When a certain number of fishermen in a particular area consider that their situation is not satisfactory and that they must unite to set up a business society to carry out economic activities, they often think of forming a PN. Frequently, the creation of a PN is the result of the initiative of fishermen (the Act stipulates that 50 or more promoters are required to establish a PN) with a lot of good-will but often with little practical experience. This is the reason why Lembaga Kemajuan Ikan Malaysia (LKIM) gives advice and provides administrative services whose aim is to promote, set up and develop economic enterprise through the provision of material and personnel.
Once PN has been formed, the constitution establishing democratic rules for planning, management and decision-making must be adopted. The bases for the constitution may be varied according to promoters of PN. PN is free to adopt the constitution it desires provided that it should be in conformity with the Act and PN's management is democratic, an in complete freedom and without any external pressure.
In order to have legal exaistence, PN must be registered. For this purpose, there is a special act (i.e. Act 44 Fishermen's Associations Act, 1971,). Under the Act, the Director General of LKIM is appointed as a Registrar of PN and given powers to register PNs. The Act lays down the conditions which must be compiled with before registration. The conditions embody the principles, functions, structure, administration and other matters. PN must have its own constitution which governs its operations. This constitution must be in accordance with the Act and in accordance with cooperative principles. For example, the constitution must provide that general meetings of members must be held at least once a year, and that at such meeting, every member must have one vote only. It must also set out the objectives and functions of the PN; who are eligible for membership; how the surpluses are to be disposed of and so on. Registration gives the PN legal status; enables it to enter into contracts both with non members and with other parties and if necessary, to sue or be sued in its own name. Without registration, the members have no legal protection.
The general meeting consists of all the members of PN, each of whom, in principle has only one vote, regardless of his financial participation or of the value of his transaction with PN. The general meeting takes place at least once a year and is the body which elects the members of the board of directors and discuss strategies and programmes.
The responsibilities of the general meeting are very important. Normally, in a majority vote, it can request the inclusion in its agenda of anything relevant. It is at the general meeting that the chairman of the board of directors presents the official report giving details of the PN's activities during the previous period; the financial results (i.e. the balance sheet, the profit and loss statement), are submitted to the meeting which either approves or rejects them; it appoints the auditors who submits its report to the meeting. In brief, it may be said that in a democratically managed PN, the general meeting is the source of all authority, of all directives and of all decisions, including a resolution to close down the PN.
Accordingly, it is very clear that as many members as possible should attend the general meeting. Without the active participation of all its members, PN cannot expect to grow into a sound organization. The general meetings must be made as attractive and as lively as possible in order to achieve full attendance. Reports of the board of directors must be kept short and simple in order to leave sufficient time for the discussions in which members should take part in large members. For the mandatory presentation of the balance sheet and profit and loss statement, use of slides should be made as well as tables, graphs and diagrams to help the members comprehend the annual reports. All documents must be circulated to the members well ahead of the general meeting, the date for which is to be chosen at the most appropriate time of year (i.e. off seasons or low seasons when most of the members are ashore).
The board of directors is the body responsible for administering PN. It must ensure that the decision made at the general meeting are applied and that the directives it has given are properly implemented. The board of directors comprises a limited number of members; from among its members, the board elects its chairman. It has been the custom that each member comes from different villages (Kampung) in the area of PN. The term of office of the members is normally two years. Depending upon the consititution of PN, he may be eligible for reelection. Travel and subsistence allowance may be paid for their attendance to the meeting of the board of directors.
In an effective board of directors:
the members should be receptive to new ideas;
they should be concerned that the economic business and social activities of PN run well;
they should be frequently available to attend meetings (the Act stipulates that if they fail to attend three times consecutively, they will be disqualified for the board member.
Financial questions are of vital importance in the life of PN. Most members are liable to be worried about the money they have put into PN. It is therefore essential that PN should inform its members how money has been spent and what financial results are. Lack of experience on the part of the board members may cause them to make mistakes and so lead to not entirely satisfactory financial results, particularly in the early years of operation.
This is why the constitution provides for PN to appoint a public auditor known for his financial and accounting ability. The Act also permits the Registrar (LKIM) to undertake auditing of PN. The auditor can issue warning to the board of directors and it is mandatory that it should present a report at the general meeting. The auditing system will enable the members of PN and to be both better informed about the actual affairs of their PN and to be sure that the accounts submitted to them are correct.
Many PNs stipulate in their constitutions the formation of a special committee in order to examine problems and propose counter-measures for solving such problems. The establishement of such a committee would be useful to facilitate appropriate action because the normal procedure of deciding on a policy at the general meeting and its implementation by the board of directors is time consuming and therefore not always appropriate. Usually such a committee consists of the chairman, manager, assistant manager of PN. This committee is authorized to make immediate decisions. It must subsequently report its decisions to the board of directors.
The operation of PN at the various stages of the planning and decision-making procedure may be summarized as follows:
The general meeting lays down the policy and programmes of PN together with its main guidelines;
The board of directors implements the programmes on the basis of PN's guidelines, under the supervision of LKIM and the auditor as regard the financial consequences;
The committee intervenes when prompt action is required.
The principle of a PN is that individual fishermen combine their resources for greater economic and social strength. The same principle can be taken much further by PNs themselves combining to form an association of PNs. This process is known as federation. A federation of PNs is called PN at the state level i.e. State Fishermen's Association. Just as PNs can federate to form secondaries, these can federate at the national level. At the top of the structure there is the apex organization i.e. the National Fishermen's Association (NEKMAT) which includes all the state fishermen's associations in its membership. PNs, the State PN and NEKMAT are multi-purpose in their business operation. It is essential that there should not be any competitive relationship among themselves. Vertical and horizontal coordination is important in the hierarchy of PNs, State PNs and NEKMAT.
Under the income tax law of the country, a PN is given income tax exemption for the first five years after their date of registration. At the end of the five year exemption period, if the members funds 1 of PN are less than M$500,000, PN will also be exempted from income tax.
Income tax exemption is also given to PN in respect of excess profit tax and development tax; and the income tax law also provides that dividends issued by PN to its members are not subject to taxiation.
