Implementation Status of the Research Components (March - August 2002)

Component 2 - Analyses of Policies, Institutions and Support Services

Fisheries Policy Analysis of the Participating Countries

Most of the DMCs do not have an independent sectoral policy for fisheries development.

Bangladesh

Bangladesh has no separate input incentives for the fishery sector, although the government has declared the sector as important. However, as part of the agriculture sector policy, subsidized credit to fisheries investors is provided. The contribution of the private sector is much higher than the existing public sector investment. The share of fisheries sector investment declined over the years 1992-1999, while its contribution to gross domestic product (GDP) increased substantially. The country has insufficient support services and quality control measures, which are extremely important for remaining competitive in the world market.

Over the last decade government has been focusing on increasing non-traditional exports such as fish and fisheries products, and textile and garment products through a series of policy measures. Among others, most important are subsidized interest rates on working capital of exportable commodities, export performance benefits, exemption of import duties and excise tax on the import of export-oriented machinery. During the last couple of years government has devalued its currency against the US dollar several times. Recently, the finance minister indicated a major change in the foreign exchange policy, that may include a floating exchange rate if the economy can accumulate a certain amount of foreign exchange reserves. As the least developed country, Bangladesh has the privilege of getting Generalized System of Preferences (GSP) treatment in the European Union (EU) countries for exporting fisheries products and garments. It has been enjoying 0% tariff advantage on its fisheries products. However, in the near future these preferential treatments in the world market will begin to wind up. It is necessary for the government and the stakeholders to have aggressive policy measures so that in the event of open competition they can maintain their level of exports.

Malaysia

The fisheries sector has been identified as a priority sector under the third National Agricultural Policy (NAP) for the period 1999 - 2010 in Malaysia. The overall objective of prioritization of the fisheries sector is to promote it as an efficient commercial industry. NAP seeks to promote intensive aquaculture technology through private sector participation, and to follow a zoning strategy that will be supplemented with necessary infrastructure and support services. Suitable finance policies, investment and tax incentives, and other investment incentives for certain fishery activities and products are available. Among these activities spawning, breeding and culturing of aquatic products, offshore fishing, harvesting and processing of aquatic products, and processing of aquaculture feeds are important.

Indonesia

The principal policy of the Directorate General of Aquaculture in Indonesia is to increase fisher communities' welfare by optimizing resources through the development of integrated aquaculture zones of both freshwater and brackish-water fisheries. The zoning strategy is to intensify aquaculture though the development of fisheries entrepreneurship. It seeks to increase quality fish seed supply through the development of private hatcheries, creating distribution and marketing channels of seeds, providing training to the fish seed farmers, and creating a network of seed information systems. Although capital needs are important in encouraging aquaculture activities, the high risk of crop failure and occasional misuse of credit, prevent banks from offering credit. A higher priority is mariculture development by small-scale farmers and cooperatives through both internal and external investment. Shrimp culture is the only activity where foreign investment is not allowed. From 1980 to 1999, the amount of foreign investment was US$169.8 million and the public investment was US$118.9 million.

Philippines

There is a well-conceived input policy and investment incentive scheme in the Philippines. There are provisions for subsidized credit for the fishers and farmers who engage in food and non-food production, processing and trading. The commercial fishers are eligible for subsidized long-term loans and tax and duty exemption to acquire or improve fishing vessels and related equipment. The duty and tax rebates are also applicable to fuel consumption for commercial fisheries.

Thailand

The government of Thailand needs to be more aggressive to nullify the shocks it has already encountered as a member of the WTO. Thailand is the first country in Asia to absorb this shock. As discussed below, their export of a few fish products is already declining. The Board of Investment (BOI) has a long list of priority activities and fish products for investment promotion. There is a subsidy scheme to assist small-scale fishers who operate with smaller vessels. The government also provides subsidized credit and price support for the tuna fishers. There is a special interest credit scheme for target fishers to buy and renovate boats, fishing gear, cages and ponds at a lower than market rate of interest (9%). The current policy on fish seed emphasizes standardization and controls over hatcheries.

The government of Thailand opened the market for import of quality fishmeal (along with maize and soybean) by reducing the tariff rate for Asean Free Trade Area (AFTA) countries and some non-AFTA countries. Importation of foreign species for breeding and reproduction purposes is tax exempted. In compliance with the WTO agreement, the government exempted custom duties and taxes on import of certain fish and fishery products effective since January 2002. In the external market, Thai fisheries have been facing tariff and non-tariff barriers. In 1999 it lost the GSP offered by the EU and was charged with 14.4% import tax, as compared to lower or no tax charges to the competitors. As a result Thai prawn lost 50% of its foreign market. Again, the EU provides a subsidy to its locally canned tuna, thus decreasing Thailand's share in the US market.

China

The fisheries sector in China has been contributing to overall economic growth as demand increases in the domestic market, due to changes in consumption patterns and in the foreign market. The Chinese government has been putting effort into keeping up with developments after its economic liberalization and reform program. It has a range of policy measures, such as fisheries production policy, feed policy, investment policy, land tenure policy, trade policy, export and import policy of aquatic products, and monetary and foreign exchange policy, etc. China considers the WTO accession as a great challenge as well as an opportunity. Accordingly, to remain competitive in world markets the country has been reviewing its existing policies. A new approach in aquatic tenure is being examined. The aim is to promote investment in infrastructure for aquaculture production, storage, processing, and delivery, and to reduce risk factors in the market.

Unlike many other countries, China expects to gain from its membership in the WTO. The average tariff on aquatic products was 14.3% in 2001, and it will be 10%-12% by the year 2004. It is expected that with this moderate decline in import tariff the fisheries sector will avoid a large import shock. Some species like prawn and fresh or chilled fish fillets will be affected by the reduction of import tariff, from 24% in 2001 to 12% in 2005. To what extent exports will be affected depends on how government responds to the changes. It is expected that the government de minimis level of support in the fishery sector will be at the level of 8.5%, which is much higher than the historical record of public investment. Two important policy measures have been identified: a) institutional reform and b) measures including sanitary and phyto-sanitary, for technical barriers to trade. China is now focusing on fish disease control and prevention in aquaculture, identifying appropriate numbers and density of sea cages, improvement of seawater systems for indoor tanks, and the development of effective vaccines.