THE TRUE TEST OF EAST TIMOR

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Dalih Sembiring - February 06, 2011 - JAKARTA GLOBE

East Timor, officially known as Timor-Leste, is experiencing an economic boom. The problem is that it’s only happening in the country’s capital, Dili, and it’s only benefiting a small number of people.

Fernanda Borges, known as one of the most vocal members of East Timor’s Parlamento Nacional, has a clear idea of what is driving the country’s economy and why it is so focused on the capital.

“At the moment, it’s all about construction. Everyone wants to be in construction and development,” she said.

It’s a situation that has fueled double-digit growth in the country’s economy over the past three years. But, according to Borges, all this success could be coming at the expense of more balanced growth in other sectors of the economy.

“Not much attention is being paid to creating conditions necessary for us to be able to, say, strengthen our livestock and horticulture exports, which a lot of women are involved with, on the border between Indonesia and East Timor.”

Interviewed in his brand new office in Dili, the country’s president, Jose Ramos-Horta, agreed with Borges’s assessment.

“Dili is becoming a boomtown. We have traffic jams almost all day long — the number of cars and motorbikes has exploded in the last two years. You see thousands of stores and shops in the city, but drive an hour outside of Dili and you see next-to-zero development in rural areas.”

This lack of growth in rural areas seems entrenched, despite 12 percent annual increases in the economy over the last three years. Over 60 percent of businesses are centered in the capital city.

Those living outside of Dili have, by and large, been forced to fend for themselves.

In Bobonaro district, farmer Rui Naibau Melo has been keeping himself updated on the progress of repairs to a bridge over the Loes River along the main route between the district’s capital Maliana and Dili.

The bridge was damaged over two weeks ago, but, to date, no crews have shown up to fix it. Rui frequently ships his cattle along this route and if the bridge collapses, his livestock and other goods will have to be shipped via a far more demanding route to reach Dili’s markets.

This is just the tip of the iceberg when it comes to the problems Rui is facing in his livestock business.

As one of only four cattle suppliers in Bobonaro, Rui has not been allowed to continue trading his cows and water buffaloes across the border into Atambua in East Nusa Tenggara (NTT), Indonesia, since new regulations took effect last August.

“My cattle exports to Indonesia were slowed down in 2005, when the Indonesian government issued a new regulation,” Melo said.

“Before that, I could easily send cattle across to Atambua twice a month, about 80 to 100 cows each time.”

Bobonaro is one of East Timor’s three districts that border NTT. In its vast, hill-fringed dry fields and savannas, cows, water buffaloes and goats are set loose by their owners to graze. Fences are not part of the local custom here.

Just like in many parts of Indonesia, the animals here function as financial assets, and are a common form of belis , or dowry.

Traditionally, grazing cattle have been moved from East to West Timor and vice versa according to what land had the best pasture.

The establishment of a definitive border between the Dutch-colonized western half and the Portuguese-colonized eastern half of the island in the early 20th century made this practice more difficult, but it wasn’t until Indonesia took control of East Timor between 1976 and 1999, that cattle herds began to be thought of as business assets rather than just personal possessions.

After gaining its independence in 2002, East Timor was allowed to ship 2,000 head of cattle to Indonesia per year.

But many of these small suppliers have become inactive due to their inability to compete with the illegal trade of livestock and other goods that is rampant along the country’s borders.

Helio Sinatra Tavares, executive director for external trade at East Timor’s Ministry of Tourism, Commerce and Industry, is aware of the illegal trade along the border that takes place in Batugade, Salele and Bobometo.

“This is happening behind everyone’s back. The border is so wide that even 500 border police are not going to be effective,” Tavares said.

As a preventive step, the Indonesian government has threatened to blacklist any East Timor cattle suppliers caught engaging in this illegal border trade.

Yosep Bere Buti in Atambua, Belu district, used to have a permit to sell cattle he imported from East Timor to several Indonesian buyers, but he thinks obtaining and keeping these permits up to date is becoming more trouble than its worth.

“Since 2005, I have to get the permit all the way from the Directorate General of Animal Husbandry in Jakarta and it’s only valid for three months,” Buti said.

“Moreover, the price of cows from Maliana has gone up. Meanwhile, the East Timor government has raised the number of cows allowed for each shipment outside the country to 50, which is a big number for the buyers there.”

The familial relations and a shared language and culture that exist between inhabitants of Indonesian West Timor and independent East Timor have helped create good conditions for business partnerships, but the harsh fact remains that almost all of what Indonesia imports from East Timor can also be obtained domestically.

Mech Saba, head of the NTT’s Chamber of Commerce and Industry (Kadin NTT), said there is no commodity that Indonesia really needs to import from East Timor.

A lack of structure and oversight adds to the difficulties of doing business with East Timor.

The world’s second-youngest nation has yet to push a lot of laws and regulations through its parliament. As a result, Doing Business, a cooperative study by the World Bank and the International Finance Corporation, recently ranked the country 174 out of 183 economies in the ease of doing business category.

Meanwhile, East Timor is importing a great deal, with the largest amount of merchandise coming from Indonesia.

According to a draft of the World Bank’s Diagnostic Trade Integration Study in August 2010, Indonesian goods accounted for 47 percent of East Timor’s total imports between 2004 and 2008.

But until something changes, East Timor, a country of nearly 15,000 square kilometers in size and slightly over one million people, will be forced to rely on exports of its horticultural commodities as a main source of income.

The country is also getting creative in hunting buyers for its goods.

Big and small entrepreneurs have been increasingly making use of a nonprofit organization named Peace Dividend Trust.

The organization specializes in connecting sellers with international agents working inside and outside the country.

The effort is undertaken either through direct lobbying or using the organization’s Internet business database and matchmaking service, which can be found online at timor.buildingmarkets.org.

There has been a 240 percent increase in visits from Indonesian buyers in the six months since the site was translated into Indonesian last July.

PDT, with it’s slogan, “Buy Local, Build Timor-Leste,” has been a big help in the eyes of local business owners.

As of the end of 2010, the organization was responsible for over 13,000 new contracts with approximately 12 percent of these being in the agricultural sector — the vast majority being cattle, mungbeans, and soybeans — and over 600 tenders being distributed to East Timorese entrepreneurs.

There are, of course, obstacles for smaller entrepreneurs, but it turns out that the main obstacle boils down to simple communication.

A cross-border event hosted by PDT last November on the border of Bobonaro and Indonesian West Timor, attended by entrepreneurs, government officials, representatives of the chambers of commerce, customs officials and border police from both sides, resulted in the realization that the main barrier to improving border trade is getting everyone on the same page.

Domingas dos Santos, a PDT representative, has made multiple trips to West Timor in an attempt to find and break down communication barriers.

On one trip she discovered that buyers there found that the crops from East Timor were of poor quality.

“The PDT began working with the [Bobonaro] Chamber of Commerce to hold workshops. We informed [farmers] about the right way of planting and looking after their crops and harvest. As a result, these farmers are selling a lot more of what they grow,” said Santos.

East Timor’s Chamber of Commerce and Industry (Ccitl) is also lobbying countries other than Indonesia.

“Starting this year, one company will be exporting large amounts of turmeric to China, which is also interested in our fruits and wild scorpions,” said Ricardo Nheu, vice president of the Ccitl.

“We are cooperating with Malaysia for [the opening of] rubber plantations. We are trying to open ways to export cattle to Malaysia too. The biggest importer of our coffee is the US and Europeans like our spices.

“Everything we grow is organic,” he added.

“The government is just beginning to focus on larger export items that can balance out our trade deficit. The next step is giving subsidies and fighting for a banking loan system to support the export sector.”

The challenges are many, but the world’s second-youngest country is far from taking them lying down.
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