TimorNewsNetwork

'Impoverished country with a very large bank account'

Michael Bachelard

March 10, 2012

Source: Brisbane Times

East Timor is a long way from realising its dreams of prosperity despite its oil revenue.

Timor Plaza's bleached interiors, glass-sided elevators and fluorescent lights mark it out as the cousin of every shopping mall in almost every city in the world.

But this mall is in Dili, the capital of tiny, impoverished East Timor. It's the first built here and it's a multimillion-dollar statement of faith that this country's future will be more affluent than the present and more stable than the past.

''Our market is the A and B demographic,'' says Abdul Rozi, Timor Plaza's sales and marketing manager, confidently.

But inside the deserted mall and outside on Dili's streets, signs of an affluent middle class are scarce.

At the nearby street market, poor stallholders eke out a living buying fresh fruit and vegetables from even poorer farmers to sell at a tiny margin to their poor neighbours.

Less than 100 metres from the mall in the other direction is the Comoro River. When it rains, it fills with rapidly running water and dozens of young men wade in waist-deep to snatch the pieces of wood that float past. They sell it to the many who can't afford cooking fuel.

But the very foundations of this country were sunk in hope and dreams, particularly the long-cherished hope that the Indonesians could be defeated and independence won.

Now the hope, against poor soil, difficult geography and a small population, is that East Timor can become prosperous and peaceful and stand on its own in Asia. Timor Plaza notwithstanding, it's a long way from reaching that dream.

Madalena Soares, 50, lives 30 kilometres from the new mall and at the other end of the food chain. She tramps among the flies and noxious fumes of burning rubbish at Dili's dump and picks out the cans and bottles the As and Bs discard. Selling them provides the paltry income of US50¢ (47¢) to US60¢ a day, with which she must try to support her six children.

Emilia Varela is 34 but looks 50. An unmarried orphan, she lives with three widows in a dirt-floor hut, eating corn they grow and earning what money they can make by collecting and selling firewood.

Both women live in the Liquica district, within two hours' drive of the capital on East Timor's potholed roads. They have lost whatever hope they once nurtured that political independence would improve their circumstances.

''During the Indonesian time and now is the same,'' says Varela. ''We are just depending on selling firewood to pay the school fees. We have been suffering since the Indonesian time.''

''I have no hope,'' says Soares, as her hook carves through a rubbish pile in search of metal. ''We are a small people, we know nobody will look after us.''

The United Nations human development report for East Timor shows that it is doing better than many post-conflict, newly-independent countries. Revenue from the nearby oil fields means that, according to the Asian Development Bank's Dili representative, Craig Sugden, the country has ''left the most fragile group'' of nations and per capita income is an average of $US2500.

But most people have no access to the oil money and without it average incomes are just $US1100 a person, or $US3 a day.

Like Soares and the 40 or so people who join her daily at the dump, about 41 per cent of the country's population live in absolute poverty and 45 per cent of children under five are underweight.

A large chunk of Timor's budget and the loans now flowing from Asian Development Bank and other donors is being spent to build new roads, bridges and power infrastructure to try to increase economic activity and spread the wealth.

The Australian Agency for International Development has a massive program, focusing on building water and sanitation equipment and then training East Timorese to maintain it.

But political stability and able government will be a crucial factor - and this is the year for East Timor to prove it's capable.

It will be the 10th anniversary for democracy this year and the birthday will be marked by two elections: one for the president next Saturday and another for a new parliament in June.

Simply to hold two peaceful elections and a constitutional transfer of power would be a big step forward if the small, tight-knit political elite can pull it off. Hopes are high that they can be.

The UN has 2700 security personnel here and the Australian and New Zealand security contingent is 460. They were invited in after the country almost dissolved into civil war in 2006 but they will leave at the request of the Timorese government if the election goes smoothly.

The events of 2006 were a profound shock for the East Timorese, as well as their many sympathisers in Australia, who up until then could blame all the country's woes on Indonesia and its cruel 1975 invasion.

That shock appears to have made a difference. This year, the politics have been as robust as ever but physical violence hasn't played a role.

The 12-way race for president will most likely come down to one of three men: Revolutionary Front for an Independent East Timor (Fretilin) leader Francisco ''Lu-Olo'' Guterres, former army commander Taur Matan Ruak, or the current President, Jose Ramos-Horta.

But the presidency is just the first prize. The winner's biggest task will be to swear in a competent government after the parliamentarians face the polls in June.

That government faces huge challenges. A recent International Crisis Group report described East Timor as ''an impoverished country with a very large bank account''. That account has $US9.3 billion invested - East Timor's share of the oil and gas being extracted from the oceans to its south. It supplies 90 per cent of government income, making East Timor more dependent on oil revenue than any other nation. Combined with massive aid spending, the economy has grown 7 or 8 per cent in recent years, up there with the best of Asia.

But the UN says the government's most important task is to build a ''non-oil economy''.

This carries monumental challenges - bringing health standards to a level where children are no longer malnourished, creating a school curriculum even though there is no common national language and delivering services in a country where the roads are regularly washed away, power infrastructure is sorely lacking and people lack the skills to work productively or populate the public service.

Business leaders say there has been little or nothing done to create a culture of entrepreneurship and the most basic legal framework is still missing.

The East Timor Chamber of Commerce president, Julio Alvaro, says the lack of a land law means business people cannot get finance because they have nothing to offer as collateral to the banks.

Business consultant Etelvino Mousaco is even more direct about the political situation.

''We are concentrating too much on oil and we are totally ignoring tourism and agriculture. We have mountains of black marble, white marble just sitting there in the ground and there are not laws yet in regard to the mining industry,'' he said.

Another business commentator says that 10 per cent of business costs are being eaten up by corruption. The hand is out at every level, he says.

The international security forces are pulling out of Dili. Eventually they will be followed by the aid community. To thrive, East Timor will need its own economy and middle class.

Alvaro says that could be 10 years away - a decade before Timor Plaza has East Timorese customers to buy its aquariums, use its travel agent and fritter away surplus cash in its amusement arcade.

''If the owners [Timorese-Chinese-Australian investor Tony Jape] didn't believe it could happen, why build this building here?'' Rozi says.

With so much hope already expended to bring East Timor to this point, what's a little more?