Sydney Morning Herald March 7, 2000

Open for business, but a while before good times roll

By MARK DODD, Herald Correspondent in Dili

In the local Tetum language it is known as Uma Mutuk, or Burnt House, restaurant. It is arguably Dili's most popular eatery, and, like the mythical phoenix, its proud owners say their flourishing business has risen from the ashes.

Libania Borges, 38, and her sister, Manuela da Silva, 40, are the owners of the Uma Mutuk, enclosed in the fire-blackened remains of a once stately Dili mansion which was torched by the militias in last year's post-referendum mayhem.

As children, the two sisters were evacuated to Darwin after the 1975 Indonesian. After a 25-year absence they returned to visit their aunt late last year.

During what had been intended as a one-week stay they decided to pool their savings and go into business - a bold decision given that both women were working mothers from a humble background. In Darwin, Ms Borges was a Woolworths sales assistant and Ms da Silva a cashier in a delicatessen.

Their aunt provided the property in Balide district, and the sisters went to work removing truckloads of rubbish, hiring local workers to re-roof and to re-wire the old house. Walls were deliberately left bare, still scorched from fire and complete with militia graffiti.

The addition of flickering oil lamps has helped create a cosy and surreal ambience, and customers have been flocking to the restaurant since it opened on January 3.

Diners have included the United Nations Secretary-General, Mr Kofi Annan, who popped in during his visit to East Timor last month, the independence leader Mr Xanana Gusmao, the Nobel laureate Mr Jose Ramos Horta and the UN chief in East Timor, Mr Sergio Vieira de Mello.

"It's mostly UN and diplomats," Ms Borges said.

"All the big people who come to Dili eat here. We can seat 70 people, and I am very sorry when we have to turn people away, which is most nights."

However, Uma Mutuk is a rare success. For most East Timorese, it is a daily struggle just to survive. Unemployment is at least 80 per cent, and formal start-up capital for small businesses is non-existent because there are no banking services.

The signing last week of a $A2.3 billion petroleum project for the Timor Sea promises revenue and jobs for the fledgling nation.

But what about now? Every day more than 100 people, mostly young men, gather outside the headquarters of the UN Transitional Administration in East Timor (UNTAET) hoping to get work. Most are turned away, and they are becoming increasingly angry and resentful.

Some of that is directed against new businesses, especially those of ethnic Chinese, who have opened groceries stocked with goods from Australia and Indonesia.

The owner of one Chinese business, Mr Peter Yeend, said the key to a trouble-free operation was to look after the workers.

Mr Yeend, 32, formerly of Darwin, is co-partner in Dili Bakery, so far the only breadmaker here. His investment is worth more than $140,000 and he employs eight staff, but said he expected to take on another 20 soon.

"We've only been open one week but it's gone really well. We're baking 200 loaves per day and six or seven hundred rolls. We've earned a good name with the locals. It's a big investment but we believe we'll be able to make something of it. We are not here for the short term. You have to have a long-term view. You cannot come here to East Timor expecting to make a million dollars in a year."

By the end of last month, applications for a UN certificate of business registration exceeded 2,000, said UNTAET's head of trade and commerce, Mr Bertrand de Gramont. About 1,600 were from East Timorese, many of whom include vegetable, fish or beer vendors operating from two-square-metre spaces at the central market.

The rest include 157 applications from foreigners, 106 being Australian, who comprise about 70 per cent of all foreign business applicants, with the balance made up of Hong Kong-based Chinese, many with links to Sino-Timorese, and a handful of Portuguese companies,

mostly selling services.

The most visible Portuguese commercial presence is Banco Nacional Ultramarino, which resumed trading in Dili after a 24-year absence. BNU's return to East Timor raises the issue of property formerly owned by Portugal, including once lucrative coffee estates. Before 1975, BNU was the main underwriter of large coffee plantations either wholly or partly owned by the Portuguese government and its nationals.

After the recent historic visit by Indonesia's President Abdurrahman Wahid at least one Indonesian construction company previously based in Dili has inquired about returning.

East Timor's widespread destruction has provided a bonanza for many Australian companies, leading to charges of price-gouging and profiteering. Many East Timorese complain about excessive charges for the services of tradesmen such as electricians and plumbers.

A Darwin-based charter company, Air North, which has been running a monopoly on the Dili-Darwin route, has been criticised for its over-the-counter fare of $A700 for a return ticket. However, the company does offer a 21-day advance purchase ticket for $A400.

Among the Australian contractors and service providers here are some big names, such as Perth-based Multiplex, Telstra and Westpac. But smaller outfits are here too, especially those already operating only 600 kilometres away in Darwin: North Australian Radio, Perkins Shipping, Rooneys Shipping, Northern Territory Construction Group, East Timor Logistics and Thrifty Car Rentals.

The militia firestorm caused an acute shortage of accommodation in Dili. With added pressure from the incoming hordes of UN officials, police and military, the hotel industry has become the liveliest sector. Among the private sector, it is also one of the biggest employers of semi-skilled workers.

Before the August ballot, Dili had four tourist hotels: the Mahkota, the Risende, the Turismo and the Dili.

The gutted multi-storey Mahkota, home to most of the international media in the lead-up to voting day, is now the town's most visible ruin.

The Risende is a UN billet, and the Turismo, under renovation, serves as accommodation for UN civilian police and the dwindling band of foreign media. The first to get up and running and charging about double its pre-ballot tariff was the Dili, run by Mr Gino Favaro, the son of the owner, Mr Frank Favaro, who first moved to Dili in 1970 and fled just before the Indonesian invasion in 1975.

The 100-room Timor Lodge, a $A2 million investment led by Mr Wayne Thomas, and whose shareholders include the former Northern Territory chief minister Mr Shane Stone, ran into a barrage of controversy over its links with the independence activist Mr Manuel Carrascalao, who claimed a former Indonesian Army barracks as the site for the venture.

Disputing Mr Carrascalao's claim to the land, the UN ordered the premises closed, but under pressure from the pro-independence CNRT, concerned about political fallout from retrenching 150 people, that order has now been rescinded.

Like Timor Lodge, Dili Palms is another joint venture with Australian and East Timorese partners.

The 40-room hotel, comprising prefabricated air- conditioned container accommodation, is a tie-up between the former Labor Federal minister Mr Gerry Hand and three East Timorese businessmen, Mr Ahmad Alkatiri, Mr Francisco Kalbuadi and Mr Oscar Lima.

The latest prefabricated hotel to open its doors is Paximus Lodge, a $A1.2 million joint venture led by the Queensland-based Curtain Brothers.

Logistical problems aside, firms doing business in East Timor face a tangle of obstacles, including a low skills base, a mish-mash of several currencies in circulation, four languages in common use, and no investment law or provisions guaranteeing security of tenure, a key requirement for any big foreign investment.

East Timor may well be open for business, but it will be a long wait before the good times roll.