Economy of East Timor

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Economy of East Timor
Markt in Kural.jpg
Market in Lospalos, East Timor.
At 27%, East Timor's urbanisation rate is one of the lowest in the world.
Currency US dollar (USD) and East Timor centavos[1]
Fiscal year Calendar year
GDP $9.629 billion (2011 est. PPP)
GDP growth 10.6% (2011 est.)
GDP per capita $8,800 (2011 est. PPP)
GDP by sector agriculture: 26.5%, industry: 17.8%, services: 55.6% (2011 est.)
Inflation (CPI) 13.5% (2011 est.)
below poverty line
41% (2009 est.)
Gini coefficient 31.9 (2007 est.)
Labour force 418,200 (2009)
Labour force
by occupation
agriculture: 64%, industry: 10%, services 26% (2010)
Unemployment 18.4% (2010 est.)
Main industries printing, soap manufacturing, handicrafts, woven cloth
Exports $18 million (2011 est; excludes oil)
Export goods oil, coffee, sandalwood, marble, note: potential for vanilla exports;
Imports $689 million (2011 est.)
Import goods food, gasoline, kerosene, machinery
Public finances
Revenues $1.3 billion
Expenses $1.3 billion (2011 est)
All values, unless otherwise stated, are in US dollars

The economy of East Timor is ranked as a low income economy by the World Bank.[2] It is placed 158th by Human Development Index, indicating a low level of human development.[3] 20% of the population is unemployed,[1] and 52.9% lives on less than US $1.25 a day.[3] About half of the population is illiterate.[3]

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%.[4]

The country continues to suffer the after effects of a decades-long independence struggle against Indonesia, which damaged infrastructure and displaced thousands of civilians.

In 2007, a bad harvest led to deaths in several parts of East Timor. In November 2007, eleven subdistricts still needed food supplied by international aid.[5]

There are no patent laws in East Timor.[6]


Prior to and during colonization, the island of Timor was best known for its sandalwood. The Portuguese colonial administration granted concessions to Oceanic Exploration Corporation to develop the deposits. However, this was curtailed by the Indonesian invasion in 1976. The resources were divided between Indonesia and Australia with the Timor Gap Treaty in 1989.[7] 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.[8] 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 East Timor was destroyed by Indonesian troops and anti-independence militias,[1] 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.

Development projects[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 East Timor.

East Timor inherited no permanent maritime boundaries when it attained independence, repudiating the Timor Gap Treaty as illegal. A provisional agreement (the Timor Sea Treaty, signed when East Timor 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 East Timor and 10% to Australia.[9] 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 East Timor.[10][dead link]

The government of East Timor 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,[11] but the Australian government had withdrawn itself from these international jurisdictions (solely on matters relating to maritime boundaries) shortly before East Timorese independence.[12]

Nevertheless, under public and diplomatic pressure, the Australian government offered instead a last-minute concession on Greater Sunrise gas field royalties alone.[13] On July 7, 2005, an agreement was signed under which both countries would set aside the dispute over the maritime boundary, and East Timor would receive 50% of the revenues (estimated at A$26 billion or about US$20 billion over the lifetime of the project)[14] from the Greater Sunrise development. Other developments within waters claimed by East Timor but outside the JPDA (Laminaria-Corallina and Buffalo) continue to be exploited unilaterally by Australia, however.[15]

Some proceeds from East Timor's petroleum royalties are directed to the country's sovereign wealth fund, the Timor-Leste Petroleum Fund.



  1. ^ a b c East Timor entry at The World Factbook
  2. ^ Timor Leste – World Bank
  3. ^ a b c "HDI". UNDP. 
  4. ^ "Highlights of the 2010 Census Main Results in Timor-Leste". Direcção Nacional de Estatística. 
  5. ^ Voice of America, 24.06.07, East Timor Facing Food Crisis and Ministry of Agriculture, Forestry and Fisheries of Timor-Leste
  6. ^ "Gazetteer - Patents". Retrieved 2010-03-28. 
  7. ^[dead link]
  8. ^ "Radio Australia". Archived from the original on 2007-01-02. 
  9. ^ "". Retrieved 2010-03-28. 
  10. ^[dead link]
  11. ^ East Timor and Indonesia Action Network
  12. ^; United Nations]
  13. ^ "Downer's spin and the East Timor talks". Archived from the original on 2005-12-01. 
  14. ^ Geoff A. McKee, oil and gas expert engineer, Lecturer, University of NSW, Sydney, Australia. "". Retrieved 2010-03-28. 
  15. ^ "". Retrieved 2010-03-28.