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Monday, June 30, 2008

Penguatkuasaan dan kepatuhan terhadap peraturan

Dalam membantu pengguna dan pengeluar terutama mereka yang terlibat dengan aktiviti pertanian seperti nelayan dan petani, kerajaan telah membuat beberapa strategi seperti memberi subsidi dan penetapan harga maksimum bagi beberapa barang tertentu.

Berjayakah dasar kerajaan yang dibuat itu?

Kerapkali kita dengar beberapa penyelewengan telah berlaku terhadap dasar pemberian subsidi diesel misalnya.

Saya ingin membincangkan kenapa keadaan tersebut boleh berlaku dan pendekatan ekonomi yang boleh digunakan untuk mengatasi masalah tersebut.

Beberapa pengkaji sosial yang mengkaji tingkahlaku manusia telah mengkategorikan manusia kepada tiga kumpulan: Pertama, lima peratus individu yang akan melanggar peraturan tidak kira apa pun yang berlaku; Kedua, dua puluh peratus individu yang akan mematuhi peraturan tidak kira apa pun yang berlaku; dan Ketiga, tujuh puluh lima peratus individu yang akan mematuhi peraturan hanya jika pelanggar peraturan akan dikenakan tindakan, sekiranya tidak mereka sendiri akan turut terlibat melanggar peraturan.

Kita boleh menggunakan konsep pemaksimuman kepuasan untuk menerangkan tingkahlaku jenayah. Pada pandangan saya, individu boleh terlibat dengan jenayah sekiranya aktiviti haram tersebut memberi kepuasan (atau keuntungan) yang lebih tinggi berbanding dengan penglibatan dalam aktiviti yang sah.

Dua halangan kepada tingkahlaku jenayah adalah kebarangkalian ditangkap dan kadar denda yang akan dikenakan. Sekiranya individu yang melakukan jenayah menanggapi kebarangkalian yang tinggi untuk ditangkap dan dikenakan denda yang bersesuaian, semua aktiviti jenayah akan beransur kurang. Dari sudut ekonomi, penyertaan dalam aktiviti jenayah bergantung kepada jangkaan keuntungan dan jangkaan kerugian, tanggapan individu terhadap kemungkinan ia ditangkap dan didapati bersalah, dan sikap terhadap risiko. Tingkahlaku sedemikian dipanggil tingkahlaku rasional. Faktor yang dikenalpasti termasuklah kemungkinan untuk ditangkap, pendakwaan, dan hukuman ke atas ketidakpatuhan.

Sebagai contoh, ketika harga minyak diesel di pasaran adalah RM1.70 seliter, dan nelayan mendapat kemudahan membeli diesel RM1 seliter. Sekiranya ada pembeli dari Thailand ingin membeli pada harga RM1.50 seliter, tentulah kumpulan 75% individu yang mempunyai tingkahlaku rasional akan mempertimbangkan untuk mengambil kesempatan menjual minyak diesel subsidi secara haram. Jika satu hari dapat jual 10 ribu liter, bererti dah dapat keuntungan RM5 ribu. Jadi denda kepada mereka yang melakukan kesalahan sedemikian mestilah tidak kurang dari RM5 ribu sehari kesalahan dilakukan. Begitu juga mereka akan melihat juga kebarangkalian ditangkap. Sekiranya kebarangkalian ditangkap cuma 50%, bererti keuntungan dari aktiviti haram tersebut ialah RM10 ribu (dari pengiraan keuntungan dari aktiviti haram dibahagi dengan kebangkalian ditangkap). Untuk meningkatkan kebangkalian ditangkap, maksudnya perlu dipertingkatkan bilangan pegawai penguatkuasaan dan bilangan pemeriksaan. Penambahan pegawai penguatkuasaan dan bilangan pemeriksaan pula akan meningkatkan kos kepada kerajaan.

Persoalannya, adakah cara lain untuk meningkatkan kepatuhan mereka yang suka melanggar peraturan ini terhadap peraturan?

Walaupun Jabatan Perikanan mempunyai kuasa penuh menguruskan sumber perikanan, adalah menjadi amalan biasa Jabatan itu untuk berbincang dengan nelayan (melalui Persatuan Nelayan), pemilik bot, NGO, dan ahli politik menerusi dialog, perjumpaan dan bengkel sebelum polisi atau undang-undang baru diperkenalkan. Melalui Persatuan Nelayan, perjumpaan boleh dibuat antara wakil nelayan dan pegawai Jabatan Perikanan untuk membincangkan masalah nelayan. Maklumat dari Jabatan Perikanan menunjukkan konsep co-management tidak diistiharkan secara nyata di kawasan perikanan mana telah dijalankan dengan sepenuhnya. Walau bagaimanapun penglibatan nelayan dalam memberi maklumat berkaitan isu perikanan, perundingan dalam perlaksanaan peraturan perikanan, khidmat nasihat, dan tindakan bersama di antara Jabatan Perikanan dan nelayan dalam hal-hal berkaitan perikanan menunjukkan program co-management telah pun dijalankan di Malaysia dan berpotensi untuk diperkembangkan. Pendekatan ini akan meningkatkan moral para nelayan untuk mematuhi peraturan dan pengaruh sosial masyarakat nelayan boleh mempengaruhi nelayan untuk mematuhi peraturan perikanan yang ditetapkan.

Ini bermakna, untuk menjayakan sesuatu polisi, kita tidak boleh tertumpu kepada satu pendekatan sahaja, seperti penguatkuasaan peraturan, penggunaan kaedah baru yang menjimatkan dan memberi kesan yang positif perlu juga difikirkan dan dilaksanakan.

Sunday, June 29, 2008

Compliance Model 2

The main assumption in the economic analysis of criminal behavior is that the individual is a rational decision maker who considers the costs and benefits of participation in illegal activities. In the present context, people are assumed to subjectively weigh the potential gains and losses of committing a regulatory infraction. A fisherman’s decision of whether to comply with regulations or not is modeled as a function of: 1) the probability of getting caught violating fishery regulations, 2) severity of the penalty, 3) illegal gains, 4) a set of demographic and individual characteristics, 5) involvement with co-management activities, and 6) a set of normative (non-economic) factors such as moral, social control and legitimacy factors. By incorporating the details of the fishery laws with the regulatory, economic and normative (non-economic) factors, a more complete assessment of the decision of the people to violate the law can be developed.

An individual’s utility from illegal activity (rule violation) can be written as a function of the anticipated monetary return under violation YV, the subjective probability of detection p, and of incurring an expected monetary penalty F, if caught and penalized, with the standard form
U(V) = (1-p)U(Y) + pU(Y V – F) [1]

In many cases it may be assumed that in addition to the imposition of a fine , the value of the illegal income YV will be forfeited if an individual is caught. Note that YV is the income under violation and YNV is the income under no violation. Then:
U(NV)= U(YNV). [2]

Violation will occur if U(V) > U(NV) and that YV >YNV.

Time spent on non-compliance activity is assumed to contribute directly toward fisherman’s utility in term of generating higher income (YV). Income generated from illegal activity is used to consume goods that contribute to utility. However, subjective probability of detection p, and an expected monetary penalty F, if caught and penalized will also affect utility from non-compliance activity.

Within the standard economic framework of crime and punishment, the optimal remedy for non-compliance is

F* = (monetary return under violation)/(probability of detection)
=YV/p(r) [3]

where the optimal fine (F*) is (at least) equal to the financial gain of non-compliance (YV) divided by the probability of being detected and punished for the particular violation (p(r)). Whereas p(r) shows that the level of resources r determines the probability of detection. For some fixed expected financial gain (YV), the optimal fine will be declining when the probability of detection (p(r)) increasing.

Equation [3] shows that, to increase probability of detection, level of resources such as number of enforcement officers and equipments such as number of boats must be increase. At the same time optimal fine must be higher than illegal gain. However, as I mentioned earlier in my article’s “Compliance Model”, that in practice, the costs of enforcing fisheries regulations result in relatively low probabilities of detection, but penalties were not usually sufficiently high to produce a deterrent effect. Despite this, a high proportion of people complied with regulations. Other factors that can be included in explaining individual compliance behavior were variables such as “moral obligation” and “social influence”.

The individual’s expected utility from violation depends upon the expected monetary gain (Yi), the perceived probability of detection (pi), and the expected size of the penalty if caught (Fi). The violation decision by individual’s fisherman (Vi) related to the first three of these variables as mentioned in deterrence theory can be written as
Vi = f (Yi, pi, Fi, Xi) [4]

where Xi represents a vector of other variables including personal characteristics such as the individual’s experience, size of the boat, fishing areas and involvement with co-management activities.

We can now re-write the supply of violations [4] to include index variables for moral obligation , perceptions of legitimacy , and social influences . With this in mind we can write the individual’s supply of violations function as

Vi = f (Yi, pi, Fi, CO-Mi, Mi, Li, Si, Xi) [5]
for the initial form for estimation.

I will use this model in explaining why government intervention in a market economy has many challenges in my next articles.

Sunday, June 22, 2008

Compliance Model

The usual economic analysis of enforcement in any economic activities, assumes that people act in all circumstances as self-interested rational agents. Given a choice of alternative actions, firms will seek to maximize profits and individuals will seek to maximize their utility in monetary terms, and the illegality of an action is only reflected in its expected cost. The shortcoming of this assumption is that not all people may want to violate the regulation, even though it is financially profitable to do so. The role of moral and social norms, as well as instrumental factors such as social pressure, in shaping individual behavior is examined extensively in the sociology and social psychology literature. These factors, in addition to threats of sanctions, are recognized as important in determining individuals’ compliance decisions.

A large number of survey studies has been conducted to test the economic model of criminal behavior as originally formulated by Becker (1968). Jamal Ali (2005) used deterrence theory to conduct an econometric study of regulatory enforcement and compliance in the commercial fishermen in Peninsular Malaysia. He set five testable hypotheses, namely: (1) fishermen who were more income-dependent have a stronger conservation motive and were more likely to comply with conservation and management regulations; (2) fishermen with more years in the fishery were more likely to perceive and appreciate the long-term benefits of conservation and management measures, and were more likely to comply with regulations; (3) younger fishermen faced greater financial pressure and were more likely to violate regulations to realize short-term gains; (4) fishermen with relatives in the fishery have a greater interest in the long-term health of fishery and were less likely to violate regulations; and (5) frequent violators tend to remain in the fishery for short-term gains only.

The model used by the researcher assumed that violation rates were a function of probabilities of detection and conviction, level of economic gains from violation activity and variables reflecting people’s commitment to the fishery. In that study, he used both Positive Theory (Deterrence Theory) and Normative Theory (Social Influence and Cognitive Theory) to estimate a compliance model. He noted that, in practice, the costs of enforcing fisheries regulations was high, result in relatively low probabilities of detection, but penalties were not usually sufficiently high to produce a deterrent effect. Despite this, the author observed that a high proportion of people complied with regulations. This led him to look for other factors explaining individual compliance behavior. The researcher developed an extended model that, alongside monetary incentives, included variables such as “moral obligation” and “social influence”. In his model, moral obligation included variables related to moral norms, as well as the perceived legitimacy of the regulator and the regulations.

His study showed that income potential plays a major role in the compliance decisions of fishermen. When the difference in the catch per unit effort between the zones becomes more pronounced, the incentive for the fishermen to violate the zoning regulation increases. The researcher also found that moral development and social influences factors were statistically significant in explaining compliance behavior in the normative model.

Thursday, June 12, 2008

Factors that influences increase of the food prices

These days you hear a lot about the issue of food prices. Over the past few weeks the prices of rice, wheat and chickens meat have doubled or tripled.

How did this happen?

The answer is a combination of the impacts of emerging economies and bad policy. Let's start with the impacts of the growing number of people in emerging economies, i.e. China and India, who are, for the first time, rich enough to start eating more food like people in others developed country.

Increase in demand for food, means that production of foods by farmers in these emerging economies has to be increases. Increase in production, means increase in demand for oil. Modern farming is highly energy-intensive, a lot of energy goes into producing fertilizer, running tractors and, not least, transporting farm products to consumers. However, supply of oil is limited, especially after the invasion of Iraq which reduced oil supplies below what they would have been otherwise. The impact is that the price of oil increase.

With oil persistently above US$130 per barrel, energy costs have become a major factor driving up agricultural costs. Directly and indirectly, these rising economic powers of China and India are competing with the rest of us for scarce resources, including oil and other farm inputs, driving up prices for raw materials of all sorts.

Second, is the implementation of a bad policy. Like the Malaysia case, governments that have a policy like to control the market bear some responsibility for food shortages. I would like to discuss about chicken meat industry in Malaysia.

Besides taxing and subsidizing the production or sale of various goods, another way government can interfering the market is by controlling prices of certain goods and services. When government fixes the prices of a good or services, the free forces of market demand and supply no longer determine its price. The price is determined by government regulation.

At the equilibrium price, there will be no shortage or surplus. The equilibrium price, however, may not be the most desirable price. The government, therefore, may prefer to keep prices above or below the equilibrium price. If the government set a maximum price, this mean that the price is not allowed to rise above this level (although it is allowed to fall below it).

Government sets a maximum price to prevent the market price of product or services from rising above a certain level. This will normally be done for reasons of fairness. During inflation or festive seasons, the government may set maximum prices for basic goods so that poor people can afford to buy them. Maximum price is advantageous to the consumers because they can get the good at a lower price now. But is has some disadvantages. For example, the maximum prices reduce the quantity produced of an already scarce commodity. Artificially ceiling price of chicken is likely to reduce chicken supplies: if not immediately, then at the next harvest, because of less being produced by chicken growers/livestock farmers.

Some of the livestock farmers will left the industry if they find out that the ceiling price is much lower than the production cost. The cost of production can be escalated due to the global grain shortage, then increases the price of grain. We have experienced the situation like this in year 2000. When the government start to set a maximum price of chicken at RM5.40 per kg, many livestock farmers complained that the chicken price set by the government was too low. Many small livestock farmers left the industry. There are only 2,600 livestock farmers in year 2000, compare to 4,900 livestock farmers in 1994. Most of the livestock farmers that remain in the industry have their own grain factory, chick’s breeders and modern farming systems.

We should realized that cheap food, like cheap oil, may be a thing of the past.

Tuesday, June 10, 2008

Kesan Ekonomi Kenaikan harga minyak

Kenaikan 78 sen bagi petrol dan RM1 bagi diesel sejak Khamis lalu (5 Jun 2008) memang memeranjatkan rakyat Malaysia.

Semua sedia maklum kenaikan harga petrol kepada RM2.70 seliter dan diesel kepada RM2.58 seliter adalah yang tertinggi pernah diumumkan kerajaan, dan ia menimbulkan rasa tidak puas hati di kalangan orang ramai. Nilai wang dalam poket bertambah susut nilai untuk membeli barangan yang sama pada masa sebelum ini. Contoh terbaik ketika membayar harga minyak sekarang dengan wang RM50 kita mendapat 18.52 liter pada harga RM2.70 seliter. Bandingkan dengan harga RM1.92 seliter sebelum ini, kita mendapat 24.04 liter petrol. Sekiranya kenderaan kita menggunakan 100 liter minyak sebulan, bererti kini kita perlu membayar RM 270 sebulan, berbanding dengan RM 192 sebelum kenaikan harga minyak.

Peningkatan harga minyak yang tinggi tersebut akan memberi kesan kepada kenaikan harga barang, terutama harga barang makanan. Bahan makanan, sama ada dalam bentuk mentah, separa proses atau siap diproses perlu diangkut dari tempat pengeluaran atau pemprosesan kepada tempat pemasaran. Kenaikan kos pengangkutan dan kos pemprosesan tentunya akan dipindahkan kepada pengguna dengan menaikkan harga barang akhir barang yang diangkut. Memang kerajaan boleh campurtangan dengan mengumumkan dasar kawalan harga barangan, tetapi dari segi ekonomi, dasar campurtangan tersebut akan membawa kepada herotan ekonomi dan memberi lebih banyak keburukan dari kebaikan.

Orang ramai masih gemar memandu kenderaan sendiri daripada menggunakan pengangkutan awam. Ini antara sebab utama penggunaan bahan api terus meningkat. Walau bagaimanapun kita tidak boleh menyalahkan pengguna atas pilihan tersebut. Jika diteliti, mutu perkhidmatan awam baik bas, teksi dan kemudahan LRT dan komuter dilihat masih kurang memenuhi kehendak dan permintaan rakyat. Kita tidak boleh membandingkan dengan Singapura sekiranya ingin menggalakkan pengguna menggunakan pengangkutan awam. Sistem pengangkutan awam di Singapura adalah cekap dan lengkap.

Beberapa strategi untuk mengurangkan kesan kenaikan harga barang makanan telah dicadangkan, di antaranya kempen menanam sendiri tanaman seperti cili, sawi dan terong dirumah. Maksudnya, bermulalah Kempen Bumi Hijau, merancang pembelian, membeli barang keperluan sahaja, membudayakan sifat berjimat cermat, meminimumkan penggunaan kad kredit, di samping membentuk imej pengguna bijaksana. Kerajaan juga mengeluaran arahan supaya Agensi-agensi Kerajaan berjimat dan mengurangkan perbelanjaan tidak perlu seperti pengubahsuaian penjabat dan pengujudan jawatan baru. Tentulah timbul semula kewajaran program Angkasawan yang menelan belanja RM39 juta. Rakyat tentu ingin melihat bagaimana penjimatan RM13.7 bilion dari pengurangan subsidi minyak kepada 30 sen seliter sahaja itu dibelanjakan. Tentulah sistem pengangkutan awam perlu dipertingkatkan kualitinya jika strategi menggalakkan orang ramai menggunakan perkhidmatan awam hendak dilakukan.

Penelitian juga perlu dibuat terhadap keberkesanan subsidi kepada pengangkutan awam seperti bas dan lori. Sebenarnya apabila berlaku kelemahan di atas sistem yang ada, maka pihak yang ingin mengambil kesempatan akan menggunakan kelemahan yang ada untuk mengaut keuntungan. Lihat sahaja kepada kelemahan sistem subsidi diesel kepada nelayan. Terdapat sebilangan kecil nelayan yang menggunakan kesempatan tersebut untuk menjual diesel subsidi dan bukannya menangkap lebih banyak ikan.

Monday, June 9, 2008