East Timor - Country brief
Introduction
East Timor's population of over 1 million is one of the fastest growing in the world at around 4 per cent per annum. The official languages are Tetum and Portuguese, while English and Indonesian are working languages. Approximately 95 per cent of East Timorese are Catholic.
Australia and East Timor have a very close relationship, based on proximity and close people-to-people links. Australia has been in the front-line of support for East Timor's transition to independence, and continues to play a very important role, including through the provision of extensive development and security assistance.
Political Overview
The Democratic Republic of East Timor (Timor-Leste) achieved formal independence on 20 May 2002. East Timor's independence resulted from the August 1999 UN-sponsored national referendum in East Timor, in which 78.5 per cent of the population voted for independence. The United Nations Transitional Administration in East Timor (UNTAET) was established after the widespread violence and destruction that followed the independence vote, and governed East Timor until independence.
The first democratic legislative elections were held two years later on 30 August 2001. Over 91 per cent of East Timor's eligible voters elected a Constituent Assembly. In March 2002, the Constituent Assembly then passed East Timor's Constitution, based on the Portuguese model, with a unicameral system of parliament, a prime minister with executive power and a president as Head of State.
| Legislative Elections | Presidential Elections | |
| Last Held | 30 June 2007 | 9 May 2007 |
| Key Results | Fretilin (29.01%)
National Congress for the Reconstruction of Timor (CNRT) (24.1%) Coalition of the East Timorese Social Democratic Association and the Social Democratic Party (ASDT/PSD) (15.75%) Democratic Party (PD) (11.31%) Association of Timorese Heroes (KOTA) and the People's Party of Timor (PPT) (3.2%) National Unity of Timorese Resistance (UNDERTIM) (3.19%) |
Dr Jose Ramos-Horta (69%) Francisco Guterres – Lu'Olo (31%) |
| Term Duration | Five years | Five years |
| Next Elections | 30 June 2012 | 9 April 2012 |
Dr Jose Ramos-Horta replaced Xanana Gusmão as President on 20 May 2007, following his success in presidential elections. Following the 30 June 2007 parliamentary elections, former president Xanana Gusmão was appointed as Prime Minister and sworn in with his new cabinet on 8 August 2007. Prime Minister Gusmão leads a coalition government called the Alliance of the Parliamentary Majority, comprising CNRT, ASDT/PSD, PD and UNDERTIM (see chart above). Fernando d'Araujo (“Lasama”) of the Democratic Party is President of the Parliament (Speaker). Fretilin, which was unable to form a coalition with a parliamentary majority, is in opposition.
Five hundred observers from 15 countries, including Australia, and international organisations observed the presidential and parliamentary elections in April, May and June 2007, and overwhelmingly characterised them as peaceful, fair and democratic.
On 11 February 2008, President Ramos-Horta was shot and severely wounded in an attack led by rebel Alfredo Reinado (who was allegedly involved in the unrest of April/May 2006 and who had escaped from jail on 30 August 2006). A short time later a convoy including Prime Minister Gusmão was fired upon. The Prime Minister was uninjured. Responding to the attacks, the East Timorese Government declared a “state of siege”, the conditions of which included a curfew and restrictions on public gatherings. A combined East Timorese army and police force led operations to apprehend those responsible for the attacks. President Ramos-Horta returned to East Timor on 17 April 2008, after receiving medical treatment in Australia. The “state of siege” ended in May 2008, following the surrender of rebel leader Gastao Salsinha and most of his followers.
The role of the United Nations
UNTAET's mandate expired with East Timor's independence on 20 May 2002. The UN Mission of Support in East Timor (UNMISET) was then established to provide assistance to the new East Timorese Government in the areas of public administration, law and order and external security. The UN Security Council agreed in November 2004 to extend UNMISET's mandate until 20 May 2005.
The United Nations Office in Timor-Leste (UNOTIL) succeeded UNMISET on 20 May 2005. UNOTIL was a special political mission established to carry out peace-building activities and to support the capacity development of critical state institutions including the National Police (PNTL) in order to strengthen democratic governance and to help build peace in East Timor. Following the unrest in April/May 2006, UNOTIL's mandate was extended until 20 August 2006.
UNOTIL was replaced by the current UN Integrated Mission to Timor-Leste (UNMIT), which has focussed on policing functions and police training, political and community reconciliation, assistance for the elections and humanitarian relief services. On 26 February 2009, the UN Security Council adopted resolution 1867 (2009) which extends UNMIT's mandate until 26 February 2010. Australia is contributing to UNMIT, especially through the provision of police personnel.
Australia leads the International Stabilisation Force (ISF) that was asked by the East Timorese leadership to help restore stability following the unrest experienced in April/May 2006. The ISF operates independently from, but in support of, UNMIT.
East Timor became the 191st United Nations member state on 27 September 2002. East Timor is also member of the World Bank, International Monetary Fund (IMF) and the Non-Aligned Movement (NAM). It has expressed interest in membership of ASEAN and is a member of the ASEAN Regional Forum.
Economic Overview
East Timor is one of the poorest countries in the Asia-Pacific region. It was ranked 158 out of 179 countries in the 2008 UN Human Development Indicies, and fares poorly on key indicators such as life expectancy, literacy and GDP per capita.
While it has made significant progress in building an institutional framework to support economic development and promote macroeconomic stability, East Timor's economic performance since independence has been fragile. Growth contracted following the reduced international presence after 2002, before increasing in 2004 (0.3 per cent) and 2005 (2.3 per cent). The economy contracted sharply again in 2006 (-3.4 per cent) following the violence of that year. With UNMIT's establishment and the return of a significant number of international personnel, East Timor's economic growth rate increased sharply in 2007 (19.8 per cent). In 2008, IMF forecast 2.5 per cent growth with 4 per cent inflation.
The nation continues to face a range of long-term development challenges that will impact on the achievement of broad-based economic growth including labour force incapacity, weak public governance and inadequate infrastructure. Political instability has undermined Government efforts to promote private sector investment as a basis for long-term development. East Timor ranked 170 of 181 in the World Bank's 2009 Doing Business report. East Timor's economic challenges are compounded by profound infrastructure deficits, notably in the areas of transportation, telecommunication and electricity.
East Timor's National Development Plan identifies governance, poverty reduction and improved food security as development priorities. Objectives include reaching an annual GDP growth rate of 5 per cent in the medium term and the 50 per cent reduction of the number of people living below the poverty line by 2015. Other development priorities include strengthening the judiciary and other institutions; creating an enabling environment for civil society and business; reducing unemployment and providing skills training and education. Continued reform of the power sector and improvement of infrastructure will also be important.
Despite these challenges, East Timor is set to benefit from the commercial exploitation of its petroleum reserves. East Timor's economy is one of the most heavily petroleum-dependent in the world. The Government of East Timor is seeking to use its oil revenues in support of long-term economic development, economic diversification and poverty reduction. East Timor has established an internationally-acclaimed Petroleum Fund to manage its petroleum revenues transparently and sustainably. As at 31 December 2008 the fund had accumulated savings of around US$4.2 billion.
Trade
In 2007-08, East Timor ranked as Australia's 91st largest goods trading partner, with total merchandise trade valued at $37 million. Australian exports to East Timor were valued at $33 million with major items including refined petroleum and motor vehicles. Imports were valued at $4 million, with coffee a major import. In July 2003, Australia extended preferential duty free access and quota-free access to the Australian market for goods of East Timorese origin.
East Timor has a steadily improving trade balance, reflecting the contribution of petroleum development. Excluding hydrocarbons, coffee accounts for around 90 per cent of merchandise exports, and this could increase as world coffee prices rebound.
Labour Market
East Timor suffers from a significant unemployment problem which is an important factor contributing to political instability. In Dili, home to about a quarter of the labour force, unemployment is estimated at 23 per cent overall, and 40 per cent among those aged 15 to 29. This unemployment data, however, should be interpreted with caution given the difficulties in measuring unemployment in a largely subsistence economy.
Agriculture
Agriculture dominates the East Timorese economy, accounting for over 30 per cent of GDP and approximately 70 per cent of employment. Insufficient food production (from an average landholding of 1.2 hectares) and an underdeveloped local market have led to a dependency on imports. Transforming subsistence farming, which dominates the agriculture sector, into an export-oriented industry, is a challenge. Key crops such as coffee and vanilla, and potentially candlenut and palm oil, will be targeted for increased capital investment.
Finance and Banking
The USD was adopted as the official currency in January 2000. Timorese coins in denominations of 1, 5, 10, 25 and 50 centavos were introduced in November 2003 to enable small denomination transactions and partially assist with monetisation of the economy.
Legal and Judicial Issues
Although a broad range of legislation has been promulgated, further strengthening of legal and judicial frameworks will be key to promoting economic development and effective governance in East Timor. Delays in the passage of legislation have been caused by a backlog of legislation and a shortage of skilled personnel. East Timor's legal and judiciary systems are also complicated by language issues. Indonesian law was made the subsidiary law in November 2003 however this has only partially resolved the complexity of the legislative environment.
Key commercial legislation that has already been passed by Parliament includes company law, commercial registry and tax legislation providing further incentives to investors. These are based on civil as opposed to common law. The promulgation of land ownership, investment, bankruptcy, banking and insurance laws is a priority. The Government of East Timor is also developing additional private sector enabling legislation, designed to establish an open, attractive and competitive environment for investment. Central to this aim has been the establishment of an Investment and Export Promotion Agency.
Although several foreigners have previously purchased land in East Timor, the East Timorese Constitution does not recognise foreign land ownership. There are also plans to develop legislation that will recognise traditional land ownership and protect women's rights to traditional land claims.
Bilateral relationship
The Australian people have a special affinity with East Timor stretching back many decades. Australia has been in the front-line of support for East Timor's transition to independence, including our role in the first UN monitoring mission, UNAMET. This culminated in a national referendum which in turn resulted in independence. Australia led the multinational INTERFET force which restored security in East Timor following the 1999 post-ballot violence, and played a leading role in UNMISET. Australia leads the ISF which deployed to East Timor at the request of the East Timorese leadership to help restore stability following the unrest of April/May 2006. The ISF remains in East Timor in support of UNMIT, with the full support of the East Timorese Government and United Nations. Following the events of 11 February 2008, the Australian Government, at the request of the East Timorese Government, deployed approximately 200 additional soldiers and 70 police under the ISF. These additional forces have now been withdrawn.
Australia and East Timor signed a Memorandum of Understanding (MOU) on Cooperation to Combat International Terrorism in August 2003, and two MOUs on combating illegal immigration and people smuggling in February 2002. Australia and East Timor also signed an MOU in October 2006 on security arrangements within the Joint Petroleum Development Area (JPDA).
Reflective of the strength of the bilateral relationship, there have been numerous high-level visits between Australia and East Timor. Prime Minister Rudd and Foreign Minister Smith visited East Timor on 14 December 2007 as part of their first overseas visit. Mr Rudd visited East Timor again on 15 February 2008 to express solidarity following the 11 February 2008 attacks. East Timor's Foreign Minister, Zacarias da Costa, paid official visits to Australia from in February 2008 and February 2009. Prime Minister Xanana Gusmão, accompanied by a range of ministers, secretaries of state and East Timor's Chief of the Defence Force, visited Australia as guest of the Government between 24-28 August 2008.
At a joint news conference on 25 August 2008 Prime Ministers Rudd and Gusmão announced a joint education, training and employment initiative that will review existing cooperation and make specific recommendations, with a focus on needs in East Timor's public sector so it can better support East Timor's development. The review will also consider possible access for East Timorese workers to Australia's seasonal labour market. Prime Minister Rudd also announced a range of additional initiatives, including: an increase in the number of Australian Development Scholarships available to East Timorese students from 2009; a scoping study for an English language training centre in East Timor; an additional $1.3 million to support the World Food Program's mother and child nutrition program; and an additional $2.5 million for the "seeds of life" joint rural development program to improve agricultural productivity.
Development Assistance
As a close neighbour, Australia is strongly committed to East Timor's development priorities and provides support to assist the Government of East Timor to achieve stability and greater prosperity.
Although East Timor is one of the poorest countries in the Asia-Pacific region, it has made considerable progress since independence, including through implementation of a National Development Plan. But considerable challenges remain, including in public sector administration, law and justice, and governance, which are compounded by a low skills base, high population growth and limited prospects to generate jobs. The challenges facing East Timor are complex and will require substantial assistance by the international community, including Australia, for some time to come.
AusAID's development assistance budget to East Timor in 2006-07 was $43.6 million. Due to the unrest in April/May 2006 and the subsequent humanitarian crisis, Australia's spending on Official Development Assistance increased to an estimated $74.8 million. Australia's Official Development Assistance budget for East Timor in 2008-09 is $96.34 million.
Australia is assisting East Timor to build appropriate institutions and policies for the efficient use of its petroleum revenues. Australia supports effective and accountable planning, budgeting and expenditure management (including at the district level), and work to improve broader public sector management.
Australia continues to support improvement in the delivery of basic services in East Timor. This includes assistance for: strengthened rural water supply and sanitation, with an emphasis on environmental health; strengthened health systems and improvement in maternal and child health; expansion of vocational education, training and job opportunities for youth, particularly in rural areas; and improved food security.
Australia has also been working with the East Timorese Government to assist the development of East Timor's security forces. Australia is assisting East Timor's National Police Force which is managed by the Australian Federal Police. Australia will also assist the justice sector and support accountability and oversight mechanisms including the Parliament and the nation's electoral system.
Australia is also a lead donor in the development of the East Timorese Defence Force. Our Defence Cooperation Program focuses on capacity building through in-country training and professional advice. On his 15 February 2008 visit, Prime Minister Rudd foreshadowed additional support for East Timor's security sector to support long-term reform.
Travel
Australians planning on visiting East Timor should consult the Department of Foreign Affairs and Trade's Travel Advisory before departure.