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Timor-Leste

Flag of Timor-Leste

Timor-Leste country brief

Overview

The Democratic Republic of Timor-Leste is situated on the island of Timor, approximately 700km northwest of Darwin. The capital of Timor-Leste is Dili.

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 partner in development. 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.

Political overview

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

The first democratic legislative elections were held on 30 August 2001 and over 91 per cent of Timor-Leste's eligible voters elected a Constituent Assembly. In March 2002, the Constituent Assembly approved Timor-Leste's Constitution (based on the Portuguese model).

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.

On 20 March 2017, Timor-Leste held presidential elections, which were won by Francisco Guterres Lu'Olo. The next presidential elections are due in 2022.

Timor-Leste's parliamentary elections were held on 12 May 2018. On 28 May 2018, the Timor-Leste Court of Appeal confirmed the Alliance for Change and Progress (AMP) had won an absolute majority with 34 seats in the 65-seat parliament. Of the opposition parties, Fretilin had won 23 seats, the Democratic Party (DP) won five, and the Democratic Development Front (FDD) won three. HE Jose Maria 'Taur Matan Ruak' Vasconcelos 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 the government. The new alliance comprises the Prime Minister's People's Liberation Party (8 seats) and the former opposition parties 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 President Lu'Olo on 29 May and 24 June 2020.

Economic overview

Timor-Leste aspires to become an upper middle-income country by 2030 and has set out its development agenda in their Strategic Development Plan 2011-2030.

Despite impressive progress since independence, the country's economic challenges are considerable. COVID-19 is causing further challenges and exacerbating existing vulnerabilities. Restrictions on domestic and international movement are disrupting agricultural markets, business activity and employment prospects, especially for women, in an already fragile economy. Reductions in income are constraining households’ ability to meet basic needs and access sufficient nutritious food. The COVID-19 outbreak in the first half of 2021 as well as damage from the Easter floods have further undermined Timor-Leste’s economic recovery,

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 downstream oil and gas processing, tourism and agriculture.

Remittances from labour mobility – including Australia - are the largest non-oil contributor to the economy. Prior to COVID-19 travel restrictions, one in five Timorese households was 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 live in rural areas and is heavily reliant on subsistence agriculture with little or no access to markets.

Finance and banking

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.

Legal and judicial issues

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 already 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.

Bilateral relations

The Australian people have a special affinity with Timor-Leste stretching back decades.

Security and defence cooperation

Australia was in the front-line of support for Timor-Leste's transition to independence and led the multinational INTERFET force 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 continue through the Australian Defence Cooperation Program and the Australian Federal Police's Timor-Leste Police Development Program.

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 manage the disruptions caused by COVID-19. We also provide support to the government to enable business and investment, including through regulatory reform, such as simplified business licencing laws.

In 2020, Timor-Leste commenced the process for accession to the World Trade Organisation (WTO) as a least developed country (LDC). Australia provides support for this process, including through our Governance for Development program.

People to people links

The people of Australia and Timor-Leste 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.

Development assistance

Australia is committed to being an effective, responsive and long-term partner.

Australia has been Timor-Leste’s primary partner in its COVID-19 response and recovery. We have drawn upon existing aid investments, while deploying new resources, to support the Timor-Leste Government’s response across several sectors.

Beyond the immediate health support, Australia is working in partnership with the Timor-Leste Government to deliver long-term human development outcomes, grow and diversify the economy and support the resilience of institutions and communities. Australia’s Timor-Leste COVID-19 Development Response Plan focuses on the vital areas of health security, stability and economic recovery.

More information on development assistance to Timor-Leste.

Labour mobility programs

Australia's Seasonal Worker Programme and Pacific Labour Scheme are 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.

Australia Awards

Through the Australia Awards initiative, Australia provides scholarships for Timorese students, researchers and professionals to study in Australia. The Awards are an important 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).

Volunteers

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.

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