Last updated: 26 Oct 2012
Doing business
Current business situation
In 2011, East Timor ranked as Australia's 103rd largest goods trading partner, with total merchandise trade valued at $42 million. Australian exports to East Timor were valued at $30 million with major items including passenger motor vehicles, refined petroleum, electrical machinery and parts and beef. Imports were valued at $1 million, and were mostly coffee. East Timor has had preferential duty free access and quota free access to the Australian market since July 2003.
East Timor's economy is largely based on offshore oil and gas exploration in the Timor Sea. East Timor has established a Petroleum Fund to manage its petroleum revenues transparently and sustainably. As at August 2012, the fund was valued at US$10.8 billion. The East Timorese Government released a Strategic Development Plan in July 2011 and is seeking to use its oil revenue to support of long-term economic development, diversification of the economy and poverty reduction. The Government Program of the Fifth Constitutional Government, sworn in on 8 August 2012, outlines its priorities for the development of infrastructure and social services and initiatives to generate employment and private sector growth over its 2012-2017 term in office.
Agriculture, largely at subsistence level, dominates the East Timorese non-oil economy, accounting for over 30 per cent of GDP and around 75 per cent of employment. Coffee accounts for around 90 per cent of non-oil merchandise exports. There has been little onshore minerals exploration, but gold, oil and gas, manganese and marble have been identified as potential resources. These industries are under-developed and would benefit from international investment and development.
The sectors offering the majority of opportunities are oil and gas, infrastructure and building and construction inputs. Business opportunities in East Timor will increasingly relate to major infrastructure projects, particularly as the government ramps up public spending on these to achieve goals in the Strategic Development Plan.
There are also opportunities either directly or indirectly related to aid-funded activities. Public sector opportunities are often funded with donor countries, including by AusAID. The Asian Development Bank (ADB) is focused on infrastructure activities while the World Bank is focused on both infrastructure and social sector activities. Private sector opportunities are predominately in the services sector catering to international staff working in East Timor.
Major government procurements are handled by the National Procurement Commission. East Timorese Government tender opportunities are advertised on the Government’s Procurement Portal website. Most donor partner tender opportunities are advertised internationally. Smaller value contracts might only be advertised in East Timor. Many opportunities also require on-the-ground market intelligence to be identified.
For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade - Country economic fact sheet.
Business culture
Business tips
Tetum and Portuguese are the official languages of East Timor, with some English spoken in business circles. Indonesian is also used widely, especially in rural and regional areas. Knowing the local languages will assist in both a business and social setting.
The handshake is the most common form of greeting in East Timor.
Timorese traditions of clothing are modest. Garments above the knee (for both men and woman) are rarely acceptable in a professional or traditional social occasion. A relaxed dress code applies with collared shirt and pants appropriate for most business meetings. Light-coloured, natural fabrics such as cotton and linen are recommended for protection against mosquitoes. More formal attire is suggested if visiting senior East Timorese business and political leaders.
Pre-arranged appointments are highly recommended as contacts frequently move around East Timor and to and from Australia, often at short notice. It's a good idea to confirm meetings a day before the scheduled time and be prepared to reschedule at the last minute. It is polite to wait until your host invites you to sit down, or to eat and drink.
Setting up in East Timor
A new foreign investment law was passed by the East Timorese Parliament in 2011, which aims to simplify business registration for foreign investors. In 2012, the East Timorese Government established a Registry and Verification of Enterprises Service (SERVE) for one-stop registration of businesses. The Government has also established an agency to promote foreign investment and assist investors called TradeInvest Timor-Leste. A Chamber of Commerce and Industry (CCI-TL) was established in 2010.
The International Fincance Corporation (IFC) provides advice on the process of starting and running a business in East Timor in its Doing Business report.
The business environment in East Timor presents challenges to foreign investors. There is no collateral law and no form of regulated security against which borrowers can apply for credit. There are currently only two insurance providers in the market. Although company, foreign investment and labour laws are in place, property rights may be difficult to enforce through the courts and there is no land law in place. Business-related legislation is published (in Portuguese and Tetum) in the official Journal of the Republic.
Banking and Finance
Three commercial banks operate in East Timor and provide personal and business banking:
The ANZ Bank maintains a network of ATMs in Dili and Baucau.
Links and resources
Government, business and trade
Government of Timor-Leste – http://timor-leste.gov.tl/?lang=en
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.