Doing business with East Timor

Australia has provided significant capacity-building technical assistance to East Timor’s Finance Ministry and its Land and Property Unit through our bilateral aid program.

Over the past two years, our support has helped build the capacity of the East Timorese administration to manage all aspects of government and private property.

Business opportunities

Australia’s trade and economic relationship with East Timor is still at an early stage in its development. There are estimated to be some 347 Australian businesses with offices in East Timor. Many of these are small, privately owned concerns.

While some of these businesses can be expected to move on as the UN presence decreases over time, there is already a real basis for developing a mutually beneficial business relationship between our two countries in the future.

Much of the focus of the past three years has understandably been on the rehabilitation of the physical and administrative infrastructure of East Timor to pre-1999 levels. Reconstruction will continue to provide opportunities for Australian business in the foreseeable future.

But there is scope for growth in other sectors too, including tourism and agricultural processing. Such growth will be dependent on substantial new investment.

The coffee industry is likely to be East Timor’s leading non-oil/gas export earner for some time. At this stage, productivity is low and costs are high. Investment is needed in replanting, infrastructure, transport and marketing to increase yields and help East Timor ensure that more of its production reaches the niche market for high-quality organic coffee.

Given the current low global coffee price, East Timor is looking into the development of new cash crops. One promising new option is vanilla. High prices for this crop have encouraged more farmers to plant it.

East Timor also has a large fishery potential, with many valuable varieties. It is estimated that less than one percent of the potential fisheries output is currently harvested. Future income from fisheries can be boosted by increasing investment in the national fishing capacity and by licensing foreign vessels.

There is relatively little manufacturing industry in East Timor. In 1996, manufacturing accounted for only 3.5 per cent of GDP, most of which employed people in weaving traditional cloth (tais) and furniture. The immediate potential for manufacturing is limited, but may improve over the longer term.

Australia is committed to doing what we can to help develop a competitive, export-oriented business sector in East Timor. Given its developing country status, East Timor qualifies for preferential tariff rates of up to 5 percent under the Australian System of Tariff Preferences (ASTP).

Already, most products of immediate interest to East Timor, including coffee, its most viable export, either face no duty, or very low rates.