Land development schemes in West Malaysia : a study of benefits and costs
Creators: name: Lim, Sow Ching
Publisher: name: The Australian National University
Year: 1972
Subjects: subject: Land settlement Malaysia

description: This thesis evaluates the economic performance of 20 selected F.L.D.A., State and Fringe types of land development schemes in West Malaysia. The assessment is made from the commercial, social and settlers' viewpoint. Part I comprises two chapters: the first contains a statement of the problem and a description of the salient features of the schemes, while the second sets out the analytical framework. The latter includes the derivation of variability measures, which reflect risk, for the economic criteria based on the internal rate of return (IRR) and benefitcost ratio (B/C). The four chapters in Part II (3 to 6) deal with the evaluation of inputs and outputs. In Chapter 3 the production patterns of different types of rubber trees over a 30-year period are analysed statistically, using historical data secured from estates. The yield trends so determined are employed as guides, allowing also for the different conditions prevailing on individual schemes and for the expected technology in rubber exploitation, in determining the expected yields in the selected schemes. Chapter 4 carries this analysis further by considering in detail the composition of rubber yields, the final products therefrom, and their expected prices. To determine the expected variance of value output, for the purpose of estimating the variability measures mentioned, the variances of prices and yields are investigated. Chapter 5 deals with the costs relevant to a commercial firm and to a settler. It covers the historical costs, extracted from various sets of accounts, of establishing rubber over a 7-8 year period and the future costs over the whole exploitation cycle budgetted on the basis of survey and other data. Chapter 6 evaluates the social costs of development using the Little/Mirrlees method of shadow-pricing. This involves splitting each item into expenditures on materials, taxes and factor incomes, and then revaluing these components in terms of foreign exchange. The economic analyses are undertaken in the six chapters in Part III, In Chapter 7 attention is primarily directed to showing that public-sector investment in land development schemes is economic from the commercial viewpoint, whether the investment is regarded as a 'smallholding' or an 'estate' operation. Despite their high cost the F.L.D.A. schemes are the most profitable commercially. Contrary to common belief the Fringe schemes are only marginally inferior to those run by the F.L.D.A. when they are regarded as an 'estate' operation, and are amenable to considerable improvement through the use of higher-yielding material and closer supervision. Chapter 8 reveals that public-sector land development is highly profitable socially. Although the social profitability differs little between types of strategy, the F.L.D.A. and State schemes provide much less employment than Fringe developments per unit of public funds involved. The F.L.D.A. approach, however, has the great concomitant advantage of improving the 'quality of rural life' through the provision of public amenities and services. Chapter 9 demonstrates that the schemes have succeeded in raising the incomes of the settler-families, and that the settlers on most F.L.D.A. and some State schemes are now earning a 'reasonable' income, The latter target is far from being attained by those on Fringe schemes because of the small area of the holdings. Chapter 10 highlights the existence of a substantial amount of surplus labour, of a severe lack of equilibrium in resource use, and of great possibilities for improvement . In Chapter 11 the results contained in Chapters 7 and 8 are employed to demonstrate the relationships between the IRR, B/C ratio and the net present value in respect to the ranking of a set of projects. In the final chapter there is first a summary of the conclusions reached in earlier chapters (pp.375-379). There is then an overall assessment of public-sector participation in land development. This focusses on the need for a two-pronged strategy involving both highcost F.L.D.A, approach and low-cost Fringe type developments backed by centralised administration. The excellent prospects of raising the incomes of settler-families through a better use of resources within individual farms are also analysed.