Essential services in 2003: Who owns (and thus, trades) our life?
Essential services in 2003: Who owns (and thus, trades) our life?
Yanuar Nugroho
Director
The Business Watch Indonesia
Life is a game of power. The powerful rulers have their power not
because others want it, but because the former use the latter for
their own benefit.
Despite its bright side, globalization, in one or many ways,
has been creating the imbalances between the powerful, who
benefit from the increasing share of our world economy, and the
powerless, who suffer from it. Will the year 2003 become known as
the year when these imbalances start to be become more equitable,
or get worse?
Around the globe, poverty as a consequence of inequality seems
to have been the major problem over the past three decades. But,
thanks to the globalization, The World Bank reports that the
situation is getting better. According to the Bank, there has
been considerable progress in improving human well-being, as
measured by human development indicators. Average income per
capita (population weighted in 1995 dollars) in developing
countries grew from $989 in 1980 to $1,354 in 2000. Infant
mortality was cut in half, from 107 per 1,000 live births to 58,
as was adult illiteracy, from 47 to 25 (The World Bank, 2002)
At a glance the numbers seem impressive. But wait -- do not be
confused by the bombastic, major statistics, because in a micro
perspective, the reality is more than bitter to swallow. In a
country like Indonesia, the Bank also reports that absolute
poverty (those who live on less than $2 a day) was reduced to 13
percent of the population, and only 13 percent of the population
above 15 years was illiterate. An improvement? Perhaps, but do
not forget: infant mortality is at 41 per 1,000 live births,
child malnutrition made up 24 percent of total children under 5
years, and access to improved water sources was only 74 percent
of the population (ibid).
Tabel 1
And when we go into the more detail we have to see other
shocking facts, especially in the area of the-so-called essential
services. Most related services to the poor are seriously
neglected. The UNDP reported in 2002 that with two-thirds of the
population below the poverty line, people in developing countries
lacked access to the basic human needs -- 60 percent lacked basic
sanitation, 33 percent had no access to clean water, 20 percent
lacked access to health services and 25 percent lacked adequate
housing.
Tabel 2
The most basic needs, which include water, healthcare and
power (energy) -- among other services (education, banking,
tourism & waste management) are all crucial and lacking in most
cases here.
One: Water. No doubt, it is increasingly scarce. Fresh water
consumption is rising quickly, and the availability of water in
some regions is likely to become one of the most pressing issues
of the 21st century. One third of the world's people live in
countries that are already experiencing moderate to high water
shortages. That proportion could (at current population
forecasts) rise to half or more in the next 30 years unless
institutions change to ensure better conservation and allocation
of water. More than a billion people in low- and middle-income
countries -- and 50 million people in high-income countries --
lacked access to safe water for drinking, personal hygiene, and
domestic use in 1995. The number is not getting better until
recently.
In a city like Jakarta, the capital city of Indonesia, for
example, only 600,000 (i.e., less than 5 percent) of the city
population have access to water supplies from the official water
firm (PDAM). Moreover, around 70 percent of the population has to
meet their needs for water from low or deep wells and the rest
from river (The Jakarta Post, 14/9/02).
Yet, in this situation, the exploitation of usable water does
not seem to slow down, let alone stop -- it continues badly, in
all countries around the globe. In front of official institutions
like The World Bank, the danger sign applies only when the
exploitation is environmentally targeted. The Bank reports the
worst happened especially in countries where the natural
resources were desperately being exploited (The World Bank,
2002).
Tabel 3
But, although the Bank has noted that many "lacked access to
safe water", it forgets to address that now many more lack access
to affordable water since water exploitation also happens in
other forms: commodification -- of course propelled by such
policies like privatization -- which make the situation even
worse. Fortune magazine predicted that water would be to the 21st
century what oil was to the 20th. With annual revenues of the
water industry estimated at some US$400 billion, 40 percent of
the oil sector and one-third larger than the pharmaceutical
sector, water is becoming a very precious tradable commodity that
determines the wealth of nations. And the poor will be simply
marginalized -- if not forgotten -- by a lack of access to
affordable water. It might be noteworthy; in 2003 the price for
clean water provided by PDAM (which is set to privatized by then)
will increase around 20 percent to 29 percent from its current
price starting in January 2003.
Two: Health. Nowadays, more than 11 million young children die
every year (from 15 million in 1980), the risk of dying in
childbirth is one in 48 in developing world and HIV/AIDS, malaria
and other diseases have erased a generation of development gains.
Thus, the targets of healthcare provision worldwide, according to
the UN, are (1) reducing child mortality and under-five mortality
by two-thirds (2) improving maternal health and reducing maternal
mortality by three-quarters and (3) combating HIV/AIDS, malaria
and other diseases.
Yet, there is a contradictory fact: from 1975 to 1996, 1,223
new genres of medicines were developed, but only 13 genres were
intended to cure deprived people from major tropical diseases. In
1998, from the total budget of US$70 billion allocated for
research of the giant medicine corporations, only $300 million
(0.43 percent) was allocated for AIDS vaccine research and $100
million (0.14 percent) for malaria medicine research. The biggest
portion of the production cost was allocated to the research of
cosmetics, obesity and other "vanity" drugs. How can this be
explained?
The healthcare sector has suffered from the same illness of
water which has largely been privatized, but with other -- and
yet less provocative-terms, i.e., decentralization of healthcare
service. It means, under the GATS (General Agreements on Trade in
Services) which is aimed at increasing trade in services,
healthcare is considered a trade sector, not a public service --
thus with no goals to improve health or social equity. With
decentralization of healthcare, private health providers do not
aim to provide health care to society, but health products and
procedures to individuals.
As for Indonesia, the National Household Expenditure Survey
(Susenas) found that although illness rates rose during the
crisis, outpatient visits to health service providers fell by 23
percent (1998) and contacts with public facilities fell most
sharply, by 28 percent. Visits to private providers fell as well,
compared to the situation before the crisis. The decline in
utilization rates for public facilities was larger in rural areas
than in cities and seems to have extended a shift in visits from
public to private providers which was underway before the crisis
-- this reached 10 percent in 1997 (Saadah, et.al., 2000).
Meanwhile, recourse to self-care increased, with the share of
households receiving no medical treatment when sick highest
amongst the poor, i.e., those in the four lowest percentiles of
the expenditure distribution (The WB, 2000).
Three: Energy, or power sector. In spite of significant increases
in electrification in developing countries, over 50 percent of
the world's rural population still does not have access to
electricity. While on one hand energy is essential for
sustainable development, on the other hand the poor are
disproportionately affected by lack of access to safe, affordable
energy services.
Tabel 4
In Indonesia, while the fuel price will increase by 15 percent
in early 2003, the price for household electricity (up to 450VA)
will rise by 5 percent to 22 percent at the same time, and
electricity prices will increase once every three months from 2
percent to 20 percent each time. This is because the government,
in return for its bailout loans, is being asked to carry out IMF
structural adjustment reforms, and The World Bank has a policy of
gradually withdrawing subsidies from the power sector. What are
the arguments?
Energy subsidies, the bulk of which are directed to fossil
fuels in both industrial and developing countries, entail
economic efficiency losses. But they also have highly deleterious
effects on the environment, some reflected in higher economic
costs. Subsidies to fossil fuel and nuclear energy in
Organization for Economic Cooperation and Development (OECD)
countries totals $71 billion annually. The WB then simulates the
effects of removing the subsidies -- either for individual
countries or the world -- but all find significant environmental
benefits in reducing CO2 emissions. And most studies that look at
the economic effects also find real GDP gains (The World Bank,
2002).
Tabel 5
Yet, it seems something is forgotten, that to a great extent,
subsidies are currently still needed to help poor people in
developing countries, even though subsidies of fossil fuels
reduces the incentive to develop renewable energy sources. It is
true that while dismantling perverse subsidies may be good for
society, some groups will lose in the short term. For example,
the effects of removing energy subsidies in industrial countries
often can involve a significant loss of jobs.
The typical mode of service delivery, centralized public-
agency production, has had successes and failures. Thus, it has
to be improved. No doubt. However, in this era of globalization,
the pendulum seems to swing from one extreme to another. The
privatization of public services -- regardless of its names or
terms -- looks to have a single logic: establishing a global
public service market where public services are treated as
commodities, sold and traded freely. Of course, this is another
extreme.
Public services would be great if third world governments
could deliver to the people, instead privatization seems the best
way for it to get done, while corrupt, ineffective governments
fail. Thus, it should be funded, managed without corruption and
governed orderly -- this is the only direction in forthcoming
years for public services policies and management. If not, our
res-publica will surrender as it will only be owned and traded by
those in the res-privata.
The writer is also a lecturer at Sahid University at Surakarta
and a researcher at Uni Sosial Demokrat Jakarta.