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Timor-Leste

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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, and remains Timor-Leste's largest partner in development and security. 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 1.2 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.

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 a clear development agenda through its Strategic Development Plan 2011-2030.

Despite impressive progress since independence, the country's economic challenges are considerable. Timor-Leste remains 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 key challenges facing Timor-Leste's economy are the diversification of activity from public to private, and from petroleum into other sectors, while maintaining a sustainable fiscal position and improving services.

Doing business remains a challenge, with Timor-Leste placed 178 out of 190 in the World Bank's 2019 ease of doing business rankings.

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 2018-19, two-way merchandise trade between Australia and Timor-Leste was worth $19.9 million. Australian exports to Timor-Leste totalled $17.5 million with major items including passenger motor vehicles and prams, toys, games and sporting goods. Imports from Timor-Leste totalled $2.4 million, with nearly half consisting of coffee. The country fact sheet contains more details about Australia's trade and investment relationship with Timor-Leste.

There is room for growth in two-way merchandise trade, and the Australian Embassy in Dili has targeted initiatives in place to support Australian businesses to take advantage of investment opportunities in Timor-Leste. Australian businesses have found opportunities in construction, logistics, business and financial services, vocational training, consulting, tourism and security. Timor-Leste has had preferential duty free access and quota free access to the Australian market since July 2003.

Australian development programs are contributing to the growth of a non-oil private sector in Timor-Leste, including through investments in health and education, governance and strengthening the business environment. More information is available on the development assistance page. Timor-Leste is the third largest participant in Australia's Seasonal Workers Program, and remittances are an increasingly significant contributor to Timor-Leste's economy.

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 works with the Government and people of Timor-Leste to support their priorities and their programs. Our development assistance program has two broad objectives:

  • improved livelihoods and economic development; and
  • enhancing human development. Across all programs, we prioritise improving nutrition, empowering women and girls and supporting disability-inclusive development.

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.

Timor-Leste is the third largest source of workers for the Seasonal Worker Programme.

Timor-Leste joined the Pacific Labour Scheme on 29 March 2019.

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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