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Challenges ahead for Timor-Leste

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Timor-Leste has emerged from its dark past and extremely low levels of development with some cause for optimism. A range of human development indicators, from infant mortality to longevity and education, have all begun to trend more positively, government programs have alleviated some of the worst effects of poverty and infrastructure is being developed.
But Timor-Leste still faces significant challenges, which its new government, no matter who is elected this year, will have to deal with. These challenges fall into three categories; the environment, the resources curse, and human capacity.
At one level, Timor-Leste has a physical environment that is set. The soil is relatively poor, especially on the north coast, its capacity to produce crops is limited and its rainy season is usually brief, in regional terms, but often very heavy. Added to the mountainous nature of the land, cropping is difficult, poor seasons are common and torrential rains can wash away crops in a day.
Exposure to natural ‘shocks’ is made worse by how close many people live to subsistence. Planning for such shocks must be a part of any government’s contingency planning.
These problems are made worse by high levels of deforestation, mostly through the need for fuel wood. In all, Timor-Leste probably has a ‘natural’ carrying capacity of 400,000 people, perhaps up to 600,000, but subject to population reverses in times of hardship. This is roughly consistent with its earlier pre-Indonesian population. It also means that it current population is two to three times more than the land can sustain. This has two consequences.
The first consequence is that Timor-Leste must import food just for its people to survive. This is possible with government subsidised food such as rice, but should the government not have access to disposable income in the future this program will end and the problem of inadequate food will become critical.
The second consequence is that, as the land is less able to support more and larger families through subsistence agriculture, young people are forced to leave the land to look for others ways to survive. Many gravitate to larger towns and to Dili, where they join a large and growing body of unemployment or underemployed.
Population control is, therefore, critical to Timor-Leste’s future. It may not be popular with the church, but even at the reduced rate of 6 live births per woman, it remains unsustainable and a ticking time bomb.
The resources curse has one major, underlying problem and that is, despite the benefits that accrue from income from resources, it beggars the rest of the economy. That is, with resources providing most income or, in Timor-Leste’s case, effectively all income, it is almost impossible to establish any other viable industry, other than those that survive as an indirect consequence of resource revenues, such as from government spending.
This means that, apart from government jobs, work generated by government spending and support industries and job creation programs, employment remains very limited. As a consequence, not only does Timor-Leste have a high unemployment rate, made worse by its unsustainable population, the structure of the economy is such that it will remain high without targeted job creation programs relying on government spending.
Other problems associated with the resources curse include its tendency to promote fiscal irresponsibility – spending without due regard for sustainability, increased corruption and, in some cases, producing a bubble economy that, inevitably, has to burst. When that happens, the money that has fuelled what employment and economic growth there is stops, leading to economic collapse.
Economic collapse can be avoided, but it requires careful short, medium and long term planning and, especially, the sustainable use of the income that is available. One day the oil will run out and, if Timor-Leste has not invested and used it wisely, it will face economic and hence social and political disaster.
Being realistic about what options exist, too, is critical to this planning. Within this context, the Woodside dispute will have to be resolved soon.
Timor-Leste’s opportunities to develop its human capacity have been limited. Portugal did almost nothing and Indonesia did little to develop local capacity and the latter murdered many of the best and brightest ahead of its departure in 1999. Many UN and NGO staff have also found it easier to do tasks in Timor-Leste rather than taking the time to mentor and teach how tasks can or should be done. Similarly, education is improving in Timor-Leste but the benchmark for its institutions of higher learning remains far below world or even regional standards.
Similarly, generations of exclusion have meant there is little understanding of the idea of a ‘work ethic’, not just in private business where there is at least the incentive of profit, but especially in government service. Institutional competence remains shallow and drops off markedly much beyond director level, with the Anti-Corruption Commission, the National Electoral Commission and STAE and the Ministry of Foreign Affairs being among the notable exceptions.
Underlying these issues remains unfulfilled expectations. Ahead of Timor-Leste’s vote for independence, there was a somewhat unrealistic expectation that liberation would solve all problems. Yet the experience of post-conflict and post-colonial states is that problems get worse with independence before they get better. In some cases, they just remain problems, as much of sub-Saharan Africa attests.
The costs of war, the loss of skilled workers and capital and inexperienced government usually mean that state capacity declines when people expect it to increase. As the previous government learned, limited opportunities to address such problems often lead to social breakdown and chaos.
Timor-Leste is now a very much more stable place than in the years immediately after independence, the flow of revenue from the oil fund has made life easier for many, if not all, and all political actors are now more experienced. The challenge now, however, will be how to plan the next five, 10 and 20 years, not just as a series of aspirations but with careful, detailed and concrete steps about how to avoid the pitfalls that trap so many other countries attempting to emerge from poverty and darkness into well-being and light.

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