Situation and cooperation

Students of an agricultural school in Timor-Leste

Thanks to high revenues from oil and gas extraction, Timor-Leste's per capita gross domestic product (GDP) in 2012 was 5,643 US dollars. The In­ter­national Monetary Fund (IMF) estimates that the gov­ern­ment-owned Timor-Leste Petroleum Fund, which is financed from oil revenues, reached a volume of around 14 billion US dollars at the end of 2013. These positive data are only one side of the coin, however. If we subtract revenues from the oil and gas sectors, per capita GDP falls to around one fifth of the aforementioned figure (2012: 1,175 US dollars).

Moreover, wealth is highly unequally distributed. Half of the popu­la­tion lives below the national pov­er­ty line. Life expectancy, which is 68 for women and 65 for men, is below the average for other coun­tries in East Asia and the Pacific. The Human De­vel­op­ment Index (HDI 2015) ranks Timor-Leste 133rd out of 188 coun­tries evaluated.

The management of the Petroleum Fund and the use of gov­ern­ment revenues are scrutinised as part of the Extractive Industries Transparency Initiative (EITI). An EITI assessment dating from 2010 confirms that Timor-Leste successfully complied with the prescribed standards. The high degree of public expenditure on education and health – with each area currently accounting for more than 12 per cent of annual gross domestic product – reflects the government's pro-de­vel­op­ment and forward-looking policy.

One particular feature of Timor-Leste is that the coun­try remained free of debt during the first ten years after its foundation. It was not until 2013 that it borrowed significantly more from the World Bank and the Asian De­vel­op­ment Bank for the first time, in order to expand its infrastructure. Thanks to the revenues generated by the mineral resources sector, the coun­try will remain independent over the medium term as regards its financial policy and will enjoy an unusually high level of creditworthiness for a de­vel­op­ing coun­try.

A difficult en­vi­ron­ment

Timor-Leste continues to face the typical problems of a post-conflict society. Economic structures have barely got off the ground, state institutions are weak and some of the popu­la­tion are traumatised. In 2012 the United Nations High Commission for Refugees (UNHCR) closed its office in the capital Dili after a period of 12 years. Nevertheless, refugees are still returning home – most of them from West Timor – and need to be reintegrated into society.

The violence that followed in the wake of the referendum on independence in 1999 destroyed two thirds of the country's infrastructure. Road networks, health facilities and schools remain in poor condition. In this en­vi­ron­ment, private investment is a difficult undertaking. The World Bank' Doing Business Report 2014, which rates the climate for private business in coun­tries, ranks Timor-Leste 172nd out of 189 coun­tries evaluated.

Improving the infrastructure could also boost the tourism sector. With its natural beauty, cultural diversity as well as its proximity to Australia, there is enough potential for Timor-Leste to become an in­ter­national travel destination.

Education and basic services

Group of schoolchildren and teachers in Timor-Leste. Copyright: Heile/GIZTimor-Leste still has a lot of catching up to do, especially in the areas of education and the provision of basic services. Some 30 per cent of the popu­la­tion have no reliable access to safe water, and around 60 per cent must make do without sanitation. Although energy supply remains at a low level, it has improved significantly over the last few years. According to the World Bank, in 2010 around 38 per cent of people were connected to the electricity grid (compared to 22 per cent in 2009).

The education system remains weak. Some 40 per cent of adults are unable to read or write. Only 57 per cent of young people attend secondary school, despite the fact that almost all children are now enrolled in school.

One of the largest problems is the poor labour market situ­a­tion. Although the official unemployment rate is low – only 3.6 per cent – 70 per cent of people gainfully employed work for themselves, without social protection. Young people are significantly over-represented among the unemployed.

Alongside the extractive industries, ag­ri­cul­ture is the main sector of the economy in Timor-Leste. Around 50 per cent of the working popu­la­tion are employed in this sector, which contributes just 17 per cent of the gross domestic product. Most farmers practice subsistence ag­ri­cul­ture.

Coming to terms with the past, and human rights

According to the World Bank, post-conflict states need between 15 and 30 years to make the transition from state fragility to stable structures. Seen in this light, the social and economic de­vel­op­ment of Timor-Leste has been remarkably positive.

The legal system in Timor-Leste remains inefficient, and is de­vel­op­ing slowly. There is a lack of staff with legal training and the appropriate infrastructure is not in place. The authorities are overstretched and no improvement in the staffing situ­a­tion is likely in the immediate future. So far, the popu­la­tion has therefore developed very little faith in the justice system.

Since gaining independence, Timor-Leste has signed up to the key human rights agreements. Implementing these agreements within the country's own legal system and translating them into national legislation is proving difficult, however. Women in particular continue to face massive restrictions on their rights: forced marriage, trafficking of women, sexual exploitation and domestic violence are widespread. Almost 40 per cent of women over 15 have already become victims of physical violence. A law against domestic violence was passed in 2010.

In 2006 the national human rights institution "Provedoria dos Direitos Humanos e Justiça" was created, with a mandate to promote human rights and good governance, and prevent corruption. So far its work has had only limited effect, however, as the gov­ern­ment implements its re­com­men­da­tions only to a minor extent.

Corruption and clientelism remain a challenge for this young state and its gov­ern­ment. On its Corruption Perceptions Index 2013 the non-gov­ern­ment­al or­ga­ni­sa­tion Trans­parency In­ter­national ranks Timor-Leste 119th out of 177 coun­tries. Efforts to stem corruption are evident, however. An anti-corruption agency has been created, and high-profile legal proceedings have been launched against corrupt ministers and officials.


Government building in Timor-Leste. Copyright: Heile/GIZIn 1999, the UN transitional administration had the difficult task of es­tab­lish­ing a gov­ern­ment and associated institutions for Timor-Leste within a very short space of time. So far, these state institutions have remained weak.

During the Indonesian occupation, Timor-Leste was administered centrally. The transition to a decentralised system which ensures effectiveness, acceptance and responsiveness in all districts is one of the most im­por­tant tasks facing the gov­ern­ment of Timor-Leste. If the population’s expectations are to be met, the coun­try must address the lack of qualified and motivated civil servants, par­tic­u­lar­ly in rural regions.

Priority areas of de­vel­op­ment co­op­er­a­tion

Co­op­er­a­tion with Timor-Leste concentrates on the priority area of peace­building. The overarching objective of German support is to promote the peaceful and economically successful de­vel­op­ment of the coun­try. Peace­building projects, as well as projects designed to improve transport infrastructure and promote employment, are helping achieve this objective.

At the intergovernmental dialogue between Germany and Timor-Leste held in March 2013 in Dili, a commitment of 7 million euros was made as Tech­nical Co­­op­er­a­tion.


Young people in Timor-Leste. Copyright: Heile/GIZTimor-Leste is home to very large numbers of young people, most of whom live in rural regions. More than anything else, peacebuilding means creating prospects for these young people.

Co­op­er­a­tion focuses on supporting a peace fund. The fund delivers financial support to non-governmental organisations and local initiatives that provide services and other offerings to young people aged between 16 and 30. Examples of these offerings include communication training and sports events that transfer methods for non-violent conflict transformation. At the same time, governmental and non-governmental actors are trained in youth work, and networked. It is envisaged that this will lead to the emergence of a national structure for youth promotion in the medium term.

A German-supported employment promotion project gives young people the opportunity to learn key professional and social skills. This will make it easier for them to integrate into the economic and social life of their communities, and enable them to make a practical contribution to securing peace. Germany has so far supported the project to the tune of four million euros.

Another German de­vel­op­ment co­op­er­a­tion project is helping to conserve ag­ri­cul­tur­al biodiversity while at the same time promoting rural de­vel­op­ment in Timor-Leste. Education and further training for farmers and forest workers, as well as awareness-raising campaigns, are to be instrumental in achieving sus­tain­able management. This will also safeguard the livelihoods of the rural popu­la­tion.

De­vel­op­ment of maritime transport

Ferry boat in Timor-Leste. Copyright: Heile/GIZBy financing the ferry "Berlin-Nakroma", Germany has made a significant contribution toward establishing a transport link between the island of Atauro, the exclave of Oecussi and Dili, the capital city of Timor-Leste. The financing of a second ferry will further increase people's mobility and strengthen the country's economic and social de­vel­op­ment. The Government of Timor-Leste is making a significant financial contribution of its own here, thus underlining the political priority which the second ferry also enjoys.

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