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AseanAffairs Magazine January - February 2011



With the growth of the Asean economies, David Swartzentruber reports on the entry of Dark Pool electronic trading platforms into the region.

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East Timor Deputy Prime Minister Jose Luis Guterres, left, with Rajiv Biswas.

Swarup Roy and economist Rajiv Biswas speak with East Timor Deputy Prime Minister Jose Luis Guterres as he discusses East Timor as it prepares to become an Asean member.

Biswas: Deputy Prime Minister, what is your assessment of the current economic situation in East Timor and the outlook for the year ahead?

Guterres: In 2008, East Timor achieved GDP growth of 12.2 percent, followed in 2009 by 12.3 percent growth. We believe that with the current economic policies East Timor is doing very well. And we hope to maintain this growth for years to come and we are saying this because of a specific plan announced by the prime minister a few months ago.

Our intention is to give a high priority to key infrastructure, such as roads and housing for the communities. The currency of east Timor is driven by the proceeds from oil and gas, about $100 million a month. East Timor is a small country with about 1.1 million people with oil revenues of about $1 billion a year. We have created a petroleum fund that the government can only access through parliament and the aim of this petroleum fund is to make some of these profits available for the next generation.

We are sending our students to the Philippines, Indonesia, Malaysia and some are in China. We also have sent around 700 medical students to Cuba and next year around 410 will return to East Timor. We are interested in the well-being of the people Social services will help and are important for East Timor.

We have created a pension system for 80,000 people aged 60 years old and up. They receive a payment of $30 a month, a method to improve conditions for the older generation and still draw on their reservoir of knowledge. We believe that when social problems arise, we have a population and social system that can handle them.

Biswas: You said how important the oil and gas revenues were. What is the outlook over the next few years for the future growth of oil and gas revenues?

Guterres: What we are doing is to invest the money that we have in basic infrastructure like roads, water, transportation, ports. These are basic investments for us. Our country is very beautiful and mountainous and we are located next to one of the major tourist centers -Bali- that many people have visited. People might be interested in visiting another place such as East Timor, which is close to a key source of tourism demand, namely Australia. Many tourists come from Australia and Japan, and in future the Indians and Chinese will increasingly be tourism growth markets. It is important to develop our tourism industry and we have conditions for it and it is important to invest in one of our major ports. We are also close to the Philippines.

Biswas: What about the domestic education system? Does every one have access to primary education?

Guterres: Yes, according to our constitution, education is free at the secondary level and even at the higher levels. But the question is here we do not have the educational infrastructure and the capacity. We have been sending out our young people to build our capacity, but it will take time. It is important for us to have our young people learning in different parts of Asia, but it is most important for them to understand the region they are part of. They are in Malaysia, Indonesia and the Philippines, which will help our preparation for joining Asean.

Roy: it’s been a long time in the air about joining Asean. When do you think this will happen?

Guterres: We are preparing for 2012.

Roy: With indonesia becoming the Asean chairman in january 2011, do you think that will help?

Guterres: Indonesia has already said they support us 100 percent. We haven’t met any Asean members who have said no. We have some good advisers from Asean to prepare us better.

Roy: When you said prepare, what do you mean?

Guterres: You have many meetings to attend and laws that we have to introduce. If you are part of Asean you have to adapt your laws to Asean. There is no geographical conditionality.

Biswas: You are geographically part of southeast Asia.

Guterres: So we are very happy about Asean. We hope this will be positive for us and East Timor as well. To give foreign investors an opportunity to come to East Timor and invest. We have not only oil and gas in mind, but also mining.

Biswas: What are the prospects for mining?

Guterres: We have manganese and gold but we have not yet explored these reserves. But right now, we don’t have to rush. For oil and gas, we have developed just one block, and one block has been tested by an Australian company and the pipeline could go through East Timor. The Australians already have one pipeline and we believe one pipeline could go through East Timor. The situation is that East Timor and the Australian companies are discussing this and we hope the outcome is a way that would help East Timor.


Biswas: What would be the impact if this agreement was reached?

Guterres: It means many millions of dollars for the country and we have also opened another new block. Reliance of India is there and ENI of Italy is there , so many oil companies are already there in East Timor, like Phillips, but the most important thing we have to manage these resources very well by investing in the future in a responsible way and not expand it in a process that doesn’t help the people. In the three years since 2007, according to a World Bank report, we have reduced poverty by 90 percent because of the government policies we have implemented. We hope to continue.

You can’t develop your country if you don’t take care of your own people. With the direction and goal in which we are traveling, there is a general consensus that we have to do more for our population.

One important priority is that we have to develop our agricultural sector. Since the food crisis of two years ago, food now is a vital commodity. Rice is very specific to our people. We have been working with the Chinese, the Australians and the Thais.

Roy: Are you importing rice at this moment?

Guterres: We are importing rice from Vietnam. During the crisis we imported it from Vietnam and Thailand.

Roy: You have seen the Asean report on dependency. When do you think you will get out of this dependency?  

Guterres: In less than 10 years time, we can achieve sufficiency in rice production. We have land, we have water. We need to invest properly and increase the fertility to help farmers plant.

Biswas: Getting back to oil. If Sunrise happens, when do you think these the project will begin operations?  

Guterres: If there was a decision today, maybe in 2 years from now.

Biswas: You mentioned $100 million per month in existing oil revenues. That revenue is from one block. What would the increase be if Sunrise happens?  

Guterres: The profit might be $70 million. For us it is important that we use the profit well and right now, with the resources coming from one block, we have sufficient revenue to finance our budget. Our budget is 100 percent domestic and we don’t depend on anyone else and we don’t have any debt. And I think that these days it is economically quite unique not to have any debt.


Biswas: Actually, you will likely become a creditor nation if the Sunrise project comes in.  

Guterres: Yes, right now we already have around $7 billion invested in U.S. treasury bonds 



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