Fishing for the right answers

  • Business
  • Saturday, 15 Feb 2014

Ahamad Sabki showing the book of the tuna industry strategic development plan book of 2012-2020 at the Malaysia Fisheries Research Institute in Batu Maung, Penang. With him is Fisheries Research Institute Director Abu Talib Ahmad.

If past mistakes aren’t properly addressed, Malaysia’s RM1.5bil tuna plan should perhaps be canned.

APPARENTLY, Malaysia is hooked on the allure of the tuna industry.

Despite the expensive failure of some tuna-related projects, the Government hopes that new investments of more than RM1.5bil in the nine years leading to 2020 will enable the country to be a significant player in the global tuna market.

On Feb 4, the Fisheries Department launched a book on the strategic plan to develop the country’s tuna industry between 2012 and 2020.

The news reports on the event didn’t explain the lateness of the launch, but according to the department, the plan is a sequel to a similar development plan for 2002 to 2010. In the book, the department said 60 tuna vessels were licensed during the earlier period to operate in international waters.

Other initiatives implemented under the first plan included the development of an international tuna port in Batu Maung, Penang; captain training; and the growth of support services and downstream activities. That’s the extent of the book’s review of the 2002-2010 plan. It’s a sketchy account of what had transpired over those nine years.

A report in The Star on the launch in Penang hints at the fact that there’s indeed a lot more to be said about this subject.

At a press conference, Fisheries Department director-general Datuk Ahamad Sabki Mahmood said Malaysia could become an international tuna port because it was near the Indian Ocean, a tuna spawning ground. He added that this could be achieved easily with good facilities and in partnership with other countries.

“We could be using the wrong methods to venture into the industry, so it is time for us to look at it from another perspective,” he was quoted as saying.

What are these wrong methods? Could it be that he was referring to the collapse of Malaysian International Tuna Port Sdn Bhd (MITP), the concessionaire for the Batu Maung port? The episode drew so much attention and criticism that it prompted a probe by the Dewan Rakyat’s Public Accounts Committee (PAC) in 2011.

Late last year, the flop made the news again amid finger-pointing and confusion over the status of the port and its problems.

In December 2004, MITP entered into a concession agreement with the Fisheries Development Authority of Malaysia (LKIM), a statutory body under the Agriculture and Agro-based Industry Ministry (MOA). The 32-year concession gave MITP the exclusive rights to develop, manage, operate and maintain the tuna port.

LKIM had a 40% stake in MITP, while the rest of the equity was owned by Bindforce Sdn Bhd, which was controlled by Sabah businessman Datuk Annuar Zaini Binyamin.

The project was plagued by delays, which in turn prevented MITP from commencing operations at the port. In November 2009, MITP defaulted on its RM240mil Islamic bonds. This triggered lawsuits, including OSK Trustee Bhd, the trustee for the bonds, successfully suing MITP to recover the debt.

However, when MITP didn’t pay up, OSK Trustee then sought to extract the amount from the Government, on the basis that the MOA had issued a letter of support for MITP’s borrowings. The Kuala Lumpur High Court rejected the trustee’s claim, but it’s not known if there’s subsequently an appeal against that decision.

In its report on the MITP fiasco, the PAC said the Government might incur a loss of up to RM209mil because of MITP’s inability to proceed with the port project. Presumably, the PAC was alluding to OSK Trustee’s claim against the Government. If the case hasn’t gone beyond the High Court, the liability doesn’t arise and the taxpayers won’t be unfairly penalised.

But what happens with the port? The PAC concludes that the project is viable because of the port’s location and the infrastructure around it. The committee adds that the project failed to take off because of the incompetent management of LKIM and Bindforce, and also because it was highly geared.

The question is, have the lessons from the debacle sunk in? Also worth noting is the demise of Langkawi Tuna Corp Bhd, which was set up by Khazanah Nasional Bhd to undertake tuna farming in Bukit Malut, Langkawi.

Another initiative that would have boosted Malaysia’s tuna dreams was Konsortium Perikanan Nasional Bhd (KPNB), which was formed to spearhead the development of the local fisheries industry by modernising the country’s deep-sea fishing fleet and by improving the processing, marketing and distribution of fish.

This too drifted into stormy weather. In March 2010, it defaulted on a credit facility of RM7.56mil taken from Bank

Pertanian Malaysia Bhd. A 70% subsidiary of Oilcorp Bhd had a 51% stake in KPNB. But Oilcorp itself landed in financial trouble and was delisted from Bursa Malaysia in January 2011.

The websites of the MOA and the Fisheries Department don’t mention KPNB at all.

The current strategic development plan for Malaysia’s tuna industry calls for the Government and the private sector to invest RM721.75mil and RM800.6mil respectively.

The bulk of the funds are meant to be spent on the Batu Maung international port (RM250mil); the development of two domestic tuna ports in Labuan and Sabah (RM200mil); the purchase of tuna vessels (RM560mil); and the lease of tuna fishing quotas (RM105.6mil).

The Government is expected to underwrite the expenditure on the ports, while the vessels and quotas will be part of the investments by the private sector.

There’s nothing wrong with Malaysia attempting a second bite of the cherry – a fishy cherry but a plump one nevertheless – but considering the past failures in the fisheries sector, there has to be a proper accounting of what has gone wrong and what has been done to prevent repeats of the mistakes.

To begin with, what was the MOA’s response (if there was one) to the 18-page PAC report on the Batu Maung port? The PAC apportioned blame for the port project’s failure largely to LKIM. Does the MOA agree with this and if so, what action has it taken?

What is the fate of KPNB? Has it been abandoned altogether? If it’s to be revived, what role does it play in the tuna industry development plan?

Most importantly, how is the MOA satisfied that the current plan can avoid the pitfalls and underperformance of the previous plan?

If there’s a lack of convincing answers, maybe it’s best that Malaysia’s tuna dreams be canned.


Executive editor Errol Oh doesn’t really fancy tuna, but will cheer Malaysia on in finding a place in the world tuna market, as long as it’s done in a transparent, competent and sustainable way.

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