Financial Crime World

Timor-Leste: A Country on the Rise, Overcoming Challenges for a Brighter Future

A Decade of Progress

DILI, Timor-Leste - After a tumultuous first decade of independence, Timor-Leste has made significant strides towards stability and growth. Since 2008, the country has enjoyed a period of relative peace, paving the way for economic development and investment opportunities.

Infrastructure Development

The government has been working tirelessly to improve the country’s basic infrastructure, including:

  • Roads
  • Airports
  • Electricity
  • Telecommunications

A major focus is on fiscal reform, aimed at bringing the system in line with best practices as Timor-Leste seeks to join the Association of Southeast Asian Nations (ASEAN).

Economic Growth and Challenges

Economic growth rates have consistently been strong, but challenges remain. The country still struggles with:

  • Incomplete and unclear legislation
  • Inadequate regulatory mechanisms
  • Corruption
  • Insufficient personnel capacity
  • Deficient infrastructure

Despite these hurdles, investment opportunities are increasing outside of the oil and gas sector.

Investment Opportunities

The agricultural sector, construction, telecommunications, and tourism are attracting interest from investors. To offset some of these challenges, the government offers investment incentives, including:

  • Five to ten year tax holidays depending on location
  • Special Economic Zones in Oecusse exclave and Atauro Island
  • Major petroleum sector infrastructure project along its south coast

Corruption and Ease of Doing Business

According to the Transparency International Corruption Perceptions Index (CPI) 2015, Timor-Leste ranks 123 out of 168 countries. The World Bank’s Doing Business Report 2015 places the country at 173 out of 189 in terms of ease of doing business.

Population Growth and Economic Outlook

In other indicators, Timor-Leste scores:

  • 2,680 USD per capita in GNI (Gross National Income) for 2014
  • A population growth rate of over 60% under the age of 30
  • One of the world’s most rapidly growing populations

International Ties and Future Outlook

The government is committed to expanding private sector economic activities to provide employment opportunities for new labor market entrants. Timor-Leste is applying for full membership in ASEAN and currently serves as President of the Community of Portuguese Speaking Countries, viewing these international ties as key to increasing investment opportunities.

In a move to boost cross-country investment, Timor-Leste is also pursuing trilateral economic cooperation with Indonesia and Australia.

Conclusion

While there are still challenges to overcome, Timor-Leste’s commitment to reform and its growing economy make it an attractive destination for investors. With its strategic location in Southeast Asia and natural resources, the country has the potential to become a significant player in the region’s economic landscape.