Impact of Subsidies on the Economic and Environmental Conditions of Small Scale Fisheries in Malaysia

Fisheries Subsidy in Malaysia

In Malaysia, the government introduced fisheries subsidy programmes in the early 1970s through a poverty eradication scheme for small-scale fishers. Under the programme, the government provided direct assistance to enhance livelihoods of small-scale fishers. The government introduced fuel subsidy in 2008, all licensed fishers were entitled to receive the fuel subsidy. In Malaysia, government spent about RM715 million on fisheries subsidies in 2012 (EPU, 2013). Fuel subsidy accounts for 67% (RM474 million) of total subsidy in 2012. Generally fuel subsidies are viewed as bad subsidies as this subsidy contributes to capacity enhancement in the fisheries. The major fuel subsidy recipients were the small scale fishers who comprise over 70 percent of the total fishers in zone A in Malaysia. Zone A is assigned to coastal fishers operating within 5 nautical mile and is reserved for traditional fishers, small vessels operating traditional gears. Zone B is assigned to vessels below 40 GRT operating 5-12 nautical miles from the shoreline and is reserved for trawlers and purse seiners. Zone C is for vessels below 70 GRT and operating within 12-30 nautical miles. Zone C2 is for offshore vessels greater than 70 GRT and operating beyond 30 nautical miles from the shore. Fishers are the poorest group in Malaysia, excess fishing capacity thus may cause deterioration of the resource and pose negative impacts on the wellbeing of fishers (Islam et al., 2014). Fishers also have received living allowance which accounts for 24 percent of the subsidies (RM172.8 million).

The government has increased the living allowance for fishers operating in zone A from RM200 to RM300 per month in 2015. The fishers in zone B and C receive the living allowance of RM250. All licensed fishers are entitled to receive fish catch incentives: RM0.10 per kg for boat A and B and RM0.20 per kg of catch for zone C boats. Fisheries is complex in Malaysia as it has multispecies and multi gear characteristics. In Malaysia, fisheries policies have addressed poverty alleviation and livelihood of small scale fishers. The impact of subsidies should be examined to understand whether the poor fishers can improve their wellbeing through fuel and non-fuel subsidies. The limited studies on fisheries subsidies in Malaysia provides the backdrop for undertaking this study (Viswanathan et al., 2013). The objective of this study is to determine the socioeconomic and environmental impacts of fisheries subsidies in Malaysia. The study offer useful information to understand the relationship between fisheries subsidy and resource sustainability especially the contribution of subsidy towards livelihoods of fishers in Malaysia.

Study area, data source and questionnaire

The study was conducted in the states of Kedah, Selangor and Terengganu in Peninsular Malaysia. These states are considered as the most important sites for the small scale fishers in Peninsular Malaysia. The fishery in these areas is mainly characterized by small scale artisanal fishers with very low catch relative to larger scale commercial fishers (boat B and boat C). Fishers rely mostly on fishing for their livelihood, with limited access to other employment. The data for this study were obtained from face-to-face interviews with fishers using a structured questionnaire. Prior to field data collection, focus group discussions (FGD) were conducted to improve the questionnaire and gather information on fishing practices, gear used, fisher’s income and expenses. The questionnaire included household characteristics by type of fishing boat, fishing gear, subsidy indicators; catch and costs; household income from fishing and non-fishing sources; and respondents’ perceptions about fisheries subsidies on their livelihoods. Respondents were selected from a list of fishing vessels, by district, provided by the Department of Fisheries office. Respondents were randomly selected from the list of boat A, boat B and boat C operators. Interviews were conducted by a group of trained enumerators. Each survey took around 30 minutes to complete. A total of 246 respondents were interviewed from April to August 2015. The average monthly fishing income was derived by deducting day-to-day operational costs of a fishing vessel which consist mainly of fuel, ice, food and bait. Fishing income was computed by catch per trip. The study used descriptive statistics to analyze impact of subsidies on the income of fishers by different category of fishing boats.

Sample characteristics

The sample respondents covered three category of fishing boats, boat A, boat B and boat C operating their gear in their respective fishing zone. Among the respondents, 74% were interviewed from zone A, 19% from boat B, the rest 7% interviewed from boat C. The mean engine horse power is 36.2, 238.7 and 364.6 for the respondents operating in zone A, zone B and zone C respectively (Table 1 ). The results show that the artisanal small scale fishers use significantly low powered engine, spent less fishing hour, and harvested very low amount of fish compared to the boat used by commercial fishers (boat B and boat C).

Fishing effort

Fishing effort was calculated based on the number of hours spent per fishing trip per month by type of boats which shows that the fishers from zone A spent 157 hours per month for fishing, while the commercial fishing boats (boat B and boat C) spent relatively more fishing hours for fishing (Table 1 ). The results indicate that fishing effort of small scale fishers was substantially different from other commercial fishing boats. Average fish catch per hour of fishing effort show that boat zone B were able to catch 12 times higher catch compared to boat A (Table 1 ). Catch per hour for zone A boat was significantly different from commercial boats. The difference in fishing effort between boat zone A and other commercial boats was relatively less, 1.6 (boat B) to 2.2 (boat C) times, while the difference in fish catch was 12 times to 16 times higher compared to boat A. This indicates that the relatively low powered boats operating in zone A were less efficient compared to the larger engine powered boats.

Operational expenses

The results show that the respondents spent more than 70% of total operational cost for fuel use (Table 2 ). Food at sea is the second highest cost spent by zone A fishers, while the larger vessels (boat C) spent relatively higher for ice1. The results also show that the quantity of subsidized fuel was not adequate. Majority of the respondents from boat A obtained additional fuel with a monthly value of RM66 from open market, while half of the respondents from boat zone B obtained additional fuel with a value of RM1, 340 from outside (Table 2 ). The results indicate that some larger commercial boats (boat zone B and boat C) had to spent more for additional fuel from outside in order to operate fishing (Table 2 ).

Income from fishing

Monthly average fishing income for small scale fishers was RM3,798, the income for group B was RM25,989 and RM16,125 for the boat C. The results show that income for the boats operating in zone A was relatively low compared to other boats. The results indicate that the larger boats were able to invest in fishing equipment that substantially increased catch and income. The evidence suggests that the larger powered boats (boat B) could capture major benefits from fisheries, it seems that there is inequitable distribution of benefits in fisheries. The small scale fishers have failed to increase substantial income from fisheries subsidies. The results supports other study finding in Malaysia, where it was found that the catch per unit of effort (CPUE) was significantly higher for purse seing gear (boat B and C) but the productivity was relatively low compared to other traditional gear and trawls (Islam, Noh & Yew, 2011).

Benefits from subsidies

Majority of the respondents from boat A obtained average RM416 per month from livelihood subsidies, cash aid (Bantuan Rakyat 1 Malaysia, BRIM) and catch incentives while the larger boat (boat B and C) respondents received average RM948 per month. The respondents were asked about their views on the impact of fisheries subsidies for their livelihoods. Majority of the small scale fisher respondents agreed that subsidy has contributed to increase their income. However, 54.9% of respondents (boat A) reported that their incraesed income was not adequate to meet their daily expenses (Table 3 ). The boat A fishers have also improved their household assets.

About 66% of respondents from boat A agreed that government subsidy has contributed to their wellbeing as fishing is the only livelihood option for almost all fishers in the coastal areas in Malaysia. Some alternative income generating programmes should be created to enhance livelihoods for the small scale fisher households. Creation of non-fishing economic activities are required. These activities could be in the tourism area or in the processing of artisanal products. This may reduce fishing effort and dependency on fishing activities. Diversification of livelihood options could improve fishers income and wellbeing as in other countries such as Bangladesh (Islam, Yew & Viswanathan, 2014). Their perceptions about fishing effort show that fishers of both zone A and B have been encouraged to go out to fish more days. The result supports the evidence that fuel subsidy has reduced fishing operational costs. The important results of this study suggests that subsidy has attracted fishers that lead to increase fishing effort. Fisheries subsidies are benefiting the artisanal fishers but excess fishing create pressure on the resource and the small scale fishers were not able to capture benefits from fishing. These problems cannot be reduced by elimination of subsidy, effective planning and designing of subsidy programmes may improve the wellbeing of fishers in Malaysia.