How ASEAN's Newest Member Is Working To Lift Its Economy | CNA Correspondent | Timor-Leste

Key Concepts

• Timor-Leste's Independence and ASEAN Membership: Gaining independence in 2002 and becoming ASEAN's 11th member in October.
• Infrastructure Development: Focus on upgrading the Dili International Airport, electrification, and telecommunications.
• Natural Resources: Exploitation of oil and gas reserves, particularly the Greater Sunrise gas field.
• Economic Diversification: Efforts to develop the hospitality and MICE (Meetings, Incentives, Conferences, and Exhibitions) sectors, and promote coffee exports.
• Human Resource Capacity Building: Emphasis on training and education for the young population.
• Referendum Day: Commemoration of the 1999 vote for independence from Indonesia.
• Youth Demographics: Timor-Leste has one of the youngest populations globally, with a median age of 20.
• Challenges: Frequent government changes, reliance on petroleum funds, and the need for job creation.

Infrastructure Development and Regional Integration

Timor-Leste, a young democracy since 2002, is actively pursuing economic growth and regional integration, notably by becoming ASEAN's 11th member in October. A cornerstone of this strategy is significant investment in infrastructure.

Dili International Airport Upgrades

The Dili International Airport, a key gateway, is undergoing a major transformation to become a modern hub.

• Current Limitations: The airport currently handles only 21 flights weekly and operates solely during daylight hours due to limited facilities.
• Planned Enhancements:
  • Runway extension from 1,850 m to 2,100 m.
  • Runway widening from 30 m to 45 m.
  • Construction of a new air traffic control tower to replace outdated systems, enhancing safety and efficiency.
  • Development of a new two-story passenger terminal with separate arrival and departure halls.
• Timeline: Upgrading works are scheduled to commence in January of the following year and are expected to conclude in early 2028.
• Significance: These upgrades are crucial for accommodating larger aircraft, boosting regional connectivity, and improving the country's international image, as stated by passengers who anticipate increased comfort and convenience.

Electrification and Telecommunications

Beyond air travel, infrastructure development extends to essential services:

• Electrification Goal: The aim is to achieve 97-98% electrification coverage.
• Transition to Gas: A strategic shift from expensive diesel to abundant natural gas is planned for power generation.
• Digitalization: Telecommunications are being modernized, with Starlink integration expected to lead to a fully digitized Timor-Leste within approximately one year.

Hospitality and MICE Sector Development

The hospitality industry is also a focus for growth, particularly with ASEAN membership.

• Palm Springs Hotel: The only five-star establishment in Dili, it began operations earlier this year and reflects the industry's nascent but promising growth.
• Skilled Workforce Challenge: The lack of a skilled workforce in the hospitality sector necessitates significant investment in training, as demonstrated by the hotel's eight-month intensive training program.
• MICE Sector: Timor-Leste is developing its Meetings, Incentives, Conferences, and Exhibitions (MICE) sector to diversify the economy.
• New Convention Center: Plans are underway to build a larger convention center in Dili, which will serve as a venue for major meetings, including future ASEAN summits, and other activities.

Challenges in Infrastructure Development

Despite these ambitious plans, Timor-Leste faces hurdles:

• Government Instability: Frequent changes in government have disrupted long-term planning, impacting the resilience of democratic institutions.

The overall objective of these infrastructure upgrades is to lay a robust foundation for future economic growth and to foster closer regional ties, with the hope that ASEAN membership will catalyze economic advancement.

Tapping Rich Natural Resources: Oil and Gas

Timor-Leste possesses significant natural resources, particularly oil and gas, which are central to its economic development strategy.

Greater Sunrise Gas Field

The Greater Sunrise gas field, located in the Timor Sea between Timor-Leste and Australia, is a key asset.

• Reserves: It holds an estimated 5.1 trillion cubic feet of gas reserves, valued at over $70 billion.
• Location: Situated approximately 140 km off Timor-Leste's south coast and 450 km northwest of Darwin, Australia.
• Ownership: Timor Gap, the state-owned oil and gas company, is the majority shareholder.
• Development Route Discussions: Ongoing negotiations between Timor-Leste and Australia concern the piping and processing of the gas.
• Concept Study Findings: An independent study indicated that piping the gas to Timor-Leste for liquefaction (LNG plant) is technically feasible, commercially viable, and offers the best economic return, estimated at over $50 billion.
• Timor-Leste's Stance: President of Timor-Leste emphasizes the project's critical importance for the country, stating that its development is contingent on the pipeline coming to Timor-Leste. He asserts that the project will not proceed to Darwin and that Timor-Leste can survive without it if necessary.

Tasi Mane Project

Timor-Leste is preparing to process gas domestically through the Tasi Mane project.

• Natar Bora Hub: Planned as a hub for a refinery, petrochemical complex, and LNG facility.
• Suai Logistics Hub: Being developed to support oil and gas exploration and production in the Timor Sea.
• Connecting Highway: A 155 km highway is under construction to link Natar Bora and Suai, a vital component of the Tasi Mane project.

Suai Airport and Supply Base

The Suai airport is integral to the Suai supply base and the Tasi Mane project.

• Role: Supports companies operating in the Timor Sea's offshore oil and gas fields and serves as a petroleum industrial corridor.
• Refurbishment: The regional airport was upgraded to ICAO standards for international use, with refurbishment completed in 2017.
• Future Upgrades: Further enhancements are planned to support the expansion of services at the Suai supply base.

Social and Environmental Considerations

Development projects, such as the Suai airport expansion, have social and environmental impacts.

• Land Clearance and Relocation: A nearby village east of the airport has been affected by land clearance, necessitating the relocation of residents.
• New Housing: The Timor-Leste government is constructing 63 permanent homes for displaced residents, with construction expected to finish by March 2026.
• Resident Concerns: Some residents, like Matilda, who has lived in her home for over 40 years, express concerns about relocation and the potential disruption to their lives.
• Skepticism: Despite promises of long-term economic benefits and job creation, some residents remain skeptical due to past project delays.

Economic Sustainability Concerns

The nation's economy is heavily reliant on its petroleum fund, derived from finite offshore oil and gas revenues.

• Diversification Imperative: Advocacy groups warn of the need to diversify the economy and manage wealth carefully to ensure a sustainable future beyond oil and gas.
• Crossroads: Timor-Leste faces a critical juncture, balancing the promise of prosperity from projects like Greater Sunrise and Tasi Mane with the risk of over-reliance on fossil fuels.
• Equitable Benefit Sharing: The success of these projects is also measured by how fairly the benefits are distributed among the population.

Referendum Day and the Young Generation

Referendum Day, celebrated on August 30th, commemorates the historic 1999 vote for independence and serves as a reminder of Timor-Leste's journey and its future aspirations.

Historical Context of Independence

• Decades-Long Struggle: The path to independence was a result of a long struggle for self-determination, initiated during Portuguese colonial rule.
• Portuguese Revolution (1974): Led to decolonization for its colonies, including Timor-Leste.
• Declaration of Independence (1975): The pro-independence party FRETILIN declared independence from Portugal.
• Indonesian Invasion and Occupation (1975-1999): Indonesia invaded and occupied Timor-Leste for 24 years.
• UN-Supervised Referendum (1999): Following the resignation of Indonesian President Suharto, Timor-Leste voted overwhelmingly for independence, leading to violence.
• Official Independence (May 20, 2002): Timor-Leste officially regained its independence, becoming the first new nation of the 21st century.

The Young Population and Education

Timor-Leste boasts one of the world's youngest populations, with a median age of 20 years.

• Post-Independence Generation: Many students in high schools were born after Timor-Leste's independence and are learning about their country's history.
• Importance of Education: Education is identified as crucial for unlocking the potential of this young demographic.

Employment Challenges and Economic Diversification

Despite the young population's potential, significant challenges exist in job creation.

• Seeking Overseas Employment: Young Timorese frequently visit recruitment centers in Dili seeking work abroad, such as Milanosa's application for a job in South Korea.
• Economic Diversification Needs: Economists advocate for rapid diversification into manufacturing and service sectors to create more jobs.
• Import Dependency: Over half of Timor-Leste's GDP comes from imports, highlighting opportunities to fulfill domestic market demand.

Entrepreneurship and Coffee Sector Development

Enterprising individuals are finding innovative ways to create livelihoods.

• Mariano's Cafe Atsab: Mariano, displaced by an infrastructure project, turned his passion for coffee into an opportunity by establishing Cafe Atsab in Dili.
• Ambition for Expansion: His ambition is to expand Cafe Atsab within Timor-Leste and internationally, and to develop the coffee sector.
• Coffee as a Key Export: Coffee is a vital non-oil export for Timor-Leste, known for its resilient and aromatic Arabica-robusta hybrid beans, offering a bold, rich flavor with low acidity.

Future Outlook

The future of Timor-Leste rests on its young generation, who represent both a challenge and an opportunity. Historical milestones like Referendum Day instill confidence. The nation's progress is seen as a steep and challenging climb, but with determination and resilience, the rising generation believes each struggle brings them closer to their dreams.