A study on the economic efficiency of the offshore long line fishery in Khanh Hoa province, Vietnam

Abstract

Since the 1990s, Vietnam’s government has made great efforts to develop the offshore fisheries development program. Study on the economic efficiency of the offshore long-line fishery is needed to evaluate and improve the program’s effectiveness. This thesis presents findings based on survey data collected through a representative sample of 37 registered offshore vessels operating in the Vietnam’s Exclusive Economic Zone and in the international waters. The empirical results show that excluding the government fuel subsidy, the owner of an average long-liner earns a profit of 63.363 million VND - equivalent to profit margin of 7.5% and return on investment of 16.0%. With subsidies, profits increased to 93.111 million VND and the two corresponding economic ratios also went up to 10.6% and 23.5%, respectively. This paper also discovered that the fishery in 2008 was less economically efficient than in 2004. However, the average monthly crew share is 1.8 million VND, higher than the average income per labor working in the gill net fishery in Khanh Hoa Province. A closer inspection of the economic data reveals that direct subsidy to compensate partly for fuel costs increase affected the overall fishery. Furthermore, this study provides evidence to support why an average longliner is still able to generate profits in the open access regime if vessels can capture more cost efficiency while the average revenue of relative standardised effort for all vessels is the same. Finally, this study also demonstrates, the surprising result, that the vessel group with the biggest engines, larger than 150 hp, are least cost efficient, whereas the vessels with the smallest engines, less than 90 HP, are most cost efficient and have the highest return on investment.