Subject: East Timor eyes economic ties with Indonesia

The Jakarta Post September 11, 2001

East Timor eyes economic ties with Indonesia

By Yemris Fointuna

DILI, EAST TIMOR (JP): The United Nations Transitional Administration in East Timor (UNTAET) is planning to forge economic cooperation between the former Portuguese colony and Indonesia's province of West Timor, the other half of the island of Timor.

This is one of the programs to be tackled by a development commission to be set up here this month.

At a recent press briefing here attended by journalists from West Timor, UNTAET chief Sergio Viera de Mello said he hoped to meet with President Megawati Soekarnoputri in the near future to propose the program.

"There should be mutual benefit if the two countries cooperate in the economic sector given their close geographical proximity," de Mello said.

He said he also hoped to discuss the program with other senior Indonesian officials, including Coordinating Minister for Political and Security Affairs Soesilo Bambang Yudhoyono and Minister for Foreign Affairs Hassan Wirayuda.

The program would come under the aegis of a council on East and West Timorese economic cooperation to be set up soon, de Mello said.

East Timor presidential candidate Xanana Gusmao is a strong supporter of the program.

Xanana recently said that although East Timor is rich in natural resources, they were still largely unexploited. The country could not develop without the support of foreign countries, especially its nearest neighbor Indonesia, he said.

His blunt statement reflects the reality in that almost all basic needs come from either Kupang, Makassar or Surabaya.

Countries like Australia and Portugal only supply cars, electronic products like cellular phones, and motor cycles.

The Jakarta Post found during a recent token survey that some 315 commodities on sale had been imported from Indonesia. In any given shop about 90 percent of the labels on the products sold are foreign names.

Xanana said he hoped that in return Indonesia would open itself to East Timor's exports of agricultural products.

A number of East Timorese products, such as coffee and copra, have already entered the world market.

Sigit Wardono, Indonesia's Economic Section head in KUKRI (a consul-general level representative office based in Dili) was upbeat about the program.

"The non-oil and gas commodities bring in US$3 million in revenue for Indonesia," Sigit said.

In the aviation sector, Indonesia's Merpati Nusantara Airlines serving the Denpasar-Dili route contributed about US$500 million from January 2000 to August 2001. Another source of income, estimated at US$15 million annually, was from United Nations' staff visits to Denpasar and other places in Indonesia.

Indonesian products that currently dominate the East Timor market include aviation fuel, diesel, kerosene, LPG, zinc, cement, wood, nails, cooking oil, packaged noodles, mineral water, beer, cigarettes, as well as hundreds of other products.

Manuel Gutteres, an importer based in Dili, said East Timor's economy would not be able to develop without the support of Indonesia.

He said he had once imported packaged noodles, cooking oil, cigarettes and cosmetics from Singapore but they were not well-received by the East Timorese as they had been used to Indonesian products.

The planned program has also won the support of Xanana Gusmao, the former independence fighter.

Two years into its independence, East Timor with a population of more than 730,000 has yet to boast income taxpayers from the business and industrial sectors.

The handful of foreign firms operating in the country are mostly involved in the services sector, such as hotels and restaurants.

Observers say that once East Timor has a legitimate government, the country's economy will take off.

East Timor held its first free election last week, two years after it voted to split from Indonesia. The territory had been a Portuguese colony for four centuries before Indonesia invaded it in 1975 and withdrew in 1999 leaving a totally ruined Dili and a still largely impoverished territory.

The country's current development budget of over US$800 million is subsidized by various agencies of the United Nations.

Almost the entire area of East Timor is rich in minerals and agricultural as well as forest products.

The right approach to its development could turn it into another Brunei or a country on a par with any of the Middle Eastern countries.

However, the dire quality of its human resources is testament to the low-level of development in its economy.

The writer is The Jakarta Post's correspondent based in Kupang, West Timor.

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