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New administration pushes for economic diversification

Interview - August 18, 2015

Domingos Sarmento Alves, Ambassador of Timor-Leste to the United States of America, describes how Timor-Leste is planning to diversify its economy from oil and gas to agriculture and industry.


Your Excellency, in February Timor-Leste underwent a smooth transition of government when serving Prime Minister and former President Xanana Gusmao, a hero of the war of independence, handed power to the opposition leader, Rui Araújo. In a move that paved the way for national unity, the government ushered in a new generation of leaders for the country – a very important milestone for Timor-Leste. Among the tasks of the new government, effectiveness in the delivery of services has become of the main priorities. Mr Araújo’s cabinet aims to achieve a more efficient administration that finds synergies for the deployment of the state services, but also with a strong social agenda. In your opinion, how different are the challenges that the new government faces and how can the generational change at the top of the country’s leadership bring about substantial change for the people of Timor-Leste?

Thank you for the question. Yes, you’re right! We have a new government with a new generation at the helm of leadership.

As a system, once a new element is introduced, of course, there will be always changes because with new people in the government, they will bring along with them new ideas, and new levels of energy.

So the new government is a government of National Unity. Its members are from all parties (that have seats in the national parliament) and I believe it is a very unique government in the world, especially because the position of prime minister was handed over by Mr. Xanana Gusmão to one of the opposition leaders, Mr. Rui Maria Araújo, to lead the sixth constitutional government.

This is an uncommon process of transition of leadership from old generation to young generation. It is a new and unique experience of democracy that Timor-Leste is going through.

This might be the first practice in the world. I have never seen any kind of similar situation or experience in any part of the globe.

So when a new element is introduced, a new dynamism is also created and, consequently, the way of dealing with challenges or dealing with issues will be completely different to that of the previous government.

Although there are a lot of members of the previous government who are still part of this new government, but in a system where there is a presence of a new element, it will definitely affect the functioning of the whole system.

The fact that four members of the opposition parties have been invited to take part in the sixth constitutional government and one of them as prime minister, there will certainly be different approaches in facing the challenges ahead.

Timor-Leste is aware of numerous and multi-dimensional challenges ahead but we are going to deal with each challenge in a creative way, as always, to transform Timorese society into a prosperous society with adequate food, shelter and clothing for all people – in line with the objectives of our Strategic Development Plan (SDP) that aims to bring Timor-Leste from a low income to upper-middle income country, with a healthy, well educated and safe population by 2030.

We, the Timorese people are determined to fulfill this aspiration. We are going to achieve our dream by acting with the same remarkable resilience, strong sense of self-determination and creativity of our people during the resistance.

We still retain this nature of spirit to fight against the challenge that now is more in relation to poverty reduction, which is one of our main concerns.

The Strategic Development Plan (SDP) is a framework that guides us on how to deal with the situation and to achieve our vision. The new government is functioning and basically it continues the previous government’s programs.

Fantastic. As you see, the new government’s first three months have been characterized by dynamism, creativity, determination and resolved-driven action. New guidelines for the delivery of health care services as you mentioned, like poverty reduction, improved training for teachers, and water irrigation infrastructure projects that are very important for the agro industries of Timor-Leste. What has been the impact of these measures on the everyday lives of the people? And what other initiatives are in the government’s pipelines for these coming years in government?

Actually, you cannot have the impact of any policy measure right away since it is a process, so the impact will be seen and sensed later on.

But it is important to underline that the new government is working with consistency and responsibility, and as long as it is in the right direction, as long as the government acts in line with the objectives that we have set in our Strategic Development Plan (SDP) by designing good programs and an effective controlling system for the implementation of those programs, obviously, the impacts will become a reality in everyday lives of the Timorese people.

For example, the measures taken by the new government to introduce reform in public service to be more efficient in terms of discipline and delivering services, in terms of budget execution or public expenditures, of implementing infrastructure projects, including building schools and training teachers, all of them, will have impacts on people’s lives.

Regarding schools and education in general, it is quite unfortunate because the person who was very committed to getting things done passed away this June.

Mr. Fernando Lasama de Araújo was Coordinating Minister for Social issues and Minister of Education. He was so consistently pushing for reforms in the education sector, including the plan to revise the school curriculum.

So, if you take these kinds of measures you will have impacts, maybe not in a short term but in a long perspective I think there will be impacts on people’s life.

In terms of human resources, we are seriously investing in the education sector and in vocational training programs so that, in the future, we will have qualified human resources in place.

We tend to focus more on vocational training programs, because we have learned from the experiences of Austria. It is one of the countries in Europe with the lowest level of unemployment, since its education system focuses more on vocational training programs rather than on master and doctoral programs.

So, learning from Austrian experiences in preparing qualified human resources for specific fields, we are concentrating more on skill training programs.

We have a Secretary of State just to deal with vocational training programs. I think these measures will provide skilled and trained people, ready to be employed by companies or public institutions and, subsequently, will contribute to our economic development and to the wellbeing of Timorese people. The impact then becomes real on people’s lives.

Besides preparing skillful people for the domestic market, Timor-Leste is also preparing skilled and trained young Timorese workers to be sent to Australia for seasonal working purposes as well as to South Korea to work in the fishing industry and other factories.

By sending Timorese workers overseas, we expect that they can gain more experiences, more knowledge and skills, including more discipline in working, thus when they come back they will contribute to the economic development of Timor-Leste.

Regarding human development, last year, the UNDP uplifted Timor-Leste from low-level to medium-level of human development alongside South Africa, Indonesia and others.

Speaking about a huge impact, one of the government initiatives has also been to diversify the economy to not just depend on the oil and gas sector, but advance other parts of the economy and have strong private sector collaboration. Which sectors in your opinion can drive this change and what other competitive advantages, not only to the region, but also on a global scale?

In fact, Timor-Leste’s economy is highly dependent upon oil and natural gas revenue. We are aware of this situation and the government is determined to change it.

The development of the petroleum sector, however, can help to secure the foundation of a sustainable and vibrant economy. The oil and gas production and downstream industries will provide an industrial base for our economy.

Hence we have this project! We called it the “Tasi Mane Project”! It is going to be implemented on the south coast of Timor, which has a huge reserve of oil and natural gas.

The “Tasi Mane Project” is a multi-year project that will further develop our domestic petroleum industry and eventually generate thousands of valuable jobs.

The “Tasi Mane Project” will cover the construction of large infrastructure such as an LNG plant, supply base, refinery, petrochemical industrial parks, seaports, and regional airports.

Three regional airports are going to be built and one has been under construction since early this year and is expected to be ready next year, 2016.

While we are talking about economic diversification, the south coast, which covers an area around 2,500 acres of land, also holds great potential for the development of industries of livestock farming, horticulture, forestry, and so forth.

So to answer your question, as part of the economic diversification efforts, the government of Timor-Leste is using part of the revenue from the oil and gas sector to be invested in two important sectors – one is agriculture and the other one is tourism.

Timor-Leste is going to develop its economy based on these two sectors alongside oil and gas industry. 

Meanwhile, the revenue from oil and gas is also being invested in key infrastructure such as roads, power, ports, airports and telecommunications, as well as in the education and healthcare sectors.

We have been investing money from oil and gas in these sectors that are indispensable to build a diversified economy and transform our country into a modern nation.

Timor-Leste has an agriculture potential that is incredible. Starbucks coffee retailers are marketing Timor beans worldwide. Coffee accounts for 17.3% of the total exports of the country, and it is one of the main sources of incomes also for thousands and thousands of families. What is the government doing to boost and enhance the competitiveness of this sector and how do you see this development for future generations?

As I have mentioned, agriculture is one of the key sectors for the development of our economy. The development in this sector is needed to reduce poverty and to promote economic growth in rural areas.

For this sector, I think we have done a lot of improvements during our 13 years of independence. In these years we have been adopting new farming techniques, equipment and constant research that is important for the future of the agriculture sector.

Timorese farmers in general, and particularly coffee farmer,s still have the tendency to do farming in the traditional way that results in low levels of production and productivity, not simply because of the lack of skills but also because most of them are not business-oriented farmers.

Coffee is our main crop of non-oil export. Since it is 100% organic, Timor-Leste is already successfully exporting organic coffee and is the largest single-source producer of organic coffee in the world.

That is why Timorese coffee gains the market easily in Australia as well as in Japan.

As first ambassador of Timor-Leste to Japan, I was involved in the promotion and launching of Timorese high quality organic coffee in the Japanese market.

Germany is another country that also imports Timorese organic coffee, mostly through a system called fair trade in which the consumers, if possible, will buy directly the coffee from the farmers.

We gained those markets because of the high quality of 100% organic and Timor-Leste will concentrate on retaining its niche as a producer of quality organic coffee.

What about the US?

Actually the US is the promoter of Timorese coffee around the world. The US started being involved in coffee trading even far before our independence, two or three years before.

That is why, through Starbucks, the US is actually the one that promotes our coffee throughout the world. It is the main importer of Timorese organic coffee.

The US also assisted Timor-Leste in establishing the coffee-processing factory and we had the privilege to have the visit of the honorable former Secretary of State Hillary Clinton to the coffee-processing factory in September 2012.

Since independence, Timor-Leste has invested significantly in agriculture infrastructure to reduce rural poverty, and support the transition from subsistence farming to a more commercial-oriented farming, as well as attending to the needs of better roads and reliable power to be able to get their crops to the market.

To change the overall reality of subsistence farming, the government is developing a program to provide training and support for the farmers to be innovative and more business oriented.

Moreover, to attend the increased demands, the government is aimed at boosting the production of coffee through replanting and pruning as well as expanding the field of coffee plantations.

Let me underline, however, that agriculture products is not limited only to coffee production but there are also other numerous products or commodities that need to be tapped, such as vanilla, candlenuts, coconuts, various tropical fruits and high-value vegetables, rice, maize and other basic food crops, not to mention livestock and animal farming, as well as fisheries, including costal aquaculture activities such as seaweed, prawn, crab farming, and so forth.

As a matter of fact, Heineken is to build a new plant in Dili, is this right?

Yes, this is one of the big companies that are going to invest in Timor-Leste, but there are many others that are coming as well. For example, a South Korean company is going to invest in the fishing industry, or a big Australian company that is now investing in Timor-Leste by establishing the first cement factory in Baucau District.

This is a sign that Timor-Leste has an excellent environment for foreign companies to invest in sectors that are deemed to be economically advantageous at the regional and international levels.

Please note that Timor-Leste has a strategic geographic position and is going to be member of ASEAN in the near future. In addition, it is the only Asian country that is member of the ACP (African, Caribbean and Pacific) group of countries.

According to the Cotonou Agreement (between EU and ACP countries) there are special treatments concerning tariffs on agriculture products from ACP countries to EU markets.

Moreover, Timor-Leste is also the only country in Asia that is part of the Community of Portuguese Speaking countries known as CPLP (Comunidade dos Países the Língua Portuguesa) that consists of Angola, Brazil, Cabo Verde, Equatorial Guinea, Guiné-Bissau, Mozambique, Portugal, São Tomé e Príncipe, and Timor-Leste.

These countries are spread all over the continents and Timor-Leste has been chairing this community of countries since July last year (2014), and that will end on July 2016.

Each of these countries also became members of their regional organizations and most of the CPLP countries are rich in natural resources, namely oil and gas.

It is predicted that, in the coming years, the CPLP countries such as Angola, Brazil, Equatorial Guinea, Mozambique, Timor-Leste, São Tomé e Príncipe and Guiné-Bissau, all together, will constitute the fourth largest oil and gas producer in the world.

So, by considering the strategic geographic position of Timor-Leste and the positive aspects of regional and international markets, combined with the excellent environment for investment, it is worth foreign companies investing in Timor-Leste.

Going more specifically into tourism, this is one of the sectors that are receiving major backing from the government in its diversification plans. How does the country market itself abroad? What are the most interesting markets to develop the sector? You are here in the US, is this one of the target markets?

Yes, tourism is another key sector in our economic development. Timor-Leste’s natural beauty of wonderful mountain ranges, white sand beaches, tropical waters and rich marine life, as well as its cultural heritage, is extremely packed with potential for the development of the tourism sector that, consequently, will build business and infrastructure, create jobs and, ultimately, will contribute to the wellbeing of Timorese people.

Our tourism sector is still in its early stages of development and we are absolutely aware of the challenges ahead, including in the field of marketing.

Besides relying on diplomats at embassies to promote tourism abroad, Timor-Leste also have participated in a number of international expo events around the world, and the most recent one was in Expo Milano.

We still need to do more! We need to be more creative in using all the necessary tools to promote our tourism abroad, including initiatives to make use of electronic media, the Internet, and others, to promote tourism.

Internally, we need to deal with all related infrastructure and the lack of human resources to attend a growing tourist industry.

To fulfill the needs of the tourist market, we need to improve our main infrastructure, including ports, airports, roads, bridges, electricity and telecommunications.

This reality keeps on posing challenges to the growth of the tourism sector but these challenges will be addressed as we develop our economy.

Due to its natural beauty, rich traditional culture, the living history of rural communities, including the resistance history at locations across the country that are of great significance to the resistance movement, Timor-Leste will be able to provide visitors with a memorable experience.

Regarding the historical resistance sites and to give the visitors an understanding of the terrible conditions faced by the resistance movement, as well as for future generations, the government is taking measures to preserve the sites as part of our proud history of resistance to the Indonesian military occupation for 24 years.

There has been a documentary film entitled “Where the Sun Rises: A Hero’s Journey” directed by Grace Phan as part of the contributions in promoting our historical sites of resistance.

So by taking advantage of our natural beauty, culture and heritage, Timor-Leste will offer a range of tourism experiences.

Based on this reality, Timor-Leste will develop a model of tourism that differentiate itself from the regional market of tourist offerings because Timor-Leste cannot compete with Bali, Thailand or Fiji and other Asian and Pacific countries.

The model of tourism that Timor-Leste intends to develop is “Eco and marine tourism, a historic and cultural tourism”, which is more similar to the model that has been developed by Costa Rica.

Timor-Leste is relatively very young, with only 13 years of independence. It is one of the youngest nations in Southeast Asia, and has made remarkable strides to raise its voice among fellow nations in the world. Your country has been a pioneer in defending a new and more inclusive way of international engagement. Currently the country holds the chairmanship of the CPLP countries and is making economic integration one of the main priorities of this organization during the two years that Timor-Leste will be president. There’s also another issue of pursuing deeper relationships with your ASEAN neighbors. Membership of ASEAN is being considered and I want to know what is Timor-Leste doing in preparation for this entry into the regional block? What can be your country’s role in this region to contribute to make it to the ASEAN nations?

Let me begin by saying that we started building our country from ground zero, not only from physical aspects but also from social and psychological aspects.

The 24 years of war did not simply destroy infrastructure but also tore apart or forcibly displaced communities and families and created division and hatred among them.

So, from the very beginning, our founding fathers realized that we could not build our nation based on hatred and revenge.

Accordingly, we started building our country through the process of peace and reconciliation among us, the Timorese, and later on we extended this peace and reconciliation process to our former occupier, Indonesia.

It was Timor-Leste’s decisive measure to build good relationships with its neighbors, especially with Indonesia.

Through the process of peace and reconciliation, the two countries succeeded in overcoming their unpleasant experiences by leaving behind the bitter history of the recent past and decided to build a future-oriented relationship.

Today Timor-Leste and Indonesia enjoy an excellent relationship and an intense cooperation on all levels, socially, economically, politically and culturally.

Around 78% of Timor-Leste’s trade and commerce activities are with Indonesia and most of the big construction companies that are involved in infrastructure construction are from Indonesia, including big companies that are investing in areas such as the telecommunication and banking sectors. 

From a political aspect, Indonesia has been the main supporter of Timor-Leste’s bid to be part of ASEAN. I will not mention every positive aspect here as the direct consequence of peace and reconciliation policy.

But let me underline that Timor-Leste’s intention to be part of ASEAN is a very long commitment.

It is part of Timor-Leste’s efforts to reintegrate itself successfully in the community of nations, after regaining its dignity as a people and as sovereign nation in May 2002.

Regarding our preparation for the formal admission of ASEAN membership, Timor-Leste has done its part by preparing itself in line with the requirement that covers three pillars namely: a political and security pillar, economic pillar and socio-cultural pillar.

The assessment on the preparation concerning those pillars has been conducted by ASEAN secretariat.

So the question is no longer when Timor-Leste is ready to be member of ASEAN but when the ASEAN countries are ready to welcome Timor-Leste as part of the family.

To be a member of ASEAN is not an intention to seek financial assistance from other members, but the very main reason is for Timor-Leste’s security and stability as well as for gaining a wider opportunity for economic cooperation and development.

The need for regional integration is to achieve our national vision of  sustainable and diversified economy that supports a healthy, prosperous and well-educated population.

Therefore, Timor-Leste will continue moving forward at a good pace towards membership of ASEAN to ensure Timor-Leste’s safety and stability as a solid foundation for long-term economic development and to contribute to regional economic cooperation and integration, so as to effectively spread prosperity and development among all countries in the region.

As Timorese, I am proud to affirm that despite facing enormous challenges in the early years of our independence, we have succeeded in our nation building and state building process.

Timor-Leste is now a democratic country and the consolidation of its democratic institutions has become a reality. So, I am convinced that our regional integration will reinforce the process of democratization in the region.

There is no doubt that we still have to face numerous challenges ahead on our way towards being a modern and prosperous country.

The most notably one is poverty reduction, but this reality of being a poor country will not confine us to offer our contribution as part of the international community.

Timor-Leste is moving towards greater international engagement, as it looks beyond its shores to how it can contribute to the global community.

Timor-Leste is actively sharing its experiences of peace building and state-building with conflict-affected countries, which is known as the G7+ group of countries that is comprised of 20 countries.

The G7+ is also actively promoting country-owned and country-led planning mechanisms and recommending new forms of aid partnership and delivery in a more effective way for the reconstruction and development of post-conflict countries.

The endorsement of the “New Deal” by donor countries, also known as international development partners, is one of the positive responses to the group’s recommendation. 

In addition, as part of its recognition and gratitude for the great support that it had enjoyed from the international community and guided by a strong sense of solidarity and brotherhood, Timor-Leste also helped restoring peace and stability in Guiné-Bissau, a member of G7+ as well as of CPLP.

It was the most notable and all-out support from one poor country to another poor country. Besides sharing its experiences, Timor-Leste provided financial and technical support to Guiné-Bissau in order to restore democracy in that country.

For the first time, Timor-Leste helped electronically register the population of Guiné-Bissau and 87% of them participated in the general election held in early 2014, which was monitored and considered by the international community as successful, fair and democratic.

Moreover, despite of being a poor country, Timor-Leste also actively offers its contribution to natural disaster relief to countries afflicted by natural calamities around the world, as well as financial assistance to countries that are fighting contagious diseases such as Ebola in West African countries.

Hence, Timor-Leste, as an active member of the international community, will continue to provide its modest contribution in different forms to the wellbeing of our common humanity, including initiatives to introduce creative ways of cooperation, such as promoting economic cooperation among the CPLP countries during our chairmanship.

This will enable the CPLP countries to establish operating guidelines through bilateral and multilateral protocols and, in turn, will enable a new dynamism for the whole community.

One of the countries that has really supported Timor-Leste for reaching reconciliation and security and stability in the nation has been the United States. The relationship is defined as excellent. What other issues are deemed of common interest for the two nations on domestic, regional or international levels? What can be done to advance those ties that are already great?

The United States of America and Timor-Leste share similar fundamental values of democracy, freedom, and respect for human rights.

It has been for centuries that Timor-Leste has fought for these values and has paid with a very high price.

First we fought against the Portuguese colonialism for four and a half centuries and then Japanese occupation during three years, and lastly against the Indonesian military occupation for 24 years.

The United States of America has shown its strong commitment in supporting Timor-Leste since its inception, but above all, in the current phase of consolidating our democratic institutions and in our efforts of regional integration.

Timor-Leste and the United States have been developing bilateral cooperation in a number of sectors, such as security, agriculture, education, healthcare and justice.

Besides having strong military cooperation, the United States is supporting our efforts of consolidating our democratic institutions by strengthening the justice sector, reinforcing our national police, our anti-corruption commission, and empowering our civil societies to monitor every step of the government and the state as a whole.

Timor-Leste is also fortunate to enjoy the assistance of the United States in improving access to healthcare, especially in the maternity sector. In the education sector, the United States consistently provides a number of scholarships to young Timorese to continue their studies in US universities and, after the conclusion of their studies, most of them are now playing important roles in the government and other State institutions by influencing the course of public policies.

In addition, the US also helps us diversify our economy by actively engaging in the development of agriculture, expanding trade, and so forth.

To allow for a road map for development through strengthening economic cooperation and integration in our region that will lead to job creation and poverty reduction, we also explored creative ways of cooperation by proposing trilateral cooperation in agriculture between Timor-Leste, the United States of America and China.

For the first time in Asia, I believe, such cooperation took place where China and the US could work together to help diversify Timor-Leste’s economy through agriculture. Before leaving for Washington in April 2014, I had the privilege of witnessing the first harvest of agriculture products on display in Dili, Timor Plaza, as the result of the trilateral cooperation.