Malaysia Seafood Export Industry Collapse

One interesting topic on theSun today (18 Dec o8): "Malaysia's RM2.5 billion seafood export industry near collapse". According to the paper, the collapse was because of the ban on Malaysian seafood by the European Union (UE) in June 2008.

For information, the Malaysian seafood industry is the country's second largest food export earner, with Europe as its main market. But, the EU has found environmental and hygiene standards in the Malaysian industry to be wanting.

The Malaysian Frozen Foods Processors Association (MFFPA) has raised an alarm that the industry has a lifeline of only three months left, as millions of ringgit in stocks languish in cold rooms, unable to be exported.

According to theSun, the situation is worsened because the product cannot be sold to other countries due to different packing and logistical requirements. MFFPA said the seafood exporters have reported an estimated loss in sales and production of more than RM1.5 billion to date. Further more, the players can no longer withstand the losses and pressure from commercial banks; and some 10,000 workers from the MFFPA's 25 member operators stand to lose jobs, alongside 50,000 indirect workers in related services. It is understood that many factories have started to retrench workers.

To add insult to injury, the Malaysian government has increased the electricity rate by 30%. Three months ago, the cabinet approved a RM500 million rescue package through soft loans to help industry players, with priority given to MFFPA members, however, the money has yet to be given out.

The Malaysian government has been given the Guidelines for export to the EU in 2005, but these were not implemented when EU inspectors came to Malaysia in April and May 2008. The inspection team's main concerns were fishing vessels, landing ports and agriculture farms. The processing factories were not the concern as most of the processing plants were audited by the EU Health Authority on an ad hoc basis.

According to MFFPA, the industry can be saved if the government acts fast.