Looking Seawards: The Benefits of the Blue Economy Await Penang

Penang’s economy, culture and environment are defined as much by the water that surrounds its shoreline as it is by the land on which its people live and work. Its coastal waters, rivers, lakes, wetlands, coral reefs and estuaries create jobs and provide an important source of food, creating huge economic opportunities.

The ocean has come to represent a new economic frontier for actors of different interests across the public and private sectors. Ocean-based economic activities can be sustainably developed to optimise the benefits and minimise negative impacts on the environment and society.

Enter the Blue Economy.

It refers to the supportable use of aquatic resources for economic growth for the improvement of human wellbeing and social equity; and protection against negative environmental externalities such as pollution and climate change.

This concept, which emerged in response to the 2012 United Nations Conference on Sustainable Development (UNCSD), is part of a global dialogue on achieving Sustainable Development Goal (SDG) 14: “Life Below Water”, which seeks to conserve and sustainably use the oceans, seas, and marine and aquatic resources. Discourse on SDG14, which has been guided by conservation objectives and large economic interests, is shifting; and greater emphasis is now being placed on the Blue Economy generating employment, eradicating poverty and hunger, spurring entrepreneurship, and creating better opportunities for men, women, youths and indigenous peoples.

Discussions on the Blue Economy typically focus on high-tech innovations, large-scale aquaculture systems and mining drills scouring the ocean depths, and also require focus on better integration, coordination and planning, and adding value to existing systems, sectors and tools.

The main challenge, however, is to ensure that everyone benefits – that we not only protect, produce and prosper from marine and aquatic resources, but also share the gains.

To What End?

According to the Organisation for Economic Co-operation and Development (OECD), oceans contribute approximately US$1.5tril annually to the overall economy; this will more than double by 2030. Direct employment in the Blue Economy is estimated at 80 million, with around 60 million people employed in fisheries and aquaculture, more than half of whom are employed by capture fisheries working in small-scale operations. By contrast, the oil and gas sector employs approximately 1.8 million; and tourism about eight million people directly.

Asia accounts for 84% of all individuals employed in the fisheries and aquaculture sector worldwide, and 75% of global fishing vessels1. By 2030 Asia will consume 70% of the world’s fish, and will export fish valued at US$136bil.2

Penang's waters provide an important source of food and create vast economic opportunities.

Fisheries, aquaculture, tourism, shipping, biotechnologies, maritime security, mining, oil and gas, renewable energy, and ecosystem services all compete for coastal and ocean space. Understanding the different economic, social and environmental costs and benefits, as well as the risks of each sector in sustaining and conserving aquatic resources, is necessary in making meaningful inter-sectoral trade-offs.

The Blue Economy aims to achieve this through various tools and assessments that incorporate the real value of the ocean’s natural capital into all aspects of economic activities.

There are five key themes – each with its own unique goals and objectives – in the Blue Economy concept: economic growth, environmental sustainability, social inclusion, governance and institutional mechanisms, and technical capacity.

Who’s On Board

Implementing the Blue Economy requires good data and analysis of respective ocean-based sectors, including a better understanding of their potential contributions to revenues, people’s welfare and ecosystem services.

Many sectors have poor data collection systems, and this undermines their potential to benefit from the Blue Economy, or may even exclude them from participation. Of note are capture fisheries, in particular small-scale fisheries where the intrinsic value of the sector is poorly understood and the economic analysis weak. Where there is data on fisheries such as in the Pacific, there are good examples of State ability to adopt management practices that permit sustainable growth of jobs and that lead to better policies and governance.

Even when data are scarce, a Blue Economy approach can be employed to improve planning and coordination between sectors. Several countries have done well in this, including South Africa, Kenya, the Seychelles, Mauritius and Madagascar.

A local restaurant in Penang. Seafood consumption can reduce non-communicable diseases such as diabetes or heart disease.

Strategically integrated planning and coordination are the key characteristics in such cases. Kenya, the Seychelles and South Africa have created departments for the Blue Economy that integrate responsibilities to coordinate inter-sector planning into the government’s institutional structures.

In Kenya, the Ministry of Fisheries brings together key parties responsible for transport, tourism, shipping and environmental protection to form an inter-agency committee that reports to the Cabinet. The committee has undertaken a cross-sector analysis with the aim of unlocking jobs, and has produced a roadmap for the Blue Economy. This improved communication between agencies has resulted in the establishment of several public-private partnerships.

When the Seychelles transformed into a high-income country, it stimulated the development of an innovative financial instrument called the Seychelles Blue Bond, which was made possible thanks to a World Bank guarantee and which helped to raise US$15mil. Funds have been used to finance sustainable increases in productivity through better management of fisheries, including measures to rebuild stocks, restructure fishing capacity and support post-harvest value adding.

Japan is on board as well, supporting what is termed as the sixth industry development. This sees investments in several new fish landing sites to provide quality market and retail space which brings consumers to fish production areas. The use of “green-lanterns” indicates to consumers when a retailer is selling local produce. The approach has been particularly successful in creating jobs and diversifying the aquatic resources-based economy.

The Blue Economy concept also helps to minimise environmental degradation and pollution; restore and conserve biodiversity and natural resources; protect against overfishing; and facilitate the transition towards a low-carbon economy and renewable “blue” energy generation. Essentially, it helps to ensure an ecosystem-based management of human activities in the sea, ocean and coastal areas.

What’s in it for Penang?

Penang’s current state of marine and coastal ecosystems is in need of better management – especially in terms of human activities – and transitioning to a Blue Economy will require investing in economic, social and environmental knowledge and technologies, as well as people to fully unlock its innovative potential.

Adopting the Blue Economy approach will promote the importance and value of marine and aquatic resources, and allow for a greater focus on gender equality not only in developing low-skilled jobs in post-harvest and processing, but also in leadership and technical skills that are currently underrepresented in the field.

This approach can actively support small-scale businesses in diversifying livelihood opportunities and contribute to food security and nutrition through fisheries, aquaculture and other food processing sectors. By working together with coastal communities, minorities and vulnerable members of society, an inclusive and sustainable economic growth can be better assured.

Man fishing off the coast near the Tun Dr Lim Chong Eu Expressway.

Relative to its land size, Penang has vast marine and aquatic resources. Traditional fishing, shipping and maritime trade have historically dominated ocean activities in Penang. The potential of adopting the Blue Economy can be significantly expanded into alternative, emerging and new sectors (Table 2), and contribute towards the building of resilience against external shocks, be it economic, social or environmental.

Small-scale Fisheries

Small-scale fisheries (SSF) are at the heart of Penang’s fisheries sector, but their contribution is often undervalued. Marine and coastal waters are specific locations designated for SSF activities, making their long-term viability important to small-scale fishers’ and fish workers’ livelihoods. It is important to note that under the Blue Economy objectives, the social dimension of fisheries and SSF concerns are represented and recognised in an inclusive and sustainable manner.

Aquaculture Production

The sustainable production of fish through aquaculture and capture fisheries is a cornerstone of creating a Blue Economy in Penang. Increasing the supply of affordable, high-quality aquatic food sources to meet growing demand is essential to transform these sectors into sustainable production systems.

Small-scale fisheries account for 50% of the world’s marine fish catch for human consumption, with the other half coming from aquaculture.

In Malaysia, fish contributes around 44% of the total animal-sourced protein intake.3 Malaysians are among the world’s biggest consumers of fish (56.9kg/capita/year) – far above the world average of 20.3kg per capita.4 However, the country’s fish production cannot meet domestic consumption: in 2018 Malaysia imported about 224,578 tonnes of fish valued at RM1.7bil;5 in 2017 Penang’s food fish sector produced 96,970.4 metric tonnes, valued at RM1.4bil – the third highest wholesale value in the country. Yet, domestic demand for fish exceeded that of local supply.

To increase the supply of food sources from the seas without further damaging the ecosystem requires a combination of better fisheries management, investment in sustainable aquaculture and a reduction in fish loss and waste.

The number of international cruise ships that docked in Penang increased by 88.2% in 2017.

Globally, one in three fish caught are lost in post-harvest processing. Aquaculture can help to minimise the pressure on wild stocks and produce fish at affordable prices for domestic markets, and as high-value seafood for tourism and export markets.

At the same time, better management practices in capture fisheries can improve resource sustainability and enhance local supplies with new wealth creation opportunities through value-adding in fish processing and retail, providing new job opportunities for women and youths.

Sustainable fish production systems not only provide economic benefits; they also help maintain a healthier population particularly in reducing non-communicable diseases such as diabetes or heart disease. In 2017 about 1,409 and 10,284 persons died of diabetes and heart disease respectively in Malaysia.6 Our obesity rate is highest among Asean countries, with nearly 14% of citizens categorised as “obese”.7 Low seafood consumption during pregnancy increases the risk of the foetus’s sub-optimal neurodevelopmental outcomes, including poorer cognition and fine motor skills.8 A Blue Economy can help promote good public health through the supply of nutritious fish and fish products that are high in micronutrients and essential fatty acids.

Tourism

In 2016 travel and tourism generated US$7.6tril – 10.2% of the global GDP – and supported one in every 10 jobs in the world.9 About 80% of all tourism takes place in coastal areas, with beaches and coral reefs among the most popular destinations.10

Penang’s tourism industry is the second main source of income generation, after manufacturing. Its coastal and marine tourism makes up an important share of the tourism industry, and brings jobs and economic growth to the state. Case in point: cruise tourism in Penang is growing considerably; in 2017 the number of international cruise ships that docked in Penang and the number of passengers increased by 88.2% and 84.2% respectively – a remarkable boost from 2016.

The tourism industry is extremely dependent on environmental quality to attract visitors. However, uncontrolled and irresponsible mass tourism may put pressure on urban centres and environmental resources, including the degradation of valuable habitats such as coral reefs, wetlands and mangrove forests, increased greenhouse gas emissions, and significant consumption of resources including water and energy, and waste generation.

Adopting a Blue Economy approach where ecosystem services are properly valued and incorporated into development planning can help diversify the tourism industry to promote low-impact activities, such as ecotourism, while minimising the negative impacts of mainstream tourism.

Global and Local Maritime Transport

About 90% of all goods in the world are transported by sea.11 Five out of the top six shipping economies in the world are located in East Asia, along with nine of the top 10 busiest container ports (by volume).

Malaysia stands to benefit from continued growth in seaborne trade, and is poised to be the main fish exporter due to its well-developed port cargo transport facilities for shipping to the main East Asian markets, and its close proximity to the Indian Ocean. Penang is a major transportation and logistics hub in the northern region and the Indonesia-Thailand-Malaysia triangle can facilitate fishermen and farmers to gain access to the global market.

As an island, Penang can also benefit from greater connectivity to provide maritime transportation solutions to alleviate urban traffic congestion; and at the same time, connect consumers with producers to buy and consume fish, promote commerce and enjoy the rich culture of the coastal communities at fish landing sites.

Safety, Renewable Energy and Resource-based Industries The security and safety of maritime resources in Penang are essential for trade, communication, and job and wealth creation. However, security challenges have escalated for ports, offshore installations and ships in recent times, endangering the crew, ships, cargo, marine life and other investments.

To that end, collaboration – and this includes Asean cooperation – between different Blue Economy stakeholders is needed to develop new regulations, enforcement and technologies that can deter a range of threats and criminal activities. High priority needs to be given towards eliminating illegal, unregulated and unreported (IUU) fishing that threatens the sustainability of the world’s fisheries, and which costs the industry an estimated US$23.5bil annually.12

As energy consumption in Penang continues to climb, alternatives to traditional fossil fuels are needed. Great potential exists for the development of renewable energy such as solar, wind, wave and tidal energy resources in Penang’s coastal and marine environment. Ocean currents and wave energy can be captured to provide a sustained source of energy, while wind and solar farms can be placed in the ocean to relieve pressure on the land.

The sea can provide much of the raw materials for resource-based industries and the food manufacturing sector. Being a manufacturing and services-oriented economy and a main hub for exports, Penang is set to benefit from increasing its seafood supplies.

High-tech and Biotech Marine Services

A significant market exists for companies providing marine technology and environmental services, including oil spill response, environmental consulting, marine scientific services and IT and data solutions, among others. The marine environment offers a new frontier of biological resources to develop a range of products from pharmaceuticals and chemicals to personal care products. Marine species, for instance, provide key ingredients for biofuel, cosmetic products, dietary supplements, painkillers and even treatments for cancer.

Marine biotechnology has in fact been included in Malaysia’s investment strategies and growth plans.13

A Way Forward

Adopting the Blue Economy approach in Penang will require a clear vision that brings together the government, businesses and the local community – especially small-scale fishing – into a facilitated dialogue that will be mutually beneficial for all. Likewise, public-private partnerships need to be established to improve communication between agencies to enable better understanding and sharing of ideas and strategies.

The information base needs to be strengthened to improve the valuation of the costs and benefits of different economic sectors on marine ecosystems and services. Good data are needed to support transparent decision-making, and can be used to harness new technologies and encourage innovation.

A period of socialising and data gathering is required to enable Penang to apply more strategic approaches in generating long-term benefits from marine and aquatic resources that do not degrade the environment, but create sustainable and environmentally friendly jobs and businesses.

Dr Gareth Johnstone is a geographer with 25 years of professional experience in natural resource management and research, with an emphasis on governance issues, policy development, capacity building and institutional development. In 2017, he was appointed as Director General of WorldFish, an international non-profit research organisation based in Malaysia.
Negin Vaghefi is a senior analyst at Penang Institute. She holds a Ph.D. in Environmental Economics. Her research interests include agri-environmental economics, climate change, green economics, poverty and income inequality, and policy analysis.
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2Whisnant, R., and Reyes, A. 2015. Blue Economy for Business in East Asia: Towards an Integrated Understanding of Blue Economy. Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), Quezon City, Philippines. 69 p.
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4FAO. (2018). The State of World Fisheries and Aquaculture - Meeting the sustainable development goals. Rome. 210 pp.
5Department of Fisheries, Malaysia 2018.
6Ministry of Health Malaysia. Health indicators 2018.
7The Economist Intelligence Unit, 2017.
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10Whisnant, R., and Reyes, A. 2015. Blue Economy for Business in East Asia: Towards an Integrated Understanding of Blue Economy. Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), Quezon City, Philippines. 69 p.
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12PEW. (2017). How to End Illegal Fishing. From coastal waters to the high seas, criminals are robbing the oceans and hurting economies. Retrieved from: https://www.pewtrusts.org/en/research-and-analysis/issuebriefs/2017/12/how-to-end-illegal-fishing.
13Whisnant, R., and Reyes, A. 2015. Blue Economy for Business in East Asia: Towards an Integrated Understanding of Blue Economy. Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), Quezon City, Philippines. 69 p.



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