Economy of Timor-Leste
Template:Short description Template:EngvarB Template:Use dmy dates Template:Infobox economy The economy of Timor-Leste is a low-income economy as ranked by the World Bank.<ref>Timor Leste – World Bank Template:Webarchive</ref> It is placed 140th on the Human Development Index, indicating a medium level of human development.<ref name="UNDP">Template:Cite web</ref> 20% of the population is unemployed,<ref name="cia.gov">Timor-Leste Template:Webarchive. The World Factbook. Central Intelligence Agency.</ref> and 52.9% live on less than $1.25 a day.<ref name="UNDP"/> About half of the population is illiterate.<ref name="UNDP"/> At 27%, Timor-Leste's urbanisation rate is one of the lowest in the world.
In 2007, a bad harvest caused a "major food crisis" in Timor-Leste. By November, eleven sub-districts still needed food supplied by international aid.<ref>Voice of America, 24.06.07, East Timor Facing Food Crisis Template:Webarchive and Ministry of Agriculture, Forestry and Fisheries of Timor-Leste.</ref>
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%.<ref>Template:Cite web</ref>
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.<ref>Template:Cite web</ref> 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.<ref>Template:Cite web</ref> 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 Timor-Leste was destroyed by Indonesian troops and anti-independence militias,<ref name="cia.gov"/> 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.<ref>Template:Cite web</ref>
While Timor-Leste 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.<ref name="Schonhardt">Template:Cite news</ref> Template:As of, nearly half the East Timorese population was living in extreme poverty.<ref name="Schonhardt"/>
Data
[edit]| Year | GDP
(in bil. US$ PPP) |
GDP (in bil. US$ nominal) |
GDP per capita (in US$ nominal) |
GDP growth (real) |
GDP per capita growth (real) |
Inflation rate (in %) |
Government debt (in % of GDP) |
|---|---|---|---|---|---|---|---|
| 1993 | 0.36 | 480 | |||||
| 1994 | 0.43 | 561 | |||||
| 1995 | 0.50 | 658 | |||||
| 1996 | 0.61 | 801 | |||||
| 1997 | 0.71 | 926 | |||||
| 1998 | 0.25 | 328 | |||||
| 1999 | 0.25 | 328 | |||||
| 2000 | 1.1 | 0.37 | 415 | ||||
| 2001 | 1.3 | 0.48 | 530 | ||||
| 2002 | 1.2 | 0.47 | 508 | ||||
| 2003 | 1.2 | 0.49 | 517 | ||||
| 2004 | 1.3 | 0.44 | 453 | ||||
| 2005 | 1.4 | 0.46 | 464 | ||||
| 2006 | 1.3 | 0.45 | 446 | ||||
| 2007 | 1.5 | 0.54 | 523 | ||||
| 2008 | 1.7 | 0.65 | 614 | ||||
| 2009 | 1.9 | 0.73 | 676 | ||||
| 2010 | 2.1 | 0.88 | 806 | ||||
| 2011 | 2.3 | 1.04 | 936 | ||||
| 2012 | 2.7 | 1.16 | 1,024 | ||||
| 2013 | 2.9 | 1.40 | 1,210 | ||||
| 2014 | 3.2 | 1.45 | 1,232 | ||||
| 2015 | 3.5 | 1.59 | 1,332 | ||||
| 2016 | 3.8 | 1.65 | 1,353 | ||||
| 2017 | 3.9 | 1.62 | 1,299 | ||||
| 2018 | 4.0 | 1.58 | 1,249 | ||||
| 2019 | 5.0 | 2.05 | 1,583 | ||||
| 2020 | 6.7 | 1.90 | 1,442 | ||||
| 2021 | 7.3 | 1.90 | 1,442 | ||||
| 2022 | 9.4 | 2.45 | 1,793 | ||||
| 2023 | 5.1 | 1.99 | 1,425 |
Industries
[edit]In the Doing Business 2013 report by the World Bank, Timor-Leste 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.<ref name=edb>Template:Cite web</ref> In 2020 it ranked 181st.<ref name="BTI2022"/>Template:Rp There are no patent laws in Timor-Leste.<ref>Template:Cite web</ref>
Regarding telecommunications infrastructure, Timor-Leste 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, Timor-Leste ranked number 141 overall, down from 134 in 2013.<ref>Template:Cite web</ref>
Timor-Leste is part of the Timor Leste–Indonesia–Australia Growth Triangle (TIA-GT).<ref>Template:Cite web</ref>
Agriculture
[edit]The agriculture sector employs 80% of Timor-Leste's active population.<ref name="wb-expanding">Template:Cite web</ref> In 2009, about 67,000 households grew coffee in Timor-Leste, with a large proportion of those households being poor.<ref name="wb-expanding"/> Currently, the gross margins are about $120 per hectare, with returns per labour-day of about $3.70.<ref name="wb-expanding"/> There were 11,000 households growing mung beans as of 2009, most of them by subsistence farming.<ref name="wb-expanding"/> 94% of domestic fish catch comes from the ocean, especially coastal fisheries.<ref name="ADBWBG2021">Template:Cite web</ref>Template:Rp 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.<ref name="ADBWBG2021"/>Template:Rp Coffee, rice, maize, coconuts, cassava, soybeans, bananas, mango, and sweet potatoes are cultivated here. With 5,014 Metric Tons in 2019, the country was ranked number 42 among other countries in Avocados Production.<ref>Template:Cite web</ref>
After petroleum, the second largest export is coffee, which generates about $10 million a year.<ref name="us-dos">Template:Cite web</ref> 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.<ref>Template:Cite web</ref> In 2019, 186 Metric Tons of cocoa beans were produced and the country was number 48.<ref>Template:Cite web</ref>
Energy
[edit]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.Template:Citation needed The resources were divided between Indonesia and Australia with the Timor Gap Treaty in 1989.<ref>Template:Cite web</ref> Timor-Leste inherited no permanent maritime boundaries when it attained independence.Template:Citation needed A provisional agreement (the Timor Sea Treaty, signed when Timor-Leste 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 Timor-Leste and 10% to Australia.<ref>Template:Cite web</ref> An agreement in 2005 between the governments of Timor-Leste and Australia mandated that both countries put aside their dispute over maritime boundaries and that Timor-Leste 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)<ref>Template:Cite web</ref> from the Greater Sunrise development.<ref>Template:Cite web</ref> In 2013, Timor-Leste 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.<ref name=ABC>Template:Cite news</ref>
At the time of independence Timor-Leste 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,<ref name="WBG2009">Template:Cite web</ref>Template:Rp and by 2011 it had reached a worth of US$8.7 billion.<ref name="irin-asia">Template:Cite web</ref> Timor-Leste is labelled by the International Monetary Fund as the "most oil-dependent economy in the world".<ref name="art4">Template:Cite web</ref> 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.<ref name="irin-asia" /> 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.<ref>Template:Cite news</ref> 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.<ref name="BTI2022">Template:Cite web</ref>Template:Rp A decrease in oil and gas reserves led to decreasing HDI beginning in 2010.<ref name="BTI2022"/>Template:Rp 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.<ref name="BTI2022"/>Template:Rp
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.<ref>Template:Cite web</ref> 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]Development projects
[edit]Electricity
[edit]Oil and gas
[edit]
One promising long-term project is the joint development with Australia of petroleum and natural gas resources in the waters southeast of Timor-Leste.
Timor-Leste 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 Timor-Leste became independent in 2002) defined a Joint Petroleum Development Area (JPDA), and awarded 90% of revenues from existing projects in that area to Timor-Leste and 10% to Australia.<ref>Template:Cite web</ref> 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 Timor-Leste.<ref>transparency.gov.tl Template:Dead linkTemplate:Cbignore</ref>
The government of Timor-Leste 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,<ref>Template:Cite web</ref> but the Australian government had withdrawn from these international jurisdictions (solely on matters relating to maritime boundaries) shortly before East Timorese independence.<ref>Template:Cite web</ref>
Nevertheless, under public and diplomatic pressure, the Australian government offered instead a last-minute concession solely on royalties from the Greater Sunrise gas field.<ref>Template:Cite web</ref> An agreement was signed in 2005 under which both countries would set aside the dispute over the maritime boundary, and Timor-Leste would receive 50% of the revenues (estimated at A$26 billion or about US$20 billion over the lifetime of the project)<ref>Template:Cite web</ref> from the Greater Sunrise development. Other developments within waters claimed by Timor-Leste but outside the JPDA (Laminaria-Corallina and Buffalo) continue to be exploited unilaterally by Australia, however.<ref>Template:Cite web</ref>
Some proceeds from Timor-Leste's petroleum royalties are directed to the country's sovereign wealth fund, the Timor-Leste Petroleum Fund.
Telecoms
[edit]References
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Further reading
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- Mats Lundahl and Fredrik Sjöholm. 2019. The Creation of the East Timorese Economy. Springer. Template:Webarchive
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