Economic Overview & Business Opportunities
Timor-Leste, also known by the name East Timor, is an island situated at the southern end of Maritime Southeast Asia, north of the Timor Sea and Australia. Bordering Indonesia in the west and the Savu Sea in the north, Timor-Leste comprises the eastern half of the Timor Island, the Oecussi (Ambeno) region on the northwest portion of the island of Timor, as well as the islands of Pulau Atauro and Pulau Jaco.
Timor-Leste gained its independence from Indonesia in May 2002 after decades of conflict. In Timor-Leste, Tetun and Portuguese are the official languages, while Indonesian and English are the two working languages. A mix of Indonesian laws and regulations, acts passed by the United Nations Transitional Administration, and post-independence Timorese legislation, complicates the Timorese legal system. Timor-Leste’s economy is the world’s 172nd freest in the 2019 Index with an economic freedom score of 44.2. Since its independence, Timor-Leste’s government has put in the effort to reduce poverty and improve social outcomes. That said, structural changes and institutional deficiencies are the constant issues of the country, especially in the area of labour and logistics risks.
Timor-Leste was granted observer status by the World Trade Organization (WTO) in 2016 and its Working Party for accession has been established in December 2016. The accession to the WTO has paved way for Timor-Leste’s accession to the Association of Southeast Asian Nations (ASEAN) where Timor-Leste is applying for full membership of ASEAN. Besides, the Timorese government has been putting efforts to develop the country’s tourism sector with enhanced infrastructure and improved air connectivity. Today, the Timorese government has concluded the air services agreement with Indonesia, Singapore, and Australia to increase air routes to the country. Despite the political instability and corruption, the Timor-Leste’s government has spent a fair amount of money to develop basic infrastructure, including electricity and roads, in a bid to promote tourism in the country.
The Timorese government’s spending is mostly financed by revenue from the offshore petroleum projects in the Timor Sea. The three main engines of the Timorese economy are a subsistence agriculture sector, a goods and services sector driven by private consumption, as well as the public spending on infrastructure development. Agriculture sector dominates the non-oil economy that accounts for over 30% of Gross Domestic Product (GDP) and around 75% of employment. If you are interested to invest in Timor-Leste, certain underdeveloped industries (with little onshore mineral exploration) could be in the list for consideration:
- Oil and gas
Other sectors that offer business opportunities are as follows:
- Oil and gas
- Building and construction inputs
- Tourism infrastructure.
Though Timor-Leste is a developing nation, which is also one of the world’s youngest democracies, the country is one of the world’s fastest-growing economies due to its modest petroleum resources.
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