Various problems with regard to management, operation and accounting of the Tumpat Area Fishermen's Association have already been indicated in the preceding chapters of this report. These problems, with others not indicated in the preceding chapters, are compiled here comprehensively.
Though the membership of the Tumpat PN increased sharply in 1986 and 1987, many members failed to pay their annual subscriptions for more than two successive years. According to the regulations, any member of a PN who fails to pay his annual due (subscription) for more than two successive years, shall be regarded as withdrawn voluntarily from the PN.
If the Tumpat PN complies with the regulations strictly, its membership may necessarily be decreased by half or less than the present level.
There has been an understanding between the Department of Fisheries (DOF) and the PN that the DOF will ensure that member fishermen fulfil their financial obligations to the PN when their fishing licenses are to be renewed. This procedure is however applicable to and effective only for those members who are boat-owners.
Furthermore, the PN management are not taking any effective measures to encourage members to pay their annual dues to the PN. If the management untiringly perseveres in its effort to collect annual subscriptions from members, the collection from members in a subscription will certainly rise from the present level as the amount of an annual subscription is only one ringgit (M$1.00).
The larger proportion of total membership consists of the crews of fishing boats who have no direct interests in the PN economic activities as those activities are directly related to fishing businesses which are mainly the concerns of boat owners. In addition, a crew may be employed by a boat owner who is a member of another PN some day. Therefore, most crews of fishing boats who are members of PNs usually are not under obligation nor owe any responsibility to the PN.
The foundation of an association rests on a group of people with a common need which they undertake to satisfy by making a commitment to act together in a united way. This commitment must be especially strong when it touches on a vital part of life and living. The loyalty of members to the organization tends to be strong because of income and livelihood. Therefore, the much of the membership of the PN should be people who have direct interest in the PN activities through the nature of their livelihood, this will strengthen the commitment of members.
Most of the economic activities carried out by the Tumpat PN have been launched through the efforts of LKIM and not from the PN's plans or strategies. And, the PN has launched too many projects, many of which have already ceased operations.
Over a decade in Malaysia, fishermen's associations became almost synonymous with failure in economic activities, and many projects within the framework of PNs collapsed and disappeared as seen in the Tumpat Area Fishermen's Association. Even though some of its projects have not failed outright and still continued their operations, they have chronic troubles with poor management and often tend to be backward. These failures in various economic activities in the PN are attributed to several dominant causes.
One of these causes is the weak or total lack of commitment of members to the activities of the PN. Commitment of members is the life-blood of the association, and where it is lacking or weak the organization declines. The strength of the bond between members and the association is a measure of its success, and obviously is of great importance in accumulation of business volume of the PN.
The reasons for the poor commitment are many and are often subtle and complex. For member fishermen, it may be the presence of an alternative, better service which leaves the members with little advantage to show. In some situations, the value of dividend or rebate also affects commitment. The PN Tumpat has never paid a dividend or rebate to members since its establishment.
Whatever the cause, the factor of commitment is vital, which must be studied and perhaps made a subject of careful research. The Project is looking forward to the results of socio-economic surveys carried out recently in the target areas. The reports of these surveys are still being processed at the time of preparation of this paper. They may reveal the obvious reasons for the weakness in the members' commitment.
The second and most important cause associated with the failure in the business activities of the PN is the lack of ability, skill, aggressiveness and ingenuity of the management to operate business successfully for the main purpose of the fishermen's association. This is analysed in the next paragraph.
Another cause may be that the PN has launched projects in a variety of economic activities. The PN should not have over extended itself in the range of its economic activities and projects, and instead concentrated in the major line of economic activity.
Figures in the financial statements in recent years have clearly testified that the results in input supply activities, fuel and ice, together with fish marketing have greatly improved as the volume of sales in fish marketing rapidly increased. The whole part of net profits of the PN are from these projects.
If the management puts its full strength in fish marketing for its successful operation, greater returns can be obtained not only from fish marketing but also from input supplies.
As the management staff are government officers seconded by LKIM and members of the board of directors are mostly fishermen elected from among members of the PN, they may be lacking in the knowledge, skills and experience in management.
Although, the lack or weakness in aggressiveness and ingenuity may be the basic defect in the PN management, if the management maintained a disciplined attitude toward the management and operations of economic activities, they might have learned much from actual everyday operations and even from failures.
One particular example indicates that the Tumpat PN refused to be involved in the direct shipment of fish from the PN to super market chains in Kuala Lumpur which was programmed by the Project to strengthen the PN fish marketing activity. The programme and results of this trial project shall be described in a separate paper.
The reason for refusal to join in the project of direct fish shipment was that the cost benefit was still uncertain and risky. However, the PN was already facing the problem of dispose of unsold fish at the present auction carried out by them. This problem could have been overcome by the direct shipment of fish to retail markets in the urban area.
Another fundamental problem in the management is that a management information system has not yet been established in the PN. There is no daily report of particular projects for management to monitor and evaluate the progress of operations.
There is the monthly report prepared by each economic project, but the purpose of its preparation is just to submit it to LKIM and not for management to review the grogress and results of operations.
As stated in the previous chapter, the annual financial statements are available to the management more than six months after the closing of accounts for a particular year.
Lack of sufficient management information as well as of understanding of that information will reduce the capacity of the management to successfully operate an economic business.
No decision concerning operating policies of the PN economic projects can be made and carried out that will not be reflected in the figures of those reports and statements mentioned above. The figures in those reports and statements of the PN are a reflection of management operating policies or a lack of operating policies.
As mentioned in Chapter 7 above, PN Tumpat has carried quite heavy accounts receivable of which the majority had already been frozen for many years.
Credits accepted for member fishermen or fish dealers by the PN act as a medium of exchange in that it facilitates the passage of goods or services from the seller, the PN, to the buyer, the member fishermen or fish dealers. Just as money is recognized in our economy as a medium of exchange permitting the easy passage of goods or services between seller and buyer, so is credit recognized.
However, credit does have particular characteristics. The seller can accept money as a medium of exchange without any limit, but in the case of credit, the seller has the right to make an investigation of the buyer and to decide whether or not to accept the individual as a credit risk because the credit must be redeemed by the process known as payment. Therein lies the main difference between credit which is generally considered to have “limited acceptance” and money which has “unlimited acceptability”.
It seems that the PN has accepted credit from anybody without limits in volume and terms of payment, as well as the PN has never made an investigation of a member fisherman or a fish dealer before accepting the individual as a credit risk.
As long as the PN accepts the credit of members or dealers, there always will be the need for some type of collection effort. Thus, collections are an inherent part of the credit business. Credit has limited acceptance, as pointed out previously, because of the risk.
The PN seems to be lacking in its collection effort. Nor has it established any workable collection system. The PN often complained of imprudent members and dealers, however, a lax collection policy often affected the purchaser's attitude. Also, there is a definite correlation between the length of time debts are unpaid and the volume of resulting bad debt losses, which are found in the receivables of the PN in may instances.
Moreover, slow collections tend to result in the loss of future sales to those members and dealers because of their reluctance to attempt to buy from PN to whom they have owed for some period of time. This might has been reflected in the decrease of sales in some of the projects in 1987, i.e. fish marketing and retail shop.
As mentioned earlier, PN accounting has shown many misconducts in its procedures, which is mainly caused by lack of understanding and skills in accounting principles, procedures and systems.
The PN divided project accounts into two groups each of which has been entrusted to a separate accounting clerk. There has been no responsible person, however, to take overall charge of PN accounting. This has caused many unbalanced figures represented in accounts between these two groups of projects.
The PN has provided no particular cabinet or locker for accounting books, records, ledgers and supporting documents which are generally kept on tables or racks which might resulted in losses of evidence of particular transactions.
There is also no daily check list of accounts to ascertain the balance between debit and credit of accounting items for everyday transactions, nor monthly accounting reports. If such checking and reporting systems exist, errors in book-keeping can be easily identified.
It is the responsibility of the accounting staff to present periodical financial reports, i.e. daily, monthly and annual, to the management. This has not been implemented until now.
Accounting is the language of finance and management. It is the means of recording through Arabic numerals the forces and values that represent everyday business transactions. By its very nature, accounting adapts itself to business procedure and to operating policy, not business procedures or operating policy to accounting. Therefore, the PN should establish well organized and systematic accounting based on the nature of its economic business procedure and policy.
