27 Nov 2017

Controlling prostitution through legalization?

Phuong writes*

Here’s a fact: Vietnam, like other East Asian countries, does not like prostitution, which is regarded as a disgraceful, shameful occupation.

Here’s another fact: It is impossible to eradicate prostitution, and current statistics indicate that the sex industry in Vietnam is only increasing in size and types of harlotry employment.

As shall be detailed further, strengthening the police force is not an effective solution to tackle the issue, therefore, the country needs to look at more innovative, viable options. One of the options that have been suggested in prostitution studies and policies of many countries is to legalize and/or regulate the occupation. Such options have been proposed and rejected multiple times due to the government and society’s conservative nature; however, they have received media coverage and sporadic civil support [BBC Vietnam 2017]. These suggestions include the open of red light districts in the country’s economic capital Ho Chi Minh City (HCMC).

HCMC has the biggest number of prostitutes in the country, with over 29,000 service locations, and 10,000-15,000 sex workers [VNExpress 2014, ILO 2002]. According to the city’s AIDS Prevention Agency, 13% of AIDs cases come from streetwalkers and 9% from prostitutes at service locations [VNExpress 2014]. 5.2% of male sex customers in HCMC are infected with AIDS, significantly higher than the infection rate of total male clients nationwide at 1.7%. In an interview conducted by the National Institute of Labor Science and Social Affairs, nearly 50% of sex workers are found to be victims of violence during work [Thanh Nien News 2015]. It is estimated by the ILO (2002) that around 10% of sex workers in HCMC are children under 18. The city is also the center that links transnational human trafficking lines. High number of prostitutes is also said to damage woman’s status in the society and exacerbate gender equality issue [Europe Parliament 2014]

These are the negative externalities of the prostitution industry in the city. However, criminalizing prostitution cannot eradicate the sector as demand for prostitution is highly inelastic [Levitt & Venkatesh; Edlund & Korn 2002], and since an average prostitute’s salary exceed an average person's salary (8.6 million VND and 6.03 million VND respectively), prostitutes’ supply is also tenacious and sustainable. Additionally, law enforcement and police’s control and oversight over prostitution in the city is deeply inadequate; authority only possesses 180 profiles of sex workers out of thousands [Baomoi 2017]. The existing law only prohibits the direct harlotry activity but allows for alternative service locations such as salons and spas to flourish.

In addition to the inability to obliterate prostitution of the current police force, the proposal to establish red light districts in HCMC is worth exploring because of its economic gains and potential positive social effects. In comparison to other cities that also home prostitution businesses, the average monthly salary of a HCMC prostitute is higher than that of national average (12 million VND and 8 million VND respectively). Additionally, a billion-dollar industry of professional prostitution that involves models, actresses and singers are also operating in HCMC [Baomoi 2017]. Daily income of these high-class prostitutes and pimps are $3,500 and $1,500 respectively [Baomoi 2017]. However, comparing to Hanoi, Hai Phong or Can Tho, establishing a control red light district in HCMC seems to be the most plausible, since the city has the most competent and less corrupted police workforce. HCMC inhabitants are also known for their open and Western-prone mindset, which make the cost for social objection minor once the policy is introduced.

In contrast to its apparent economic gains, the impacts of red light district on society are seemingly positive but uncertain. As experts has pointed out, legalizing prostitution does not lead to a direct reduction in HIV/AIDS patients, but a strict management over prostitutes would [MOH 2016]. Current treatment for HIV/AIDS prostitutes has been insufficient and costly, which is mostly due to the high transaction cost of gathering infected sex workers [MOH 2016]. The legalization and management of prostitution can help reducing this transaction cost. The same logics can be applied to violence against sex workers, the frequency of which can only be reduced by an effective public security force. With a better supervision, domestic sexual exploitation of forced adult and child labor can be reduced; however, strengthening supervision may lead to a rise in transnational human trafficking. An effect on gender equality is also debatable, as the red light district can invite and encourage voluntary sex workers, which would only reduce female participation in formal economic sectors and exacerbate women’s status in society.

Bottom line: Despite the controversies around the idea, legalizing prostitution seems to be a more efficient solution to control the industry than criminalizing it.

* Please help my environmental economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)


Anonymous said...

Hey Phuong Anh, I think this is a very interesting topic.
I think an important issue to consider is the nature of demand for prostitution in HCMC. What will happen if the city starts to regulate the industry? Obviously, they will want to earn from this which is done by levying taxes, which will be on the expense of either the consumer or the producer (i.e. the sex workers/pimps) or both. I do not how elastic the demand for prostitution is, but I reckon the answer to this is may have serious implications to how well this regulation would pan out.

If inelastic, then there should be little problems meaning the costs can be put on the consumers and the producers will see no change in their income. However, if the consumers find that prostitution becomes too expensive, two things could happen: first, consumers will forego prostitution hence less is demanded; or second, producers will pay the tax instead which leaves the price for consumers relatively the same.

Both scenarios are not optimal for the industry, as they will lose out on income either way. What could be a consequence of this? Well, if they don’t like it prostitution may go underground anyways to avoid regulation/taxes. Of course, this is just speculation, but I cannot imagine that producers are happy with their market being regulated. How this pans out in practice I do not know, but it may be interesting nonetheless to explore this hypothetical.

Nguyễn Phương Anh said...

Hi Elliot, thank you for your question! Indeed, a potential increase in prostitution price can produce unexpected outcome. However, this can be easily addressed as:
1, Taxation in VN is relatively low
2, Legalizing and regulating prostitution reduces the industry's transaction cost of hiding from the police
3, I guess most of them want to come clean
Therefore, I think that legalizing prostitution can reduce a large amount of transaction cost and hence, balance out the new increase in price.

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