On the economic performance and efficiency of gillnet vessels in Nha Trang, Vietnam

Abstract

Vietnam’s policy was to shift the fishing pressure from onshore to offshore water since the coastal resource has been overexploited, and a program of investing offshore vessels has thus implemented since 1997. The question raised is whether the offshore fishing fleet is profitable and efficient or not? This study aims to evaluating economic performance and efficiency of the offshore fleet in Vietnam – the case of the Nha Trang gillnet fishery in open access condition, based on a costs and earning survey carried out on the 58 offshore vessels. The empirical results indicate that an average gillnet vessel earns a gross margin profit of 17.3% and a profit margin of 3.8%, but makes an economic loss, including the government fuel cost support. The average annual crew income is 74.5% more than the local average income per capita. Efficiency analysis of the vessels basing on an application of the Salter-diagram shows that the large number of vessels with high relative standardized effort (above one) is the most cost efficient vessels in both short- and long-run perspectives. The majority of them get intra-marginal rents. The government fuel subsidies help to increase 17.5% for gross cash flow and 36% for profit in an average vessel. The small-scale vessels receive the most benefits from these subsidies. The study also demonstrates that engine capacity, fishing gear and fishing day are the factors best reflecting fishing effort of the vessels.