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East Timor expects more private sector investment
Bangkok Post - June 7, 2016
Cars were parked in front of the restaurant. Inside, young people stood in line, waiting for their turn to place orders.
Burger King was the first international franchise chain to arrive in the tiny country of 1.2 million people in 2013 and there are now four outlets of the fast-food giant. East Timor Trading, which runs the restaurants, is eyeing up to eight outlets within the next 10 years.
For East Timor, which desperately needs to grow its low-income economy, however, such a franchise business is still not enough to develop the country and provide jobs for its young people under 25 years old, 60% of whom are unemployed.
"We have to attract private investors to come to invest in Timor Leste," East Timor Prime Minister Rui Maria de Araujo told Kyodo News in an interview Monday, referring to the country's official name in the local language.
"The economic growth of the country, in order to be sustainable, has to be led by the private sector, not by the public sector as we have witnessed during the last 14 years," he added.
After plunging to minus 3.1% in 2006 partly caused by civil unrest, East Timor saw its economic growth surge to 12.1% in 2007 and 14.6% in 2008, according to the World Bank. Last year, it grew by 6.8% and is expected to expand by 6.9% this year.
Speaking broadly about his country's economy at his office, Araujo said that his administration has to make "strategic choices" to establish an environment attractive for private investment.
According to him, the government is mixing the use of its Petroleum Fund set up in 2005 and accessing some loans, particularly soft loans from international financial institutions, such as the Asian Development Bank and the World Bank, and some countries, including China and Japan, to manage the country.
"At the moment, our debt is going up to $300 million and all of those debts are mainly allocated to build infrastructure, particularly roads (to attract investors)," he said.
At the same time, the government has listed some priorities to diversify the economy that hopefully can grow the economy and provide jobs for its youth, focusing on manufacturing, tourism, agriculture with agro-industry in particular, forestry and fisheries.
Araujo said the current presence of Japan's investment, particularly in infrastructure areas such as building roads, bridges and irrigation systems, has helped East Timor a lot to create economic conditions suitable for further diversification.
"You cannot develop agribusiness if you don't have proper irrigation facilities. You cannot push for economic activities, particularly linking rural with urban areas if you don't have good road conditions. Japan plays an important role here," he said.
East Timor, however, wants to see more investment from Japan in fisheries, agriculture and manufacturing since East Timor has a lot of natural resources but has not been seriously developed, he added.
The 52-year-old prime minister stressed that economic diversification is the only way to deal with the unemployment in the country. There is another challenge, however.
"The young people need to be educated, trained with skills that could match the needs of the industry and the needs of the market, and at the moment, we realize that it's not the case of East Timor," he said.
According to him, many young people are graduating from high school without any skills required by employers, while those who graduated from universities are not able to have access to jobs because their skills do not match the market.
"So, now what we are doing is to work more closely with the private sector, as well as education institutions, in order to recalibrate the education system to prepare the young to be able to get access to job market," he said, adding that the Education Ministry is transforming general high schools into technical, vocational schools in agriculture, fisheries and other priority areas.
Despite receiving oil and gas revenues since 2005, East Timor remains one of the poorest countries in the Asia-Pacific region, with official statistics indicating that around 40% of the population lives below the poverty line.
Basic income, health and literacy levels are similar to those of countries in sub-Saharan Africa, while unemployment and underemployment combined are estimated to be as high as 70%.
Indonesia annexed East Timor by force in 1974 after it had been under Portuguese colonial rule for about 400 years. It formally gained independence in 2002 after two-and-a-half years under United Nations administration following a referendum in 1999 in which the East Timorese overwhelmingly voted for separation from Indonesia.
In 2006, facing a full-scale collapse of civil order, East Timor's government sought redeployment of international peacekeepers that had withdrawn in 2005. The redeployed peacekeepers are expected to be withdrawn by the end of this year. (Kyodo News)
Source: http://www.bangkokpost.com/business/world/1004057/.
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