Masidi Manjun, tourism, culture and environment minister in eastern Sabah state on Borneo island, said local activists and foreign tourists have complained about cruel shark finning activities by local fishermen.
He said the state government is aiming to impose the ban starting next year. It would make Sabah the first state in Malaysia — one of the world's top shark-catching countries — to impose such a ban.
While there is no official data on the shark population, Masidi estimated only 20 percent of sharks spotted in the state 15 years ago are still in Sabah waters.
"There are only four coastal areas now where sharks can be spotted," he told The Associated Press. "If we don't do something about it, sharks may disappear from our waters completely. We will also lose tourism dollars."
Tens of millions of sharks are killed across the globe every year, mainly for their fins. Activists say finning is inhumane and a threat to the ocean ecosystem because fishermen slice the fins off the shark and toss the fish back into the water to die.
Shark fin soup, widely sold across Asia, can sell for more than $80 a bowl and is often served at weddings and banquets as a symbol of wealth.
Restaurant operators in Sabah oppose the ban, saying that sharks are also harvested for their flesh, skin and bones, which can be made into soup.
"We conserve our sharks here, but then they swim out to the South China Sea and get caught by Chinese or Vietnamese fishermen instead. What is the point?" said Sabah Restaurant Association chairman Lim Vun Chen.
Masidi said the state would not ban the importation and sale of shark fins for now but would educate consumers on the cruelty of shark finning. Sabah's government has already taken shark fin soup off the menu for official functions, he said.
Tourism is a major revenue earner for Sabah, which is famed for the rich biodiversity in its rain forests and dive sites teeming with coral reefs and marine life.
Traffic, a wildlife trade monitoring network, says up to 73 million sharks are killed annually. Malaysia ranks among the world's top 10 shark-catching countries, according to the International Union for Conservation of Nature.