indonesia's tuna fisheries: past, present and future prospects

This article analyses the rapidly developing Indonesian skipjack and tuna industry. After briefly presenting information on the size of the resources and their current levels of exploitation, the article focuses on government initiatives to develop the tuna fisheries to achieve the maximum financial benefit for the economy, ie to increase the value added within Indonesia. The recent success of the different business/ national development strategies adopted by both the private and state firms is analysed. Particular attention is given to developments in fishing methods and in the future size and structure of the Indonesian tuna catching and canning industry within SE Asia.

Dr James Kevin McElroy is Senior Fisher- ies Economist, Rogge Marine Consulting GmbH, JI. W. Monginsidi, No 11-13, Lan- tai 2, Kebayoran Baru, Jakarta Selatan, Indonesia. The opinions expressed are those of the author.

‘Comparatively little has been published on Indonesia’s marine fishing industry to date despite it having the world’s largest territorial, archipelagic and second largest EEZ sea areas. Even less has been published on the physical and economic structure of its fishing industry. In part this reflects the relatively underdeveloped state of Indonesia’s fisheries. However, various reports are available in the files of the two main development banks in this country, the World Bank and the Asian Development Bank, in the Directorate General of Fisheries (mostly in Indonesian) and in the various private and state fishing company offices. Where possible, these have been consulted.

The main published reference works re- lating to tuna are all recent. ‘Indonesian

continued on p 286

Indonesia’s tuna fisheries

Past, present and future prospects

James Kevin McElroy

The tuna resources of Indonesia are some of the largest, most valuable and least exploited in the world.’ Today, Indonesia is probably the world’s fourth largest producer of tuna, after Japan, the USA and Spain (see Table 1). Production of skipjack and tuna caught by the Indonesian fleet reached between 140 OOt&lSO 000 mt in 1988, equivalent to about 6% of world production, up from 135 000 mt in 1987; and exports (excluding canned tuna) reached between 40 000-45 000 mt, up from 34 000 mt in 1987. This puts Indonesia among the top five exporters of fresh and frozen tuna in the world today (see Table 2). In 1988, it became the fourth largest exporter of fresh sashimi tuna, after Taiwan, Guam and the Philippines. And while at present, it is only a small producer and exporter of canned tuna - 2% of world exports - (see Table 3), the tuna canning industry is expanding rapidly and Indonesia could become the dominant canned tuna exporter in SE Asia over the next five to ten years.

The main growth markets are Japan for sashimi-quality, fresh (air- freighted) or deep frozen (-55°C) tuna; the USA and Europe for skipjack/tuna canned in Indonesia; and the domestic market for fresh, salt-boiled or smoked skipjack/tuna.

In 1988, fresh and frozen sashimi-quality tuna fetched US$4 200- 6 800 and US$2 000-4 700 per tonne (YF-BE) respectively (c & f) compared to US$850-1 200 per tonne (c & f) (SK-YF) for canning quality (-1S’C) frozen tuna, which has traditionally made up the bulk of Indonesian tuna exports. Meanwhile, prices on the domestic auction markets ranged between US$150-1 20O/mt, depending on location and season. Despite this price overlap, there is generally little competition between the domestic and export markets for tuna supplies. The reasons are structural and geographic; the former is supplied by medium and small-scale fishermen, the latter by large-scale enterprises; and the main tuna resources and fisheries are in east Indonesia, whereas the main population centres are in the west of the country (Java, Sumatera).

The major structural change that has taken place in the past 15 years is the shift away from foreign vessels taking the bulk of the tuna caught in Indonesian waters and supplying their home and international markets directly, towards a predominately Indonesian-owned fishing fleet, supplying the bulk of its tuna catch to its own domestic market.

0308597X/89/040285-24$03.00 0 1989 Butterworth & Co (Publishers) Ltd 285

Table 1. World tuna catch by principal countries 197C1988.

Sources: Adapted from UNIDO, Manne Resource lndusfnes Development in East Indonesia, INS/ 851015, Jakarta, June 1987, with FAO ‘Fishenes statlstlcs - catches and landings’, FAO Year- book 7986. Vol 62, and with data from Infoffsh Markebng Dgesf. Globefish and Fisfnng News Infemabonal. various recent issues. Note: Ranking In Table based on 1986 statistics, except for Indonesia which IS based on latest statlstlcs Table excludes tuna-llke ‘Euthynnus’ species

continued from p 285 marine capture fisheries’ by Barley et al, despite its annoyingly common numerical mistakes, provides the best general de- scription up to about 1982, C. Bailey, A. Dwiponggo and F. Marahudin, ‘Indonesian marine capture fisheries’, KXARM Studies and Reviews, Vol 10, Manila, Philippines, DGFIMRFI, Minlstry of Agriculture, Jakar- ta, Indonesia, 1987. J. Marcille et al, ‘Tuna fishing in Indonesia’, Collection Travaux et Documents’ No 181, ORSTOM, Paris, 1984, is comprehensive and authoratitive, again up to about 1982. Several recent reports, statistical tables and maps of fleet effort and catch have been published by the IndePacific Tuna Commission which give a clear picture of what has been happening, particularly on the Indian Ocean side of Indonesia; and the South

Japan USA Spain Indonesia Philippines Taiwan France Korea Mexico Venezuela Solomon Is Group total

1970 1975 1980 1982 1983 1984 1985 1986 1987 1988 (000’s mt)

502 542 214 259

47 77 21 39 52 84 89 90 50 58

n/a 119 11 23

2 1

(109; 129;

723 674 696

226 199 266 101 131 127

73 90 103 79 103 119

106 104 104 72 69 85

110 108 89 34 45 38

4 4 57 23 20 34

1 551 1 547 1718

264 154 111 104 99

189 71 78 63 36

857

653 772 234 252 179 183 121 123 135 140-150 125 137 n/a n/a 101 109 132 92 108 93 105 64 91

41 30 41 (1793203 (2 021)

The fleets of foreign vessels hacl been :ilmost totally replaced (at least

until mid-1WiS) hy foreign investment within Indonesia to create new.

high xl&xi voluc. export-oricntcd. tuna fishing companies. These

young coinpunie now doniinatc the Indonesian tuna export industry - ii

position previously held (since exports l>eg;111 in 1975 up until 1%3.3) by

the several, nc;lr-h:lnkrupt, state fishing companies.

The current large influx of foreign tuna vessels (all long line), 80%

Tuiwanese. almost csclusively fishing for fresh tuna. is related to the

shortage of suitithlc local vessels. Although operating with foreign

vessel liccnccs. they usu;dIy land their catch in Indonesia for export by

air, ;lrrangcd hy their local partner.

This :u%clc :111alyxs the past, present ;tnd probable future size :md

shape of this m;~jor Indonesian industry. ;md examines the way the

industry h;bs and is responding to changes in the market supply :tnd

dcmancl situation, and in government policy.

Pacific Commission gives a similarly de- tailed picture for the west and central Pacl- fit. IPTP, At/as of industrial Tuna Longline Resources and production and Purse Seine Fisheries in the lndian Ocean, IndePacific Tuna Development Incionesin‘s 82 000 km of coastline is Ihe longest in the world. This

and Management Programme, April 1988; ~OLIII~ archipelagic nation has total territori:ll and EEZ waters of 5.X IPTP, At/as of the Tuna Fisheries in the Indian Ocean and Southeast Asia Re-

million km’.

gions, Ind*Pacific Tuna Development The Directorate General of Fishcries’ has estimated annual sustain-

and Management Programme, May 1988; IPTP, ‘Report of the Experf Consultation

;lhle yield for akipi:rck ( KNISIII-~~~~I~S pelrrrnis) and tuna (yellowfin and

on Sfock Assessment of Tunas in the higqc) is 342 000 mt, split skipjack 276 000 mt and tuna 166 000 mt (see

Indian Ocean ‘, Mauritius, 22-27 June Table 3). The IOX6 catch” reached 1 22 700 mt. which represents 2X’% of

continuedon p 287 the estimated iVSY (23% for large tuna. 30% for skipjack). Catches

Sources- Adapted from UNDO. Manne Resource Industnes Development ,n East Indonesfa. INS/ 85/015. Jakarta, June 1987, with FAO, ‘Fishery statistics - commodities’, FACJ Yearbook 1987, Vol 65, and with data from lnfofish Markebng Digest, Globefish and Fishing News Inlernational. InfernaGonal Trade Stabstics for F&e&s Com- mod&es 1982-1987, and unpublished data Estimates for lndonesla for 1988 made by author based on latest information. Notes: ‘Wankings based on latest estimates for Indonesia, and 1986 statlstlcs for other countries “Estimated by Infofish. ‘Imports of tuna to Indonesia are negllglble

Table 2. Exports and imports of fresh and frozen tuna 1980-1988.

1980 1982

Exports by principal producers Korea 118 81 France 17 37 Mexico 4 6 Japan 91 40 Indonesta” 11 19 Spaln 21 53 Solomon Islands 22 15 PhIlIppines 49 15

Imports by major importerb,c USA 269 222 Japan 92 127 Thailand 0 0 Italy 77 77 Ivory Coast 14 25

1983 1984 (000’s mt)

188 88 82 182 143 46 37 62 84 83

2 0 29 66 72 56 89 47 70 47 20 15 18 24 34 40-45 46 26 29 52 38 30 33 27 40 26 36 14 13 12 9 11

199 183 183 207 200 142 111 146 148 202

0 21 81 205 159 74 83 105 110 120 28 34 34 38 45

1985 1986 1987 1988

286 MARINE POLICY October 1989

Table 3. Production and exports of canned tuna by major producing countries, 1980-1988.

Sources: Adapted from UNIDO, Marine Resource industries Developmenf in East Indonesia, INS/ 651015, Jakarta, June 1987, with FAO, ‘Fisheries statistics - commodities’, FAO Yearbook 1987, Vol 65, and with data from lnfofish Marketing Digest, Globefish and Fishmg News International, international Trade Statistics for fisheries Com- modities 1982-1987, and unpublished data. Estimates for Indonesia for 1986 made by author based on latest Information. Notes: Wrtually the whole of Indonesia’s canned tuna production is exported. For the world as a whole, exports account for about 23% of production. b less than 0.5. c- no exports. d( ) estimated.

continued from p 286 1988, IPTC, October 1988; and IPTP, ‘Col- lection Volume of Working Documents, Vol 3, presented at the expert consultation on stock assessment of the tuna in the Indian Ocean, IPTC, October 1988. Also John Hampton, ‘Status of tuna fisheries in the western and central Pacific Ocean’, Pro- ceedings 2nd Southeast Asian Tuna Con- ference, Kuala Trengganu, Malaysia, IPTC, 22-25 August 1988, pp 187-200. Finally, James McElroy, ‘Indonesia’s tuna fisheries: a case study of its development policy and industrial structure’, Proceed- ings of the Fourth Conference of the Inter- national institute for Fisheries Economics and Trade, 8-12 August 1988, Danish Institute of Fisheries Economics, Esbjerg, Denmark, 1989, provides a recent economic analysis of this industry. Although broadly similar, the present article concen- trates much more on the recent major developments which are helping reshape the Indonesian tuna industry into the dominant international player, along with the Philippines, within SE Asia. ‘DGF/MFRI, Evaluation Report on Marine Fisheries Resources in Indonesia’s Ter- ritorial and EEZ Waters, Directorate General of Fisheries and Marine Fisheries Research Institute, Ministry of Agriculture, Jakarta, Indonesia, 1983 (in Indonesian). “DGF, Fisheries Statistics of Indonesia 1986, Directorate General of Fisheries, Ministry of Agriculture, Jakarta, Indonesia, 1988. These are the latest published statistics. “IPTP, At/as of the Tuna Fisheries in the /ndian Ocean and Southeast Asia Re- gions, op tit, Ref 1. Landing statistics and hence MSY estimates for small tuna and tuna-like species in SE Asia remain un- satisfactory because of the common practice of grouping several species (often

continued on p 288

Source: DGF/MFRI, Evaluation Report on Marine Fisheries Resources Potential in East lndonesian Terntorial and EEZ Waters, DGF/MFRI, Jakarta, 1983; and DGF, Fisheries Statistics of Indonesfa 1986 DGF, Jakarta, 1988. Note: 1986 landings of eastern little tuna (tongkol) 112327 mt.

1980 1982 1983 1984 1985 (000’s mt, product weight)

Production by principal producer USA 275 246 268 265 250 Japan 95 113 125 130 121 Italy 40 46 52 59 65 Thailand b

;5 a 16 40 87

France 30 35 40 42 Total 602 637 704 783 796

Exports by major exporter Thailand - 6 18 40 a7 Japan 38 36 37 46 34 Philippines 11 19 24 23 25 Ivory Coast 18 19 24 23 22 Indonesiaa _c 1 2 2 1 Total 110 137 172 200 243

1988 1987 1988

294 297 114 112

79 84 142 145 49 49

915 938

142 30 26 24

(302s)

145 140 15 26 29

4 76 304

have been rising rapidly, at 10.75% annually, over the previous 12 years (1975-1986).

A separate MSY assessment for the tuna-like species (predominantly eastern little tuna (tongkol)) of 191 000 mt has been made recently.3 The 1986 catch was 112 300 mt, representing nearly 60% of its MSY.

The total tuna and tuna-like catch was 235 000 mt in 19X6 (see Table 5). The provisional value for 1987 is 257 000 mt.

In this article, the term ‘tuna’ is most commonly used generally, to cover skipjack and tuna, but occasionally specifically, to refer to tuna (yellowfin and bigeye) alone.

Pattern of exploitation

The pattern of exploitation of tuna and tuna-like species within Indone- sia can be subdivided into three areas; the shallow waters of the Sunda Shelf; the deep, exposed waters of the Indian Ocean; and the deep, oceanic waters of east Indonesia, stretching from the Makassar Strait to the Pacific Ocean off the north coast of Irian Jaya, including the highly productive internal waters of the Banda Sea (see Figures 1 and 2).

Sunda Shelf

The tuna and tuna-like catch within the Sunda Shelf area is incidental (< 5% of the total fish catch), consisting mostly of tongkol (> 80%). It is taken mostly by gill net and purse seine.

Only small amounts of tuna are taken (mostly as a by-catch) by (un)licensed foreign vessels fishing in this area.

Indian Ocean

The tuna and tuna-like catch along the Indian Ocean coastline is more significant (2 20% of the total fish catch), but again consists mostly of tongkol (SS-60%). The skipjack/tuna catch amounted to 22 I50 mt in 1986. Longline, purse seine and trolling are all significant. In addition, foreign (un)licensed longline vessels (Taiwanese, Korean) also probably took between 2 000-4 000 mt that year.

Table 4. Tuna resource potential and exploitation by territorial area.

Territorial waters EEZ waters Total % in Landings 1986 % exploited by ton/year ton/year ton/year EEZ ton/year Indonesia

Tuna 62 867 83 435 166 302 50 36 902 23 Skipjack I76 645 98 760 275405 36 63 764 30 Total 249 512 182 195 441 707 41 122 666 28

MARINE POLICY October 1989 287

Table 5. Indonesian production of tuna by species.

1978 1979 1980 1981 1982 1983 1984

Tuna 13412 17899 20 898 25 239 28 080 26 088 30 697 Skipjack 33515 42 834 51 818 57 430 61 577 76 790 80 658 Tongkol 55 244 66 582 76 797 87 731 106 012 103 179 103 179 Total 102 171 127 315 149 513 170 400 195 669 206 756 214 534

Source. DGF, Fishenes Sfalisffcs of Indonesia, 1984, 1986, DGF. Jakarta, 1986, 1988 Note: aEstimates for 1987 and 1988 made by author based on latest available information

1985 1986 1 987a 1988=

33 672 38 902 43 700 48 000 87 448 83 764 91 300 100 000

111 630 112327 122 000 122 000 232 750 234 993 257 000 270 000

continued from p 287 unrelated) under one common name. In Indonesia, tongkel represents a group of species in which Euthymus affinis, a tuna- like species, is dominant. But it also in- cludes some true tuna species. ‘Author’s estimate. ‘ibid. 7See Ref 12; also John Hampton, op tit, Ref 1.

Figure 1. Distribution of major areas

of fishing for tunas in waters in and around Indonesia.

The centre of the Indonesian tuna industry is east Indonesia, which accounts for 80% of the Indonesian tuna catch and traditionally has been the source (ie including Jakarta-based vessels) of X0-95’%, of tuna exports. This dominant position changed in 1988. at least as far as the fresh tuna export fishery was concerned, with the Indian Ocean,

particularly to the south of Java Island. accounting for most of the catch. East Indonesia is ;I vast region of over 3 million km’ which can be

broken down into four fishing areas/bases; Sulawesi; Maluccu; lrian Jaya; and Bali/West Nusa TenggaraiEast Nusa Tenggara/East Timor (this last area overlaps with part of the Indian Ocean fishery).

In east Indonesia, tuna and tuna-like species account for between 1%70% of the total fish catch (increasing towards the east). Here. skipjack is the dominant tuna species caught, although the larger tuna may dominate in some areas or seasons.

Here, too, tuna is mainly caught in a directed fishery. with skipjack pole and line (caught mostly without using payaos) dominant (56 500 mt in 19X7”) and tuna longlinc (large and, very recently, medium scale) also significant (10 700 mt in 19X7).” Tuna purse seiners operate successfully off the north coast of Irian Jaya and arc becoming increasingly

significant (author’s estimate 12 400 mt in 1987 from five vessels.

including one foreign (US) superseincr landing to Bali Raya). Other methods add 20 OOO+ mt per year.

Foreign purse seine and longline vcssels (Japanese. Taiwanese and

Korean) arc active in the Sulawcsi Sea and Pacific EEZ. No reliable figures exist for the proportion of their catch taken within Indonesian waters but, on the available evidence, their catch probably lies within a range of 20 OOOPIO 000 mt per year.’

Of the more than 100 000 mt of tuna caught in 19X7 by the Indonesian

fleet in east Indonesia, Sulawesi took an estimated 4674, Maluccu 27% and Irian Jaya 21%. However, in terms of the total Indonesian

MARINE POLICY October 1989

Indonesiu’s lunu fisheries

950 100” 105” IIOO 115” 120” 125” 130” 135” 140’ 145’

25’

0”

Figure 2. Geographic distribution; ,o” coastal tunas. Source: FAO Fisheries Technical Paper 278, 1986.

’ a hain fishing ar;as ’ Areas of geographic distribution

Areas of abundance

- 3 400 800 <ilometres I I I 1 I ~ ~-

95” 100” 105O llo” 115O 120” 125” 130” 135’ 140’ 145”

25”

fresh/frozen export volume of 34 000 mt, Irian Jaya was dominant, accounting for IS 500 mt (46%), with Sulawesi and Maluccu contribut- ing 10 300 mt (30%) and 3 500 mt (10%) each. The remaining 14% came from Jakarta (3 140 mt, 9%), Bali-East Java (1 480 mt, 4%) and Riau-West Kalimantan (3.50 mt, 1%).

Skipjack/tuna export growth

Tuna was first exported directly from Indonesia in 1975. Since then, exports have grown rapidly (see Figure 3). The period from 1981-1985 was very depressed for the tuna catching and export industry worldwide, with high fuel costs and falling market prices; and the Indonesian industry was no exception. However, since late 1985, substantially lower fuel prices and increased demand in all three major import markets of the USA, Europe and Japan have helped to stimulate tuna production and export growth worldwide.

In Indonesia too, tuna exports have been given a sustained boost since 1985, as export prices doubled and domestic costs were cut (by a 31% devaluation of the Indonesian Rupiah and low domestic inflation). Additionally, the shift towards catching and exporting a greater proportion of higher-value, sashimi-quality, tuna (fresh and frozen) has

40

m Frozen mt a Fresh mt 0 Canned (LWE) mt

Figure 3. Total skipjack/tuna exports, fresh/frozen/canned. 1982 1983 1984 1985 1986 1987 1988


‘Jakarta Post, 22 February 1989. ‘The fortnightly investment Approvals Re- ports issued by the Investment Coordinat- ing Board (BKPM), Jakarta, 1988/89 (various). “UNIDO Marine Resource industries De- velopmeh in Easf Indonesia, UNIDO INS/ 83015, Jakarta, June, 1987.

increased earnings. Export volumes of freshifrozcn skipjackituno rose

by 28% in 1985. 35% in I%6 and 40% in 1087. to 33 000 mt worth US$31 million (FOB). Canncd exports reached about 4 275 mt worth US$8.3 million (FOB). (The official statistics understate the actual value of exports. Basccl on internationally quoted prices, Indonesian tuna exports easily topped US&l5 million in lW7. ;I minimum of 15’!4, above the values reported to govcrnmcnt.)

Indonesia’s prospects for sustaining the recent rapid improvement in export turnings from tuna in the period l%-WIWO appear equally bright. Fuel costs have remaincd fixed in Rupiah terms since 19X4 and. though likely to rise in the fiscal year IWO/~ I, arc low by international standards (US$137/mt fuel oil in Fcbruarv I%-#). Lahour is exccptional- ly cheap (US$I .O-3.O/day) aind trained labour productivity is cornpa- blc to that in other tropical tuna exporting countries. Also. the resources are abundant and locallv available. As ;I result. the tuna export industry in Indonesia has strong comparative advantages. As evidcncc of this, foreign (joint venture) and domestic companies are investing heavily in additional fishing and procasing capacity.

Over the fiveyear period IW-CIWS, some US$6X.6 million of the total US$l70 million spent on fisheries was invest4 in the tuna industry. of which US$63.7 million came from the private sector anti US$4.9 million from the four state skipjack/tuna fishing comp;mics.s However, investment applications by both new and expanding tuna fishing and processing companies made to the lnvcstmcnt Coordinating Board in IWX alone committed more than d~~uble this sum.” And despite the year-end fall in pricey, this wave of interest by foreign and local investors in the Indonesian tuna industry is persisting.

Structure of the Indonesian tuna industry

There arc six types of indigenous tuna fishing ‘enterprises’ which are grouped for planning purposes into small. medium and large scale. In addition, there arc foreign-registered vesacls which are limited to the EEZ (see Table 6).

Although the smnll- (artisanal) and medium-scale enterprises account for most landings (currently about 7S”X). in terms of exports the most important sector is the large scale (currently accounting for about X0’%).

Below, WC briefly review the historical development of and map out the prospects for the different types of large-scale investment and fishing method. And we highlight the impact of government policy on the development of each.

Tltc [orcigtt vc.r.scl ,flcrt. Foreign skipjack/tuna fishing vessels entered Indonesian waters (as currently dcfincd) in three ‘waves’, each ‘wave‘ rcprescnting a different fishing method (respectively. pole and line. longline and purse seine), and each spcarhcaded by the Japanese. Subsequently, each ‘wave’ of foreign vessels has in turn declined, giving way to an expanding domestic fleet (see Figures 4 and 5). The *first wave’ of foreign tuna vessels commenced operations in the Maluccus in 1WS. It reached its peak in 1074, when the Japanese pole and line fleet alone, operating with mostly 350 gt vessels, caught over 60 000 mt ot skipjack.“’ This ‘wave declined sharply after 1973, largely due to high unit fishing costs and problems of access (which affected livebait supplies).


Indonesia’s funa fisheries

Note: aAll large-scale investment companies are export-oriented. ‘All such companies, with the exception of state fishing companies, are restncted to fishing in areas specified in their licence. Foreign-registered vessels are restricted to one or more of the five EEZ areas. Joint venture companies are restricted to fishing archipelagic and EEZ waters.

Table 6. Structure of Indonesian skipjack/tuna fishing industry. -

Type of enterprise

Small-scale sector 1, Artisanal fishermen

Medium-scale sector 2. Individual

Entrepeneur(s)

Source of capital 1966 catch Comment ownership %

Domestic informal sector 100% Indonesian owned

Domestic formal/ informal sector 100% Indonesian owned

Large-scale sectc@ 3a. Private National

Company (SN)

3b. Private Nattonal Company (SN)

Domestic 100% Indonesian owned

Foreign/domestic 51% state and/or Indonesian owned, 75% after 1974

4. Domestic Company (PMDN)

Foreignidomestlc 51% Indonesian owned

5. State Fishing Company (PN/PT)

6. Joint Venture Company (PMA)

7. Foreign-registered vessel

Foreign loan 100% state-owned

Foreign/domestic 20% Indonesian owned, rising to 51 in 10 years

%

If >US$l.Om and >85% production exported, 5% Indonesian owned rising to 20% after five years

Foreign. Foreign- owned

25 By definition operate vessels without engines. No restrictlon on fishing area

50 Own one or more motorized vessels <30 gt. Usually

SUPPlY domestic market. May operate in PIR scheme or supply cannery. No restriction on fishing area

25 No foreign component

Some foreign components (expertise, vessels). Aim to nationalize fishing companies, etc

No restrictions on fishing area

For C/SE Sulawesi, Maluccu, lrian Jaya, NTB/NTT/TT

Restricted to EEZ

Legal basis

No regulations

Regulations (vessel licence, business licence. building permits)

Provincial Regulations

General regulation on licensing for marine fisheries enterprises (GOI, No 64, 1957, No 9, 1985)

Domestic Capital Investment Law (GOI. No 6,1968, No 12.1970)

Minister of Agriculture Decrees (various)

Foreign Capital Investment Law (GOI. No 1,1967,No 11.1970) Minister of Agriculture Decree June 1986

Foreign fishing in Indonesian EEZ (GOI No 51983No15, 1984). Minister of Agriculture Decrees 4 17/ 88.900/88


Figure 4. Indonesia’s tuna catch development, 1975-2000.

“This assessment is based on three separate bits of information: the size of the Japanese distant water purse seine fleet operating in this area remained stable at 39 between 1983-1988 (IPTC, 1988); the Japanese requested 19 foreign-registered purse seine vessel licences at the start of the so-called ‘interim measures’ (read ‘ban’) in January 1984, which have never been issued by the Indonesian authorities. Nevertheless, it is generally considered that all of these vessels did in fact fish in this area since before this time (ie 1983, before a licence was required) and con- tinue to do so. The Indonesian Navy has only four patrol boats to police east In- donesia’s waters, an area of over 3 million km’, and had no surveillance aircraft be-

continued on p 293

First ‘wave’ Second ‘wave’ Third ‘wave’ state fishing private purse seiners companies long line P&L and

I companies , long liners ,

1980 1985 1990 1995

It was rapidly superseded in terms of skipjack catch by the ‘third wave’, consisting of large (SOW?iO gt), autonomous, tuna purse seiners. Fishing trials began off north Irian Jays/Papua New Guinea in 1974. By 1980, half (14 vessels) of the rapidly expanding Japanese distant water tuna purse seine fleet caught en estimated 25 000 mt of skipjack in this area. Between lY83-10X8, a Japanese purse seine fleet of 39 vessels is understood to have operated in this area. Their catch alone is estimated at 40 000~60 000 mt/year, perhaps half taken in Indonesian waters.”

Besides the Japanese, tuna purse seine vessels from South Korea and Taiwan are known to have operated off the north coast of Irian Jaya in recent years (also at least one US superseincr). However. since January lY84, no foreign pole and line or tuna purse seine vessels (with the one exception of the US superseiner) have operated legally within any part of Indonesia’s 200-mile EEZ.

By contrast. the ‘second wave’, which commenced in 1062, still has :I

1

Figure 5. Schematic development of the cumulative foreign and Indonesian skipjack/tuna catch in Indonesian EEZ

waters (as currently defined).

Indonesian catch /

” 1950 1960 1970 1980 1990


continued from p 292 fore 1989, thereby producing a miniscule risk of being caught and successfully pro- secuted for vessels operating illegally in the main purse seine grounds some lO- 300 miles offshore on either side of the PNG/lrian Jaya border, see Marcille, op tit, Ref 1, pp 39-45. And the recent catch rate for Multi Transpeche Indonesia’s three purse seine (650-750 gt) vessels operating in the same area throughout the year from their base in Biak, lrian Jaya, has averaged 3 000 mt/vessel/year. “FAO, implications of the Extension of National Jurisdiction for Fisheries Manage- ment and Development in Indonesia, SCSI DEV/80/20, 1980. ‘%ee Figures in John Hamilton, op tit, Ref 1. Also, over the past five years (1984- 1988) the Indonesian Navy has arrested about 100 Taiwanese vessels (mostly longline, gill net) for fishing illegally. Some of the vessels have been confiscated when the fines imposed have not been paid. These vessels have been given to the state fishing companies or sold to domestic fishing companies, and have helped ease a desperate medium-sized vessel

Indonesiu’y tuna fisheries

presence, which is today on the rise again. This ‘wave’ first consisted of Japanese, followed by Taiwanese and Korean, longline vessels, operating throughout the Indian and Pacific Ocean EEZs and in the Banda Sea (from 1970-1980, the latter area was supposed to be restricted to Japanese longline vessels under the Banda Sea Agreement). This ‘second wave’ probably reached its first peak between 1975-1977, when the total foreign vessel longline catch taken within 200 miles of Indonesia averaged 7 100 mt, with the Japanese fleet again taking the lion’s share (5 000 mt).12 Between 1980 (the year Indonesia declared a 200-mile EEZ) and 1983, Japanese longline vessels were restricted to the northern waters of Indonesia’s Pacific EEZ, since when they have ceased to fish (legally, at least) within Indonesian waters. Nevertheless, foreign (including Japanese) vessels are known to operate here, particularly along the island dotted ridge separating the Pacific Ocean from the Sulawesi Sea (ie between Mindanao and N Sulawesi-N Maluku) and the Irian Jaya (Waigeo) and Marshall (Helen-Anna) Island ridge, where on a seasonal basis hook rates are particularly high.13

As of 28 March, 1988, there were 15 foreign licensed vessels fishing for skipjack/tuna in the Indonesian EEZ, 14 longline (nine Taiwanese, four Honduran and one Korean) and one super purse seiner (US). However, for conservation reasons and in the most blatant attempt yet to encourage foreign vessels to set up their base in Indonesia, the Government of Indonesia (GOI) decreed in June 198X that new licences for foreign vessels will only be issued for line (pole and line or longline) boats (all net boat licences to be withdrawn when the current vessels retire from this fishery); all fish caught must be landed within Indonesia for marketing or processing; and a minimum 30% of the crew should be

shortage. See for example Fishing News International, February 1989, p 7; IPTP, op

Indonesian. This regulation was extended six months later to apply to all

tit, Ref 1; IPTP, Report on the Joint Tuna f oreign vessels (including those with existing licences), making licences

Research Group Meeting of Philippines available only through Indonesian companies to encourage them to set and lndonesia, Indo-Pacific tuna development and management programme, IPTPi

up joint venture companies for fishing and processing.‘4

85/GEN/8, Colombo, Sri Lanka, November This is only the latest in a long line of policy initiatives to attract

1985; IPTP, Report on the Expert Con- additional foreign investment into Indonesia’s fisheries, particularly in sultation on Stock Assessment of Tuna in east Indonesia. the Indian Ocean, IPTP/86/GEN/ll, De- cember 1986; and IPTP, Report of Work- shop on Small Tuna, Seerfish and Billfish GOI development policy in the Indian Ocean, IPTPl87lGENI13, February 1988.

The GO1 has, since the mid-1960s, been trying to encourage foreign

14Minister of Agriculture Decree No 417/ fishing companies, especially those already operating in these waters, to 1988, Jakarta, Indonesia and Minister of invest directly in Indonesia. Their reasoning then as now is straightfor- Agriculture Decree No 900/l 988, Jakarta, Indonesia. The latter regulation specifically

ward. The marine fisheries in east Indonesia and the EEZ offer huge

prohibits the issuance of fishing licences to development potential especially for exports; domestic capital is in short foreign fishing companies, which goes supply and commercial bank loans are prohibitively expensive (2&30X against the spirit of UNCLOS Ill. To obtain licences for their vessels, foreign fishing

Rupiah annual interest rates); Indonesian entrepreneurs generally lack

companies must in effect join forces with knowledge of and interest in marine fisheries, and the level of requisite Indonesian companies only. Also, all domestic skills (in fishing, processing, and management) of a large-scale catches by foreign vessels should be exported through one of (at present) 12 spe-

fisheries enterprise are generally not available. Furthermore, the area is

cified Indonesian ports, thereby encourag- mostly sea, and has a low population and dispersed domestic market. In ing the growth of these local ports and the addition, the largely subsistence domestic fishermen in east Indonesia increase in value added retained within Indonesia between capture and retail

would welcome the opportunity to develop their fishing activities into a

marketing. In addition to encouraging the primary source of income.

development of the domestic fishing and However, attracting foreign investors into Indonesia’s fisheries has fish processing industries, this also allows Indonesia to ‘statistically capture’ (in prin-

been a slow process. Table 7 charts the major events, both economic

ciple at least) the catch taken by the and political, of the past 80 years and their impact in developing the foreign vessel fleet. Indonesian tuna industry. While the agent of innovation has invariably


Table 7. Historical development of the tuna industry in Indonesia: the influence of major economic and political events.

Year

1905

1918

1945

1949

1957

1960

1962

1963 lnan Jaya ceded to RI by Dutch

1967168 New ForelgniDomestic Capital Investment Laws

1970

1972173 First 011 orice hike

1972-75

1974

1975-77

1977-81

1979/80

1980 (March)

1980

(July)

1981182

1980-85

1983 (March)

Pole and line Introduced by Japanese to Foreign flshlng companies dommated Maluccus the P & L fishery until the mid-i 970s

P 8, L Introduced by Japanese to Sulawesi

Independence from Dutch

Agreement on terms of Independence from Dutch

Law on Private National Companies Foreign companies to be 75% owned by GOI or Indonesian by 1974 Sequestration of former Dutch assets by GOI. including a few flshlng companies Disincentive to foreign investment in lndonesla

Extension of territorial waters to include inbound archipelagic waters (enacted 1957, enabling regulations 1960)

Introduction of commercial tuna longllne by Japanese followed by Taiwanese & Korean vessels

‘Banda Sea Agreement, with Japan Led to Japanese Government loan to Government covering longline fishing in set up Perikani Samodera Besar. a eastern Indonesia archipelaglc waters state tuna longline company, In 1972

P & L introduced to II ian Jaya by Japanese

Export-oriented No development of domestic P & L fishery; developed baltfish fishery only

Establishment of four state tuna fishing companies, one longline, three pole and line in east Indonesia

Second 011 price hike

Declaration of 200.mile EEZ

End of Eanda Sea Agreement (Japanese longline vessels still allowed to fish In Pacific EEZ without fees until end 1983)

Dollar surges by 42%, Yen rises by31%

Devaluation of Ruplah by 27.5%

Outcome

No immediate effect lncreaslngly affected foreign P & Land longline fishing operations as enforcement stepped up in 1970s but effect amellorated to Japanese by Banda Sea Agreement (197C-1980)

Led to establishment of nine JVs for shrimp In Arafura Sea between late 1960s and early 1970s

Gave added stimulus to formation of JVs In Arafura shrimp fishery

Development of export-oriented domestic pole and line fleet centred on the state enterprises at Ambon, Bltung and Sorong

Peak In foreign pole and line catch Japanese 60 000 mt, others 20 000 mt

Peak In foretgn vessel tuna longllne activity. catching about 7 100 mtfyear

Development of export-onented. private-company pole and line fleet at Kendarl

Establishment of six pnvate longllne companies with 17 vessels

1982 to mid-1985 US$ price of sklpfack falls by half, tuna by 15% Fishing for skipjack or canning-quality tuna no longer profltable

Temporary export Incentive Benefit eroded within 12 months by high domestic inflation

continued on p 295


Table 7 continued.

‘sBailey et al and McElroy. op tit, Ref 1.


Year

1984-86 (August)

1985-88

1985 (November)

1986

(May) 1986 (September)

1987 (December)

1988 (June)

1988 (December)

1989 (March)

Event

Closure of Indonesian EEZ to foreign vessels to encourage direct foreign investment

Dollar falls by 46%, Yen rises by further 40%

Collapse in the world oil price

Outcome

Incentives to invest in east Indonesia --I Devaluatron of Rupiah by 31% Sashami-quality tuna US$ price

doubles while US$ productron costs fall (domestic Inflation held at 810% pa) Large inward investment in new longline fishing companies and vessels Skipjack P & L fishing for export activity jumps

No new licences to import fishing vessels to be issued All vessels to be imported before end-l 989

Increase in fishing vessels (i) imported by JVs & Indonesian PTs (ii) foreign-registered vessels jump from

80 end-l 986, to 250 end-l 987, to 480 June 1988,637 July 1988

No new licences Issued for foreign vessels using gill net or purse seine in EEZ. Exrsting licences will not be transferable. Requirement to offer fish for sale on local market for processing before export and for vessels to have minimum 30% Indonesian crews.

Latest attempt to (i) increase longkne and P & L fleet operating in EEZ; (Ii) increase added-value of exports; and (iri) train Indonesians in modern P & L and longline fishtng methods

Licence fees also increased approx 25%

Foreign vessels now only allowed fishing licences when under charter to or joint venture arrangements with domestic companies

Foreign vessels to employ 100% Indonesian crews by end of 1989

Latest attempt to increase value added withrn Indonesia

Latest attempt to increase employment opportunitres for Indonesians

been the Japanese, the process of adoption and the diffusion of technical progress in the three tuna ‘business areas’ of pole and line, longline and purse seine has been very different. We consider the way these ‘domestic’ industries have developed below.

Pole and line and longline

The pioneering role of the state fishing companies. In 1970, Indonesia had no significant domestic tuna fishing companies/industry (total domestic skipjack/tuna landings were less than 2.5 000 mt); and none of the major foreign tuna fishing companies, unlike elsewhere in this region, were enthusiastic about setting up a base in Indonesia for both political and economic reasons.

Against this background, and with a desire to extract some gain in income and employment from the rich skipjack/tuna resource, the Government of Indonesia, with the assistance of the two major development banks (Asian Development Bank and World Bank) and the Government of Japan, established four state-owned and state-run tuna fishing companies. ” Each company had its own sizeable fleet. How- ever, their declared long-term purpose was to train domestic fishermen in these new techniques and, subsequently, to act as a channel for financing the development of a domestic fleet and to provide a market outlet (domestic or export) for its catch, (ie a state-funded fisheries nucleus company scheme, Perusahaan Inti Rakyat (PIR) in Indone-

295

‘“During the five-year period 1984-l 988, total investments made by state-owned companies reached approximately US$4.9 million. About US$2.1 million of these investments was made by PT Tirta Raya Mina, the only remaining non-tuna state fishinq company, for procurement of fishing boats,. ani US$1.7 million out of an ADB loan of US$34 million bv PT Usaha Mina for building a new berth iacility at its main operations base in Sorong, lrian Jaya. Perum Perikanan Maluku invested US$O.8 million in cold stores of 600 mt capacity at Ambon, and PT Perikanan Samodera Besar US$O.247 million for spare parts on fishing boats. These investments took place prior to 1986. In addition, all these companies plus PT Perikanan Sulawesi Utara-Tengah have invested in badly needed overhaul of vessels, cold stores and fishing equipment from retained earnings in the past two profitable years. See, for example, Jakarta Post, 5.10.1988, 8.10.1988 and 22.2.1989 for a fuller dis- cussion of the financial state of the state fishing companies. ‘Wniversity of Indonesia, ‘The future of the 6 state-owned fishing companies’, Uni- versity of Monesia Consultants Report, prepared for Ministry of FinanceiDGF, Jakarta, 1986 (in Indonesian). leThis review plus the renewed threat of privatization has galvanized the three skipjack pole and line companies into (separate) action. They will each report profits for the fiscal year 1988/89. They are now all involved increasingly in management of PIR schemes in their respective provinces and beyond, and despite their effective monopoly position, their political power- base within their constituencies (the provinces of Sulawesi, Maluccu and lrian Jaya) has not been stronger. Consequent- ly, they may survive independently for some considerable time longer.

Sian). Their declared long-term purpose was to attract private domestic funding into this industry and then, soon afterwards, to sell off the state fishing company assets to the private sector. It was also the intention that they should each be profitable.

These four state skipjack/tuna companies came into operation in the early 1970s. All are still in existence today, although three of the four may shortly be forcibly ‘privatized’ (probably forming separate joint venture companies with private partners during 1%X)). This is because, prior to 1%7/198X, they had not been (three) or had only occasionally been (one) able to earn enough to cover even their operating costs for the previous six years (indeed they have suffered losses for between 1 l-13 years of their average 15year existence). Given the high tuna prices in 19x7 and 19XX and the move towards managing PIR schemes. three of the four companies have report4 profits in the past year (fiscal

I ‘)X8/89). The first moves to privatizc came in 19X6. The trigger was the 19X6

collapse in oil prices which reduced GOI revenues by 33% that year, forcing the state to stop underwriting state company losses. In the fisheries sector, this has meant no new Rupiah loans for capital investment. (There is one exception. The pole and line company, PT Usaha Minn, based in Irian Jaya, and probably the most successful state fishing company to date, already had (since 1X32) 21 foreign loan to finance part of a diversification programme (into large purse sciners, carrier vessels, and aquaculture). iIowever, little of this loan has actually been invested by Usaha Mina because of the poor outlook for tuna during most of this period.)‘”

A 19x6 review of the state-owned fishing companies, while recogniz- ing the development role these cornpanics had played in getting large-scale tuna fishing moving in Indonesia, nevertheless rccom- mended that the activities of the three pole and line companies should

be merged and. along with the longline company, be sold ;o the private sector. ” However. no action was taken until September 1%X, when it was recognized by the two responsible Ministcries that, despite cyclical- ly high tuna prices, only one of the three pole and line companies reported any profits for the first half of 1%X. Since then, both the Asian Development Bank and World Bank have considered separately various arrangements for privatizing the state fishing firms. Ix In the interim, given the lack of state support after lc)X6, all four state tuna companies have been forced into seeking arrangements with private partners to help finance their fishing operations. Thcsc agreements ranged from short-term ‘futures’ contracts (where half payment for II consignment at discount prices is paid in advance to finance the fishing operation), favoured by the three pole and line companies. to a medium-term (five year) management and profit-sharing agreement between Perikani Samodera Besar (PSB) and a joint venture tuna canning company (Bali Raya). The latter is now being flouted as the model to be employed for the three remaining state-owned pole and line companies.

In the past five years (I%?-89), there has been a growing apprecia- tion among the three state-owned, pole and line companies that, if they are to survive, their role must change - to providing the financial, managerial and organizational inputs to an export-oriented fishing, processing, and marketing operation. Their own fishing fleets, which from the outset have suffered from poor design, construction deficicn- ties and high operating costs, have nevertheless led directly to the


“TO date, all the PIR schemes have util- ized existing infrastructure and company facilities as the parameters of the fishery are determined (size of fish, species, catch rate, seasonality of the fishery, etc). At the successful locations, it is proposed to con- struct proper landing, vessel service and processing (ice plant, freezing, cold storage, cannery) facilities, as considered appropriate.

associated development around their bases of a sizeable, privately owned, pole and line fleet. A major portion of this evolving domestic fleet has been harnessed to catch skipjack and tuna for export by the three state companies under the fisheries nucleus company scheme (PIR) model (see Tables 8 and 9).

The extent of their dependence on the ‘plasma’ fleet differs markedly - from an informal, market-clearing, role activated only during glut landing periods, to a highly dependent, sole-agency, contract fishing arrangement with private vessel owners/fishermen. Largely because of the ‘excess’ catching capacity that has built up around the original three nuclei, and of the ‘near virgin’ resources - of both baitfish and skipjack/tuna - available outside of these areas, the latter system has proved the most successful within the usual objective framework of improving fishermen employment; fishermen incomes; processors/ marketeers’ profits; and the country’s export earnings.

Thus, the most successful current schemes have shifted emphasis to harnessing the lower unit cost, more highly productive, small- to medium-scale private pole and line or tuna longline fleets to catch the bulk of the export-quality fish, while the nucleus company has provided the primary processing (freezing, cold storage) mothership and/or land-based operation, and export market outlet. Thus, the most committed PIR state company more than doubled its production over the three-year period 1984-1987, with 90% of this increase coming from PIR scheme vessels. And this has been achieved without major new investment, to the benefit of both parties” (see Tables 10, 11 and 12). Table 13 lists details of the PIR schemes in operation as of February

1989.

The role of large-scale private sector companies. Privately owned, large-scale, skipjack/tuna fishing companies (joint venture (JV), domestic and private national companies) are essentially a post-1980 develop-

Table 8. Skipjack/tuna production of state enterprises, 1970-1988.

Yeap

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

Perikani Maluccu Perikani Sulawesi Own (mt) Other (mt) Own (mt) Other (mt)

658 1 578 773 1 326

1 067 598 944 502 616 657 546 617 686 408 501 339 944 271

1 067 78 2215 994 3 737

1 205 2 925 916 388 3 389 1 527

1 337 554 2 648 54 620 301 1 461 310 519 663 1 099 418

(600) (750) 1 202 760 (600) (750) 1 850 2 725 (600) (750) (1 588) (3 064)

Pole and line Longline

Usaha Mina Own (mt) Other (mt)

-

Perikani Samodera Besar (mt)

- - -

56 174 69 679 68 1311

871 1 494 1 803 1 781 4 838 75 2 004 4 131 212 2 104 3 697 504 2 239 3 576 963 2 832 2 462 918 2 930 3 844 858 2 356 2 058 810 2 201 5 238 530 1 921 4 400 1 106 (1 750) 2 857 4 068 (1 742)

(2 850) (7 150) (1 750)

Total Own catch catch

(mt) %

2 236 100 2 099 100 1 665 100 1 676 100 2 021 100 2 542 100 3 459 100 4 424 100 8 132 100 9 809 100

11 171 100 11501 100 12530 100 11 651 100 7 261 98

10388 92 (10568) 81 (14600) 52 (17750) 41

Sources: DGF and the state enterprises. Notes: ‘Year established as a state enterprise: PM 1974, PS 1970, UM 1973, PSB 1972. “Other’; pre-1984, predominantly consists of catches made by own longline vessels; since 1985, predominanHy consists of purchases from contracted private pole and line groups. “( ) estimated or projected.


Table 9. Skipjack/tuna exports by state enterprises, 1976-1988.

PT Perikanan PT Usaha Mina PN Perikani Samodera Besar Sulawesi

Quantity Value Quantity Value Quantity Value Year (mt) (US$m) (mt) (US$m) (m0 (US$m)

1976 815 673 600 300 1977 1 563 1.643 1156 1 156 236 83 1978 2 302 2 246 4 244 2 422 307 165 1979 1 974 2.564 3 906 2.905 1 926 1 423 1980 1 805 3.187 2 905 3416 2 741 3 041 1981 2 956 5 028 4 354 4 654 3 376 3 736 1982 2 079 3.168 3 750 2 902 1 855 1 288 1983 3 276 4 144 3 576 2215 2 106 1.213 1984 2 226 3 011 2614 1 454 297 450 1985 1 728 2.236 4 339 2 516 699 568 1986 (1 750)” (2.275) 4615 2 872 525 357 1987 (1 750)” (2 550) 5 660 3511 2 747 1 900 1988 3 284 3 153

Perum Perikanan Maluku

Quantity Value

(m0 (US$m)

- -

345 179 990 834

1 192 1 306 3 290 3.440 1 160 758 1 084 688

80 61 892 557

(900) (760) (900) (810)

Total

Quantity Value

(mt) (US$m)

1415 973 2 955 2 a83 7 198 5012 8 796 7 726 8 643 10 950

13976 16.858 8 944 8.116

10 042 8 260 5 217 4.976 7 658 5 877 7 790 a 539

11 057 12 346

% of total tuna exports

(Gt’

-

94

90 78 99 47 49 35 43 32 32

Sources: DIrectorate General of Flshenes and Central Bureau of Statlstlcs Notes: “( ) are estimates. bPT PSB’s fleet of 17 longllners landed 1 742 mt of tuna In 1987. of which 875 mt was fresh It exported 830 mt, equivalent to 95% of fresh tuna exports In 1987. Part of its frozen tuna catch of 867 mt was canned for export by Bali Raya under their joint management agreement

ment in Indonesia (SW Tables 13. 15, 16 and 17). Existing companies

have been set up largely with foreign capital. Despite this, the vast

majority arc rcgistcred as domestic or private national companies,

where the Indonesian partner holds at least 51% of the shareholding

from the outset. This compares with joint venture companies where the

major shareholding is held by the foreign partner for up to IO years. The

reasons for this arrangement are various ;~nd not of primary importance,

although one would have expected the joint venture investment vehicle

10 be preferred hec~ruse of the greater control and, in the international

context, the generous tax concessions available to the foreign partner on

company profits and dividends. It is significant, however, that in nearly

every czx the product (tuna, shrimp, pearl) is sold through ;I trading

company of the foreign (primarily J~~pan~s~. but also Taiwanesc and

South Korean) partner. Thus, production cost or arbitrarily low ‘trans-

fcr pricing’ is comniol~place, with the profits being subdivided actor-

dingly to some prc-arranged formula at the foreign-based ‘parent’

company.

The advantages to the Corcign partner of establishing :I company in

Indonesin are twofold; XCL’SS to 21 valuable, long-term source of raw

material supply; and low fishing costs (fuel. labour).‘” The ad\;antagcs

to Indonesia come in terms of increasing foreign earnings; potential for

“‘Diesel fuel is available at Indonesian adding value through processing; :tnd elnployment. Combined esport

ports to domestic-registered vessels at earnings from Indonesia’s large-scale marine fisheries sector were

half the price foreign vessels pay. US$l3X million in IWO, 56% of total fisheries export earnings 01

Table 10. Production of PT Usaha Mina and its artisanal fleet.

Unit Weight 1984 1985 1986 1987 % 1 23456789 10 Total

PT Usaha Mina mt 2 368 5 238 4 400 214 232 221 204 327 120 160 180 296 277 2 231

(%) (100) (90) (80) (41) Tunas Jaya

($ 555 1131 136 127202 115 178 113 143 116 136 149 1415

Sorong (10) (20) (26) Tunas Java mt 5 51 68 144 372 347 323 441 1 751 Labuha ’ W) (33) Total purchased mt 0 555 1 134 136 127 207 166 246 257 515 463 459 590 3 166

Source: Usaha Mona, personal communlcatlon (59) 1988

(%) (0) (10) (20) Grand total 2 368 5 793 5 531 350 359 428 371 573 377 675 643 755 867 5 397

Note. Figures may not add up due to rounding.


Table 11. Agreements between Usaha Mina and Tunas Jaya Labuha in 1987.

Skipjacklyellowfin

Export (> 1.5 kg) Domestic (< 1 5 kg) Damaged (all sizes) YellowfIn (> 10 kg) Support to Tunas Jaya

Membera Non-membe? Aug-Nov Dee-present Aug-Nov Dee-present

Rp/kg Rp/kg Rp/kg Rplkg

250 300 325 350 125 150 175 200 125 150 175 200

- 600 - 650 10 15 -

Notes: aMembers receive fuel (400 litre/mt), bait (30 bucketsimt), hooks (2imt) free. Usage above this allowance, they pay at cost; fuel Rp 200/11tre, bait Rp 1250ibuckef Rp 750ihook. ‘Both non-members/members receive ice free and can use rumpon. (Virtually all fishing vessels are members.) Exchange rate US$l .OO = Rp 1660.

“Estimates made by author, based on various official and unofficial sources. 22Jakarta Post, 22 February 1989. ‘3Based on foreign vessel (chartered) and vessel import licences (Indonesian-owned) issued up to 31 January 1989. Assess- ment updated June 1989. ‘“They had represented the equivalent in income of two to five days fishing (eg

US$l 1 500 a year for a 250 gt long liner) and were increased by an average of 25%.

Source: 1988.

US$230 million in that year. Furthermore, this sector provided employment for over 10 400 people. IO 000 of whom were Indonesians. By 1987, export earnings from the large-scale, marine fisheries sector

(including PIR) were estimated in excess of US$.?lS million, some 73% of total fisheries export earnings in that year. Employment in this sector topped 15 000 people.”

Foreign investment in large-scale fishing enterprises got underway in the late 1960s on shrimp in the Arafura Sea. By contrast, privately owned tuna companies did not really take off until the 198Os, after the adoption of the 200-mile EEZ in 1980. Table 14 and Figure 4 chart the rapid growth of the privately owned, large-scale, tuna fishing companies in Indonesia since 1979 and contrast it with the relative decline in the state-run sector. Interestingly, by 2X March 19X8, 14 of the 17 private companies (and 61 of their 75 vessels) were involved in tuna longline, whereas only one of the four state companies (and 18 of their 65 vessels) was. Of the remaining three private companies, one (a French JV) is involved in purse seine (three vessels of 650-750 gt) and pole and line [four vessels of 300 gt), while the other two (domestic) are pole and line companies.

The privately owned, tuna company sector has been growing rapidly in size since 1986. The total investment committed in lY88 was about US$150 million. This compares with the total investment realized between 1984-1988 in the tuna fishing sector of about US$6X.6 mi1lion.22

The total number of private company tuna vessels in operation (owned or chartered) is set to rise from about 75 in 1987 to at least 500 by the end of 1989.”

On top of the improvement in skipjack and tuna prices in 1987 and 1988, growth prospects in the private company sector were given a further substantial boost in June and again in December 1988 by the GOI with the announcement that for foreign-registered vessels, only pole and line and longline vessels will be issued with new licences; foreign vessel licences (to operate in EEZ waters) can only be obtained by Indonesian companies; and that foreign vessel licence fees had been increased substantially.“”

Usaha Mina, personal communication.

Table 12. Change in monthly catch and income of entering a PIR scheme with rumpon.

Catch Income of owner Income of crew Before Afler Increase Before After Increase Before After lncreasa

Type of vessel mt mt % Rp ‘000 Rp ‘000 % Rp ‘000 Rp ‘000 %

Outboard vessel (3 gt) 3.74 77 +70 438 919 + 110 57.5 148 + 157 Motor vessel

(10 gt) 7.7 14.74 + 90 655 2 256 + 244 39 132 + 238


Tab

le

13.

Sta

te

and

priv

atel

y-ru

n fis

hing

nu

cleu

s co

mpa

ny

(Per

usah

aan

lnti

Rak

yat)

sc

hem

es

in o

per

atio

n

or

pla

nn

ed

as o

f 28

Feb

ruar

v 19

89.

- -

Nam

e o

f co

mp

any1

fi

sher

men

’s

gro

up

PT

U

saha

M

ina

Tun

as

Jaya

S

oron

g

Tun

as

Jaya

T

erna

te

Tun

asJa

ya

Labu

ha

Tun

as

Jaya

G

oron

talo

PT

P

erik

ani

Sul

awes

i U

tara

-Ten

gah

PT

Per

ikan

r M

aluc

cu

PT

Per

ikan

i S

amod

ra

Bes

ar

(wrt

h P

f B

ali

Ray

a)

PT

Bal

i R

aya

PT

Per

ikan

an

Ken

dari

6 co

mpa

nres

Lo

cati

on

/ p

rovi

nce

No

of

vess

els

Dat

e b

y si

ze (

grt

) S

tart

F

inis

h

3/30

/60/

l 00

Sor

ong

(Iria

n Ja

ya)

Ter

nate

(M

aluc

cu)

Bac

an

(Mal

uccu

)

Gor

onta

lo

(Nor

th

Sul

awes

i) G

oron

talo

(N

orth

S

ulaw

esi)

Tog

ian

(Cen

tral

S

ulaw

esi)

Kay

aoiB

acan

T

obel

lo

(Mal

uccu

) A

mbo

n (M

aiuc

cu)

Ban

da

Nei

ra

(Maf

uccu

) M

amuj

ui

Maj

ene

(Sou

th

Sul

awes

i) M

aum

ere

Kal

abah

i La

rant

uka

Labu

han

Baj

o K

upan

g (E

ast

& W

est)

K

enda

ri (N

usa

Ten

ggar

a)

(SE

Sul

awes

i) 15

locat

ions

ac

tive

1985

on

goin

g 20

1801

-/-

2/19

87

5119

87

--/I

5i-i-

5/i

987

ongo

ing

30/6

01-I

-

2119

88

ongo

ing

1984

19

86

1986

on

gorn

g

1986

on

goin

g 19

86

ango

rng

1987

ongo

rng

1988

on

gorn

g

1983

O

ngoI

ng

1111

988

ongo

rng

1 Oil

988

ongo

ing

1989

pl

anne

d 19

89

plan

ned

1979

on

goin

g

1-3

gt o

utng

gers

30

uni

ts

l-3

gt o

utng

gers

15

-20

units

1 o/2

01-/

--

5 gt

, 6

umts

Pol

e an

d itn

e, l

ove

hart

. ru

mpo

n H

and

ltne

usrn

g 6-

10

rum

pon

Pol

e an

d lin

e,

live

bait.

ru

mpo

n P

ole

and

Irne

, liv

e ba

it

-132

1~I-

P

ole

and

line,

liv

e ba

it

10 g

t. 90

unr

ts

5 gt

, 30

uni

ts

1-3

gt o

utrc

gger

s 10

~150

un

its

Pol

e an

d lin

e, l

ive

bait

Tro

ll lin

e

2500

(8

7)

4000

(8

8)

400

(88)

250

(858

6)

1500

(87

,88)

1750

(87

98)

457

(88)

900

(87)

3325

(8

8)

1290

(88

) H

andl

ine

usin

g ab

out

30 r

umpo

n 10

00

(88)

15 g

t, 26

uni

ts

Pol

e an

d Ir

ne,

live

bait

15 g

t, 16

uni

ts

Pol

e an

d Ir

ne,

live

bait

15 g

t, 30

uni

ts

Pol

e an

d lin

e, l

ive

bait

15 g

t, 50

uni

ts

Pol

e an

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ive

bait

15 g

t, 50

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Pol

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ive

bait

2080

(8

8)

(960

)(89

) 18

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89)

-/32

/-I-

- P

ole

and

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6000

(8

7)

Fis

hin

g

met

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Pol

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n (a

bout

12

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w

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bait

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P

ole

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5-6

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1

day

fishi

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Pol

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(10-

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rum

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Han

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5 ru

mpo

n

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(mt)

4500

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0 (8

5-88

)

1985

m

am s

tart

19

C-2

40/5

31/-

---

27 0

00 (

88)

5000

0-75

000

:s 1

6 00

0 (8

8)

Pro

du

ctio

n

pla

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ed

(mt)

Exp

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s fm

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8000

43

oct

5700

(8

5-88

) 10

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po

ssib

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4005

5000

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23

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(87)

fu

ll d

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600

see

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4000

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2000

20

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1350

(87

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1550

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)

900

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2006

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2100

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1800

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2000

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com

petit

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with

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mam

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to B

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9019

1 se

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al

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12

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PT

Per

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or

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se

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mpo

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Out

put

mos

tly

cann

ed

in l

ndon

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(B

ali)

seas

onal

se

ason

al

Mal

or

port

ion

of p

rodu

ctro

n w

ill e

vent

ually

be

can

ned

in I

ndon

esia

Not

e:

Maj

or

base

in

corp

orat

es

wha

rf

for

fishi

ng

and

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fer

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els,

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mpl

ex,

poss

ibly

w

ith

a ca

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Sec

onda

ry

base

in

corp

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rf

for

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ng

and

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els,

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zing

/col

d st

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mpl

ex

or v

esse

l, no

can

nery

.

Table 14. The development of tuna fishing companies in Indonesia, 1979-1988.

Year

1979 1980 1981 1982 1983 1984 i 987

State company Number of Number of company vessels

4 73 4 a3 4 93 4 97 4 92 4 92 4 65 4 65

Foreign invest Number of Number of company vessels

1 5 1 3 1 3 2 7

: 8 9 2 5

National invest Number of Number of company vessels

_ _

2 2 2 2 4 9 4 9 6 16

Domestic company Total privately owned Number of Number of Number of Number of company vessels company vessels

1 2 2 7 1 2 2 5 4 13 7 18 5 21 9 30 5 22 11 39 5 22 12 40 7 54 17 75

Sources: T.M. Tambunan, ‘Investment in fisheries in Indonesia’s exclusive economic zone’, Proceedings of lndonesian Production Exhibition 1985, Joint Marketing Association of PNiPlPiBogor Research Institute, 1986; and DGF, unpublished data. Note: 1) the number of vessels excludes PIR scheme vessels.

Recent development trends in Indonesia’s tuna fisheries

An analysis of the tuna industry reveals the following main trends. 1. The historical progression in the development of fishing methods

and of their technological sophistication seen in the foreign fleet in the past 80 years has largely been mirrored in the subsequent development of the domestic fleet (see Table 18 and Figure 6).

For example, the progressions:

0 pole and line + longline + purse seine; 0 sub-surface longline - large vessels, (10@200 gt), for canning-quality

J tuna deep longline - large vessels, (25G300 gt), for frozen sashimi

1

mini longline medium vessels, (50 gt) for fresh sashimi - (5045%)/tanning (15-50%);

Table 15. Recent development of the tuna longline fleet and catch by Indonesian and foreign registered vessels.

1975-1977 1978-l 980 1982 1985 January 28 March 31 August Type of ownership (1) (2) (3) (4) 1987 1988 1988

State fishing companies 21 (2)a 22 (3) 22 (3) 22 (3) 20 (3) 18 (2) 25 (3) Private national _b _ _ 14 (4) 22 (7) 30 (15) Domestic capital _ 17(6) 17 (6) 16 (5) 37 (5) 25 (5) Foreign capital _ _ _ _

(Joint Venture) Total Indonesian 21 (2) 2$ (3) 39 (9) 39 (9) 52 (12) 77 (14) 80 (23) Vessel sizes % % % % % %

50 gt _ _ 12 32 31 100 gl a5 05 48 48 38 25 26 20&300 gt 15 15 52 52 50 43 43 Estimated catchC 1 600 2 500 7 100 7 100 9 300 12 500 13000 (domestic) (1980) Foreign-registered = 40 7 ? _ 8 (2) 19 (4) 22 (4) Estimated catchC a 700 7 ? 7 100 10 700 15 000 15900 (total)

31 December 1988

25 (3) 35 (15) 25 (5) _

85 (23) % 35 25 40 13300

262 (23) 36 300

Sources: FAO, ‘Implications of the extension of national jurisdiction for fishenes management and development in Indonesia’, SCS/DEV/80/20. 1980, 20 pp; J. Marcille et al, ‘Tuna fishing In Indonesia’. Collection Travaux et Documents No. 181, ORSTOM, Paris, 1984. 125 pp; UNIDO, ‘Manne resource industries development in east Indonesia’, INSi85/015, Jakarta, June, 1987; DGFIADB, ‘Indonesian fisheries economy study’ Main text plus five Annexes, DGF, Jakarta and Asian Development Bank, prepared by R N Nathan Associates. Inc, Hawaiian Agronomics lnternahonal and PT Uni System Utama, 1988; last 3 columns, DGF, unpublished data, 1987, 1988. Notes: aNumber in ( ) Indicates the number of companies within each investment category, where known. b--signifies none. ‘Estimated by author, based on average catch rates by vessel size category The number of illegal vessels operating in these waters IS not known. No allowance is made for falling catch rates with increasing fishing effort. Also: This data is not systematically reported in the Indonesian fisheries statistical yearbook senes, le it can be assumed that landings by the commercial longline fleet have been largely unreported. Between 1 January 1984 and August 1986, no foreign-registered fishing vessels were allowed to operate in Indonesian waters through failure of the GOI to Issue llcence regulations. All Indonesian longline companies appear to have been set up, at least from their registration under the Domestic Capital Law, as domestic companies. In practice, most if not all were capitalized (ie vessels were provided by) foreign partners. These companies use thetr ‘parent’ for marketing their catch mostly in Japan.


Table 16. Total number of tuna longlinefishing vessels in operation in Indonesia, March 1988.

Sources. DGF. unpublished data. 1988: and tuna catch; estimated by author from vessel catch rates. Notes. “No longer operating as tuna longllners: both used as carrier vessels bin addltlon to those 19 longllners. there was one foreign-registered super seiner operahng in Indo- nesian EEZ waters In 1988 JFP x Jakarta Fishing Port

Company Total vessels (GT) Operation area Base

Domestic investment (PMDN) (37) PT Penkanan Tuna Indonesia 5 (formerly PT Pertut? Utama) (ZOO-350 GT)

PT Sumber Hasllndo 6 ( + 300 GT)

PT Koral Fishery Development 1 ( 1 300 GT)

PT San Segar Utama

PT Ball Raya

Private National (PN) PT Anton0 Raya

PT Doyot Mona Utama

PT Dlan Sari Bahtera

PT Swadaya Nelayan

PT Mma Pura Raya

PT Tn Manunggal

PT Anugerah Tlmur Sqatl

5 (50 GT-F Glass) 20 (50 GT-F Glass) (22)

(215 GT) 6 (100-300 GT)

;300 GT)

3 (650 GT)

1

(25 GT)

:25 GT) 5 ( 100-200 GT)

State fishing co 119) PT Perikanan Samodera Besar 17

(110 GT)

PT Perlkanan Sulut 1” ilO0 GT1

PT Perikanan Maluku ;,I

(50 GT)

Foreign investment company (PMA) Total domestic Indonesia Foreign-registered vessels PT Yala Mina Thama Karya

PT Mona Sapta Samudera (Honduras)

PT Eraska Nova (South Korea)

PT Sari Darma lndah (Thailand)

Total (all vessels)

78 (19”) 8 (200-300 GT) 4 (150 GT)

;433 GT) 6 (20 GT) 97

Banda Sea lndlan Ocean Sulawesl Sea Banda Sea Maluku Sea Arafura Sea Tlmor Sea Indian Ocean Paclflc Ocean Banda Sea lndlan Ocean Indian Ocean Banda Sea lndlan Ocean Banda Sea

Kendarl. Kupang. JFP

Ambon. JFP

Ambon. JFP

Benoa

Benoa. JFP Maumere

Banda Sea JFP

Banda Sea Sulawesl Sea Indian Ocean Banda Sea Sulawesl Sea Indian Ocean Banda Sea Maluku Sea Halmahera Sea lndlan Ocean Maluku Sea N lrlan Jaya Banda Sea

Ambon, JFP

Ambon. JFP

Aru. Ambon. JFP

Jayapura

Banda Sea Sulawesl Sea Halmahera Sea EEZ N Sulawesl

Ulung Pandang Ambon

Everywhere Benoa Sabang Surabaya U Pandang

Banda Sea, Bltung EEZ N Sulawesl Banda Sea. Ambon Flares Sea, Maluccu Sea. Arafura Sea

Arafura Sea. - Pacific Ocean Indian Ocean -

lndlan Ocean -

South China Sea -

Catch mt

(5 250) 1 400

1 800

300

350

1 400

(5 530) 240

1 440

1 200

1 650

100

150

750

(1 700) 1 700

12 500 (2 500) 1 600

400

150

15000

0 domcstidcxport pole and line-in groups. ncarshore, 30 gt

industrial-singly or in groups. offshore. 100-300 gt

mini pole and line-in groups. fishing rumpon, 3-15 gt.

7 I. The introduction of payoes (rumpon in Indonesian) from the

Philippines in I%%) has led to two distinct fisheries:


Table 17. Total number of tuna purse seine vessels registered in Indonesia, 1988.

Type and name of company

Joint venture PT Multi Transpeche Indonesiaa (198songoing)

Domestic capital PT East Indonesian Fishing Co (1974-l 986)

Private national

State fishing company PT Tlrta Raya Mina (1976ongoing)

Foreign registered vessels PT Bali Raya (Agent) American-owned” (1985-ongoing)

Number Size (GT) Area of of vessels operation

650

750

South-west Pacific/ EEZ north of lrian Jaya

600 Banda Sea, Halmahera, EEZ North of lrian Jaya _

60 Sulawesl Sea Banda Sea

1 200 Pacific Ocean

Base port Estimatedb 1987 catch mt

Blak lnan Jaya

8 700

Ternate MaluccUSorong lnan Jaya

(2 500)

_ _

Kendari South East Sulawesli Pekalongan C. Java

500

Benoa Ball

3 200

Company also operates four 300 gt P & L Total 1987 catch 11 680 mt of skiplackituna

Operated purse seiner 198&1984, also had two 200 gt P & L vessels

Started expenmental tuna purse seining only in 1987

This vessels spends approx 12 days In transit’trlp. Catch rate/ day similar to 600 gt vessel. Advantage more days at sea.

Sources: DGF, unpublished, 1988; and PT Multi Transpeche Indonesia, unpublished, 1988. Notes: aAdded 2nd and 3rd vessel in 1986 of 645 gt (450 mt hold capacity) bAverage catch estimated by author. CThe US super salner licence was not renewed In January 1989.

Table 18. Main facts about the foreign and domestic tuna fleets.

Method Period

Peak production

Location

Optimum vessel size (gt)

Pole & line --) 1905-1979

80 000 mt (I 974)

East lndonesla

250 gt

Prospects Licences available

Method Pole & line Period 19101ongoing

Peak production 56 500 mt (1987) Location East lndonesla

Optimum vessel size (gt)

Ocean fisheries also offer potential

7-l 5 gt Payoes,

100 000-l 50 000 mtiyr

(1 day trip)

InteractIon with

2C+30 gt (l-5 days/tnp)

purse seine fishery

1 oc-300 gt Industrial (1 s30 days/trip) Excellent. Most of east Indonesia coastal areas still under exploited;

Prospects

Constraints

economics marginal

Foreign fleet Longline - 1962-ongoing

7 100 mt (19751977) ~10 000 mt (1988) Banda Sea Indian & Pacific Ocean 250-300 gt frozen sashimi 50 gt fresh sashlml Licences avallable

economics reasonable/ good

Domestic fleet Longline ~ 1972-ongoing

(seasonal) prospects, 15 00&30 000 mffyr

Interactton with purse seine fishery

10 700 mt (1987) Banda Sea Indian & Pacific Ocean 20 gt l-2 days 250 hooks 50 gt 1 O-l 2 days 80(&l ,000 hooks 25@300 gt 60 days 2 000 hooks Limited. Banda Sea heavily exploited. Indian and Pacific Oceans reasonable

Purse Seine 1974-ongoing

20 000 mt (1983)

North lrlan Jaya/ Papua New Guinea 600-l 200 gt

No new licences avallable since June 1988 economics reasonable/ good

Purse Seine 1980-ongoing

8 700 mt (1987) North of lrian Jaya

25 gt (l-5 days/trip) 60 gt (7-14 daysitnp) 60&l 200 gt (2&65 daysitnp)

Excellent. North lrian Jays/western Pacific offers greatest potential. Also east lndonesla archipelago and Indian Ocean seasonally; 50 000-l 50 000 mtiyr Conservation aspects. Possible negative effects on other tuna fishing methods


Figure 6. Development of main fishing methods for skipjack and tuna.

TUNA SKIPJACK

42 800 rnf

1986 38 900 ii, i 83 ii)0 I,,,

**Purse seine vessels catch schools of small pelagic fish in the Java Sea using floating coconut leaves. Two state fishing companies, PT Perikani Sulut and PT Tirta Raya Mina have employed purse seiners around rumpon specifically for skipjaW tuna in North and Central and South and Southeast Sulawesi provinces respectively. They report successful results. How- ever, neither company has yet adopted this method of fishing on anything other than a ‘fishing trials’ basis.

0 for yellowfin tuna (50% (range 2%75%) of the catch) in Tomini

Bay and Makassar Strait (Sul~lwesi); 0 for skipjack (8S-90% of the catch) in Sorong (Irian Jaya) and Bacan

(Maluccu). Here, additional baitfish is used to bring the skipjack to the surface and for ‘open water’ fishing during the day. The USC of rumpon to catch skipjack/tuna schools by purse seine, common in the Philippines, has been shown to be effective in some parts of east Indonesia. However, this method hiis yet to be widely adctpted.‘5

3. The four state fishing companies played a pioneering role in the shift from foreign to domestic fishing enterprises. particularly in the development of the small and medium-scale pole and line sector. Although pioneering the development of a domestic longlinc fleet, foreign capital (,vesseIs) plus ~l~~rnesti~~lly procured licences have been the source of its expansion:

e Foreign companies + Private companies (JV and domestic)

1‘ (longline, purse seine);

0 Foreign loans ---f State companies -+ Private companies

(ADB, WB, Japan ( h t ree P&L, one LL)(JV and domestic)

Govt) J (pole and line)

0 Domestic capital - Small and medium-scale (latterly PIR schemes) (P&L, some LL).

4. The industrial skipjack purse seine fishery has been developed by two JV enterprises (one Japanese (198%1984), one French (19X3- ongoing)), both in combination with industrial pole and line vessels


Table 19. Multi Transpeche Indonesia: total production and exports of skipjack/yellowfin tuna frozen and canned 1983-1992.

Canned Year Frozen mt Input Output cases

mta (‘000)

1983 1 575 1984 6 050 1985 5 772 1986 9 337 1987 11281 1988 15000 3300b 165b

1989 20000 7300 365

1990 25000 10400 520

1991 20000 16700 835

1992 17000 26000 1300

Sources: PT Multi Transpeche Indonesia. May 1988 and DGF personal communication, May 1989. Note: a48x 185 9m (6.5 oz) cans/case; 20kg skip- lackltunaicase. “Cannery of 10 000 mt capacity commenced operation on 30.4.1988.

‘%ee also James McElroy, ‘RI expects tuna canning industry to double capacity’, Fishing News international, June 1989. “Thai exports of canned tuna in 1986, 1987, and probably 1988 as well, topped 140 000 mt, worth between US$250-350 million (export prices (C&F Europe) averaged US$19, US$20 and US$25 per case, whether in oil or brine, during these con- secutive years). However, to achieve these impressive values, Thailand supple- ments its approximately 100 000 mt of small tuna catch with imports of between 150 000-200 000 mt of skipjack/tuna per year. It took between 15 00&20 000 mff year from Indonesia and about 5 OOO- 8 000 muyear from the Philippines.

Indonesiu’s tuna fisheries

(100-300 gt), respectively fishing off North Maluku/Irian Jaya from Ternate and north Irian Jaya from Biak. They have been using

650-750 gt autonomous, purse seine vessels. The French- Indonesian Joint Venture expects to land 25 000 mt of tuna in 1990, 22 000 from an expanded purse seine fleet - landings in 1987 topped 11 200 mt with an estimated 8 700 mt from its purse seine fleet (three vessels) alone (see Tables 17 and 19).

5. The tuna canning industry has developed only since the early 198Os, mostly (though not exclusively) through US, French, Dutch and Australian JVs. Initially, it relied almost exclusively on catches by domestic fishermen. Today, the only two really successful companies are vertically integrated, with their own or a contract (PIR-style) fishing fleet. Exports of canned tuna, which jumped 135% to 4 274 mt (product weight) in 1987, are projected to rise to about 11 000 mt (25 000 mt LWE) in 1990.

The development of this industry is still hampered by high internal shipping costs; high cost of money (typically, interest rates of 20%-30% on Rupiah funds and bank fees of l-2% for letter of credit encashment); and the high cost of local tin plate. As a result, most skipjack/canning quality tuna is still exported frozen (zero duty) to Thailand for canning before re-export to the USA and Europe. However, the internal shipping market is being opened up; rebates on imported tin plate are available for export-oriented companies; and direct foreign loans (including loans from the World Bank and Asian Development Bank) to reduce the cost of credit to export-oriented companies are increasing2h (at the present time, low-interest foreign loans (World Bank, Asian Development Bank) are mostly ‘lent-on’ to their target companies by Indonesian Banks at very high real Rupiah rates (lo%-20%) of interest).

If these and other technical difficulties can be adequately over- come, it is this author’s contention that Indonesia, probably along with the Philippines, will on present evidence develop major export-oriented skipjack/tuna canning industries over the next two to five years that could, in terms of combined exports, take over the dominant position currently held by Thailand.*’

Indonesia, together with the Philippines, feels it allows other nations, particularly its neighbour Thailand, to take a large part of the value of its catch simply by canning it.

Indonesia and the Philippines respectively caught 260 000 mt and 270 000 mt of tuna and tuna-like species in 1987 and currently both have a large excess of canning capacity, which is mostly poorly located in relation to fresh or frozen skipjack/tuna supplies and the supply of other inputs. However, both countries are undergoing major transformations in terms of bureaucratic and financial market reforms aimed at keeping the wave of new investment, seen since 1986, heading their way. These developments, together with the recent skipjack/tuna price increases, have led to a re-examination by potential investors of the canning industries in both countries.

The Philippines canned tuna exports hovered at just under 30 000 mt between 19861988, while Indonesia’s exports have risen sharply from 1 800 mt to an estimated 7 000 mt over the same period.

The Indonesian fish canning industry in 1988 was operating at just 29.1% of the 138 800 mt full capacity. Yet despite this, three major groups (the two existing integrated tuna fishing and canning com-


Notes: aActual DGF statistics for 1985, plus an allowance of 3 000 mt for unrecorded commercial tuna landings. Pro]ections to 1988 are based on catch and export statistics plus company and government statements. ProjectIons for 1989, 1990,1995 and 2000 were made by author Note possible ban on exports of frozen sklpjack’tuna for canning beginnlng 1990 (latest 1991). bVolume of tuna canned. One case tuna canned (48x 185 g) requires f 20 kg sklpjackituna. The table ignores the potentially large Impact of skipjack’tuna imports for canning plus the grow- lng domestlc market demand for canned tuna on canned output. ConversIon ratios used; product weight to live weight equivalent (1 00). Fresh/ frozen sashimi = 0.87; frozen canmng = 1 .OO; canned = 0.375 (85% of net weight IS tuna); total domestic = 1 00.

pan&s of PT Multi Transpeche Indonesia and PT Bali Raya plus the Licm Group) plan to add c)O 000 mt of tuna canning capacity by lc)!40. Other investors plan to add over 15 000 mt capacity by Ic)c)O. This will effectively double the existing capacity. If fully realized. Indonesian canned tuna production :ind exports (virtually all pro-

duction is exported) could easily reach 60 OO(HO 000 mt (LWE) annually in the early 1u)c)Os from its own supplies alone. Add lo thih frozen tuna imports, and canned tuna exports WOLIICI top 50 000 mt/year and could top 100 000 mt/ycnr.

The industry in the Philippines also has the capacity to double it\ canned tuna exports quickly. With both thcae SE Asian countries entering this market, competition with Thailand for frozen skil’jacki tuna supplies will increase and the volume of Thai exports of canncd

tuna is likely then to fall to below 100 000 mt ;I year in the first half of the lc)‘X)~.

h. An assessment of the impact of the major dcvelopmcnt trcndh in terms of production by product type (sashimi fresh. sashimi frozen. canning-quality frozen ;~nd canned tuna) fat- exports together with the growth in domestic consumption (predominantly fresh (>SO%,). but also smoked and salt-boiled) is pruscnted in ‘Table 30 (XC al$o Figure 7).

It is anticipated that total skipjack/tuna production of roughly 135 000 mt in 19x7 will reach 3-00 000 mt in 1900. with the domestic market share remaining more or less static at 100 ()()(~I IO 000 nit.

Thus total exports are expected to grow lOO’%, from about 45 000

mt (LWE) in 19x7, to reach ahout 00 000 mt (LWE) in IYAI, with

approximately 33% sashimi, and the remainder canned (exported

frozen for canning or canned within Indonesia) (see Figure 8).

Conclusions

The tuna rcsourcc: is only moderately fished at present. Landings arc‘

projected to rise to about 200 000 mt hy I990 and thereafter to rise to

between 250 000-300 000 mt hy the year 2000. The major endogenous

constraint on the rate of growth of the large-scale sector iy the present

government restriction on imported vessels (and ban after l9N). It

maintained, this will slow the rate of growth of the large-scale tuna

purse seine and longlinc fleets and limit the growth in export incomc.

Table 20. Total domestic supply and exports of fresh, frozen and canned skipjack/tuna (1985-2000).

Fresh Frozen Frozen Year (sashimi) (sashimi) (canning)

1985 1 075 7 075 10 800 1986 2 725 7 975 12 570 1987 2 660 13430 20 000 1988 5 500 13 000 24 600 1989 7 000 16 000 31 000 1990 10 000 20 000 35 000

Cannedb

2 750 4 130 9710

15 700 21 000 25 000

Total Total Total Exports Domestic SUPPlY

21 700 99 300 121 000 27 400 95 600 123 000 45 800 89 200 135 000 58 800 91 200 150 000 75 000 100 000 175 000 90 000 110000 200 000

1995 10000 20 000 0 80 000 110000 140 000 240 000

2000 10 000 20 000 0 110000 140 000 160 000 300 000


Indonesia’s tuna fisheries

200

0

Figure 7. Tuna production and export by industry sector, 1975-l 990.

Figure 8. Estimated volume, value and composition of skipjack/tuna exports, 1987 and 1990.

q Private companies (Including JVsl

•ZI State companies

0 Medium and small scale

PS Purse seine

LL Long line

PL Pole and line

PIR Fishing nucleus company schemes

P E P E

1975 1980

P and L

P E P E

1985

I Likely range

Likely range

Exports and value added

Exports of skipjack/tuna are projected to jump from about 38 000 mt (product weight) in 1987 worth an estimated US$45 million to about 90 000 mt LWE in 1990 worth about US$lSO million, and to stabilize thereafter at about 100 000-140 000 mt LWE/year. Of this, roughly 25% will be used for sashimi-quality tuna, and the remainder will be used for canning.

The success of the Indonesian canning industry depends on changes in government policy. The industry is frustrated by two controllable factors; high (monopolistic) internal shipping rates; and the high cost of money. The combined effect of these two factors is to add a net ‘cost burden’ to Indonesian canners, depending on location, of between

r 1987 LWE 1990

38 270 mt product weight Value lJS$45 mullion fob 90 000 mt LWE lJS$180 million fob

:k EM) mt LWE (officially USQ39.2 milhon fob1


US$S0~2OO/mt (US$l-3/ease, or 5-20% to the export price). However. large savings on transport :md handling costs are available to canners based in certain locations in Indonesi2i.‘s

The potential exists to extend the PIR concept to several other parts ot

exist Indonesia, both by state :md private companies. Where spare catching capacity exists. it can product :I rapid rate of development if directed to the right ;u-c;is. Attempts to attract foreign tuna fishing firms to invest directly in Indonesia had little success until the declaration of a

ZOO-mile EEZ in IWO. Since then. various government mc;isurcs (devaluation. deregulation) introduced in 10X6. 1987, I%# and I%9 have improved the investment climate for tuna projects. p;u-titularly in cast Indonesia. With ;I lurgc rusourcc base. low-cost fuel and Inbour. :uid ;I favour~ible tiix regime, Indonesia currently has strong comparn- tive advantages for the foreign investor :~nd oper:ltor in the tuna fishing

and canning industry.

Str7rct7rrc o,ftlw t77li(i i,7riirstr?

During the past I5 years, the structure of the tuna industry has shifted from being dominated by fleets of foreign vessels exporting their catch direct. to ;I predominantly clomcstic catching and marketing industry, served by ;I large number of small- to medium-scale vessels. Today. largescale, domestic (private and state) and joint venture companies dominate the export industry, while foreign-licensed vessels now account for only ;I minor part of the total catch and total exports. Despite the large number of tuna fishing companies now operating in Indonesia, during the past three years. three groups of companies have established ;I dominant position in the pole and line and purse seine fisheries.‘” They :\re the Usaha Mim-Pcrikani Sulut axis, both state companies operating throughout the northern half of east Indonesia, both with their own and with PIR scheme vessels in pole and line and longlinc; the Mantrust-Bali Raya group. based in Bali. operating predominantly in the southern half of exist Indonesia, the Indian Ocean” and off north Irian Jay:~ with :I combinntion of ;I large purse scincr (chartered), large longliners (at present belonging to PSB) and modern PIR scheme pole :ind line and longline vessels; and PT Multi Transpcchc Indonesia, operating off north Irian Jayn, with its own large purse seincrs and pole ancl liners.

Although the product mix will differ-, each of these groups export part of their tuna catch fresh and/or deep-frozen for sashimi, with the

“Exporting tuna in cans as opposed to skipjack/small size. lower quality tuna catch exported frozen or canned. frozen tuna in the round saves about 10% on the canned export price. This helps

(The last two groups are vertically integrated, fishing-canning

provide local canners with a significant companies.“) Combined. these three groups already account for ;\bout

cost advantage over foreign-based can- 20”/,, of the total Indonesian skipjack/tuna catch and about 75X of neries. ‘“Because of its nature, no strong natural

exports in 1987. In addition. each has distinct comparative advantages

comparative advantage giving rise to within their respective areas/methods of operation and each has large

dominance exists or is expected in the expansion plans which they arc currently implementing. These three longline fishery. 301ncIuding a new base in Sabang, Aceh

‘industrial groups’ are expected to maintain their dominance in skil>j;lck/

province, off northwest Sumatera. tuna fishing, at least into the early p;lrt of the 1990s.

3’PT Mantrust, the major canning group in Should the Gem group enter the tuna canning industry as recently Indonesia, purchased the Van Camp label and tuna canning factory In Pago Pago,

announced, it also is likely to quickly become ;I major canner, with

Western Samoa in July 1988. It plans to facilities in Bali , Jakarta and Batam (this free port lies opposite

expand output at that plant also. Singapore and adjacent to the busiest shipping route in SE Asia).
