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Report No. 1757b-MA Mft 0 t
MalaysiaAppraisal of the Northwest SelangorIntegrated
Agricultural Development Projectlanuary 30, 1978
Projects DepartmentEast Asia and Pacific Regional OfficeFOR
OFFICIAL USE ONLY
Document of the World Bank
This document has a restricted distribution and may be used by
recipientsonly in the performance of their official duties. Its
contents may nototherwise be disclosed without World Bank
authorization.
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CURRENCY EQUIVALENTS
US$1.00 = M$2.48M$1.00 = US$0.40M$1 million US$403,000
WEIGHTS AND MEASURES - METRIC SYSTEM
1 millimeter (mm) = 0.039 inches1 meter (m) = 39.37 inches1
kilometer (km) = 0.62 miles1 square kilometer (sq km) = 0.386
square miles1 hectare (ha) = 2.47 acres1 cubic meter (cu m) = 35.31
cubic feetI liter (1) = 0.264 gallons (USA)1 liter/second (l/s) =
0.035 cubic feet per second1 kilogram (kg) = 2.2 pounds1 metric ton
(ton) = 2,205 pounds
ABBREVIATIONS
AA = Agriculture AssistantAO = Agriculture OfficerAT =
Agriculture TechnicianBPM = Bank Pertanian MalaysiaDID = Drainage
and Irrigation DepartmentDOA = Department of AgricultureFOA =
Farmers' Organization AuthorityGOM = Government of MalaysiaGRP =
Glass-Reinforced PolyesterMOA = Ministry of AgricultureMARDI =
Malaysian Agriclture Research and Development InstituteLPN =
Lembaga Padi dan Beras Negara = National Padi BoardSG = Sungei =
River
MALAYSIAN FISCAL YEAR
January 1 to December 31
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FOR OFFICIAL USE ONLYMALAYSIA
APPRAISAL OF THE
NORTHWEST SELANGOR INTEGRATED AGRICULTURAL DEVELOPMENT
PROJECT
TABLE OF CONTENTS
Page No.
SUMMARY AND CONCLUSIONS i-ii
1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . .
..
2. BACKGROUND . . . . . . . . . . . . . . . 1
The Agricultural Sector . . . . . . . . . . . . . . . . .
2Irrigation and Drainage Development in Malaysia . . . .. 2
The State of Selangor. . . . . . . . . . . . . . . . . . . 3
3. THE PROJECT AREA . . . . . . . . . . . . . . . . . . . . . .
4
Climate . . . . . . . . . . . . . . . . . . .. . . . . . 4
Soils, Topography, and Drainage . . . . . . .. 5
Drainage and Irrigation Infrastructure . . . . . . . . . . 6Farm
Size and Tenure .. .. . . . . . . . . . . .... 7Estate Agriculture
. . . . . . . 8
Agricultural Supporting Services . . . . . . . . . . . . .
8Project Formulation . . . . . . . . . . . . . . . . . . . 11
4. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . .
12
Project Components . . . . . . . . . . . . . .. . 12Status of
Design . . . . . . . . . . . . . . . . . . . . . 15Implementation
Schedule . . . . . . . . . . . . . . . . . 16Cost Estimates . . . .
. . . . .. ... 16Financing . . . . - . . . . . * . . . . . . . . .
17Procurement . .. . . . . . . . . . . . . . . . . . .
18Disbursements . . . . . . . . . . . . . . . .. . . 19Accounts
and-Audits . . . . . . . . . . . . . . . . . . . 19Environmental
Effects . ... .. . . 19
5. ORGANIZATION AND MANAGEMENT ................ 20
Project Coordination . . . . . . . . . . . . . . . . . . .
20Agency Responsibilities . .. . . . . . 21
Smallholder Rent and Cost Recovery . . . . . . . . . . . .
23Estate Taxation . . . . . . . . . . . . . . . . . . . . . 24
This report is based on the findings of an appraisal mission
composed of
Messrs J. Goldberg and G. Temple (Bank), and G. Thorsky, R.
Shepherd, and
P. Judd (consultants).
This docunent has re tricted distribution and may be usd by
recipients only in the performanceof their omcial duties. Its
content mAy not otherwise be diclosed without Worid Bank
authorization.
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Page No.
6. PRODUCTION, MARKETING, PRICES AND FARM INCOME . . . . . . . .
24
Padi Production, Marketing, and Prices . . . . . . . . . .
25Tree Crop Production, Marketing, and Prices . . . . . . . .
25Farm Incomes .. ....... . . .. 27
7. BENEFITS, JUSTIFICATION AND RISK . . . . . . . . . . . . . .
28
8. RECOMMENDATIONS . . . . . . . . . . . 29
ANNEXES
1. Water Demand, Supply, and Quality2 Present and Projected
Developments in Padi Production3. Present and Projected
Developments in Tree Crop Agriculture4. Drainage and Irrigation
Works, Equipment and Staff - Cost
Estimates5. Agricultural Supporting Services6. Summary Cost
Estimates7. Expenditure and Disbursement Schedules8. Proposed
Allocation of the Proceeds of the Loan9. Production, Marketing and
Prices10. Farm Budgets and Incomes11. Economic Analysis
CHARTS
17908 - Proposed Timing of Farm Activities in Tanjong Karang
Padi Area(attached to Annex 2)
17696 - Schedule of Implementation of Civil Works (attached to
Annex 4)17618 - Tanjong Karang Irrigation Area - Typical Layout
(attached to Annex 4)
MAPS
13026R - Northwest Selangor Rural Development Project13027R -
Typical Drainage Layout (Sabak Bernam)
REFERENCES
1. FAO/IBRD Cooperative Program; "Draft Report of the Northwest
SelangorDrainage and Irrigation Improvement Project Preparation
Mission;"March 8, 1977
2. S. Selvadurai, "Coconut Smallholdings in Lower Perak, Kuala
Selangor,and Sabak Bernam," Ministry of Agriculture, 1974
3. S. Selvadurai, "Padi Survey in Kuala Selangor and Sabak
Bernam,"Ministry of Agriculture, 1976
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MALAYSIA
APPRAISAL OF THENORTHWEST SELANGOR INTEGRATED AGRICULTURAL
DEVELOPMENT PROJECT
SUMMARY AND CONCLUSIONS
1. The Government of Malaysia has requested Bank assistance in
financing
the Northwest Selangor Rural Development Project. The major
objective of theproject is to raise the productivity and incomes of
about 32,000 smallholderfarm families dependent on the cultivation
of padi and a wide variety of tree
crops in a region bordering the northwest coast of the State of
Selangor.Project formulation originated in the efforts of the
Selangor Drainage andIrrigation Department (DID) to upgrade
existing drainage and irrigation infra-
structure and to promote agricultural development (increased
cropping intensityin padi areas, intensified intercropping in tree
crop areas) in the majoragricultural subregion of the state. Over
time it became apparent that only
piecemeal engineering solutions to the region's drainage and
irrigation problems
were possible as long as development was dependent on routine
annual budget
allocations. It was also necessary to involve the agencies
providing agricul-tural supporting services together with DID in an
integrated extension effortto upgrade smallholder farm practices in
conjunction with full-scale improvementin agricultural
infrastructure. The formulation of this project thus involvedthe
long-term planning of irrigation works and regional drainage
systems on the
engineering side, and the working out of a complete operational
methodology offield extension activities with the Department of
Agriculture, the Bank Pertanian
Malaysia, the Farmers' Organization Authority, and DID at both
the State andFederal levels.
2. The proposed project is composed of three major
infrastructureelements, including the upgrading and intensification
of the existing Tanjong
Karang irrigation system serving 12,000 families cultivating
20,000 ha of padi;provision of an integrated and improved drainage
and flood protection system for
about 10,000 families cultivating 28,000 ha of coconuts and
intercrops in theSabak Bernam area; and provision of major drainage
works in the Kuala Selangor
area, to serve 10,000 smallholder families cultivating 25,000 ha
of tree crops
and to link the private drainage systems of 35 estates with over
26,000 plantedha. In addition to the irrigation and drainage
infrastructure elements, the
project would provide required access roads throughout the
region and agricul-tural installations, quarters, and equipment to
support an expanded program of
agricultural and irrigation extension, production credit, crop
marketing, input
supply, and operation and maintenance services for the region's
smallholders.
3. The project would advance the Government's two major goals
for therural sector - increasing incomes of smallholder farmers and
increasing produc-tion of imported staples and diversified export
crops. About 65% of the North-west Selangor region's padi and tree
crop smallholders currently earn incomesbelow the absolute poverty
line, and the incomes of the majority of these
families would be raised above the absolute poverty line by full
project develop-ment. A combination of factors, including the rapid
spread of intercropping
of cocoa and coffee by coconut farmers, the recent development
of very highyielding hybrid dwarf coconuts, and relatively high
prices for a range of coconut
products, provides the first opportunity in recent years for
large numbers of
coconut farmers to escape poverty, given adequate drainage of
the coconut areas.
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Similarly, padi farmers in the region are progressive enough and
possess largeenough farms (1.7 ha on average) to rise out of the
poverty group, given anadequate irrigation and drainage system. The
project would produce an incre-mental 30,000 tons of milled rice at
full development, reducing imports byabout US$10 million per annum
at present prices. Total incremental productionof coconut products,
cocoa, coffee, rubber and oil palm products would amountto
approximately US$9.3 million per annum by the year 2000. The
overall eco-nomic rate of return is estimated at 21%, comprising a
19% rate of return forthe irrigation component and a 22% rate of
return for the drainage component.
4. Total project cost is estimated at US$60 million (M$148.7
million),of which the foreign exchange component would be US$26
million, or 43% of thetotal cost. The proposed Bank loan of US$26
million would finance the foreignexchange component. The average
capital costs of the irrigation works proposedare US$1,390/ha
(US$2,100/family), while costs of the tree crop drainage worksin
smallholder areas are US$225/ha (US$540/family). Average capital
costs ofdrainage directly allocable to estate areas are US$33/ha,
or US$52/ha if costsof regional drainage works are allocated pro
rata. Incremental annual costs ofagricultural services at project
completion (1983) would amount to about US$12per smallholder
family.
5. The drainage and irrigation works and access roads would
beconstructed through a total of 12 contracts, of which five
pertaining tothe Tanjong Karang irrigation component (US$28.3
million) would be subjectto international competitive bidding in
accordance with Bank Group guidelines.The three largest ICB
contracts; (totalling US$18.3 million) would cover thesupply and
installation of the structural tertiary canal system, and wouldbe
open to any structural system meeting specified characteristics of
speedof installation, minimal disruption of existing crops, total
command of thearea, durability, and other factors. Two additional
ICB contracts (totallingUS$10 million) would cover construction of
secondary and lateral canals,drains, and roads. Rehabilitat:ion and
upgrading of headworks, main canals,and coastal bunds, and
fabricat:ion of tidal gates, totalling US$2.2 millionin value,
would be executed by DID on force account. Drainage of the treecrop
areas would be implementedl through seven contracts worth a total
ofUS$17.5 million, which would be awarded after competitive bidding
advertisedlocally in accordance with Government procedures
satisfactory to the Bank.Buildings and facilities costinig a total
of US$2.7 million would also betendered locally. Agricultura:L and
operation and maintenance equipment andvehicles (US$2.0 million)
would be tendered internationally, and a 15%preference margin, or
the prevailing customs duty if lower, would beextended to local
manufacturers of these items. Small off-the-shelf items,costing
less than US$20,000 each and limited to a total of US$500,000,would
be procured through normal Government procedures.
6. The project would be implemented over a period of five years.
AllFederal agencies involved in the project are under the
jurisdiction of theMinistry of Agriculture (IIOA). Federal DID
would be responsible for finaldesign, tendering, and supervision of
construction of all project civilworks. The agency has successEully
completed the Muda (434-MA) and Kemubu(500-MA) Irrigation Projects,
and is currently implementing the majordrainage component of the
West,ern Johore Agricultural Development Project(973-MA) and the
major irrigation component of the North Kelantan Rural
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Development Project (1294-MA), and is supervising the
implementation of
the National Small-Scale Irrigation Project (1444-MA) by the
various StateDepartments of Drainage and Irrigation. Implementation
of the present projectworks without consultant assistance is
considered feasible, particularly sincethe rectangular lot layout
of the Tanjong Karang padi area presents a muchless difficult
problem of on-farm irrigation and drainage system design thanthat
faced by DID planners in North Kelantan, and the areas to be
drained aremuch smaller and less complex hydrologically than those
of Western Johore. Theagricultural services program would be
implemented by local field staff of the
Department of Agriculture, the Farmers' Organization Authority,
and the BankPertanian Malaysia, working in cooperation with each
other and DID field staff.The project would be administered by a
Project Coordinator appointed by the
1O0A, under a Steering Committee co-chaired by the
Secretary-General of the MOAand the State Secretary of
Selangor.
7. Subject to appropriate assurances, the proposed project is
suitablefor a Bank loan of US$26 million, with a 17-year maturity
and a grace periodof 4 years. The borrower would be Malaysia.
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MALAYSIA
APPRAISAL OF THENORTHWEST SELANGOR INTEGRATED AGRICULTURAL
DEVELOPMENT PROJECT
1. INTRODUCTION
1.01 The Government of Malaysia (GOM) has requested Bank
assistancein financing the Northwest Selangor Integrated
Agricultural DevelopmentProject. The major objective of the project
is to raise the productivityand incomes of about 32,000 smallholder
farm families dependent on thecultivation of padi and a wide
variety of tree crops in a region borderingthe northwest coast of
the State of Selangor. Major infrastructure componentswould include
the upgrading and intensification of the existing TanjongKarang
irrigation scheme, reconstruction and improvement of drainage
andflood control networks in the Sabak Bernam and Kuala Selangor
tree cropareas, and construction of Farmers' Development Centers
and access roadsdistributed throughout the region. Agricultural
service components wouldpromote the introduction of an intensive
training and visit system ofagricultural extension throughout the
smallholder padi and tree crop areas,as well as a marked expansion
in volume and coverage of agriculturalproduction credit and input
supply and marketing services for smallholders.In addition to
substantial increases in smallholder padi and tree cropproduction,
the project would permit increased production of various treecrops
by private estates (plantations) which would be able to connect
theirown internal drainage systems to the new main drainage
system.
1.02 The project was identified and formulated by the Drainage
and Irri-gation Department (DID) with the assistance of Bank
missions in May andAugust 1976. Detailed project preparation was
assisted by FAO/CP missionsconsisting of Messrs. C. W. Brookson and
M. Sugimura (FAO/CP), and J. Weather-hogg and T. Bright
(Consultants), working in close cooperation with Federaland
Selangor DID, the Ministry of Agriculture (MOA), the Bank
PertanianMalaysia (BPM), Federal and Selangor Departments of
Agriculture (DOA) and theFarmers' Organization Authority (FOA).
This report is based on the findingsof an appraisal mission which
visited Malaysia in April 1977 composed ofMessrs. J. Goldberg and
G. Temple (Bank) and G. Thorsky, R. Shepherd andP. Judd
(Consultants).
2. BACKGROUND
2.01 Malaysia covers an area of 333,000 sq km, of which 132,000
sq kmare in the 11 States of Peninsular Malaysia and the remaining
60% in theBorneo States of Sarawak and Sabah. Of the total
population of 12.3 millionin 1975, 10.2 million lived in Peninsular
Malaysia, 1.3 million in Sarawak,and 0.8 million in Sabah. The
ethnic composition of the population is approx-imately 47% Malay,
34% Chinese, and 9% Indian, with the remainder chieflyconsisting of
groups indigenous to Sabah and Sarawak and a small
Eurasiancommunity. In Peninsular Malaysia, the great majority of
farm families areMalay, while the population of most urban areas is
predominantly Chinese.
2.02 With a per capita income of US$860 in 1976, Malaysia is
oneof the most prosperous developing countries in Asia. This high
averageincome masks considerable poverty among rural smallholders,
however,
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among whom padi farmers and coconut and rubber smallholders have
beenidentified by GOM /1 as target poverty groups to be assisted by
ruraldevelopment programs. The Government's commitment to financing
largedrainage and irrigation, agricultural production, rural
infrastructureand social service programs has been facilitated by
fairly high ratesof economic growth, averaging 6% p.a. during the
last decade. The growthrate of the economy slowed down to 1% in
1975 due to softening of inter-national commodity prices, following
the boom years of 1973 and 1974 whencommodity prices and GNP growth
peaked. The estimated GNP growth in 1976again rose above trend to
about ]L0%, and Malaysia's external reserves(US$2.6 billion in
February 1977) rose to a level equal to about eightmonths of net
imports at current levels.
The Agricultural Sector
2.03 Malaysia's agricultural sector is largely oriented to world
exportmarkets, and occupies a predominant position in international
trade innatural rubber, palm oil, hardwoods, and pepper. Except for
oil palm,acreages of all principal crops mainly consist of
smallholdings, althoughthe large private and public estate sector
continues to play a vital rolein the production of rubber and
coconuts. In this regard, coconut small-holders on the west coast
of Johore, Selangor, and Perak have in recentyears followed estate
breakthroughs in the intercropping of cocoa and othercrops with
mature coconuts. Other recent trends in tree crop
agricultureinclude the gradual replacement of rubber by oil palm by
estates situatedin coastal regions more suited to the latter, and
the initiation of oil palmcultivation by independent smallholders.
Planting and production decisionsby both estates and smallholders
are closely attuned to existing and projec-ted world market
conditions.
Irrigation and Drainage Development in Malaysia
2.04 Irrigation and drainage works in Malaysia constitute a
basic infra-structure network on which the settlement, continued
habitation, and pros-perity of large coastal regions, including
hundreds of thousands of farmersand town dwellers, depend. In this
sense the water control network is atleast as important as the
road, railway, and electrical networks to thelife of the country.
The most productive padi and tree crop areas of thecountry were
developed from coastal swamp jungles and marshland whichrequired
drainage to permit agric:ultural development, settlement,
construc-tion of transport links, and alleviation of the once
endemic malaria.Channelization of rivers and bunding of river banks
and sea coast wererequired to prevent annual heavy flooding of both
crops and towns in monsoonseasons, salt water intrusion, and severe
erosion of the coast in storm
/1 See Problems of Rural Poverty in Malaysia, IBRD Report No.
838-MA.
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seasons. Irrigation was required to expand the production of the
population'sbasic food, rice. All of these activities fall within
the purview of DID,which began the survey and design of its first
major project (the KrianIrrigation Scheme) in 1880.
2.05 Bank financing of DID activities began with the Muda
IrrigationProject (Loan 434-NIA) in 1965, which provided the
facilities required toinitiate padi double-cropping in Malaysia's
largest coastal plain, in thestates of Kedah and Perlis. The Kemubu
Irrigation Project (Loan 500-MIA)enabled a substantial increase in
padi double-cropping in the southern por-tion of the Kelantan
coastal plain, while the North Kelantan Rural Devel-opment Project
(Loan 1294-MA) provides for intensification of padi irriga-tion and
drainage facilities originally constructed by DID between 1958
and1962 on the north bank of the Kelantan River, as well as
construction of asystem of river flood control bunds. The recently
initiated National Small-Scale Irrigation Project (Loan 1444-MA)
will finance a program of nearly200 small irrigation schemes
throughout the country, several of which wereoriginally developed
by DID from coastal swampland. The Western JohoreAgricultural
Development Project (Loan 973-MA) is based on the constructionof an
intensive drainage and coastal bunding system which will enable
thattree-crop region to achieve higher levels of agricultural
productivity. Thepresent project would be the first to combine the
two major elements of DID'sprogram, drainage and protection of tree
crops and irrigation of padi, in asingle area development
project.
The State of Selangor
2.06 The State of Selangor is situated in the central portion of
thewest coast of Peninsular Malaysia, bounded by Negeri Sembilan to
the south,the Central Mountain Range and Pahang to the east, the
Bernam River and Perakto the north, and the Strait of Malacca to
the west. It surrounds theFederal Territory of Kuala Lumpur,
recently detached administratively fromthe jurisdiction of the
Selangor State Government. The State is now dividedinto six
administrative districts, of which two (Kuala Selangor and
SabakBernam) form the present project area. Selangor had a
population of 1.63 mil-lion in 1970, of which .87 million were in
Kuala Lumpur. Selangor is Malaysia'smost prosperous State, due
mainly to the large tin mining and manufacturingindustries in the
Klang Valley and the concentration of civil service andcommercial
employment in the Kuala Lumpur area, but the economy of the
tworelatively isolated districts in the northwest corner of the
State is almostentirely dependent on agriculture.
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3. THE PROJECT AREA
3.01 The project area lies in the districts of Sabak Bernam and
KualaSelangor (Map 13026R). It includes most of the inhabited area
of the two
districts, the remainder largely consisting of a large peat
swamp (nearly500 sq km in extent) inland from the project area and
smaller coastalmangrove swamps, which would not be affected by the
proposed project. The
project area extends about 90 km along the coast and 20 km
inland at itswidest point. The total agricultural area of the
project is about 97,000 ha,including nearly 20,000 ha of padi in
the Tanjong Karang irrigation area; adrained coastal strip between
this area and the sea of 7,500 ha largelyplanted with smallholder
coconuts; a drained area in Sabak Bernam to thenorth of 21,000 ha
largely planted with smallholder coconuts; and a drained
area in Kuala Selangor to the south of 48,500 ha of tree crops
(oil palm,rubber, coffee, coconuts, and cocoa), evenly divided
between smallholdings
and estates.
3.02 The population of thes two districts in 1970 was 213,000,
of which64% were Malay, 21% Chinese, and 15% were Indian. The
Chinese population waslargely concentrated in the area's major
towns, including Kuala Selangor,Sekinchan, Tanjong Karang, Sungei
Besar, and Sabak Bernam, and was largelyinvolved in trade, fishing,
and small-scale industry in addition to agricul-tural pursuits. The
Indian polpulation was chiefly engaged as laborers inestate
agriculture, while the Malays were largely concentrated in
smallholder
agriculture. About 73% of the households in the region were
engaged insmallholder agriculture. The present smallholder
agricultural population of
the project area is estimated at 192,000 (32,000 households),
the overwhelmingmajority of which is Malay.
Climate
3.03 The project area has a humid tropical climate characterized
byrelatively high rainfall, high humidity, consistently high
temperatures,and only minor variations in day length. Annual
rainfall averages 1,800 mmwith distribution largely determined by
the northeast monsoon (October-March)and intermonsoonal
disturbances during the March-April and September-Novemberperiods.
The influence of the southwest monsoon (May-September) is
weakenedby the sheltering effect of North Sumatra. The wettest
months are October-November and April-May. The driest months are
February-March and June-July.
3.04 Mean annual temperature is about 26 degrees centigrade and
average
relative humidity is about 83%. There are no major climatic
constraints toperennial tree crop and upland field crop production,
but the unreliabilityof rainfall in the January-August period
precludes off-season rice productionwithout supplementary
irrigation. In the absence of an intensive drainagesystem, heavy
rains in the September-November period also frequently hinder
harvest and drying of late-planted off-season rice crops, and
increase theincidence of pest and disease aLttack. Occasional
extended flooding, due toheavy localized rainfall and overtopping
of rivers, is also capable ofinflicting permanent damage on tree
crops.
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Soils, Topography, and Drainage
3.05 The bulk of the project area comprises a flat coastal
plain, withrising land and undulations in the southern section
between the Buloh Riverand the Klang district boundary. Four rivers
drain the area. The BernamRiver meanders along the northwest
boundary of the area, while the smallerTinggi, Selangor, and Buloh
rivers dissect the southern half of the area andflow in a
southwesterly direction to the sea. Due to the low elevation,slight
grade and lack of natural drainage lines, the coastal plain is
poorlydrained and was historically subject to sea water intrusion
along the coastalfringe. Since 1910, the Drainage and Irrigation
Department has progressivelyimproved the area with the construction
of a coastal bund, tidal gates and abasic network of internal
drains at about 2-km intervals. These works haveallowed most of the
more suitable soils to be developed for agriculturalpurposes.
Nevertheless, problems with the silting of drainage outlets, andthe
inadequacy of the existing drainage network still impose a yield
constrainton crops in the lower lying areas.
3.06 The bulk of the soils on the plain are fairly heavy
alluvial soilsdeveloped under marine or brackish water conditions
or organic muck and peatsoils developed under impeded surface
drainage conditions in the lower lyingareas. Fresh water alluvial
soils occur along the lower reaches of thelarger rivers. The most
common soil series in the project area, the Selangorseries, is one
of the most fertile series in Peninsular Malaysia, and most ofthe
local soils are well suited to rice production and have been
successfullydeveloped for the entire range of Malaysian tree crops.
However, the heavierphases of these soils are not well suited for
rubber production, and arecurrently being converted to oil palm.
The yields of all tree crops in theregion are closely correlated
with the adequacy of surface drainage. Smallisolated areas of
potentially acid sulphate soils have been identified, andwill
require careful water table management to insure good tree crop
yields.
3.07 A sample survey of the region's coconut smallholders /1 in
1974revealed the extent of drainage problems as follows. Fifty
percent of therespondents in Sabak Bernam, and 44% in Kuala
Selangor, reported waterloggingof coconut holdings, and 21% and 15%
of the respondents in the respectiveareas reported waterlogging of
duration between 11 and 30 days. Seventeenpercent of the Sabak
Bernam respondents reported waterlogging of over 30 daysduration,
which is an indication of serious damage for coconuts and
intercrops.Ninety-one percent of Sabak Bernam farmers and 65% of
those in Kuala Selangorhad excavated drains on their holdings, but
only 19% in the former area and22% in the latter reported that
collector drains existed to which their farmdrains could be
connected. According to the survey, the largely similarcoconut
areas of Lower Perak, immediately north of the Bernam River, are
muchbetter served by major drainage infrastructure, and perhaps as
a result,report substantially reduced waterlogging and more
intensive maintenance andcleaning of farm drains by
smallholders.
/1 Coconut Smallholdings in Lower Perak, Kuala Selangor, and
Sabak Bernam,S. Selvadurai, Ministry of Agriculture, 1974.
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Drainage and Irrigation Infrastructure
3.08 The first settlers of the project area, many of whom
migrated fromvarious regions of present-day I]ndonesia, constructed
open drains throughthe coastal areas to permit coconut cultivation.
These systems were notparticularly effective in draining localized
flooding, and the area becameincreasingly vulnerable to sea water
intrusion, and to river flooding withthe clearing of inland
jungles. Government drainage and flood control workswere initiated
in Kuala Selangor in 1910 and in Sabak Bernam in 1932, andby 1937
included 90 km of coastal bunds with tidal gates and associated
maindrains. Between 1937 and the 15950s DID provided a simple
internal drainagenetwork for 6,000 ha of smallholder tree crops in
Sabak Bernam, while theprivate estates in Kuala Selangor
constructed their own piecemeal drainagesystems. The existing
drains in the tree crop areas were designed to evacu-ate a two-year
frequency storm in 72 hours, but several large areas are
fre-quently flooded for two weeks or more (para. 3.07). Drain
capacities aretoo small and drain structures dlo not adequately
control water levels. Tidalgates are in many cases much too small
and are incorrectly sited in loca-tions that silt up. Much of the
coastal and river bund system is inadequateor needs repair.
Hundreds of ha of potential coconut land near the sea,and thousands
of ha of potential coffee land near the Buloh River, are
stillsubject to frequent sea and river flooding, and require
improved bunds anddrainage to permit cultivation by
smallholders.
3.09 The Tanjong Karang padi irrigation scheme was developed
from virginjungle by DID through a series of programs beginning in
1936. Water wasfirst provided for a single wet-season padi crop by
a weir on the TinggiRiver via a 40-km main canal along the inland
border of the project area. Toaugment the water supply for
double-cropping, diversion barrages were construc-ted in 1957 and
1964 on the Bernam River, and a 15-km feeder canal was exca-vated
through the peat swamp to transport water to the Tinggi River. A
pump-house was constructed in 1962 on the lower reaches of the
Bernam River atBagan Terap, to provide a more assured water supply
for the northern portionof the scheme. These water sources are
augmented by substantial seepage fromthe swamp into the feeder
canals, the Tinggi River, and along the entirelength of the main
canal which borders the swamp. A water balance study ofthe project
area (Annex 1) indicates that the irrigation area would have
anassured water supply, with no foreseeable restriction on cropped
area due towater shortage. This conforms with historical
experience, as the croppingintensity has never been constrained by
lack of water (rather by lack ofcommand and a poor distributary
system), despite the fact that the presentsystem of irrigation by
back-flooding is extremely wasteful (para. 3.10). Noproblem related
to water quality has been encountered in Tanjong Karang,despite the
fact that from 1938 to 1958 the padi area was virtually
entirelysupplied from the peat swamp. Since that time the diversion
from the BernamRiver has replaced the swamp as the major
supplementary water source, and theirrigation supply has become
markedly less acidic. The scheme area isdivided into seven large
blocks, of which one (Sawah Sempadan) has been
-
developed to proposed project standards as a pilot scheme. The
padi area isdivided into 16,411 three-acre (1.2 ha) rectangular
lots, which significantlyfacilitates the layout and construction of
on-farm irrigation and drainageworks.
3.10 The existing irrigation system has fulfilled its original
purposeof permitting wet-season padi production and dry-season
cropping of an averageof 70% of the scheme area, but still suffers
from several deficiencies. Thecapacity of some reaches of the main
canal is inadequate, and the gatesof the old Tinggi headworks now
leak badly and waste water. Command headof the existing
distributary canals is inadequate, causing slow inundationof fields
and late transplanting, a problem exacerbated by the fact thatwater
must travel one-half mile (.8 km) across farm lots with the
presentdensity of distributaries. Since the micro-topography is
undulating, thewater must often fill depressions to undesirable
depths (30 cm and above)before its flow continues. Much of the area
can only be inundated by back-flooding from drains which are kept
full for this purpose, thereby wastingsubstantial amounts of both
water and fertilizers. These inadequacies haveled to a situation
where large areas of padi are continually out of phase,and drainage
for drying and harvesting earlier planted fields is impossibleif
the water needs of the less mature crops are to be met.
Farm Size and Tenure
3.11 The average size of land holding of the 12,000 padi farmers
inthe Tanjong Karang irrigation area is 2 ha (5.1 acre), consisting
of 1.6 haof irrigated padi land and 0.5 ha of house lot and village
land on which somedry land crops are grown under coconut trees./l
Only 5% of the holdingssurveyed were larger than 3 ha, and no
holding contained over 5 ha of padiland. An earlier (1967) survey
of the area estimated the average padi hold-ing at 1.8 ha, the
reduction in average size probably stemming from
increasedpopulation pressure. As the padi area has been developed
relatively recently,a relatively high proportion (84%) of the land
is owner-operated, and theremainder is rented through payment of
fixed money rents averaging US$230/haper annum. The bulk of family
labor is utilized on the family padi holding.
3.12 By contrast, in the coconut areas less than half of the
availablefarm work force has been utilized on the smallholding, and
there has beena high dependence on outside work to augment the
traditionally meager incomefrom coconuts. Hired labor has been
extensively utilized, however, for thephysically difficult
and-specialized tasks of plucking ripe coconuts fromthe palms and
husking them. This situation is rapidly improving, however,with the
expansion of intercropping in the coconut areas and the
replace-ment of bananas with cocoa as the predominant intercrop,
which providessubstantially improved incomes and useful employment
for the farm familieson their own holdings. In 1974 the average
coconut holding was 2.8 ha in
/1 Current socioeconomic information is derived from Padi Survey
in KualaSelangor and Sabak Bernam, S. Selvadurai, Ministry of
Agriculture, 1976.
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-8-
Sabak Bernam and 2.6 ha in Kua:La Selangor, 94%
owner-operated./l Holdingsof ot.er tree crops average about 2 ha
and are almost entirely owner-occupied.Whi,e r- holdings are
entireLy devoted to rubber or coffee, there is acooid sirible
amount of mixed tree farming, particularly in Kuala Selangor.A
typical 2. xed farm would inc:Lude about 1.2 ha of rubber, 0.3 ha
of coffee,0.4 ha of oil palm, and the balance under fruit trees and
vegetables. Whilethe padi holdings in the project area are slightly
larger than the averagefor Peninsular Malaysia (1.3 ha), the tree
crop holdings are smaller andless productive than the Malaysian
average. This is particularly true forthe rubber smallholders.
Estate Agriculture
3.13 There are 40 private estates /2 in the project area, of
which 35are in Kuala Selangor (27,600 ha) and 5 are in Sabak Bernam
(5,200 ha). Theestates are typically interspersed among the
smallholder areas, making itphysically impossible to drain the
latter without also improving the drainageof the former. Mlost of
the estate coconut acreage is concentrated in SabakBernam. Most of
the 17,600 ha of estate oil palms, and all of the 10,300 haof
estate rubber, are found in Kuala Selangor. Cocoa is planted as an
estateintercrop in Sabak Bernam (1,500 ha) and as a minor sole crop
in two KualaSelangor estates (620 ha). In Kuala Selangor, as in
many parts of PeninsularMalaysia, estates are a basic feature of
the rural economy, employing thousandsof people,/3 introducing new
cr'ops and processing methods later adopted bysmallholders, and
providing large and assured tax revenues to the Federal andState
Governments (para. 5.11). During their establishment and expansion,
theproject area estates evolved their own internal drainage systems
and mainoutlets as was expedient. These private systems are now
constrained by themain drainage system, consisting of canalized and
natural rivers and streams,river and tidal bunds, and major drains,
which are the responsibility of DID.Improvement of the regional
system, which is a necessary prerequisite forintensive drainage of
the smallholder and town areas, would thus also providesubsidiary
benefits to the region's estate sector.
Agricultural Supporting Services
3.14 Most of the agencies responsible for providing agricultural
supportingservices to project area farmers are under the
jurisdiction of the Ministry ofAgriculture (MOA). These include the
Department of Agriculture (DOA) and theDrainage and Irrigation
Department (DID), which are line departments withinthe Ministry, as
well as the Farmers' Organization Authority (FOA), the
BankPertanian Malaysia (BPM), the MIalaysian Agricultural Research
and DevelopmentInstitute (MARDI), and the Federal Agricultural
Marketing Authority (FAMA).
/1 30% of project area coconut farmers owned some padi land,
with theaverage subsidiary padi holding equalling 1.3 ha.
/2 An estate is defined as a holding of over 40 ha (100 ac).
/3 Project area estates are estimated to employ about 8,000
laborers,representing about 4,000 households.
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-9-
In addition, the Rubber Industry Smallholders' Development
Authority (RISDA)/lsupervises rubber replanting, rehabilitation,
and cooperative processing pro-grams, and provides extension
services to smallholders who are dependent onrubber or who have
replanted rubber with other crops, typically oil palm. TheNational
Padi Authority (LPN)/2 in the Ministry of Trade, is responsible
forregulating the marketing, milling, and importing of rice,
maintaining thenational rice stockpile, and operating a network of
rice mills in the largerpadi producing areas./3
3.15 The DOA is responsible for agricultural extension to rice
andcoconut smallholders, and is thus the key agricultural support
agency in theproject area. In addition, the Coconut Smallholders'
Development Scheme(CSDS), a branch of the DOA, supervises the
Federal coconut replantingprogram, which provides grants to
smallholders replanting or rehabilitating(thinning and
intercropping) their coconut stands over a five-year
period.Extension services within the project area are supervised by
an AgriculturalOfficer stationed in Kuala Selangor town, assisted
by two AgriculturalAssistants, in Sungei Besar and Tanjong Karang.
The Agricultural Assistantssupervise the work of 20 Agricultural
Technicians, who are expected to servethe region's smallholders at
a ratio of over 1,600 families per extensionagent. As the ATs are
also responsible for regulatory duties, statisticalwork, and
administration of subsidies, the ratio is much wider in
practice,and the ATs contact few farmers in their area of
operation. The CSDS isoperated through a similar, though smaller
hierarchy, which processes applica-tions for replanting grants,
inspects the property of participants to ensurethat planting and
cultivation (including excavation of farm drains) is doneto CSDS
guidelines, and arranges for the supply of cash, inputs, and
seedlingsprovided under the replanting program. Extension for
coconut smallholders isgenerally left to the DOA staff, however, as
CSDS agents typically visitparticipants only twice a year, and lose
contact with participants once thefive-year grant period is
completed. While the recently initiated NationalExtension Project
(Loan 1493-MA) would increase the overall level of
staffing,quarters, and training of the Selangor DOA extension
service, an additionalconcerted extension effort will be required
in the project area to allowfarmers to realize the full
agricultural potential of their smallholdings.
3.16 The Selangor DID is responsible for operating and
maintaining thedrainage and irrigation systems in the project area.
DID field staff alsoadvise the District Agriculture Committees
(comprised of representativesfrom the District Office, DOA, DID,
and farmer groups) on the availabilityof water for timing of
agricultural operations which are closely related toDID water
management responsibilities, including land preparation,
nursery
/1 In the Ministry of Primary Industries.
/2 The official name of this agency is Lembaga Padi dan Beras
Negara.
/3 Details of the organization and operations of the major
agriculturalagencies in the project area are presented in Annex
5.
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planting, transplanting, and harvesting. With the implementation
of theproject the intensity of drains and canals in the area would
be increasedto about four times that of the existing system. To
ensure that DID couldcontinue to perform its important advisory
role, as well as for properoperation and maintenance of the
intensified infrastructure system, asubstantial increase in the
number of field staff (particularly technicalassistants,
inspectors, and overseers) would be necessary.
3.17 The Selangor FOA operates three Farmers' Development
Centers (FDCs)in the project area, in Kuala Selangor, Tanjong
Karang, and Sungei Besar,with a total paid-up membership of 7,000.
In addition there are 66 privatefarmers' cooperatives, organized
for rice-milling, revolving credit, and rubberprocessing
activities. Both FDCs and private cooperatives supply inputs
andplanting materials (e.g., cocoa and coffee seedlings), and in
recent yearshave become involved in the marketing and processing of
cocoa beans. Neitherthe official Farmers' Organizations based in
the FDCs, nor the private coopera-tives, have yet attained the
level of technical skill in their agro-businessactivities or the
volume of blusiness required for commercial viability.Input supply
for smallholders, processing of tree crops, and provision ofcredit
are still largely in tlhe hands of private enterprise, and are
likelyto remain so in the foreseeable future. Private enterprise,
in this regard,covers a wide spectrum of agents ranging from large
rubber and coconut oilfactories in Klang District to the south;
through medium-sized coconut oilfactories and copra kilns in the
project area; to large middlemen who purchaseprocessed tree crops
for transshipment to factories in Klang, Perak, andPenang; to the
basic unit, the general store which grants farmers credit tobe
repaid with cocoa and coffee beans, coconuts and rubber sheets
which thestorekeeper and his family thten process and sell to
middlemen or factoryagents. The marketing of rice in the project
area is, however, dominated bya Government agency, the National
Padi Authority (LPN).
3.18 The LPN has been granted an official monopoly on the
purchase ofpadi and rice-milling in the Tanjong Karang irrigation
area, which it exercizesonly in regard to the surplus production
intended for cash sale and exportfrom the irrigation area. LPN
permits padi farmers to mill rice for domesticconsumption at 46
licensed cooperative mills and 120 small unlicensed millsscattered
throughout the area. LPN itself operates 5 large milling
complexesin the project area, which handle a combined total of 65%
of the padi crop.Total rated milling capacity of these mills is 26
tons/hour, rated dryingcapacity is 80 tons/hour, and storage
capacity is 44,000 tons. Currently LPNbuys most of its padi during
two three-month seasons, dries the padi asquickly as possible, and
mills continuously throughout the year. Padi ispurchased through 30
cooperatiLves, two Farmers' Organizations, and privateagents. The
major problem faced by LPN is the high moisture and trashcontent of
the padi, which should be reflected in standard price discounts
bythe LPN mills. As the discounts have not been applied, there has
been noincentive for farmers to winnow and sun-dry the padi crop.
LPN plans tocorrect this situation through formal testing of
moisture content by itsbuying agents. The recent addition of two
LPN complexes will ease processingbottlenecks and provide
sufficient surplus capacity for the proposed project.
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3.19 BPM provides short-term padi production credit in the
Tanjong
Karang irrigation area, as part of a national program for
irrigated padi.
The credit is supplied in kind in the form of approved
quantities of fer-
tilizers, insecticides and pesticides, and contract tractoring,
and in cash
for hired labor for cultivation and transplanting, with a
six-month term at
4.25% per term. The credit has been provided through the FDCs,
which have
functioned as local credit centers for BPM, screening
applications, issuing
inputs or credit vouchers for inputs and services, and
recovering loans, in
exchange for a commission of 1.25% per season. This program
reached a peak
of 2,400 padi farmers (20% of the total) in 1973, but has since
largely
retrenched following scandals involving the management of two
Farmers'
Organizations, to a point where only 280 farmers took credit in
1976. This
credit program can be revived, and extended to a majority of the
area's padi
farmers, provided FOA improves and increases the staffing of the
FDCs, BPM
staff are brought in to field operations to control financial
transactions
and promote the program, and the credit program is publicized
and implemented
as part of a combined extension effort including DOA
agricultural advice and
recommendations, DID water management extension, and purchasing
and preliminary
drying of rice by FOA as an agent for LPN.
Project Formulation
3.20 Project formulation originated in the efforts of Selangor
DID to
upgrade existing drainage and irrigation infrastructure and to
promote agri-
cultural improvement (increased cropping intensity in padi
areas, intensi-
fied intercropping in tree crop areas) in the major agricultural
subregion
of the State. Over time it became apparent that only piecemeal
engineering
solutions to the region's drainage and irrigation problems were
possible as
long as development was dependent on routine annual budget
allocations,
and that the other agricultural agencies would have to be
involved with local
DID staff in an integrated extension effort to upgrade
smallholder farm
practices in conjunction with full-scale improvement in
agricultural infra-
structure. The preparation of this project thus involved the
long-term
planning of irrigation works and regional drainage systems on
the engineering
side, and the working out of a complete operational methodology
of field
extension activities (Annex 5) with DOA, BPM, FOA, and DID at
both the State
and Federal levels. The average capital costs of the proposed
irrigation works
are US$1,390/ha (US$2,100/family), while costs of tree crop
drainage works in
smallholder areas are US$225/ha (US$540/family). Average capital
costs of
drainage directly allocable to estate areas are US$33/ha, or
US$52/ha if costs
of regional drainage works are allocated pro rata. Incremental
annual costs of
agricultural services at project completion (1983) would amount
to about US$12
per smallholder family.
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4. THE PROJECT
4.01 The project would improve the productivity and incomes of
smallholderfarmers throughout the Northwest Selangor region through
provision of improveddrainage and irrigation facilities, access
roads, and intensified agriculturalsupporting services, and would
improve regional drainage systems with subsequentsubsidiary
benefits for the region's towns and estates. The main components
ofthe project are as follows:
(a) rehabilitation of the existing headworks and feederand main
canals and structures serving the 20,000 haof padi in the Tanjong
Karang irrigation area; con-struction of required access roads in
the padi area;construction of tertiary irrigation and
drainagenetworks which would serve each individual padi lot;and
provision of required maintenance equipment;
(b) rehabilitation and improvement of existing maindrainage and
flood control systems serving 77,000 ha oftree crops, including
upgrading and reconstruction ofcoastal and river bunds; provision
of tidal gates,bridges, and gated culverts; construction of an
inten-sive drainage system serving individual smallholderlots and
farm access roads; and upgrading of the maindrainage system in
estate areas;
(c) construction of offices, quarters, storehouses, anddrying
floors, and provision of vehicles, agricul-tural equipment, anid
training to support an intensifiedprogram of agricultural
extension, agricultural credit,input supply, and marketing services
for the region'ssmallholders.
The components of the project are summarized below, and further
detailsare given in Annexes 4 through 6.
Project Components
4.02 Tanjong Karang Irrigation Improvement: The main canal
deliverysystem would be improved by enlarging the canal in some
locations and byrehabilitating the primary structures. The
sluiceway and inlet to the BernamRiver headworks would be modified
to reduce sluicing water needs and improvethe removal of bed load
material. The Tinggi River headworks structure andspillway would be
modified ancd its gates replaced. The wasteway structure tothe Haji
Dorani flood relief channel would be rehabilitated and the drop
andthe lower end of main canal improved to provide better command
and capacity.
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4.03 The existing distributary irrigation and drainage system in
thepadi area consists of a main canal along the upper boundary of
the area,and straight tertiary canals and drains at half mile (800
m) intervalsperpendicular to the main canal./l Under the project
existing tertiarycanals would be transformed into drains, and
additional small drains would beexcavated parallel to and midway
between each existing canal and drain. Thiswould provide a drain
spacing of one-quarter mile (400 m), which would permitevacuation
of a five-year frequency storm in 72 hours. Irrigation
distribu-tion would be intensified by constructing structural
canals (para 4.04)midway between each drain, which would thus also
lie one-quarter mile apart.The distance between tertiary canals and
drains would thus be reduced fromthe present half mile (800 m) to
one-eighth mile (200 m), the length of atypical three-acre (1.2 ha)
lot, giving each farmer direct access to bothcanals and drains. In
three blocks (Sungei Burong, Sungei Leman, andSekinchan) the width
of the padi area increases from 2 miles (3.2 km) to4 miles (6.4
km), making it uneconomic to serve the entire block directly
bymeans of structural tertiary canals. In these areas, two
concrete-linedearth link canals would be constructed from the
existing main canal tosmaller transverse secondary canals within
the blocks, which would in turnsupply structural tertiaries in the
lower part of each block.
4.04 The structural tertiary canal system would total 305 miles
(492 km)in length, and the discharge capacity of various segments
would range between1.6 cusecs (45 1/sec) and 19 cusecs (538 1/sec).
Discharge capacity for outletsto individual lots would be 0.1
cusecs (4.5 I/sec) under 16 in (41 cm) ofhead. The proposed
structural tertiary canal system has been completed byDID in the
Sawah Sempadan block of Tanjong Karang as a pilot scheme.
Thestructural system used there consisted of glass-reinforced
polyester (GRP)flumes, placed above ground on concrete pads founded
at 20 ft (6 m) centerson bakau wood friction piling. Installation
and initiation of the system inthe pilot area has proceeded with a
minimum of engineering or social problems.The GRP system has been
approved by the Bank for installation in the LemalIrrigation area
under the North Kelantan Rural Development Project (Loan1294-MA),
after completion in July 1977 of a one-year accelerated
testingprogram undertaken by DID to confirm the long-term
structural and chemicalproperties of the system. The GRP system
would also be installed under thepresent project in the Sungei
Nipah block of Tanjong Karang, under the samecentral contract
utilized for the Sawah Sempadan and Lemal works./2 For theremaining
five blocks in Tanjong Karang, tendering for the tertiary
distribu-tary system would again be opened to all structural water
conveyance systemswhich could meet the performance specifications
already achieved by the GRPsystem, in terms of speed of
installation, lack of disruption of croppingactivities,
minimization of land acquisition, discharge and command, ease
ofmaintenance and durability.
/1 Tertiary canals are now one mile apart, as are the
alternatingtertiary drains. See Annex 4, Figure 1 for a layout of
typical existingand proposed distributary blocks.
/2 This contract, valid through December 1978, was approved by
the Bankduring negotiations for the North Kelantan Rural
Development Project,and is described in Report No. 1137-NA, para.
4.15.
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4.05 Existing roads run through the padi area parallel to the
maincanal at one mile intervals, and will in future cross all
tertiary canalsand drains. Checks and culverts would be located at
these crossings tocontrol the water surface upstream. Existing
tertiary canals and drainshave banks that would be upgraded and
surfaced to a 10 ft wide (3 m) roadway.New drains would be provided
with a 4 ft wide (1.2 m) laterite surfaced bankon one side. Timber
bridges would be provided where necessary.
4.06 Tree Crop Drainage Improvement. Improved drainage in the
treecrop areas would be based on evacuating a five-year frequency
storm in48 hours, equivalent in the project area to a drainage
capacity of 80 cusecs/sq mile (0.9 cumecs/sq km). In smallholder
areas existing main drainswould be improved by clearing and
deepening, and new main drains constructedwhere necessary.
Secondary drains would be constructed at half mile (800
m)intervals, and would discharge into main drains through gated
culverts orother suitable water control devices. The water control
devices would holdup the water during low flow periods to prevent
over-drainage, while allowinglarge storm flows to evacuate quickly.
Feeder drains, one-eighth mile (200 m)apart, would be constructed
to collect water from farm drains and conveyit to the secondary
drains. Construction of farm drains is the responsibilityof
individual farmers; in many cases the smallholders have already
excavatedthem (para. 3.07), while the remaining tree crop areas in
the region areexpected to be covered by the CSDS (para. 3.15)
between 1978 and 1983.1l
4.07 Secondary drains would be 5 to 6 ft (1.5 to 1.8 m) deep
with abottom width of 6 to 10 ft (1.8 ito 3m), and side slopes of
1-1/2:1 orflatter. Feeder drains would be 3 ft (0.9 m) deep with a
bottom width of 4 ft(1.2 n). MIain and secondary drains would have
a 10 ft wide (3 m) lateritesurfaced roadway constructed on one
bank. Timber bridges would be constructedover main drains and
culverts wouild be installed under roadways on secondarydrains. A
typical drainage layout for smallholder tree crop areas isprovided
in Map 13027R, which portrays a block on the Bernam Peninsulaat the
northern extremity of the project area.
4.08 In the tree crop estate areas project works would consist
of theconstruction and rehabilitation of main drains and the
construction ofbridges across main drains to provide access for
smallholders and estatelaborers. These main drainage improvements
would serve blocks of about3,000 ac (1,215 ha) of estate land. A
low-lying area of 10 sq miles (26 sq km)of State land, located
between thLe major estate area of Kuala Selangorand the Buloh
River, would be drained and poldered for eventual parcelizationand
transfer to smallholders. A pumping plant would also be constructed
toevacuate flood waters from this area.
/1 A coconut rehabilitation project, which would support CSDS
programs inNorthwest Selangor and throughout the country, has been
prepared forBank financing.
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4.09 A total of 167 miles (269 km) of bunds protecting the
entire coast-
line of the project area and low-lying areas along the lower
reaches of the
major rivers would be upgraded or reconstructed under the
project (Map 13026R).
Bunds would be designed to protect against floods of 25-year
frequencies.
The bunds would consist of earth embankments, with material
obtained from
borrow pits on the inland side, and would be finished to 3:1
side slopes with
a 10 ft (3 m) top width. All main drains discharging through the
bunds to the
rivers or the sea would be served by reinforced concrete tidal
control gate
structures founded on piling. In many installations the existing
gates are
too small, and would be replaced by larger gates up to 12 ft
(3.7 m) in width.
Some old structures would be abandoned because of constant
silting due to poor
siting, and new tidal gates would be added at more suitable
locations. All
new gates would be fabricated of marine aluminum alloy.
4.10 Operation and Maintenance Equipment. Vehicles and
excavation and
earth-moving equipment would be purchased under the project to
improve the
capability of Selangor DID to operate and maintain completed
project works
(Annex 4, Table 4). The equipment would be allocated to the
Sabak Bernam
and Kuala Selangor District DID offices, which are capable of
performing
routine maintenance. Major repairs of heavy equipment and
fabrication of
parts would be undertaken by DID's central maintenance shop in
Ipoh.
4.11 Agricultural Supporting Services. This component is
designed to
institute an integrated agricultural service system which would
eventually
provide a wide range of required services to all project area
smallholders
on a reliable, timely basis (Annex 5). Two steps are required to
achieve this
goal - the upgrading and expansion of the field operations of
the four key
agencies responsible for promoting smallholder agricultural
development in the
project area (DOA, FOA, BPM, and DID); and the integration of
operations of
those key agencies to the extent required to synchronize
services to farmers.
Each agency would require a buildup of staff at various levels
in the project
area, with an emphasis on adequate numbers of field level staff
to form and
regularly service small farmer groups, supported by smaller
numbers of addi-
tional supervisory and specialist staff. New staff would require
offices,
quarters, vehicles, equipment, and training, which would be
financed by the
project, to effectively fulfill their duties. Operations of the
various
agricultural agencies would be most closely integrated at the
planning and
management level, on the one hand, and at the level where the
field workers
contact small farmer groups and individual smallholders on the
other. To
facilitate these joint operations, a single project headquarters
to be shared
by supervisory staff of the agencies would be constructed under
the project.
Seven new secondary-level Farmers' Development Centers (FDCs)
would also be
constructed, and the three existing FDCs expanded, to provide
office space,
storehouses, meeting rooms, and living quarters for field staff
of the
various agencies.
Status of Design
4.12 Federal and Selangor State DID have completed detailed
layouts of
representative sample areas for both the padi irrigation and
tree crop
drainage components. For the irrigation distribution system the
sample areas
utilized were the Sungei Nipah and Sungei Burong blocks,
comprising a total
of 27% of the entire irrigable area. In addition, the proposed
tertiary
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- 16 -
irrigation and drainage system has already been constructed in
the SawahSempadan block of Tanjang Karang, representing an
additional 12% of the padiarea. Federal DID would be responsible
for the final design of all works,including access roads and FDCs.
Designs for the FDCs would be based on thestandard designs
developed by DID for the seven centers constructed under theWestern
Johore Agricultural Development Project (Loan 973-MA).
Implementation Schedule
4.13 The project would be implemented over a period of five
years. Theagricultural support components provide for a buildup of
staff and facilitiesphased over the implementation period. Much of
the survey work in the padiarea has already been done, and except
for two drainage blocks in KualaSelangor all surveying should be
completed in 1978. Construction of irriga-tion works in the Sungei
Nipah block, to be financed retroactively under theproject (para.
4.16) began in July 1977 and is expected to be completed inJuly
1978. Construction of irrigation works in the five remaining
blockswould commence immediately thereafter. Building of offices,
quarters, andFDCs would begin in February 1978. Construction of
drainage works wouldbegin in Sabak Bernam in May 1978. Land
acquisition is not expected toseriously delay the implementation of
construction as right-of-way for mostof the proposed drainage works
has long been reserved by DID, and the use ofstructural tertiary
canals in the padi area would require the acquisition ofonly 72 ha
of padi land. All project works would be completed by January1983.
Further details are presented in Annex 4.
Cost Estimates
4.14 Total project costs are estimated at US$60 million, of
whichUS$26.0 million (43%) would be foreign exchange. Cost
estimates for irrigationand drainage works (including roads) are
based on detailed layout and designof 10% of the drainage area and
27% of the irrigation area (para 4.12) andrecent contract unit
costs for earthwork and concrete structures in theproject area.
Costs of structural tertiary canals, which represent 38% ofthe
total construction costs of project civil works, are based on an
existingcentral contract for manufacture and installation of GRP
flumes valid throughDecember 1978 (para 4.04). Project cost
estimates exclude the costs of thetertiary canal system already
installed in the Sawah Sempadan block, at a costof US$2.1 million.
Costs of FDCs are based on similar recently completedbuildings in
Johore. All incremental operating costs for the project
period,including salaries, have been included for the agricultural
services component.Cost estimates for equipment and vehicles are
based on recent suppliers'quotations, net of taxes and duties.
Physical contingencies of 15% onconstruction costs and 10% on
equipment have been included. All costestimates have been adjusted
to February 1978 levels based on recentMalaysian and international
inflationary trends. Expected price increasesdue to inflation of 9%
in 1978-79 and 8% thereafter have been included forcivil works and
related physical contingencies, land, and operating andpersonnel
costs. For equipment, price increases of 7.5% in 1978-79 and
7%thereafter have been allowed. Expected price increases amount to
27% ofbase costs plus physical contingencies.
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4.15 Detailed project costs are given in Annexes 4-6 and are
summarizedbelow:
ForeignExchange
Local Foreign Total Local Foreign Total Component---- M$ Million
--- ---- US$ Million ---
Civil Works:
Tanjong Karang Irrigation 29.6 25.1 54.7 11.9 10.1 22.0 46Tree
Crop Drainage 16.6 13.7 30.3 6.7 5.5 12.2 45
Buildings and Facilities 2.9 1.3 4.2 1.2 0.5 1.7 30Engineering
and Supervision 6.4 0.7 7.1 2.6 0.3 2.9 10
Equipment:
Agricultural 0.1 0.9 1.0 - 0.4 0.4 90Operation and Maintenance
0.1 2.3 2.4 0.1 0.9 1.0 95
Incremental AgriculturalServices: 3.3 0.4 3.7 1.3 0.2 1.5 10
Base Cost Estimate 59.0 44.4 103.4 23.8 17.9 41.7 43
Physical Contingencies 7.4 6.3 13.7 3.0 2.5 5.5 46Expected Price
Increases 17.8 13.8 31.6 7.2 5.6 12.8 43
Total Project Cost 84.2 64.5 148.7 34.0 26.0 60.0 43
Financing
4.16 The proposed Bank loan of US$26 million would finance the
foreignexchange requirement of the project. The loan would finance
retroactivelythe installation of a GRP flume tertiary canal system
in approximately 50%of the Sungei Nipah block (2,500 ac) of Tanjong
Karang. Total costs of this
work, which commenced after completion of appraisal in May 1977,
are esti-mated at US$1.1 million. As this is a Federal project, all
local costs would beborne by GOtM throughout the implementation
period of the project. Activitiesfalling under constitutional State
jurisdiction, such as operation and main-tenance of the completed
irrigation and drainage works and agricultural
extension, would thereafter be financed through normal GOM
procedures asnecessary. An assurance to this effect has been
obtained from GOM.
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Procurement
4.17 The drainage and irrigation works and access roads would be
construc-ted through a total of 12 contracts, of which 5 would be
subject to inter-national competitive bidding in accordance with
Bank Group Guidelines. Thethree largest contracts (totalliLng
US$18.3 million) 11 would cover thesupply and installation of the
structural tertiary canal system in fivecomplete blocks of Tanjong
Karang and in one-half of the Sungei Nipahblock. These contracts
would be subject to international tender open toany structural
system meeting specified characteristics of speed of instal-lation,
minimal disruption of existing crops, total command of the
area,durability, and other factors. The tertiary system in the
remaining half-of the Sungei Nipah block (US$1.1 million) would be
installed under theexisting GRP flume contract (paras. 4.04 and
4.16). Most of the remainingcivil works pertaining to the Tanjong
Karang irrigation component, includingconstruction of secondary and
lateral canals, drains, and roads, would bedivided into two
contracts worth approximately US$5 million each. Thesecontracts
would also be subject to international competitive bidding.
4.18 Drainage of the tree crop areas would be implemented
throughseven contracts worth a total of US$17.5 million. Three
contracts wouldcover Sabak Bernam, phased with the coconut
replanting program planned forthat area. Three contracts would
cover Kuala Selangor, divided by theTinggi, Selangor, and Buloh
rivers, and a single contract would cover thecoastal strip between
the padi area and the sea. As these contracts wouldbe too small in
value to attract international interest (averaging US$2.5 mil-lion
each), they would be awarded after competitive bidding advertised
locallyin accordance with Government procedures satisfactory to the
Bank. Thelocal contracting industry is extremely competitive and
strong, and localtendering is well managed and publicized. Bids
would be accepted fromforeign contractors who wish to participate,
and no preference margins,whether domestic or international, would
be utilized in the evaluation andaward of civil works contracts.
Buildings and facilities costing a totalof about US$2.7 million
would also be tendered locally.
4.19 Force account work would include the rehabilitation of the
BernamRiver and Sungei Tinggi Headworks as well as the feeder canal
between them;improvements to portions of the Tanjong Karang main
canal and coastalbunds; resurfacing of access farm roads; and the
fabrication and supply ofaluminum roller gates and gears for tidal
control structures. The totalcost of force account work is
esitimated at US$2.2 million.
4.20 Agricultural and operation and maintenance equipment and
vehicles(US$2.0 million) would be procured under international
competitive biddingin accordance with Bank Group Guidelines. A 15%
preference margin, or theprevailing customs duty if lower:, would
be extended to local manufacturersof these items. Small
off-the-shelf items, costing less than US$20,000each and limited to
a total of US$500,000, would be procured through normalGovernment
procedures.
/1 All estimates of contract values in this section refer to the
total ofbase costs, physical contingencies, and expected price
increases.
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Disbursements
4.21 Disbursements would be made at the rate of 100% against
foreignexchange expenditures on all directly imported equipment and
vehicles andtraining, 100% of the ex-factory cost of items
manufactured locally, and 80%of the total cost of locally procured
items. Disbursements for all civilworks executed by contract would
equal 48% of total costs. Disbursements forforce account work
(para. 4.19) would equal 48% of total costs, and would bemade
against a certificate of expenditures, the documentation for which
wouldbe retained by the borrower and be available for inspection by
the Bank dur-ing the course of project supervision. Estimated
expenditure and disburse-ment schedules for the project, and a
proposed allocation of the proceeds ofthe loan, are given in
Annexes 7-8. It is expected that disbursements wouldbe completed by
August 31, 1983.
Accounts and Audits
4.22 The agencies involved in the project are all subject to
normalGovernment control and audit procedures. Assurances have been
obtained that:
(a) all agencies involved in project implementation would
maintainseparate accounts for the project;
(b) all project accounts would be collated by the Project
Manager(para. 5.01);
(c) the Government's Auditor General or other auditors
satisfactoryto the Bank would audit these accounts; and
(d) the Project Manager would send the audited project
accounts,together with the auditor's comments, to the Bank within
ninemonths of the close of each financial year.
Environmental Effects
4.23 The project would not greatly affect the regional
environment,as most of the project works would merely intensify
water control systemswhich have been established for decades. About
1,000 ac (400 ha) of coastalland subject to frequent sea flooding
and salt water intrusion, and 2,500 ac(1,000 ha) of land subject to
flooding near the Buloh River, would bereclaimed and protected for
agricultural use. Drainage works would reducelocal mosquito
habitats and facilitate ongoing malaria and dengue fevercontrol
programs. The volume of drainage into the sea would remain
essen-tially unchanged and should have no effect on marine fish or
shellfish.Project works would not disturb the coastal mangrove
fringe or the TanjongKarang swamp.
4.24 The Tanjong Karang peat swamp plays an important role as a
waterstorage reservoir for the padi area (Annex 1). Assurances have
beenobtained that the swamp would be protected as a forest area,
and that theportion of the swamp which serves as a catchment for
the irrigation areawould not be drained, logged, or developed in a
manner which would jeopardizethe supply of water for irrigation
purposes.
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5. ORGANIZATION AND MANAGEMENT
Project Coordination
5.01 All the Federal agencies which would be involved in the
implemen-tation of the project - the Drainage and Irrigation
Department (DID), theDepartment of Agriculture (DOA), the Farmers'
Organization Authority (FOA),and the Bank Pertanian Malaysia (BPM)
- are under the jurisdiction of theMinistry of Agriculture (MOA).
While each agency would be responsible forimplementing specific
activitiies within its jurisdiction, responsibility forcoordinating
all project activities would rest with a Project Manager in MOA.The
Project Manager's main administrative responsibilities would
includeassisting the project agencies in the planning of joint
field extensionprograms (para. 4.11) and in preparing requests for
the staff and operatingbudgets required to implement ithose
programs; assisting in planning construc-tion of facilities and
equipment procurement programs which would fulfill thevarious
agency requirements; representing the project in periodic
meetingswith the Public Services Deparitment, the Treasury, and
Selangor StateGovernment agencies; monitoring and evaluating the
progress of implementationactions and project effects and benefits;
and reporting on the progress ofthe project (particularly on behalf
of DOA, FOA and BPM) to the SteeringCommittee (para 5.02) and the
Bank. Experience in Malaysia indicates thattechnical officers
(i.e., agriculture officers or engineers) are able toperform this
managerial function most effectively. The appointment of asuitably
qualified and experienced Project Manager would be a condition
ofeffectiveness of the proposed 'Loan. The Project Manager, who
would residein the project area, would have a small staff to assist
in budgeting,procurement and disbursement matters.
5.02 The Project Manager would be guided on policy matters by a
SteeringCommittee composed of the Secretary General of the Ministry
of Agriculture,the State Secretary of Selangor, and other officials
they may nominate.Involvement of the State Secretary would ensure
the participation of bothState-level agencies and officers and the
District Officers, who are incharge of local governmental
ftnctions, and should facilitate coordination ofproject activities
at the grourLd level. Establishment of the SteeringCommittee would
be a condition of effectiveness of the proposed loan.
5.03 At the substantive level the Project Manager would have to
provideclose and continuous liaison between the implementing
agencies in order tomaximize the impact of the project on the
target population. The first andmost difficult task would be the
organization of common Small AgriculturalUnits, small groups of
farmers which would be contacted by the variousagencies for
agricultural extension, marketing, input supply, credit,
watermanagement, and operation and maintenance purposes. The
organization ofthese groups would have to instill a cooperative
spirit necessary for thesuccessful operation of relatively complex
irrigation and drainage systemsand for the efficient provision of
agricultural services to 32,000 small-holder families. Such groups
have operated successfully (on a small scale)
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in the project area in the past, particularly when formed
voluntarily onthe basis of natural residential and kinship
patterns. The first stepin this effort would be to ensure that the
local field staff of the variousagencies are themselves organized
and aware of each other's activities andprograms, and that they
meet the farmers jointly and with a unified program.
5.04 The Project Manager would have to ensure that agricultural
recom-mendations developed by the Malaysian Agricultural Research
and DevelopmentInstitute (MARDI) for the project area are
translated into simple field recom-mendations delivered and
demonstrated by the DOA extension staff, and thatrecommended inputs
are available in appropriate quantities through the FOA.For this
purpose, the Project Manager would function as a member of the
StateAgricultural Research Development and Extension Committee,
composed of seniorState-level officers in all agriculture-related
agencies, including MARDI.Finally, the Project Manager would have
to ensure that adequate credit isavailable through BPM to enable
farmers to purchase recommended inputs. Onthe last point assurances
have been obtained that:
(a) the Project Manager would prepare, in consultation withFOA,
DOA, and BPM staff, a statement of annual agriculturalcredit
requirements, to be submitted to BPM and the Bank notlater than
three months prior to the beginning of each fiscalyear; and
(b) GOM would thereafter ensure that an adequate amount of
creditwould be made available to project area farmers through
BPM.
Agency Responsibilities
5.05 Drainage and Irrigation Department. DID would be
responsiblefor implementing all project civil works. Design work
would require thefull-time services of a team of 7 engineers
(including a senior engineer)based in DID headquarters, as well as
approximately 50 supporting technicalstaff, for a period of 4
years. To ensure that design concepts, features,assumptions, and
data are effectively transmitted from the Federal designstaff to
the State staff who will eventually operate and maintain
thesystems, assurances have been obtained that design staff would
produce adesigner's operation manual covering major project works.
Supervision ofconstruction would require 6 senior engineers, 15
irrigation engineers,and about 170 technical and clerical staff
during the peak years of construc-tion activity (1979-82). This
staff would be posted by Federal DID to theproject area during
project implementation. Selangor State DID would
assumeresponsibility for operation and maintenance of works upon
completion andacceptance by Federal DID. To adequately fulfill this
responsibility, statestaff in the project area would have to be
augmented by an additional seniorengineer and irrigation engineer,
47 technicians, inspectors, overseers,and clerical staff of various
grades, and 140 laborers./l An assurance hasbeen obtained that all
drainage and irrigation staff required to operate andmaintain the
project would be appointed.
/1 Detailed estimates of DID staff requirements are presented in
Annex 4.
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5.06 Department of Agriculture. DOA would assume primary
responsibilityfor the organization and operation of the
agricultural services componentof the project, with the assistance
of the Project Manager (para. 5.01).As agricultural extension is a
State responsibility, the Selangor Director ofAgriculture would be
administratively responsible for allocation of extensionstaff to
the project and for the general direction of the extension effort
inthe project area. A Chief Extension Officer for the State of
Selangor, aswell as a number of administrative and field extension
staff, would beprovided under the National Extension Project.
Additional staffwould be provided under the present project to
complement the proposeddrainage and irrigation infrastructure with
an intensified agriculturalservices program aimed at raising
smallholder agricultural incomes to themaximum extent possible
(para. 4.11). The operational methodology of theproposed program is
based largely on the training-visit system of
agriculturalextension, modified to suit Malaysian institutions and
the requirements ofthe smallholders in the project area. The
proposed operation and structureof the agricultural services
program is described in detail in Annex 5. Inorder to implement
that program, the Selangor DOA would require an additional10
agricultural technicians (to bring the field agent:farmer ratio to
1:800),5 Agricultural Assistants, 1 District Agriculture Officer,
and 1 seniorproject (regional) Agriculture Officer. Effective
technical support of thefield extension staff would require the
addition of five subject matterspecialists to the staff of the
Selangor DOA, and strengthening of theFederal technical support
units serving the State. An assurance has beenobtained that all DOA
staff required to serve the project area would beappointed. The
operational guidelines for the agricultural extension
systempresented in Annex 5 should be updated and refined on the
basis of fieldexperience in implementing the system over the entire
project area. Accordingly,assurances have been obtained that the
DOA, in consultation with DID, FOA,and BPM, would prepare an
agricultural services operations manual as a guidefor field
extension staff by December 31, 1978.
5.07 Farmers' Organization Authority. FOA facilities in the
projectarea, which currently include three FDCs, would be augmented
by seven newsecondary-level FDCs (para. 4.11). The subcenters would
be operated to theextent possible by farmer group leaders (Annex
5), supervised on a regularbasis by FOA staff based in the FDCs. To
improve the FOA management systemin the project area, and to
achieve an overall staffing level which wouldpermit FOA to play its
role in the integrated agricultural services program,Selangor FOA
would require three graduate FDC managers assisted by twoadditional
Agriculture Assistants to strengthen and upgrade FDC activitiesin
the project area, and one agro-business specialist to provide
technicalsupport and training for field staff. The State Director
of FOA would bearoverall responsibility for agency activities in
the project area. Assuranceshave been obtained that all FOAI staff
required to operate FDC facilitiesand to participate in padi credit
operations in the project area would beappointed.
5.08 Bank Pertanian Malaysia. BPM staff would work closely with
FOAstaff in reviving and expanding institutional smallholder credit
in the
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project area; the two agencies would adopt the same methods of
credit assess-ment and would share the responsibility of making the
assessment. With theassistance of the DOA extension workers
creditworthiness assessment would beconverted from a seasonal
activity undertaken by a few individual FOA creditworkers to a
year-round activity handled as part of the overall extensioneffort.
Another innovation would introduce the concept of group
responsibilityfor credit, in terms of countersignature of ordinary
loans by farm groupleaders, and through loans to small groups of
farmers, cross-guaranteed byeach, in cases where farmers own no
land or are already in debt. BPM wouldappoint 14 credit assistants
to serve the project area from the 10 FDCs andthe BPM branch office
in Tanjong Karang, and 5 area supervisors (AA level)also to be
stationed at the 5 larger FDCs. One thrust of the BPM effortwould
be to provide credit directly to farmers unable or unwilling to
becomemembers of Farmers' Organizations, who at present frequently
find it difficultto gain access to institutional credit programs.
The regional BPM programwould continue to be supervised by the
branch manager in Tanjong Karang. Anassurance has been obtained
that all BPM staff required to serve the projectarea would be
appointed.
Smallholder Rent and Cost Recovery
5.09 At present operation and maintenance (O&M) costs of the
TanjongKarang irrigation system average US$15/ha, while irrigation
charges leviedby the State Government average US$10/ha. The O&M
costs in the drainageareas are lower, ranging between US$3 and US$8
per ha in various drainagedistricts. Drainage rates paid by both
estates and smallholders generallyare set to cover these O&M
costs. Incremental DID O&M costs due to projectimplementation
are calculated (Annex 4, Table 5) to average US$15/ha in
theirrigation area by 1984, US$7.30/ha in the Sabak Bernam drainage
area andin smallholder areas generally, and US$3.60/ha in the Kuala
Selangor drain-age area and in estate areas generally. The State
Legislature of Selangorhas approved an increase in irrigation rates
to a maximum of US$15/ha(in addition to a land tax of US$3/ha), and
it is expected that these rateswould be charged by full project
development. In addition to these chargesall Malay padi farmers pay
the Islamic padi production tithe (zakat) to theSelangor Department
of Religious Affairs, which uses the receipts to financethe
religious school system, teachers' salaries, welfare expenses,
andmaintenance of mosques. Estimated zakat payments (for all
irrigation blocksexcept Sekinchan) average US$69/ha, and are
projected to rise an incrementof US$40/ha proportionally with
project-induced yield increases. Thus thetotal cost recovery index
for the non-Sekinchan irrigation blocks is 37% /1and the total rent
recovery index for those blocks is 30%. For the non-Moslem
Sekinchan farmers, who are not liable for zakat, the cost
recoveryindex is 9% and the rent recovery index is 34%./2
/1 Equivalent to 300% of incremental O&M costs and therefore
covering asubstantial proportion of capital costs.
/2 The rent recovery index is high because of the more limited
potentialbenefits in Sekinchan (Annex 2).
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5.10 It should be noted that O&M of irrigation facilities in
Malaysiais totally divorced from irrigation charge collections,/l
that irrigationO&M is financed out of general revenues
supported by a highly efficientand generally progressive tax
system, and that the level of O&M is notconstrained by a
shortage of funds. In view of these factors and the levelof farm
incomes (para. 6.07) the present structure and level of charges
areconsidered acceptable. Assurances have been obtained that the
Selangor StateGovernment would continue to collect irrigation and
drainage charges whoselevel would be determined taking into account
O&M and capital costs, incen-tives to farmers, farmers'
capacity to pay, and other taxes and chargesimposed upon them; and
that the Government would exchange views with the Bankfrom time to
time on the level of these charges.
Estate Taxation
5.11 The estates in the project area pay drainage rates
typically set tocover O&M costs as calculated by Selangor DID.
They also pay export dutiesaveraging 10% of the value of rubber and
oil palm production, and quit rents(property taxes) to the Selangor
State Government. In addition, all estatesin the project area
belong to registered private companies liable to pay thestandard
Malaysian company tax equivalent to 45% of net profits. A
financialprojection of the incremental tax payments of the 40
estates in the projectarea which would be associated with
incremental production due to the projectindicates that the net
present value of such incremental taxes (US$10 million)far exceeds
the investment costs of drainage works in estate areas
(US$2.3million). The cost recovery index in these terms is over
430%./2 Finally,dividend income received by resident owners or
shareholders of the estatecompanies is again subject to personal
income tax at rates of up to 55%. Insum, the drainage works
benefit:ting estates would not constitute a burden onMalaysian
public finances.
6. PRODUCTION, MARKETING, PRICES, AND FARM INCOME
6.01 The Tanjong Karang irrigation component would provide each
individ-ual padi farmer access to imprcoved irrigation and drainage
systems, permit-ting a very high degree of water control over each
three-acre (1.2 ha) lot.The tree crop drainage component would
provide an intensive drainage systemserving most of the tree crop
smallholdings directly, which, with associa-ted gates, checks, and
other structures, would provide for the first timea reliable degree
of control over the depth of the water table in the treecrop areas.
The main drainage systems, river canalization works, and
coastalbunds would also provide flood protection to smallholder and
estate tree cropareas, as well as providing outlets for numerous
internal drainage systemsconstructed by the estates (see Map
13026R). Most of the smallholders haveenough experience with the
crops they are growing to be able to take advan-tage of the
improved infrastructure systems through changes in cultivation
/1 Irrigation and drainage rates, together with quit rents and
land taxes,are paid by landowners to the State Land offices, and
not to DID.
/2 The financial rent recovery index is approximately 65%.
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practices and input usage. However, changes in the smallholders'
agricul-tural practices can be directed and accelerated by an
integrated agriculturalextension effort, to make quicker and fuller
use of improved facilitiesto increase their production and incomes.
This is the function of the pro-ject's agricultural services
component. Penetration of the agricultural areasby extension and
credit workers, and marketing and input supply activities,would be
facilitated by the access road