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DEVELOPMENT-EAST TIMOR: ‘Big’ Projects To Make Up Oil Losses

Matt Crook

DILLI, May 8 2009 (IPS) - With an eye on tourist dollars, the government of East Timor has given the go-ahead to two major developments, including a shopping mall complete with stores, restaurants and the impoverished island nation’s first escalator.

Jape Group Australia, owned by a Chinese-Timorese family with holdings in Dili and Darwin, has begun work on Timor Plaza, a 30 million dollar project spread over five hectares of land near Comoro bridge.

On the edge of the city at Tasi Tolu, a Singaporean developer is poised to transform 118 hectares of government-owned land into a luxury resort with all trimmings, including a 400-room hotel, a 27-hole golf course and a business park – and funding from a private investor.

East Timor was illegally occupied by Indonesia for 24 years until 1999. Much of the country’s infrastructure was laid to waste in 1999 by the departing Indonesian military and its militias. The country became independent in 2002 but ranks 158th in the Human Development Index, indicating “low” development.

High population growth of 3.5 percent and the prevalence of subsistence farming have presented challenges to the government. Its main source of money is from oil, which accounts for about 95 percent of East Timor’s wealth and the country has banked about 4 billion dollars, according to the Banking & Payments Authority report, Dec. 31, 2008

East Timor still requires substantial foreign support. International donors gathered in Dili from Apr. 2 to 4 to discuss plans for security and development in the country at the second Timor-Leste Development Partners’ Meeting (TLDPM) since the 2006 crisis.

Organised by the government, the TLDPM seeks to bridge the gap between the activities of the government and those of development partners, such as the United Nations and the World Bank, to achieve East Timor’s National Priorities for the coming year.

This year’s TLDPM addressed the question of how much money should be spent on urgent development needs in the wake of already-rising expenditure and falling global oil prices.

An International Monetary Fund (IMF) statement to the TLDPM read by Resident Representative in Timor-Leste Tobias Rasmussen highlighted the government’s economic policy to save and invest a significant portion of oil money in the country’s Petroleum Fund, but warned that future government spending will have to be tightly controlled.

“It is important to recognise, however, that oil resources have a finite life while raising living standards is a very long-term endeavour,” he said.

“Unless private business expands, it will not be possible to generate the jobs demanded by a rapidly growing population and there will be little to fall back on when oil runs out,” he added.

At the end of the meeting, Abraham Joseph, senior socio-economic affairs adviser for the U.N. Mission in Timor-Leste, described as “significant” the government’s pledge to present a medium-term development strategy – crucial for prioritising development investments – in the coming months.

The TLDPM also provided a forum for the official launch of the government’s National Priorities for 2009. Food security, rural development, human resource development, social services, security, good governance and justice are high on the agenda for Xanana Gusmao’s Parliamentary Majority Alliance coalition government.

This year’s top priorities are food security and rural development. The government has so far announced plans for subsidising rice imports, stimulating agricultural production and supporting vulnerable groups.

A strong focus for 2009 will be the development of rural areas by improving economic and social infrastructure to enhance non-petroleum income-generating activities.

East Timor has to find ways to earn money and lure investors, especially with the global decline in oil prices. According to the National Petroleum Authority’s monthly statistics, the total net FTP and profit oil received for September 2008 was about 186 million dollars compared with just 97 million dollars in March this year.

Asked if developments such as the luxury resort and mall could attract foreign investment and decrease East Timor’s reliance on oil money, Ian Storey of the Singapore-based Institute of Southeast Asian Studies said in an email interview with IPS: “Both of these projects are a vote of confidence in East Timor’s future and a reflection of the political stability that has been in place since February 2008.”

“These projects are not surprising given that the government is keen to promote tourism in the country. However, clearly both the mall and the hotel will cater to foreigners as the majority of East Timorese still live below the poverty line,” he added.

Tony Jape, general manager of Jape Group Australia, is optimistic. “Timor has progressed well even though it’s been a short time since independence. The first government put down the infrastructure, the framework, and the second government is taking it on very well. That’s what gives us the confidence that the government can see that progress is good,” he said.