The Netherlands Government have been advised from Lisbon that the
Japanese Minister in that capital [1] last week had a long
interview with the Portuguese Minister for Colonies [2], during
which the former offered improved shipping services between Japan
and Portuguese Timor provided facilities could be granted to Japan
for a share in mining and agricultural development in that colony.

Although it is not quite clear whether the Australian High
Commissioner in London has been aware of this proposal, the
information states that Mr. Bruce has been in touch with the
Portuguese Embassy in London and there has pointed out the danger
of this attempted Japanese penetration in Portuguese Timor. This
has not had the desired effect, apparently because the British
Government does not seem to be very much interested in the
question, which is regretted in Lisbon. The Portuguese Minister
for Colonies is strongly opposed to Japanese penetration in Timor,
but the Portuguese Prime Minister [3] seems to underrate the
danger. The former regrets the aloofness shown by the British
Government and the vagueness of the Netherlands proposals
regarding economic assistance.

(With regard to the latter point it may be mentioned that the
Netherlands Indies Government, after a full investigation into the
economic structure of Portuguese Timor, regretfully came to the
conclusion that there was very little scope for any assistance,
aiming at an immediate increase of the agricultural or mining
production or an improvement in the existing shipping connections
of that Colony.)
The Netherlands Government considers the foregoing information of
urgent importance and would like to obtain the Commonwealth
Government's views on the matter. [4]