Frozen food industry players in Penang have been told to upgrade their operations to fulfill European Union's (EU) stringent health standards by end of August, or risk losing their multi billion ringgit business worldwide.

In a recent dialogue session with industry players, the state task force on frozen food, headed by state executive councillor Law Choo Kiang, stressed that Penang can ill-afford to lose such lucrative business, especially in ‘bad times’ like now.

The players were informed of the importance to meet the EU yardstick as non-compliance would affect their worldwide business in long term.

"If EU bans our products, the whole world would follow suit.

"Local seafood industries stand to lose billions," Law, who handles the agriculture, agro-based industries, rural development and flood mitigation portfolios, told Malaysiakini.

His three-man task force includes state executive councillor, Phee Boon Poh, who handles the health portfolio, and InvestPenang executive chairperson Lee Kah Choon.

The Penang government set up the task force to conduct studies on how the local seafood industry would be affected if EU carried out its threat to ban Malaysian frozen seafood products.

When conducting a random inspection in Penang in April, EU health experts discovered that industry players in the state have only committed ‘minor’ non-compliance with EU standards.

Among the so-called minor offences were the lack of toilet facilities in fishery vessels, non-usage of special hygienic ice cubes and existence of pets and animals at the aquatic goods landing port in Batu Maung.

Recent checks by the state task force on fishing vessels, aquaculture ponds, manufacturing plants and landing port affirmed the EU report.

'An offence is an offence'

Law stressed that "an offence is an offence, whether minor or not."

"Since they are minor offences, the producers need only undertake minor rectifications to upgrade their operations to meet EU standards.

"The industry players have realised it and are rectifying it," he said, while admitting that the Penang frozen food industry’s fate was not in its hands.

He said seafood producers from other states need to do their part to ensure Malaysian companies get re-listed in the EU market.

Last month, the government suspended Malaysia's multi-billion-dollar seafood business to Europe to avoid an outright EU ban for failing to meet its health standards.

The government withdrew Malaysian companies from EU’s list to allow local authorities and industrial players a six-week period to find ways to ensure that the 46 local companies meet European stringent health demands.

Once local health authorities are satisfied with the rectifications and upgrading works carried out by industrial players, Malaysia will invite an EU inspection team to check vessels and facilities to ensure they meet the required standards.

Only then Malaysian companies will be relisted as exporters to EU, which will take at least three months.

According to EU 2007 statistics, Malaysian aquatic product exports to Europe totaled up RM516 million, with Penang being the biggest contributor.

Malaysian Fishery Development Authority (LKIM) statistics revealed that Penang exported RM350 million worth of frozen food worldwide last year, with Europe making up half of the market.

Malaysian health authorities decided to de-list local companies from EU pre-empting a ban to avoid a far reaching devastating effect to the local industry.

EU wanted to ban Malaysian frozen food when many local seafood companies failed in random tests held by a team of EU experts early this year.

According to the Malaysian Frozen Foods Processors Association, its 26 members would lose at least RM1 billion following the voluntary suspension as it was a peak demand season ahead of Christmas.