Economy of East Timor

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Economy of Timor-Leste

 Ministry of Finance building, East Timor.

Currency US dollar (USD) and East Timor centavos[1]

Fiscal year Calendar year
Trade organisations Pacific Alliance
Country group Least Developed[2]

Low-income economy[3]

Statistics

GDP  $1.484 billion (nominal, 2020)[4]

 $4.459 billion (PPP, 2020)

[4]

GDP growth −1.1% (2018) 1.8% (2019e)[4]

−8.1% (2020e) 1.9% (2021e)[5]
GDP per capita  $1,295 (nominal, 2020)[4]

 $3,206 (PPP, 2020)

[4]

GDP by sector agriculture: 32.1%

industry: 12.9%

services: 55%

(2005)
Inflation (CPI) 2.294% (2018)[4]
Population below poverty 49.9%[6] (2007 est.)
line

  22.0% on less than $1.90/day (2014)[7]

  65.9% on less than $3.20/day (2014)[8]

  91.8% on less than $5.50/day (2014)[9]

Gini coefficient 38 (2002 est.)
Human Development Index  0.606 medium (2019)[10] (131st)

 0.436 low IHDI (2019)[11]
Labour force 430,200 (2009)

Unemployment 18% (2010 est.)

Main industries printing, soap manufacturing, handicrafts, woven cloth
Ease-of-doing-business rank  181st (below average, 2020)

External

Exports $60 million (2020 est.)

Export goods crude petroleum, natural gas, coffee, various vegetables,

scrap iron
Main export partners  Singapore 51%

 China 20%

 Japan 9%

 Indonesia 6%

 Australia 3%

(2019)[12]

Imports $850 million (2020 est.)

Import goods refined petroleum, cars, cement, delivery trucks,

motorcycles
Main import partners  Indonesia 39%

 China 27%

 Singapore 10%

 Malaysia 5%

 Thailand 3%

(2019)[12]
Gross external debt $232.4 million (2021)[5]

15.63% GDP (2021)[5]

Public finances
Foreign reserves $279,000,000 (December 2013)
 All values, unless otherwise stated, are in US dollars.

The economy of East Timor is a low-income economy as ranked by the World Bank.

[13]
 It is placed 133rd on the Human Development Index, indicating a medium level of
human development.[14] 20% of the population is unemployed,[1] and 52.9% live on less
than $1.25 a day.[14] About half of the population is illiterate.[14] At 27%, East
Timor's urbanisation rate is one of the lowest in the world.
In 2007, a bad harvest caused a "major food crisis" in East Timor. By November, eleven
sub-districts still needed food supplied by international aid. [15]
According to data gathered in the 2010 census, 87.7% of urban and 18.9% of rural
households have electricity, for an overall average of 36.7%. [16]

Contents

 1History
 2Data
 3Industries
o 3.1Agriculture
o 3.2Energy
 3.2.1Oil and gas
 3.2.2Electricity
o 3.3Tourism
o 3.4Transport
 4Development projects
o 4.1Electricity
o 4.2Oil and gas
o 4.3Telecoms
 5References
 6Further reading

History[edit]
Prior to and during colonisation, the island of Timor was best known for its sandalwood.
The Portuguese colonial administration also granted concessions to Oceanic
Exploration Corporation to develop oil and gas deposits. However, this was curtailed by
the Indonesian invasion in 1976.
Petrochemical resources were divided between Indonesia and Australia with the Timor
Gap Treaty in 1989.[17] The treaty established guidelines for joint exploitation of seabed
resources in the area of the "gap" left by then-Portuguese Timor in the maritime
boundary agreed between the two countries in 1972.[18] Revenues from the "joint" area
were to be divided 50-50. Woodside Petroleum and ConocoPhillips began development
of some resources in the Timor Gap on behalf of the two governments in 1992.
In late 1999, about 70% of the economic infrastructure of East Timor was destroyed
by Indonesian troops and anti-independence militias,[1] and 260,000 people fled
westward. From 2002 to 2005, an international program led by the United Nations,
manned by civilian advisers, 5,000 peacekeepers (8,000 at peak) and 1,300 police
officers, substantially reconstructed the infrastructure. By mid-2002, all but about 50,000
of the refugees had returned.
The economy grew by about 10% in 2011 and at a similar rate in 2012. [19]
While East Timor gained revenue from offshore oil and gas reserves, little of it has been
spent on the development of villages, which still rely on subsistence farming. [20] As of
2012, nearly half the East Timorese population was living in extreme poverty. [20]

Data[edit]
GDP
GDP per GDP Inflation Government
GDP per
Year capita growth rate debt Note
(in mil. US$
(in US$
capita
Nominal)[21] (real) growth (in %) (in % of GDP)
Nominal)[22]
(real)

1993[23] 364.92 480 non-oil

1994[23] 427.30 561 non-oil

1995[23] 501.56 658 non-oil

1996[23] 610.11 801 non-oil

1997[23] 705.23 926 non-oil

Indonesian
1998[23] 250.12 328 economic
crisis

1999 Independence

2000 367.08 415

 GDP
GDP per GDP Inflation Government
GDP per
Year capita growth rate debt Note
(in mil. US$
(in US$
capita
Nominal)[21] (real) growth (in %) (in % of GDP)
Nominal)[22]
(real)

2001 477.44 530

2002 469.51 508

2003 490.44 517

2004 440.76 453

2005 462.28 464

2006 453.80 446

oil economy
2007 542.79 523
start

2008 648.49 614

2009 726.88 676

2010 881.82 806

2011 1,042 936

2012 1,160 1,024

 GDP
GDP per GDP Inflation Government
GDP per
Year capita growth rate debt Note
(in mil. US$
(in US$
capita
Nominal)[21] (real) growth (in %) (in % of GDP)
Nominal)[22]
(real)

2013 1,396 1,210

2014 1,447 1,232

2015 1,594 1,332

2016 1,651 1,353

oil price
2017 1,616 1,299
decline

2018 1,584 1,249

2019 2,048 1,583

2020 1,902 1,442

2021

Industries[edit]
In the Doing Business 2013 report by the World Bank, East Timor was ranked 169th
overall and last in the East Asia and Pacific region. The country fared particularly poorly
in the "registering property", "enforcing contracts", and "resolving insolvency"
categories, ranking last worldwide in all three. [24] In 2020 it ranked 181st.[25]: 20  There are
no patent laws in East Timor.[26]
Regarding telecommunications infrastructure, East Timor is the second to last ranked
Asian country in the World Economic Forum's Network Readiness Index (NRI), with
only Myanmar falling behind it in Southeast Asia. In the 2014 NRI ranking, East Timor
ranked number 141 overall, down from 134 in 2013. [27]
East Timor is part of the Timor Leste–Indonesia–Australia Growth Triangle (TIA-GT).[28]
Agriculture[edit]
The agriculture sector employs 80% of East Timor's active population. [29] In 2009, about
67,000 households grew coffee in East Timor, with a large proportion of those
households being poor.[29] Currently, the gross margins are about $120 per hectare, with
returns per labour-day of about $3.70.[29] There were 11,000 households
growing mungbeans as of 2009, most of them by subsistence farming.[29] 94% of
domestic fish catch comes from the ocean, especially coastal fisheries. [30]: 17  66% of
families are in part supported by these subsistence activities, however the country as a
whole does not produce enough food to be self-sustaining, and thus relies on imports. [30]: 
16 
 Coffee, rice, maize, coconuts, cassava, soybeans, bananas, mango, and sweet
potatoes are cultivated here.
After petroleum, the second largest export is coffee, which generates about $10 million
a year.[31] 9,000 tonnes of coffee, 108 tonnes of cinnamon, and 161 tonnes of cocoa
were harvested in 2012 making the country the 40th ranked producer of coffee, the 6th
ranked producer of cinnamon and the 50th ranked producer of cocoa worldwide. [32]
Energy[edit]
Main article: Energy in East Timor
Oil and gas[edit]
The Portuguese colonial administration granted concessions to the Australia-bound
Oceanic Exploration Corporation to develop petroleum and natural gas deposits in the
waters southeast of Timor. However, this was curtailed by the Indonesian invasion in
1976.[citation needed] The resources were divided between Indonesia and Australia with
the Timor Gap Treaty in 1989.[33] East Timor inherited no permanent maritime
boundaries when it attained independence. [citation needed] A provisional agreement (the Timor
Sea Treaty, signed when East Timor became independent on 20 May 2002) defined a
Joint Petroleum Development Area (JPDA) and awarded 90% of revenues from existing
projects in that area to East Timor and 10% to Australia. [34] An agreement in 2005
between the governments of East Timor and Australia mandated that both countries put
aside their dispute over maritime boundaries and that East Timor would receive 50% of
the revenues from the resource exploitation in the area (estimated at A$26 billion, or
about US$20 billion over the lifetime of the project) [35] from the Greater Sunrise
development.[36] In 2013, East Timor launched a case at the Permanent Court of
Arbitration in The Hague to pull out of a gas treaty that it had signed with Australia,
accusing the Australian Secret Intelligence Service (ASIS) of bugging the East
Timorese cabinet room in Dili in 2004.[37]
At the time of independence East Timor had per capita natural wealth equivalent to the
wealth of an upper-middle income country. Over half of this was in oil, and over a
quarter natural gas. The Timor-Leste Petroleum Fund was established in 2005 to turn
these non-renewable resources into a more sustainable form of wealth. By 2009 it had a
value of US$4.8 billion,[38]: 4–6  and by 2011 it had reached a worth of US$8.7 billion. [39] East
Timor is labelled by the International Monetary Fund as the "most oil-dependent
economy in the world".[40] The Petroleum Fund pays for nearly all of the government's
annual budget, which increased from $70 million in 2004 to $1.3 billion in 2011, with a
$1.8 billion proposal for 2012.[39] East-Timor's income from oil and gas stands to increase
significantly after its cancellation of a controversial agreement with Australia, which
gave Australia half of the income from oil and gas from 2006. [41] From 2005 to 2021,
$23 billion earned from oil sales has entered the fund. $8 billion has been generated
from investments, while $12 billion has been spent. [25]: 30  A decrease in oil and gas
reserves led to decreasing HDI beginning in 2010. [25]: 18–19  80% of government spending
comes from this fund, which as of 2021 had $19 billion, 10 times greater than the size of
the national budget. As oil income has decreased, the fund is at risk of being exhausted.
Withdrawals have exceeded sustainable levels almost every year since 2009. [25]: 23 
Electricity[edit]
Electricidade De Timor-Leste (EDTL) is the vertically integrated monopoly generator
and distributor of electric power within the on-grid areas.
Tourism[edit]
In 2017, the country was visited by 75,000 tourists. [42] Since the later 2010s, tourism has
been increasing and the number of hotels and resorts has increased. The government
decided to invest in the expansion of the international airport in Dili.
Transport[edit]
Main article: Transport in East Timor

Development projects[edit]
Electricity[edit]
See also: List of power stations in East Timor

 Betano Power Station

Oil and gas[edit]

Protesters in Brisbane protesting Australia's claim on East Timorese oil, May 2017

One promising long-term project is the joint development with Australia

of petroleum and natural gas resources in the waters southeast of East Timor.
East Timor inherited no permanent maritime boundaries when it gained independence,
repudiating the Timor Gap Treaty as illegal. A provisional agreement (the Timor Sea
Treaty, signed when East Timor became independent in 2002) defined a Joint
Petroleum Development Area (JPDA), and awarded 90% of revenues from existing
projects in that area to East Timor and 10% to Australia. [43] The first significant new
development in the JPDA since East Timorese independence is the largest petroleum
resource in the Timor Sea, the Greater Sunrise gas field. Its exploitation was the subject
of separate agreements in 2003 and 2005. Only 20% of the field lies within the JPDA
and the rest in waters not subject to the treaty (though claimed by both countries). The
initial, temporary agreement gave 82% of revenues to Australia and only 18% to East
Timor.[44]
The government of East Timor has sought to negotiate a definite boundary with
Australia at the halfway line between the countries, in accordance with the United
Nations Convention on the Law of the Sea. The government of Australia preferred to
establish the boundary at the end of the wide Australian continental shelf, as agreed
with Indonesia in 1972 and 1991. Normally a dispute such as this would be referred to
the International Court of Justice or the International Tribunal for the Law of the Sea for
an impartial decision,[45] but the Australian government had withdrawn from these
international jurisdictions (solely on matters relating to maritime boundaries) shortly
before East Timorese independence.[46]
Nevertheless, under public and diplomatic pressure, the Australian government offered
instead a last-minute concession solely on royalties from the Greater Sunrise gas field.
[47]
 An agreement was signed in 2005 under which both countries would set aside the
dispute over the maritime boundary, and East Timor would receive 50% of the revenues
(estimated at A$26 billion or about US$20 billion over the lifetime of the project) [48] from
the Greater Sunrise development. Other developments within waters claimed by East
Timor but outside the JPDA (Laminaria-Corallina and Buffalo) continue to be exploited
unilaterally by Australia, however.[49]
Some proceeds from East Timor's petroleum royalties are directed to the
country's sovereign wealth fund, the Timor-Leste Petroleum Fund.
Telecoms[edit]
Main article: Telecommunications in East Timor