The Launch of Oxfam in Timor-Leste's program, 'Strengthening Voices for Pathways in Good Governance' in Dili, Timor-Leste on 26 September 2019.

From left to right: Laura de Jesus, Director of Codiva (LGBTIQ-rights organisation), Cesario da Silva, Director of Assosiasaun Defisensia Timor-Leste (Disabled People’s Organisation), Alberto Gonzalves, President of UNAER (Ermera Farmer’s Cooperative) and Fernando da Costa, Senior Manager for Partnerships and Influencing at Oxfam Timor-Leste.

Inclusive Voices for Economic Diversification in Timor-Leste


Introduction

Timor-Leste’s oil-dependency, one of the most oil-dependent in the world, is a political and economic reality. While the challenge and need to diversify its economy is well-known among policymakers, communities outside of Dili are excluded from this debate. Timor-Leste lacks a discussion about what economic diversification means for communities - and what is the way to achieve a diversified economy.

Strengthening Voices for Pathways in Good Governance

In September 2019, Oxfam in Timor-Leste launched a new program called ‘Strengthening Voices for Pathways in Good Governance’ (Hadalan Lian Ba Governasaun Diak in the national language, Tetun).

Over the next two years, the Hadalan program will bring diverse and inclusive voices together, particularly from rural communities, to create a dialogue on economic diversification and the everyday challenges and solutions needed to foster inclusive economic growth. At the program inauguration, Oxfam launched ‘Towards Economic Diversification in Timor-Leste’, a succinct report that explores key economic concepts and highlights the urgency to diversify Timor-Leste’s economy.

The launch included the Minister for Legislative Reform and Parliamentary Affairs, Australia’s Ambassador to Timor-Leste; and community leaders from the LGBTIQ community, people with disabilities and representatives from local farming cooperatives.

Inequality in Timor-Leste

While Timor-Leste’s economy has been growing, largely due to its rich natural oil and gas resources, benefits are only flowing to the small middle-class in the capital city, Dili. The poverty gap between the urban and rural areas has continued to expand in the past decade, with poverty rates in Dili of 25% compared to 80% in rural areas.

A key challenge contributing to growing wealth inequality in Timor-Leste is the lack of development of critical key sectors to address poverty, such as agriculture. Nearly 70% of the population relies on subsistence farming for their livelihoods. Despite the population majority depending on agricultural, there has been no real growth in the agricultural sector since 2010. The lack of investment is stark, with the 2019 State Budget allocating just $14.7m USD to agriculture. This has been a decreasing allocation since 2014, when the government allocated $28m USD. In fact, under investment is clear as research suggests only 30,000 out of 70,000 hectares of viable farming land is actively in use. There is significant untapped potential to boost food and income security for the rural population in Timor-Leste.

Government priorities

The Timor-Leste Government has developed a vision to grow into an upper-middle income country with an educated and healthy population in 2030. According to this plan, agriculture, tourism and manufacturing are identified as the key non-oil sectors to diversify its economy.

While the Timor-Leste Government have made these commitments, having a closer look at the budget over the past decade tells another story.

In Timor-Leste, the government has mostly taken a ‘top-down’ approach to economic development. This approach is through large-scale infrastructure development, with the assumption that creating large-scale infrastructure will promote local industry growth. Infrastructure investment has consistently taken the largest share of budget allocations, equivalent to 22% of the total budget alone. A closer look at the infrastructure funding shows a majority going to roads and bridges (53%), the Tasi Mane project, a development project for petroleum infrastructure over the next two decades (14%), and airports (3%). This is in stark comparison to infrastructure funding allocated for irrigation for agriculture (0.6%), health (0.3%), education (0.2%) and tourism (0.1%).

Although the government has indicated intention to diversify and develop its economy, key sectors such as health, education, tourism and agriculture were better funded in 2009 than they are in 2019.

Inclusive growth

While Timor-Leste’s economy has grown, it is important to distinguish it from ‘inclusive economic growth’, in which the most poor and vulnerable communities are benefitting from this economic growth.

Due to the focus on large-scale infrastructure projects, economic growth of the country has only benefited the small and growing middle-class in Dili. Most importantly, a majority of the funds for large-scale infrastructure projects, such as the Tasi Mane project, goes towards foreign companies. And while these same infrastructure projects do stimulate some local job economic growth, the local employment prospects dry up once the infrastructure project has been built – reflecting only a short-term gain for a small part of the population.

Towards an inclusive future

The goal towards an inclusive future in Timor-Leste is today’s challenge, particularly the need to develop key sectors such as health, agriculture, tourism and education. Oxfam’s ‘Strengthening Voices for Pathways in Good Governance’ program aims to contribute to the economic diversification debate by amplifying local community voices in this debate to influence  - and achieve - inclusive development for all people in Timor-Leste.