Sex and The City

Today’s Kompas (Sunday, 20 April 2008) wrote a feature on Dolly, Surabaya’s prostitution complex. Sex and the city in this case is not a TV drama series, it’s a bitter fact and paradox. Sex for sale is definitely not a merit good, that’s why Dolly is literally never legalized, but it has been there for decades. Dealing with the issue, do we need public policy or leave it to the sex market?

Any related findings clearly suggest that issue of (women) prostitution contains problem of moral hazard (i.e. abuse imposed on prostitutes by other parties, most notably seen is their clients). The concept of moral hazard applies to this case generally to problems of a client who performs bad and dangerous behaviors toward a prostitute when her pimp-who is supposed to be a prostitute’s protector-cannot monitor client’ behavior and a prostitute herself can not do much things to prevent and/or to protect herself. The concept of uncertainty (i.e. incomplete insurance on prostitutes’ vulnerability to various kinds of risk) generally applies to a problem of a prostitute cannot select the least risky client and pimp.

Also, it suggests asymmetric information (i.e. a prostitute does not know whether her client is free from venereal diseases or HIV/AIDS and vice versa, most prostitutes do not know about reproduction health, Authority’s lax data and information on prostitutes), asymmetric market power (i.e. a prostitute, as ‘the sex seller’, is on far less bargaining power than her client, as ‘the sex buyer’. It applies when the client refuses to use condom. In another form, a prostitute, as ‘the protection buyer’, is much less powerful than her pimp, as ‘the protection seller’), and negative externality (i.e. one may argue that the existence of prostitution incurs some social costs).

When we are aware of limitation of the competitive (market) framework, problem of endogenous preference and legitimacy of preferences also occur in prostitution issue. The endogenous preferences applies in terms of it is difficult to suggest that to be a prostitute is rational choice of any woman. At the first place, it is much likely that a female prefer not to be a prostitute over to be. Yet, preference may also change as a result of consumption of ‘addictive goods’ (i.e. for instances, early sex experience, glamour lifestyle, overload information on well-being people, and drugs). Repeated use of sexual activity and consumption of utility she gets from it (i.e. money) may produce emotionally dependencies that increase the relative importance of this good in a female’s utility function. The legitimacy preference is subject to such a question whether public restriction or private suasions is more appropriate in judging rationales presented for mitigation on prostitution. This problem has something to do with severe debate between the moralist and the activists towards the issue of prostitution. The moralists often suggest that what prostitutes need is more intensive religious education and even hard punishment to make them quit from prostitution. The activists suggest that the most urgent things to be done are how to reduce prostitutes’ vulnerability, to educate them about how huge the risks are they will face if they keep doing prostitution, and to mitigate causing factors.

However, issue of prostitution is clearly not yet on the government policy agenda. I suggest that it is because policy elites may presume such an issue as politics-as-usual. Thus, because the government views such an issue as an issue with low political and economic stakes and little sense of urgency, one may expect that decision making upon this issue, if any, would be only incremental changes from the status quo. It is incremental in the sense that middle and lower level officials that involved are highly dependent on high level support for action and most concern on budget.

In addition to that, it has been recognized that government intervention on such an issue contains problem of ineffectiveness and inefficiency. These problems may waste such a limited resource even more, which in turn can discourage government’s attempt to put issue of prostitution in their agenda basket. The possible factors cause the government inefficiency and effectiveness are: 1). Clearly, the government experiences insufficient data and studies; 2). The government programs are often fund-driven instead of clear goal-driven. The most pronounced example is it was initially no program in state budget 1999/2000 for street children. However, international development agencies (i.e. World Bank, UNDP, and ADB) offered Rp.66 billion of fund for street children, the government suddenly put program for street children in the state budget. For sure, such a program was not well designed and devised because the main motive of the government was just how to disburse the fund quickly; and 3). The government often chose to work only with NGOs that are already on the government’s list without further scrutiny whether these NGOs really have access to the grass root level or these NGOs have been working in sustainable manner in particular issue, taking into account that many NGOs that only work if funding from government is available and/or only work in ad hoc project basis rather than sustainable program basis.

Taking all these considerations, partnership with NGOs and scale of priorities may have a merit. Any policy or action plan shall integrate the attempts on curbing supply side and pressing demand side simultaneously. Otherwise, we will be still hearing this on Dolly or other Indonesia’s city streets: “Sex…Sex…Sex, anyone?” (like street vendors used to shout: “Cang…Kaca..aang”) or in Kompas’ interesting title: “Bos, Mampir Bos!”.

Children Prostitution

Even to a panel of experts, what factors that pose social problem so-called “children prostitution” are not so straightforward. Nonetheless, if we compile many reports on it and assemble information from the field, we will encounter both intrinsic and seemingly odd factors of this enormous problem. We can further conceive these factors as push factors and pull factors. The former is factors that are coming from situation inside a child’s family. The latter is factors that are going beyond a child’s control and incline her to certain experience to which she then behaves and responds.

The push factors include economic pressure, child abuse, sexual abuse, and early marriage. Low or absence of income in the family and ongoing increase of living costs depress parents’ ability to fulfill children’s needs and to send them to school. Then, these economic pressures invoke parents to do nothing when their children go prostitution. Instead, in some worse cases, parents themselves who feel reluctance if their children quit prostitution as it is the only significant source of family income. Family integrity is then out of the question. The pull factors encompass drugs syndicate and sex industry network, “cultures of denial” in the society for those who are losing virginity due to pre-marital sex, a colleague in school or informal work place, and demonstration effect of glamour lifestyle in adjacent entertainment or night life centre.

Albeit children prostitution may persist in forthcoming decades, we must convince many parties to undergo corrective actions about it. Notwithstanding we may not be able to terminate this social problem, we must levy our society obligation to mitigate the risks facing children prostitutes and to prevent other children go prostitution if we do not want to let the future pillar of our society collapse. Children prostitution is multidimensional problem, whereby we need comprehensive policy. Not only is it social affairs, but it is likewise economic, political, and legal affairs.

TVRI Talk: Kerosene - LPG Conversion

It was a live talk show and I did not have the copy of the show…so, as far as I remember, here are the main points of my talk.

Brief Background Information

In the mid 2007, the government has launched a program so called kerosene-LPG conversion. It was first started in East Jakarta and other regions in Java in 2007 and it will also be run in Sumatra in 2008. Up to 2010, it targets to replace 5.2 million kilolitres kerosene with 3.5 million tons LPG. In 2007 alone, the target was one million kilolitres kerosene. To do so, about six million of a 3 kg LPG tube would be distributed in 2007. Some data estimated it was only 3.9 million tubes (66%) that have been distributed. There was surely a problem of distribution. No wonder, people suffer of two kinds of scarcity: the kerosene and the LPG, despite of long queue everywhere.


Benefit-Cost

To state budget, the program will save as much as Rp. 30 trillion per year and it only costs Rp. 20 trillion of investment. To households’ pockets, a typical household will save Rp. 16- 25 thousand per month. Surely to estimate short term net benefit is not easy, if we also take into account:
1. Waste of productive time due to long queue. It’s not uncommon to find people queued for about ten hours.
2. The death of micro or cottage enterprises that largely depends on kerosene for their production process.
3. Unemployment due to the collapse of those micro or cottage firms.


Problems in the Field

Some constraints found in the field:
1. Socialization. Despite state budget has allocated some funds (as much as billions) for socialization, it’s not effective. Good socialization must be able to answer people’s typical questions: What benefit for them? Not only talking about the benefit for the government. If it were to secure or to improve the state budget, why does the government not first seize corruptors’ assets? Why is the government so powerful and coercive against its people but so weak and disable to use its coercive power against corruptors? Is the removal of subsidy or the saving created from the program able to send their children to school or to send them properly to hospital when they have health problems?
2. People’s resistance. It can be regarded as the consequence of poor socialization and the ambitious pace of the program.
3. Wrong target. The program is supposed to target housewives, the pure users of kerosene, a household with monthly expenditures less than Rp. 1.5 million, legal local inhabitants, and micro or cottage firms. Many eligible people haven’t received the conversion package as it’s, in many cases, distributed by nepotism and intuition.
4. Poor program infrastructure.
5. Rent seeking behavior. People bear illegal cost as much as Rp. 15 thousand to get the conversion package, that’s supposed to be free of charge.
6. About 11% of the distributed tubes are found in poor quality. Is it due to bad procurement process? This situation can hardly soften people’s resistance.
7. People resell the conversion package.
8. People receive the conversion package but not immediately use it.
9. People still use kerosene in combination with LPG.
10. The demand for kerosene is still high as poor fishermen in Northern Java’s coastal area have modified their boat’s machines so that the machines can use kerosene as fuel (due to the hike of solar price).


(Improving) Implementation

Government should also address the problem of poor fishermen’s lack of affordability for fuel, not only focusing on urban (poor) households. Otherwise, the conversion will be getting harder. The demand (for kerosene to as boat fuel) will always induce supply, illegally or not. Government should also address coordination problem among related agencies: Pertamina, BPH Migas, local government, Ministry of Industry, Ministry of Cooperative and SMEs, and private sectors. In monitoring and evaluation, government must involve universities and NGOs. Task force in tackling distribution problem should be established.


Deeper Issue: Energy Policy

Indonesia has been quite some time becoming of net importer for oil and gas. It’s hard to achieve production target of 1.3 million barrels per day. It surely puts burden on state budget, especially when world’s oil price skyrocketing to $ 100 per barrel. Oil concession with foreign and monopoly status of Pertamina in distributing oil for domestic market may also need to be revisited.

Yes, LPG is cheaper than kerosene but it’s hardly a sustainable solution. Many estimates suggest that after 2020, Indonesia will be a total importer for oil and gas, unless there are new oil and gas resources. Bio fuel is then regarded as possible alternatives. However, there’s also problem of land competition: planting corn for fuel or for food? Recall, Indonesia’s food security is also in question right now.

There’s another question: if the problem is energy scarcity and state budget burden, why does government not first convert PLN’s PLTDs (Diesel-powered electricity generators) into PLTGs (Gas-powered electricity generators)? This alternative can save about Rp. 25 trillion of solar subsidies for PLN (state electricity company) and the technology for this conversion is readily available and cheap.


Deepest Issue: Inherent Problem of Subsidy

Subsidy (or the removal of it) always triggers debate. The time frame, the target, the criteria, the amount, the design, the equity/welfare/distributional impacts are the heart of the problem. It’s increasingly becoming sensitive when it’s applied to vital commodity/goods: fertilizer, food, education, health, and, in this case, kerosene or everyone’s fuel, especially the lower income people. Subsidy creates some disparities. It possibly invites rent-seeking behavior or creates some other hazards, like: panic buying or panic stocking.

Subsidy is, however, always necessary for those who most need it or for some strategic reasons. I’m afraid the radical and careless removal of subsidy will make most vulnerable Indonesian people feel their lives much worse than the live of European cattle or American corns that receive so many subsidies to compete in world market.