Australia and Timor-Leste are close neighbours, with a shared history and strong people-to-people links. Australia has been at the forefront of international support for Timor-Leste since its independence in 2002 (diplomatic relations formally commenced on 20 May 2002), and remains Timor-Leste's largest development and security partner. Many Australians are actively engaged with Timor-Leste through Australian state, territory and local governments, non-government organisations, the private sector, learning institutions and friendship groups.

Timor-Leste has a population of around 1.3 million. The official languages of Timor-Leste are Tetum and Portuguese, while English and Indonesian are working languages. Approximately 95 per cent of Timorese are Catholic.

Bilateral relations

A strong and prosperous Timor-Leste is of fundamental importance to Australia. As close neighbours and friends, Australia and Timor-Leste have a deep and enduring bilateral partnership. Our relationship builds on Australia’s support for Timor-Leste's development, strong security and defence ties and close people-to-people links and is managed through high-level engagement.

Australia is fully committed to supporting the independence, sovereignty and economic sustainability of Timor-Leste. We are Timor-Leste's leading development assistance partner (estimated $105.7 million in total ODA in 2022-23) and we support Timor-Leste's objective of economic diversification and private sector growth through our development cooperation and labour mobility schemes.

Australia has provided comprehensive support to Timor-Leste's COVID-19 response and economic recovery. We have drawn upon existing partnerships and investments, while deploying new resources, to support Timor-Leste's response across a range of sectors.

Australia provides support to Timor-Leste's armed forces and national police. We also cooperate closely on regional security issues, including maritime security, border security and transnational crime.

The bilateral relationship is also maintained through regular, high-level engagement by Australian and Timorese ministers, Members of Parliament and officials. Recent high-level engagement includes:

• a visit to Australia by President José Ramos-Horta from 6-11 September 2022, during which a reciprocal Defence Cooperation Agreement (DCA) was signed by the Defence Ministers of both countries
• a visit to Dili by Foreign Minister Wong from 31 August – 1 September 2022, during which the Minister announced an additional $20 million in budget support for Timor-Leste
• a visit by the Governor-General HE General the Honourable David Hurley AC DSC (retired) to Dili on 19 and 20 May to attend the inauguration of President José Ramos-Horta
• a call between Prime Minister Albanese and Prime Minister Taur Matan Ruak on 5 June
• a visit to Australia by Foreign Minister Magno from 9-16 February 2022, including a meeting with then Foreign Minister Payne at which they signed the first bilateral Memorandum of Understanding (MOU) under the Pacific Australia Labour Mobility (PALM) scheme
• a virtual meeting between then Prime Minister Morrison and Prime Minister Taur Matan Ruak on 17 February 2022 at which they agreed a Joint Statement.

Political overview

Timor-Leste achieved independence on 20 May 2002. Timor-Leste's independence resulted from a UN-sponsored referendum in August 1999.

Timor-Leste's head of state is a directly elected President with limited executive power. The Prime Minister is the head of government and is formally appointed by the President. Usually, the Prime Minister will be the leader of the political party that can form a majority or majority coalition in the unicameral national parliament.

Timor-Leste held a two-stage presidential election in March and April 2022. Dr José Ramos-Horta defeated the incumbent president, Francisco Guterres Lu’Olo, in the second ballot on 19 April and was sworn in as President on 19 May 2022.

Timor-Leste's most recent parliamentary election was held on 12 May 2018. The Alliance for Change and Progress (AMP) won a majority with 34 seats in the 65-seat parliament. Of the opposition parties, Fretilin won 23 seats, the Democratic Party (DP) won five, and the Democratic Development Front (FDD) won three. HE Taur Matan Ruak was elected Prime Minister of Timor-Leste.

The membership of the governing coalition changed in 2020. The National Congress for Timorese Reconstruction (CNRT – 21 seats) withdrew from AMP and a new alliance formed to support a restructured government. The new alliance comprises the Prime Minister's People's Liberation Party (8 seats), Fretilin and the Noble Advancement of Timorese National Unity (known by its Tetum acronym KHUNTO - 5 seats). The Government has the support of 36 members of the parliament. New ministers were sworn in by then President Lu'Olo on 29 May and 24 June 2020.

Trade and investment

In 2019-20, two-way merchandise trade between Australia and Timor-Leste was worth $73 million. Australian exports to Timor-Leste totalled $71.8 million with major items including civil engineering equipment, aircraft and related parts. Imports from Timor-Leste totalled $1.3 million, the majority of which was coffee. The country fact sheet contains more details about Australia's trade and investment relationship with Timor-Leste.

Australia is working with the Timor-Leste Government to develop the private sector and support economic recovery from the impact of COVID-19. We also provide support to enable business and investment, including through regulatory reform, such as simplified business licencing laws.

Despite impressive progress since independence, the country's economic challenges are considerable. COVID-19 outbreaks in 2021 and early 2022, as well as restrictions on domestic and international movements to prevent the spread of the pandemic, created additional challenges and exacerbated existing economic vulnerabilities.

Timor-Leste continues to be one of the most oil-dependent countries in the world with around 85 per cent of government expenditure each year financed by transfers from Timor-Leste's Petroleum Fund. The government is seeking to diversify the economy by promoting investment in tourism and agriculture.

Remittances from Timorese workers overseas – including those in Australia under the Pacific Australia Labour Mobility scheme - are the largest non-oil contributor to the economy. Prior to COVID-19 travel restrictions, one in five Timorese households were receiving payments from overseas.

With the highest rate of poverty in Southeast Asia, Timor-Leste is one of three countries in the Indo-Pacific rated as 'severely off-track' to meet the Sustainable Development Goals (SDGs). Most of Timor-Leste's population lives in rural areas and is heavily reliant on subsistence agriculture, with limited access to markets.

The US dollar 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.

Timor-Leste's legal system is based on civil law. 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 Timor-Leste. Important commercial legislation that has been passed by Parliament includes an investment law, commercial registry and tax legislation.

The Timorese Constitution does not permit foreign land ownership, although leases and joint venture arrangements are possible.

Security and defence cooperation

Australia was in the front-line of support for Timor-Leste's transition to independence and led the multinational International Force East Timor (INTERFET) which restored security in Timor-Leste following the 1999 post-independence ballot violence.

Australia also led the 2006-2013 International Stabilisation Force (ISF), comprised of Australian and New Zealand Defence Force members. The ISF provided security back-up to the UN Integrated Mission in Timor-Leste (UNMIT) and remained in Timor-Leste at the invitation of the Timorese Government.

Australia's defence and police engagement with Timor-Leste continues through the Australian Defence Cooperation Program and the Australian Federal Police's Timor-Leste Police Development Program.

On 7 September 2022, Australia and Timor-Leste signed a reciprocal Defence Cooperation Agreement (DCA). The DCA will allow Australia and Timor-Leste to increase defence and security cooperation, especially in the maritime domain, given our shared border and adjacent maritime zones. Australia has undertaken to provide Timor-Leste with two Guardian class patrol boats in 2023/24, and to support their ongoing operations and maintenance.

People connections

Australia's people-to-people links with Timor-Leste are strong, founded on decades of engagement with one of our closest neighbours. We share deep personal connections forged through shared experiences during the Second World War, the Timorese journey to independence, and the growth of the Timorese diaspora in Australia. Many Australians remain actively connected to Timor-Leste, including through the Australia-Timor-Leste friendship group network, and community and church groups.

Through the Australia Awards, Australia provides scholarships for Timorese students, researchers and professionals to study in Australia. The Awards are a part of the aid program in Timor-Leste and aim to develop capacity and leadership skills so that individuals can contribute to development in Timor-Leste and develop personal connections with Australia. Timorese nationals are eligible for long-term Awards (Australia Awards Scholarships and the Australia Awards Leadership Program) and short-term Awards (Australia Awards Fellowships).

The Australian Volunteers Program promotes economic growth and poverty reduction in the Indo-Pacific region by assisting host organisations to deliver effective and sustainable development outcomes. Prior to COVID-19 travel restrictions, Timor-Leste received around 60 Australian Volunteers each year. Australian volunteers work in a wide range of sectors and contribute to Timor-Leste's development as well as build enduring people-to-people links between the two countries.

Development assistance

Australia is committed to being an effective, responsive and long-term partner. Australia was Timor-Leste’s primary partner in its immediate COVID-19 response and continues to support its economic recovery. We have drawn upon existing partnerships and investments, while deploying new resources, to support Timor-Leste’s COVID response across several sectors.

Australia is also working in partnership with the Timor-Leste Government to deliver long-term human development outcomes, grow and diversify the economy and to support the resilience of institutions and communities. For more information visit the Development assistance to Timor-Leste page.

The Pacific Australia Labour Mobility (PALM) scheme is helping to address labour shortages in rural and regional Australia and providing additional opportunities for workers from Timor-Leste to earn income and develop skills. In mid-2022, there were more than 2,000 Timorese workers in Australia under the PALM scheme and since 2012 more than 7,000 Timorese workers have been employed in Australia.

Membership of international organisations

In 2011, Timor-Leste applied for membership of the Association of Southeast Asian Nations (ASEAN). In July 2022, the ASEAN Secretariat completed the last of three factfinding missions to Timor-Leste aimed at assessing the country’s preparedness for ASEAN accession.

In 2020, Timor-Leste has also commenced the process for acceding to the World Trade Organisation (WTO) as a least developed country (LDC). Australia has reached a bilateral agreement with Timor-Leste in 2022, as part of this accession process.

In February 2022, Australia announced an additional $6.6 million in funding to support Timor-Leste’s ASEAN and WTO accessions.