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CIRCULATING COPY TO BE RETURNED TO REPORTS DESK HLE COPf CONFIDENTIAL Public Disclosure Authorized Report No.1 795-MA MALAYSIA LOAN 434-MA: MUDA IRRIGATION PROJECT Public Disclosure Authorized COMPLETION REPORT Public Disclosure Authorized June 15, 1975 Public Disclosure Authorized This report was prepared at the request of the Government of MalaysiaL. The views and recommendations contained in the report are those of the authors rather than those of the World Bank Group. The Government of Malaysia and the authors are responsible for the release and distribution of the report. CURRENCY EQUIVALENTS US$1.00 Ringgit (M$) 2.30 M$1.00 = US$0.43 US$1 million 8 M$2,300,000 M$1 million = US$435,000 WEIGHTS AND MEASURES (METRIC SYTEM) -/ 1 meter (m) - 3.28 feet (ft) 1 kilometer (km) = 0.62 miles 1 hectare (ha) - 2.47 acres (ac) 1 million cubic meters (MM ) 810 acre-feet 1 cuic meter per second 3 (m /s) 8 35.3 ft Is (cusec) 1 ton 1,000 kilogram (kg) - 2,205 pounds 1 kilowatt (kW) 8 1.34 horsepower (hp) NOTATION - Less than half the smallest unit shown - Nil or negligible Not available separately but included in total Not available * Not applicable e Mission estimate 1/ Approximate exchange rate in early-1975 and also used for future currency conversions. Exchange rates for past years are given in Annex 1. 2/ The metric system is used for the convenience of readers, even though most previous project documentation uses the Imperial system. Malaysia is in the process of converting to the metric system. ABBREVIATIONS AA Agricultural Assistant AO Agricultural Officer BPM Bank Pertanian Malaysian (Agricultural Bank of Malaysia) cif Cost, insurance and freight DID Drainage and Irrigation Division of the Ministry of Agriculture and Rural Development (Federal); Drainage and Irrigation Department (State). DOA Division of Agriculture of the Ministry of Agriculture and Rural Development (Federal); Department of Agriculture (State). FA Farmers' Association FAO Food and Agriculture Organization of the United Nations FOA Farmers' Organization Authority fob Free on board JAA Junior Agricultural Assistant KADA Kemubu Agricultural Development Authority LCC Local Credit Center LPN Lembaga Padi dan Beras Negara (National Paddy and Rice Authority) MADA Muda Agricultural Development Authority MARDI Malaysian Agricultural Research and Development Institute O&M Operation and Maintenance pH A measure of acidity SAU Small Agricultural Unit GLOSSARY Gotong royong - Cooperative effort Kampong - Village Sungei (Sg) - River Zakat - Religious tax FISCAL YEAR January 1 - December 31 MALAYSIA LOAN 434-MA: MUDA IRRIGATION PROJECT Completion Report TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ...........................i I. INTRODUCTION ...................................... 1 The Project Area .............................. 1 Project Preparation .......................... 1 II. THE PROJECT ....................................... 2 Construction History . 3 Performance of Consultants and Contractors... 3 Operation and Maintenance .................... 4 Present Problems ............................. 4 III. AGRICULTURAL DEVELOPMENT .......................... 5 Cropping Pattern, Yield and Production ....... 5 Agricultural Supporting Services ............. 6 Processing and Marketing ..................... 9 IV. ECONOMIC ANALYSIS AND FARM INCOME ................. 9 Economic Analysis . 9 Farm Income . 10 Economic Impact of the Project . 11 V. ORGANIZATION AND MANAGEMENT ....................... 11 VI. COST RECOVERY .................. 13 This report is based on the findings of a project completion mission composed of Messrs. P.W. Whitford (IBRD), R.H. Slade (FAO) and P. Judd (Consultant). Mr. J. Goldberg (IBRD) assisted in the preparation of the report. -2- Page No. VII. FUTURE DMPROVEMENTS ............................... 14 VIII. LESSONS LEARNED ................................... 15 ANNEXES 1. Basic Data 2. Project Works 3. Agriculture 4. Organization and Management 5. Economic Analysis 6. Future Development 1521 Muda Project - General Plan MALAYSIA LOAN 434-MA: MUDA IRRIGATION PROJECT Completion Report SUMMARY AND CONCLUSIONS i. The Muda Irrigation Project is located in the States of Kedah and Perlis in the northwest of Peninsular Malaysia. The area is the traditional rice bowl of Malaysia. Farms average 1.6 ha in size ancd there is a high degree of tenancy. ii. In line with its policy of attaining self-sufficiency in rice production, mainly through the construction of irrigation systems to serve traditional rainfed paddy areas, the Government engaged consultants between 1960 and 1964 to prepare the Muda Project. The project was appraised in early 1965 and a Loan, for US$45 million equivalent, was made in November 1965. iii. The project works-consist of the Muda and Pedu Dams, a tunnel connecting them and improvements and extensions to the previously existing run-of-the-river irrigation systems in the area. No on-farm development was included and the distance of field-to-field flooding is typicalLy 2 km. It is doubtful if the engineering data available at appraisal, especially on damsite geology, was really of feasibility standard, and it was necessary to make substantial design changes to the dams during construction, including the prestressing of the Muda Dam to its foundations. iv. The primary objective of the project was to achieve double cropping of paddy in the area. There was little attention, at appraisal or subsequently, to yields or alternative crops. Physical construction of the project was completed six months behind schedule and the first irrigation water was delivered in the off-season of 1970. Three extensions of the closing date were necessary to allow certain repair and improvement works to be completed and for the loan to be fully disbursed. The improvement works included pilot projects for water distribution at the farm level. v. The final project cost was M$ 245 million (US$840/ha), 7% above the appraisal estimate. This overrun is entirely accounted for by the extra works added to the project. vi. The Consultants (Sir William Halcrow & Partners) were ill-advised to undertake feasibility studies under very restrictive terms of reference and to undertake detailed engineering of the dams without additional geological studies. However, Halcrows' construction supervision was adequate. The contractor for the dams (Kajima-Taisei) was criticized in the early stages for delays and inexperienced staff but these problems were cor- rected. The other contractors performed well. - ii - vii. The standard of Operation and Maintenance is very good, with a cost of US$25/ha in 1974, which is reasonable. A computer-controlled operating system is functioning but is probably over-sophisticated for the project under present conditions of field-to-field flooding. Remain- ing problems include: leakage at the Pedu Dam, for which additional grout- ing is being done; loss of tension in some cables at the Muda Dam, which is being investigated; bank scour in the Padang Terap River, for which control measures are proposed; and problems of water distribution at the field level. viii. The net irrigable area has been found to be 98,000 ha, rather than the 106,000 ha assumed at appraisal. Cropping intensity has increased at about the forecast rate and now stands at 197%. Yields have increased more rapidly than forecast at appraisal, due to improved varieties and a greater use of inputs. Paddy production which was 268,000 tons in 1965, increased to 678,000 tons in 1974 and is expected to reach 71S,000 tons by 1980. The net value of production, evaluated in economic prices and expressed in 1974 currency values, increased from M$74 million in 1965 to M$413 million in 1974 and is expected to level off at M$200,000 million as prices decline. The economic rate of return is now estimated at 18%, compared with the 10% estimated at appraisal. Higher yields, improved prices, and on-farm production costs lower than those forecast at appraisal explain the difference. ix. The appraisal report considered agricultural supporting services only briefly. Considerable progress has been made, especially since the formation of 27 Farmers' Associations in the area, which serve as centers for all extension, credit and farmer training activities. Institutional credit now serves about 15% of the farmers and the repayment record is very good. However, both extension and credit suffer from a lack of suitably trained field workers and there is a lack of service to farmers who do not belong to Farmers' Associations. x. The project has resulted in an approximate doubling of average farm incomes, both for owners and tenants, which are above the Government's target level for smallholder projects. Available evidence indicates that the project has improved national income distribution but there has been no marked aggregate change in income distribution within the project area. Nevertheless, the rise in employment resulting from the project has been of great benefit to landless laborers and other underemployed groups. xi. Even though no provision was made at the outset for the co- ordination of engineering and agricultural supporting services, this was rectified by the Government, first by appointing a Project Coordinator and later by establishing the Muda Agricultural Development Authority, a semi- autonomous agency with responsibility for operating and improving the irrigation system and supplying extension, credit and other services to the farmers. Due to dynamic management and solid Government support,

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