost twice as much
as meat to the total protein supply for West Malaysia and is also of increasing
importance as a protein source in terms of supply increases from 1960 to
1971.
Given Malaysia's multiethnic and multireligious community, it is pertinent
to note, moreover, that fish is acceptable to all its religious and ethnic
groups. Hence, increases in protein consumption can be attained without
consideration of cultural or religious preferences or dislikes.
Source of Employment. The fishing industry provides employment for
4.26 percent of West Malaysia's economically active population (see table 3);
TABLE 3
POPULATION ANI) E MPLOYMENT IN FISHERIES 1970 CENSUS
ECONOMICALLY NUMBER OF FISHERMEN

TOTAL ECONOMICALLY ACTIVF POPULATION TO ECONOMICALLY
POPULATION ACTIVI. POPULATION NUMBER OF TO TOTAL ACTIVE POPULATION
('000) ('000) FISHERMEN (2:1 x 100) (3:2 x 100)
Malaysia-total 10,440 2,410 90,604 23.1 3.76
Peninsular Alalay-
sialatal 8,810 1,865-) 79,379 21.2 4.26
West Coast 1,318 43,955 3.34
East Coast 547 24,199 4.42
East Malaysia
(Sabah and
Sarawak) 1,630 545 11, 225 33.4 2.06
SOUiRCEi:: Arkadiusz Laboji, Malaysian Long-Term Fisheries DevelopmentPlan until 1986 (Rome: FAO, 1974), table 4, p. 10.
NoT>:: Ecollomically active population refers to those above the age of tell.
it also supports employment in ancillary industries such as boat building and

repairing, ice making, cold storage, and fish marketing and processing. In
terms of labor utilization, it is more significant than mining and quarrying
which employ 2.5 percent, or the construction industry which employs 2.9
percent of the economically active population.3 Moreover, marine fishery
resources are common property resources without ownership rights, and
fishing is an industry which permits easy entry since capital and skill
requirements are minimal. These factors have tended to result in the fishing
industry's becoming a residual employment sector and a source of work for
seasonally unemployed farmers.
The previous capital-intensive approach to fisheries development coupled
with the easy entry conditions into the industry have exacerbated the
underemployment of labor and increased the volume of surplus labor
within the industry. A recent survey carried out by the Fisheries Division
indicates that there is a surplus of 19,300 fishermen in the industry, of which
12,900 are located on the West Coast and 6,400 in the East Coast.4 It is not
realistic to expect that modernization measures such as trawling will
increase the absorptive capacity of the industry since the raison d'etre of
trawl fishing is to increase productivity rather than employment.
2 Arkadiusz Labon,
Malaysian Long-Term Fisheries Development Plan until 1985 (Rome:
FAO, 1974), pp. 5-8.
3 Third Malaysia Plan, p. 142.
4An Economic Survey of the Fishing Communities of the East Coast of West Malaysia
(Kuala Lumpur: Malaysia, Division of Fisheries, 1971), p. 6.
6 Leo J. Fredericks and Raymond J. C. W'ells
Generating Foreign Exchange. Annual exports of fish from Malaysia are

substantial, with crustaceans accounting for a major and growing portion of
their total value. In 1974, exports reached 107,175 tons worth about M$160
million, although the next export value was about M$92 million. In terms of
the food and feed industry alone, West Malaysian net exports of fish rank
second only to fats and oils.
West Malaysia is a net importer of canned fish products and fish meal.
The latter is significant as it represents a potential for the industrial use of
trash fish. It is ironic that the increasing catch of trash fish, for which a need
exists in the feed industry, is not effectively exploited because of the limited
industrial processing capacity.5
As a Poverty Sector. The fishing industry is important in the negative
sense that it constitutes a sector with a high incidence of poverty and income
inequalities partly identifiable with ethnicity. In Malaysia's New Economic
Policy, a central issue concerns the promotion of national unity through the
reduction of poverty irrespective of ethnic identity and the correction of
current economic imbalances by eliminating the identification of ethnicity
with economic function. The economic goals of such a policy might be
income growth, fuller employment, and improved income distribution. The
modernization of the fishing sector would thus facilitate attainment of the
policy objectives of poverty eradication and restructuring the ethnic shares
of sectoral income and employment.
There is evidence to suggest that measures to redress poverty were
effective from 1970 to 1975: evidence from the Third Malaysia Plan
indicates that the ratio of fishing households in poverty declined from 73
percent in 1970 to 63 percent in 1975..6 However, poverty is identifiable with
ethnicity because the East Coast, inhabited mostly by Malay fishermen, has
an estimated 95 percent incidence of poverty compared to the West Coast,
where two-thirds of fishermen are Chinese and there is a lower occurrence
of poverty.7
However, there is no doubt that gains from the modernization of the
fishing industry, caused in part by trawling and heavy investment in large
motorized vessels, were not evenly distributed. The distribution of income
has become more skewed: fishermen limited to inshore fishing by tradi-
tional methods with small boats have only marginally benefited from
productivity increases. The income differential between the West Coast
trawler fishermen and traditional artisanal fishermen has widened. The
catch on the West Coast increased by about 10 percent per annum during
1965-73, when it was 19 tons per boat or 5-6 tons per man. In contrast, the
Labon's observation regarding the lack of a surplus of trash fish may be com pared with the
statistics of the Fisheries Department, which indicate a growth in trash fish caught from 56,729
tons in 1970 to 125,186 tons in 1975-an increase of 33 percent.
0 Poverty in Malaysia is measured by the poverty -line approach. The poverty line is defined
as the income needed to maintain a family in goo health and provide minimum conventional
needs for clothing, household management, and transport. The poverty datum line for a family
of five in 1970 was estimated by the Malaysian Social Welfare Department to be M$160 per
mllonth;in 1975 it was raised to M$210 per month.
ThirdlAtaloysia Plan, 1). 165.
Marine Fisheries Policy Planning in Wlest Malaysia 7
East Coast catch rose by an average of only 6.4 percent between 1966-73,
and productivity in 1973 was only 12.2 tons per boat or 3.3 tons per man.8
Policy Goals in Fishery Development
An attempt is made here to identify and examine the ramifications of the
major goals in Malaysian fishery development. It should be clear that some
policy objectives are temporally consistent in and of themselves. Others,
newer, or even short-term and ad hoc policy goals, may be inconsistent with
traditional goals. Be that as it may, the identification of major goals, whether
long-term, short-term, or ad hoc are viewed vis-a-vis the national develop-
ment objectives of income growth, fuller employment of labor, and a more
equitable income and wealth distribution. It might be noted that the
subsector goals of fishery development are broadly consistent with the
overall sectoral goals of rural development.
Increasing Income. A temporally consistent policy goal in the postindepen-
dence period has been to secure higher incomes for fish producers.9 That 63
percent of fishing households were below the poverty line as recently as
1975 eminently qualifies the fishery subsector as a priority target. While
processes of modernization largely through capital intensification have
marginally reduced the absolute number of poor fishermen from 28,000 to
26,000 from 1970 to 1975,10there is increasing evidence that such strategies
have simultaneously, and inconsistently, exacerbated the problem of the
incidence of relative poverty."' In particular, while trawl fisheries have
raised aggregate productivity and catch per boat, the distribution of
benefits has not been equitable. The major beneficiaries have been the
investors of capital and adopters of the new trawling technology and not the
small-scale artisanal fishermen. In the words of one observer: "Most of the
economic surplus generated through modernization of the industry has been
extracted by boat-owners most of whom have little or no previous experi-
ence as fishermen. Paradoxically, this has happened in a context of
increasing official government concern for the plight of the traditional
fishermen."'2
The policy objective of increasing sectoral incomes has been perceived in
aggregate terms. In other words, the net per capita income increases have
not been the primary interest of policymakers. Two factors are relevant: (1)
the disaggregated impact of productivity/output increases over many
producers and (2) the assumption that productivity gains, even if disaggre-
gated among individual producers, ipso facto represent their net income
8 Malaysia:Second Plan Performanceand ThirdPlanIssues (Washington,DC: WorldBank,

1976), vol. 2, pp. 5-7.
" We have not attempted to develop a welfare function or to weight fisheries development
goals; we would, however, suggest that the output/productivity goals were the paramount
goals until about 1970 but subsequently income and resource conservation/management goals
have become the most heavily weighted goals. For an interesting attempt to weight Philippine
rice policy objectives, see Mahar Mangahas, "The Political Economy of Rice in the New
Society," Food Research Institute Studies 14 (No. 3, 1975): 295-309.
10 ThirdMalaysiaPlan,p. 163.
1' See An Economic Survey, p. 12.
12 David S. Gibbons, "Public Policy toward Fisheries Development in Peninsular Malaysia: A
Critical Review Emphasizing Penang and Kedah," Kajian Ekonomi Malaysia 13 (December
1976): 89.
8 Leo J Fredericks and Raymond J. C. Wells
gains.'3 Not only higher production costs but also marketing margins should
be taken into account in assessing the marginal net income increases.
Thus output/productivity goals have come into partial conflict with the
income distribution goal in the fishing sector. The rationale has been to
increase output/productivity using modernization strategies involving sub-
stantial "jumps" in technology. The indivisibility and incompatibility of the
two different levels of technology, e.g., traditional, artisanal fishery meth-
ods on the one hand and capital-intensive trawling on the other, have meant
that small-scale fishermen are unable to invest the substantial outlays
required, not to mention their problems in acquiring the necessary entre-
preneurial and managerial skills. Output and productivity increases have
been attained at the cost of increasing relative poverty in the fishing sector;
such a situation has been made more difficult by marketing deficiencies.'4 A
further goal conflict is that if artisanal fishermen's incomes are to rise, the
surplus labor problem in the fisheries sector must be overcome by a shift
outwards of surplus amounts. This is recognized by policy planners who
indicate that "while commercial off-shore fishing will offer higher income
opportunities to some [fishermen], a significant number will need to be
encouraged and assisted to branch out into alternative occupations, in
particular, settlement on new public land development schemes."'s
Further, there is a long queue from other rural sectors with a high
incidence of poverty, e.g., mixed agriculture, padi cultivation, and rubber
smallholdings, for the higher income opportunities offered by land develop-
ment schemes.'6 Moreover, the queue moves slowly because of the limited
places available in high cost/high investment per settler schemes, particu-
larly of the Federal Land Development Authority (FELDA) type. Nonagri-
cultural vocational training should be available to the fisheries subsector if a
substantial impact on nonfishing employment opportunities is to be felt.
Creating Employment. Given the surplus labor in the fisheries sector and
the seasonal nature of fishing (due to monsoon weather, particularly
inclement in the East Coast), generation of employment and greater
intensities of labor use have emerged as legitimate policy goals.'7 Their
13 See Leo J. Fredericks and Raymond J. G. Wells, "Patterns of Labour Utilization and
Income Distribution in Rice Double Cropping Systems: Policy Implications," Developing
Economies 16 (March 1978).
14 These are admirably detailed by Lim Chong Keat, "A Diagnostic Study of the Marine Fish
Middleman Marketing System of the East Coast of Peninsular Malaysia' (M.Ec. thesis,
University of Malaya, 1976).
|5 Third Malaysia Plan, p. 174.
16 Eddy Lee, "Rural Poverty in West Malaysia, 1957 to 1970," World Employment Pro-
gramnweWorking Papers, mimeographed (Geneva: ILO, 1976), p. 38.
17 Several other reasons may be adduced to explain the emergence of employment
generation as a specific and legitimate policy goal in fisheries as well as in rural development.
T hese include its role in preventing rural-urban migration, the locational advantages of agro-
based industries in rural areas, and the institutional potential of providing more o pportunities
for seasonally unemployed labor. See Leo J. Fredericks, "Concepts and Approaches to Rural
Development," in Rural Development Training to Meet New ChaUenges, ed. Amara Raksasa-
taya an(l Fredericks (Kuala Lumpur: Asian and Pacific Development Administration Centre,
1978), I)I).71-74.
emergence is due to the fact that the creation of employment is probably a

more efficient policy instrument to promote equity than income redistribu-
tion using fiscal measures.-8
In 1976, there were nearly 76,000 licensed fishermen in West Malaysia,
and from 1972 to 1976 their numbers increased by 2.6 percent.'9 Employ-
ment in fish and fish-meal marketing and processing, ice manufacturing,
boat construction, and equipment-supply industries should be added be-
cause of economic dependence on the fishing industry. By regional stan-
dards, this figure is high (4.3 percent) and is exceeded in Southeast Asia only
by the Philippines (5 percent). The relatively low productivity per man
employed in the industry is indicative of underemployment (and open
unemployment), while the intramonsoonal period (November-January) in
the East Coast contributes to seasonal unemployment.
The problems of surplus labor, underemployment, and seasonal unemploy-
ment have forced an emphasis on employment generation in order to ensure
more efficient, if not optimal, utilization of human resources. Earlier, the
inherent inconsistency between the goals of creating employment and
increasing income was noted. This inconsistency could be overcome if the
technology chosen to raise producer incomes is less capital-intensive. The
capital intensification of the West Coast fishery in response to market
incentives has been labor-displacing, the level of investment involved and
technology used has brought about nondiscrete jumps, and a relatively
scarce input-capital-has been substituted for a relatively abundant
input-labor.20 Although labor-intensive fishing methods would perpetuate
relatively low labor productivity, they would aid resource conservation.2' A
strategy which seeks to maximize the labor-capital ratio implies greater
labor use intensities. Future employment would also be safeguarded if
resource-depleting trawl fisheries were controlled and traditional methods
encouraged. While this strategy is regressive technologically, in the long run
and for future generations, it is a more optimal and rational strategy to
conserve fishery resources and maintain employment opportunities. It
appears inevitable that the alleviation of poverty, maintenance of employ-
ment opportunities, and resource management and conservation can only
be achieved concurrently at the expense of maximization of output per unit
effort. For the seriously depleted marine resources of the West Coast, this
situation cannot be overlooked.
Increasing Output/Productivity. A temporally consistent and prime goal
in Malaysian fisheries policy has been to increase the fishing catch per
"I Furthermore, fiscal measures to redistribute income are subject to political and partisan
lobbying, and administrative implementation is often difficult. More significantly, to effect
smaller gaps between classes of income earners would assume a transfer of resources of
unrealistic magnitudes.
' Economic Report 1977-78 (Kuala Lumpur: Malaysia, Ministry of Finance, 1977), p. 110.
20For a localized study of this phenomenon, see Yap Chan Ling, "Overexpansion in the
Trawler Industry with Specific Reference to the Dindings District of West Malaysia,"'Kaiian
Ekonomi Malaysia 10 (December 1973): 79-90.
21 This is because the techniques used in capital-intensive trawl fisheries, including the
dragging of the trawl net along the seabed, lea&to indiscriminate hauling of young fish and
prawns since the mesh size of nets is too small for them to escape, and da.nage is done to
breeding grounds in terms of the fuiture size and composition of the fish stock.
10 Len J. Fredericks and Raymond 1. C. Wells
producer and for the sector. Beginning in the late fifties, successive waves of
technological developments culminated in trawl fishing and heavy motor-
ized vessels. As table 4 shows, fish landings doubled between 1961 and 1972,
although in intermittent years, decreases can be noted.
TABLE 4
ESTIMATED ANNUAL FISH LANDINGS
WEST MALAYSIA, 1961-75
YEAR TONfi
1961. 10, Coo

1962 ......................... 170,200
1963 .1. 183,600
1964 .. .................... . ... 192,000
1965 .... .... ...... 198,400
1966. 236,600
1967 .. ... 301,900
1968 ............................ 339,500
1969 ................. 297,800
1970 ................. 294,300
1971................. 318,000
1972................. 306,200
1973 ................. 365,400
1974................. 441,305
1975................. 37.5,235
SouRiCE: Annual Fisheries Statistics (Kitala
Lumpur: Malaysia, D)ivisioii of Fisheries,
1961-75).
Modernization strategies, while resulting in increased aggregate output,

productivity, and domestic fish supplies, have caused an inequitable distribu-
tion of productivity gains and depletion of resources. It appears as if the
past growth-oriented strategy has been inconsistent with the other three
policy goals. This is true for the general processes of economic growth. As
noted by Ranis, "this increased level of questioning of the old fashioned
'grow first-distribute later' notions of the 50's and 60's has, of course, been
accompanied by an increasing volume of real world evidence to the effect
that higher growth rates do not necessarily guarantee diminishing rates of
unemployment or an improvement in the relative distribution of income or
even the alleviation of low-end poverty."22
Resource Management and Conservation. This goal is relatively new but
has become more significant as concern over resource depletion and
environmental despoliation in both marine and inland fisheries has mount-
ed. Demersal resources of the West Coast are already overexploited as cur-
rent landings are in excess of the maximum sustainable yield (see table 5).
West Coast fish stocks have been overfished because catch per unit effort
has recently declined, and ikan baja or trash fish catches have increased
because of greater trawling activity in inshore waters. This deteriorating
'2 Guistav Ranis, "Development Theory at Three Quarters Century," Growth Center Discus-
sion Paper no. 292 (New Haven, CT: Yale University, 1976), pp. 34.
TABLE, 5
COASTAI, FISH Ih:SOURCES-PENINSULAR MALAYSIA 1975
PRESE:NT CATCH MIAXIMUM SUSTAINABLE

i-i.a ANNUM (1975) Yll.LI PER ANNUM
LOCATION ('000 TONS) ('000 TONS)
West Coast
D)emersal 137 110
Pelagic 45 53
Prawswn 38 40
Othera 22 20
Total 242 223
East Coast
lDemersal 45 80
Pelagic 52 75
Prawvs 3 4
Othera 4 5
Total 104 164
SouRC;: "Projected Food Fish Supply for Peninsular Malaysia up to the year 1990,"
mimeographed (Kuala Lumpur: Malaysia, D)ivision of Fisheries, 1977).
NOTE: Coastal fish resources refer to those marine resources located within 60 nautical
mile.soff the coastline; they thus include the inshore (within 7 miles) and offshore (7-50
miles) areas.
'Crabs, squids, etc.
situation was compounded, until recently, by inaction from policymakers.23

The fundamental difficulty is that fishery resources are common property
resources over which specific property rights cannot be established. Indeed,
for the individual fisherman, there are few, if any, incentives for exercising
restraint: the resources left unexploited by one will be caught by another
later. This characteristic creates difficulties in controlling entry which result
in the overallocation of resources in fishing efforts and, ultimately, overex-
ploitation of fishery resources. With the rapid increase in trawling activities
in the 1960s and the severe conflicts between inshore and trawler fishermen
due to encroachment by the latter into the fishing grounds of the former,
government policy of benign neglect had to give way to regulation.24
Trawler fishing was subsequently legislated as an offshore operation (i.e.
fishing beyond seven miles from the coastline) and penal measures, such as
nonrenewal or withdrawal of trawler licenses, were imposed on violating
vessels. This regulation was officially justified on the grounds of both
security-since it was felt that such conflicts could be exploited by
subversive groups-and resource conservation.25 Current policy is to issue
licenses only for boats of 40 horsepower and above to promote offshore
trawling.
-3Goh Cheng Teik, "The Fishing Conflict in Penang and Perak: A Personal Memoir," Kajian
E:konomi Malaysia 13 (December 1976).
24 Between 1964 and 1976, for instance, no less than 113 incidents
involving 437 trawlers and
987 inshore vessels were recorded for West Malaysia. Forty-five vessels were destroyed, 62
vessels sunk, and 34 lives lost. See Goh, "Fishing Conflicts," p. 18.
25 Gibbons, "Public Policy towards Fisheries Development" p. 40.
12 Leo J. Fredericks and Raymond J. C. Wells
Goal Constraints
An attempt to identify and examine the principal constraints on policy
goals previously outlined can now be made. In traditional economic theory,
the limitations of economic development are resource scarcities, viz., land
(including natural resources), labor (including, for our convenience, entre-
preneurship), and capital. In the Malaysian fisheries sector, labor is in
abundant supply although skilled manpower is relatively scarce. Fishery
resources and capital may be regarded, at the very least, as partially binding
constraints, even assuming public sector resources to be more plentiful than
private capital. Several nontraditional constraints could also be included,
the most important of which relate to marketing and institutional structures.
Fishery Resources. A crucial constraint on policy goals identified is the
fish supply. It has been pointed out that marine resource depletion has
occurred, particularly of the West Coast demersal resources. If the goal of
resource management and conservation is to be attained, this would imply a
reduction in fishing effort which would conflict with income raising,
employment creation, and output/productivity goals. Resource conserva-
tion measures would, of course, tend to be environmentally beneficial.
Politically, however, policies to improve the environment and conserve
marine resources at the expense of income, employment, and productivity
goals may not be feasible.
The conflict could be minimized, however, if a rational exploitation of
untapped fishery resources of the East Coast took place. At present, mainly
the pelagic resources of the East Coast are harvested. There is a lower rate
of demersal resource exploitation, and a potential for offshore and deep-sea
fishing is believed to exist. Several difficulties need to be overcome if the
availability of the unexploited East Coast fishery resources is to minimize
goal conflicts and inconsistencies.
While offshore exploitation potential exists, most of the East Coast boats
are nonpowered or small powered boats, generally under 12 meters in
length and under 15 tons of displacement. If offshore and deep-sea fishery
potential is to be exploited, substantial capital investment is required from
private sources or the Fisheries Development Authority (MAJUIKAN).
Present policy indicates the latter. At the samnetime, the capital intensifica-
tion of the East Coast fishing industry must consider employment and the
distribution of benefits. Without adequate control, the injection of capital
into the industry would exacerbate rather than relieve the surplus labor
problem. Further, traditional and nontraditional constraints-especially
fishery resources and marketing-would be activated.
Skilled Manpower. The principal human constraint is skilled manpower
scarcity in government organizations and fisheries personnel. This, in turn,
affects fisheries development programs.26 Most of the staff of the Fisheries
2a Fisheries development in Malaysia is entrusted mainl to the Division of Fisheries in the

Ministry of Agriculture and the Fisheries Development Authority (MAJUIKAN) which belongs
to the same ministry. A progressively greater range of developmental responsibilities seems to
have been transferred to (MAJUIKAN), as it is currently responsible for marketing and
processing, the acquisition and operation of a fishing fleet, and the supervision and promotion
of fishermen's cooperatives, the government's major means of contact with fishermen. The
Fisheries Division has retained responsibility for regulating the industry, conducting marine
fisheries research and training, and developing fishing ports.
Division and MAJUIKAN, it is believed, have had no specialized training in

fishery development; consequently there is an urgent need to increase the
number of persons who have such training. This constraint is more binding
since MAJUIKAN, in particular, is expected to be the prime mover in the
modernization of the East Coast fishery. Restraints will be placed on private
sector activity since trawling licenses will only be issued to MAJUIKAN
vessels. This is in contrast with the modernization of the West Coast fisheries
in the 1960s which was carried out almost exclusively by the private sector in
response to market incentives. It remains to be seen whether the administra-
tive planning and entrepreneurial capacity in the public sector can secure
fishery development goals.
The lack of skills among East Coast fishermen in deep-sea fishing is also a
limiting factor. Thus, MAJUIKAN has operated joint-venture fishing com-
panies with foreigners and itself operates a large fishing fleet. The impact of
such measures on employment creation is minimal: at the end of 1975 the
MAJUIKAN fleet employed about 1,200 men. Moreover, if artisanal fisher-
men's incomes are to be raised, an alternative strategy to public sector
ownership seems necessary. As it is, new trawling licenses are reserved
exclusively for MAJUIKAN vessels and, aside from increases in the domes-
tic fish supply and the limited employment, few benefits have resulted.
Although MAJUIKAN's fleet could train Malay fishermen eventually to own
MAJUIKAN boats, coherent plans for such a transfer have yet to be
formulated.
Capital. A critical limitation in attaining income and output/productivity
goals, especially for the East Coast fishermen, has been capital shortages.
Although aggregate output and productivity have increased because of
motorized vessels and modern fishing methods, it is clear that the East Coast
fishermen (mostly Malay) have lagged behind in adopting commercial
fishing methods, especially trawling and purse seining. Capital scarcity has
aggravated their problems. The majority of traditional artisanal fishermen
have neither the capital nor the capacity to acquire it in order to commercial-
ize and modernize their operations. Specifically, they have been unable to
operate the trawlers and purse seiners for offshore fisheries exploitation.
To remove this constraint, a government subsidy scheme for the East
Coast artisanal fishermen began in 1972 to increase the number of motor-
ized vessels and the range of fishing gears available.27 Initially, gear and
engines were provided on a grant basis, while the hull component was
provided by fishermen. In 1973 and 1974, the subsidy element on engines
was scaled down to 50 percent and on gear reduced to 80 percent. The
insufficiency of credit meant that, in practice, fishermen had to borrow
from private sources to buy boat hulls and partially finance engines and
gear. The scheme proved ineffective because of the inadequacy of funds,
ineffective supervision of loan funds, and lack of necessary supporting
services such as training programs, extension services, and supporting
infrastructure. As a result, it was suspended in November 1974. Currently a
"'new" subsidy scheme is in operation, jointly implemented
27
For details of the earlier programs designed to provide credit and capital through
cooperatives, see Lee J. Fredericks, "Cooperative Stricture and Government Policy in
Malaysia" (Agr. Dr. diss., Royal AgricuilturalCollege of Sweden, 1973), ppI 120-27.
14 Leo J. Fredericks and Raymond J. G. Wells
by MAJUIKAN, the Division of Fisheries, and the Agricultural Bank of

Malaysia through fishermen's cooperatives. Under this scheme, only bona
fide fishermen, operating in inshore waters and registered as fishing
cooperative members, are eligible for the subsidy. The scheme's objectives
are to facilitate the acquisition of new fishing units, secure improvements in
the existing vessels of small owner-operators, promote conversion to new
fishing methods, and expand the use of insulated ice-
boxes and other modern equipment. Table 6 provides details of the scheme.
TABL14,6
FISHERMEN'S SUBSIDY SCHEMF:, PENINSUTLAR MALAYSIA, 1976
TOTAL SUBSIDY
TYPF, OF AID COMPONE.NTS OF AID PROViDwn (M$)
Loans and subsidies for 1. Subsidy up to 75 percent.of eost for 8,435,680

the construction of new engines lip to 33 HP
new fishing vessels 2. Subsidy uipto 100 percent for engines (For the East
between 5-8 HP Coast nlone)
3. Subsidy up to a maximuimof M3$1,500
for gear.
4. Loan up to 100 percent of cost for
building boat hulls
Subsidies for the im- 1. Subsidy up to 50 percent of cost of 35,168,850
provement of existing replacing inboard engines
vessels 2. Subsidy up to a maximum of ',90(,(0()
M$1,500 for replacing gear
3. Subsidy up to 100 percenltfor pro- 1)00,0(0
viding outboard engines to nionimo-
torized vessels
Subsidies for convert- 1. Subsidy up to 7,5percent for inew
ing to new fishing engines
methods 2. Subsidy up to a maximuim of 6,0500,460
M$1,500 for gear
Subsidies for insulated 1. Subsidy of M$50.00 per box (4 boxes 4.50',000
iceboxes and other for each boat)
modern fishing equip- 2. Other modern equipment like 2,09,501()
ment winches, fish finders, and compasses
SOURCE: Fisheries Extension and Training Division, D)ivisionof Fisheries, Ministry of
Agriculture, 1976, quoted in Jahara Yahya, The Socio-EconomicImpact of the Trawler
Fishing Industry in Malaysia, Occasional Paper Seriesino. 5 (Kuala Lumptir: University
of Malaya, Faculty of Economics and Administration, 1976), table 1, p. 5.
Marketing. Fish marketing practices have long been considered detri-

mental to increasing the income of artisanal fishermen. First, traders and
commission agents are alleged to give less than fair prices and to exploit
their position as creditors or financial backers to small-scale fishermen.28
There is, however, a paucityof empiricalevidence to verify or refutesuch assertions.29
28
Tomonari Matsushita and Toshio Homma, "Development of Fisheries in the ADB
Region," in Asian Agricultural Survey (Tokyo: University of Tokyo Press, 1969), pp. 382-84.
29 For an attempt to verify oligopolistic collusion and price manipulation in fish markets, see
Marian Krzyzaniak and Uzir Malik, "Market Power, Incidence of Government Policies and
Poverty: The Case of Fishermen in North Western Malaysia," Rice University Studies 61 (Fall
1975): 134-35.
Marketing is intrinsically difficult, and institutional changes need time to

adjust to the technological development in the sector.30 The perishability of
the commodity, the uncertain nature of the catch, and the fact that
fishermen are scattered in many small settlements along the lengthy
coastline complicate marketing. Also, the low economic returns from
investment in marketing infrastructure and the difficulty in ensuring that
improvements in marketing will benefit small-scale fishermen are serious
obstacles.
The objectives of reforming the marketing of fish are to improve
marketing efficiency3l and increase producer prices. Previous attempts to
secure these objectives through the Federal Agricultural Marketing Author-
ity (FAMA) and fishermen's cooperatives were largely ineffective. Cur-
rentlyMAJUIKANhas assumedresponsibilityfor marketingfish througha subsidi-
ary, the Fish Marketing Board. In 1973, the Board handled only 0.5 percent
of the entire fish catch of Peninsular Malaysia fish and was limited,
moreover, to marketing its own landings. Although the Board proposes
greatly to expand its marketing activities to benefit artisanal fisbermen, its
impact cannot be assessed yet.
Institutional Factors. A less explicit, but probably no less significant,
objective has been the search for mechanisms to institutionalize the partici-
pation of fishermen in modernization programs. Although cooperatives were
initiated in the then Federated Malay States in 1922, the difficulties inherent in
organizing fishermen and the neglect of the fishing sector itself prevented the
effective organization of fishermen until the late fifties. Then the ad hoc Aid
to the Fishing Industry Scheme was started on an opposition party motion in
the Federal Legislative Council "that, in view of the fact that the occupation
of fishing is one of the lowest rewarded in the country, the Government
appoint a Committee forthwith to examine all the relevant problems
connected with the fishing industry in the Federation with a view to
recommending ways to improve the economic conditions of the local fishing
population."32
The Scheme, for which $3 million was allocated, aimed at improving
fishing productivity by providing modern fishing equipment, thereby reduc-
30 Myrdal argues that the success of technological change in raising yields rests primarily on the
magnitude of prior or, at least, simultaneous institutional changes. The problem is that
institutional changes usually require a lengthier gestation period than technological changes and
are normally more difficult to effect. There is also difficulty in determining the direction of
causation. Hayami and Ruttan, for instance, implicitly suggest that technological advance itself
induces institutional reform. See Gunnar Myrdal, Asian Drana; An Inquiry into the Poterty of
Nations (New York: Pantheon, 1969), p. 125; and Yujiro Hayami and Vernon W. Ruttan,
Agricultural Development: An International Perspective (Baltimore, MD: Johns Hopkins Press,
1974), p. 258.
31 The
improvement of fish handling, including the development of cold-room facilities and
ice plants at landing points and terminal markets, is particularly urgent to reduce recoverable
losses since postcatch fish losses are believed to be of the order of 30 percent in Malaysia. See
Ahmad Kamari et al., "The Handling and Transportation of Fish in Malaysia" (Paper delivered at
Conference on Handling, Processing and Marketing of Tropical Fish, Tropical Products
Institute, London, 1976).
32
Fredericks, "Cooperative Structure," p. 94.
ing the incursions of the middlemen in the fishing economy. As it turned out,
the Scheme was a failure. It lacked financial planning, its implementation
through the Cooperative Department did not contain any appreciable
economic or managerial expertise, and it did not integrate a marketing
module into the program.33
New schemes were then started, including cooperative trawling and
fishermen resettlement plans. The former, which has undergone several
changes in content and structure, has been critically evaluated by several
researchers with largely negative conclusions.34 The introduction of fisher-
men's associations has further complicated the attempt to provide an
institutional framework within a sector noted for its imperviousness to formal
institutions. The creation of MAJUIKAN and its policy of investing heavily in
its own fleet implies that, for the time being, the objective of creating an
institutional infrastructure has been relegated to an inferior position. As
argued elsewhere, the redistribution of benefits, if any, accruing to
MAJUIKAN as one of the biggest fishing entrepreneurs will eventually have
to involve or be channeled through the fishermen's institutions.
Policy Strategies
The analysis presented above has indicated inconsistencies among the
various fishery development goals. These exist particularly between the goals
of output/productivity and resource conservation/management and be-
tween output/productivity and income/employment creation. Three al-
ternative policy strategies and the interactions between goals and constraints
are analyzed below to evaluate and project future policy directions.
Interventionist Strategy. This strategy consciously aims at reducing the
growth rate of fishing output through government intervention to restrict
entry into the fisheries subsector. In effect, this strategy would redefine the
nature and limits of fisheries resources so that these would no longer be
considered common property subject to indiscriminate exploitation. The
government, for instance, could impose limitations on the size of the fishing
catch, delineate closed seasons and closed fishing grounds, and exclude the
private sector from developing the East Coast fisheries. To offset its adverse
employment effects, public investment to generate off-fishing employment
would be necessary. While this strategy is oriented primarily to resource
conservation and management (and to generating some employment oppor-
tunities), it clearly is inconsistent with raising output and productivity.
Liberal Strategy. The liberal strategy, based on the "invisible hand"
approach, would allow the free play of market forces to induce technological
change in the industry and, subsequently, stimulate institutional develop-
ments. Under conditions of resource depletion, the market would activate
price signals to effect a more economic utilization of resources,
33 Ibid., pp. 120-28.

31 See Gibbons, "Public Policy towards Fisheries Development"; and George R. Elliston,
"Some Factors Contributing to the Success or Failure of Government Aid to Fishermen," Kajian
Ekonomi Malaysia 13 (December 1976): 125-59. Sharifah Zaleha Hassan provides several insights
into the sociological implications of introducing cooperative trawler operations in a fishing
village. See her "Institution vs. Technology in the Fishing Industry: A Case Study," Kajian
Ekononoi Malaysia 13 (December 1976): 26-39.
develop processing techniques to increase the use of poorer quality fish, and
substitute the more abundant species for scarcer ones. The liberal strategy
implies free access to fishery exploitation by the private sector on the basis of
investment opportunities available. Public sector participation would take
the form of improving market structures and increasing skilled manpower
supplies. Such a strategy would aim at output/productivity goals, at least in
the short run, but would be antagonistic to resource conservation/manage-
ment and employment creation.
Balanced Strategy. This third strategy would control growth in sectoral
output and productivity through the manipulation of technological innova-
tions, selective entry conditions, and resource conservation. In other words,
the balanced strategy in fisheries development would be analogous to the
Malaysian forestry management program. Controlled and monitored private
sector access to fishery exploitation would be permitted but in competition
with MAJUIKAN. A middle course is implied, defining the need for
government intervention to preserve fishery resources for the nation and
future generations within the framework of a "free" market. Such a strategy
would allow for the attainment of all four specified policy goals.
Some Consequences. The limitations of the interventionist and liberal
strategies are so substantial that neither could guarantee the attainment of all
the specified goals. The former policy strategy deemphasizing output/
productivity would also adversely affect employment and a significant
domestic source of animal protein. Further, the enforcement of regulatory
measures is probably beyond the capacity of the authorities (see fig. 1).
The agency of the market in the liberal strategy would generate inconsis-
tencies with resource conservation/management and employment creation.
Furthermore, the efficiency of the market to control resource depletion is a
function of market imperfections and externalities. The latter, particularly,
can be a self-serving force as is reflected by the excessive exploitation of the
West Coast fisheries and their depleted state.
Under such conditions, a more viable policy option is the balanced
strategy, which will not only facilitate goal attainment but also its political
feasibility. This strategy, however, requires an effective agency to monitor
private sector participation, conservation measures, and resource problems
and, simultaneously, to promote sectoral growth. Any deviations would
induce corrective measures to restrict or encourage technological adoption,
private sector entry, joint ventures with foreign capital sources, and so forth.
The responsibility for formulating, implementing, enforcing, and monitor-
ing implicit in this strategy can best be entrusted to the Fisheries Division of
the Ministry of Agriculture.
The balanced strategy would necessitate controlled exploitation rates by
restricting the types of fishing gear, regulating the mesh size of trawl nets,
limiting the issue of fishing licenses, closing seasons and fishing grounds, and
imposing quotas on the maximum size of the catch and limits on the minimum
size of fish allowed to be caught. Limited entry programs of the sort outlined
have precedents in countries like Canada and Japan.
The reduction in the aggregate fish supply arising from these measures
could be compensated for by the controlled exploitation of new, deep-sea
Resource Conservation/Management Output/Productivity

Comprehensive entry limitations Public sector development of new
Interventionist offshore, deep-sea fishing grounds
Removal of labor surplus Strategy income raising
Employment creationInoeasm
ofeatiReduction
Emplcsetorydevelopment of marketing and capital
Public sector development ofcosrit
integrated farming, aquaculture, constraints
fish and fish meal processing Intensification of labor utilization

No entry limitations Private sector development of new
Removal of labor surplus Liberal Strategy offshore, deep-sea fishing grounds
in response to market opportunities
Employment creation
Income raising
Private sector development of Reduction of marketing and capital
integrated farming, aquaculture, constraints
fish and fish meal processing
industries in response to Reliance on market forces to raise
market opportunities incory)es

Selected entry limitations Control land public and private sector
Selectedcontrols on fishing development of new offshore, deep-sea
technology Balanced Strategy fishing grounds
Removal of labor surplus income raising

Employment creation Reduction of marketing and capital
constraints
Private and pub/ic secror
divtelopent ofblk farminIntensification
integrated farming, of labor utilization
developrrnent of Integrated
aquaculture, fish and fish meal
orocessino industries
Fig. 1. Alternative Fishery Development Strategies.
fishing grounds off the East Coast.35 To accomplish this, the government
could encourage the private sector, rather than confining participation to
MAJUIKAN, and thus could provide a new source of capital and entrepre-
neurial talent. At the same time, improvements in fish handling, preserving,
and processing could be made to reduce the current high levels of postharvest
fish losses. The development of integrated farming and fishing systems and
aquiculture on coastal and riverine locations could be pursued, although skill
and capital constraints will have to be overcome. In the mid-1970s, Malaysia's
aquiculture production was about 6 percent of total fish production,
compared to 22 percent and 20 percent for Indonesia and the
35 Labon has estimated that the resource potential of the East Coast is about 150,000 tons per
annum. See his Malaysian Long-Term Fisheries Development, p. 22.
Philippines respectively.36 Inexorably, redundant labor in the fishing sector

will need to be absorbed either in the ways discussed above or on a privileged
access basis to the FELDA land settlement schemes, modified for displaced
fishermen.37
The measures outlined above as part of the balanced-strategy option
would facilitate a greater intensity of labor use within the fishery sector,
create employment for surplus labor moved to other sectors, raise incomes,
and generally focus attention on a sector characterized by low productivity,
poverty, and low morale.
'6 Ang Kok Jee, "A Case for the Development of Aquiculture in Malaysia," Kajian Ekonomi
Malaysia 13 (December 1976): 1-6.
37 Tan Keng Sooi, "Demography and Social Structure of the Malays of Kuala Kedah,"
Development Forum 6 (June 1971): 17-29.
Leo J. Fredericks and Raymond J. C. Wells

2 Marine Fisheries Policy Planning in West Malaysia

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2 Marine Fisheries Policy Planning in West Malaysia

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Marine Fisheries Policy Planning in West Malaysia

Author(s): Leo J. Fredericks and Raymond J. G. Wells

Marine Fisheries Policy Planning

LEO J. FREDERICKS and

Although a less "political" crop than rice, fish as a commodity has

Protein Source. Fish is a traditional and significant source of food and

1960 1963 1969 1970 1971

Animal meat (tons)

ECONOMICALLY NUMBER OF FISHERMEN

it also supports employment in ancillary industries such as boat building and

Generating Foreign Exchange. Annual exports of fish from Malaysia are

8 Malaysia:Second Plan Performanceand ThirdPlanIssues (Washington,DC: WorldBank,

emergence is due to the fact that the creation of employment is probably a

1961. 10, Coo

Modernization strategies, while resulting in increased aggregate output,

PRESE:NT CATCH MIAXIMUM SUSTAINABLE

situation was compounded, until recently, by inaction from policymakers.23

2a Fisheries development in Malaysia is entrusted mainl to the Division of Fisheries in the

Division and MAJUIKAN, it is believed, have had no specialized training in

by MAJUIKAN, the Division of Fisheries, and the Agricultural Bank of

Loans and subsidies for 1. Subsidy up to 75 percent.of eost for 8,435,680

Marketing. Fish marketing practices have long been considered detri-

Marketing is intrinsically difficult, and institutional changes need time to

33 Ibid., pp. 120-28.

Resource Conservation/Management Output/Productivity

Resource Conservation/Management Output/Productivity

Resource Conservation/Management Output/Productivity

Removal of labor surplus income raising

Fig. 1. Alternative Fishery Development Strategies.

Philippines respectively.36 Inexorably, redundant labor in the fishing sector

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