Subject: SCMP: East Timor's big coffee break
Date: Sat, 27 Mar 1999 09:24:15 -0500
From: "John M. Miller" <>

Received from Joyo:

South China Morning Post Thursday, March 25, 1999

East Timor's big coffee break

Beans means business in a territory struggling for independence and self- sufficiency, reports Jenny Grant in Dili.

Coffee farmer Luis Sarmento Dos Reis lugs smooth river stones up to the main road near his farm, adding to a pile that will be used to build the giant Santo Paulus church in the mountain town of Maubisse in East Timor.

Mr Dos Reis volunteers to help build the towering church as thanks for the healthy income of US$705 (HK$5,500) he received from his coffee harvest last year.

In the misty dusk of this former colonial resort town, the maroon coloured branches of the coffee trees spill over on to the road like wild bushes. Green fruit buds are appearing on the trees and will turn red by harvest time next month.

Back in the capital Dili, 50 kilometres further north, Mr Tony Marsh of the National Co-operatives Business Association (NCBA) slurps samples of coffee from different regions of East Timor.

"Coffee is a business, so despite what is happening politically farmers just want to get their harvests to market. We'll do everything we can to ensure that happens," says Mr Marsh. NCBA which began here in 1994 with 700 members now has 70,000 farmers selling them organically grown coffee. That is 80 per cent of East Timor's coffee producers who work one-quarter of East Timor's 40,000 hectares of coffee growing area.

The American government-sponsored, non-profit making company single-handedly broke the military's monopoly on coffee through its trading companies PT Denok and PT Salazar, which are now waiting to see if they will buy coffee this year. The growth of the coffee industry - which could earn East Timor US$30 million annually in the next 10 years - is one model other industries are now looking at to exploit.

The Free Timor Economic Development Plan, a report produced by the National Council for Timorese Resistance, reveals how East Timor could survive without the US$50 million funds from the central Indonesian budget. It warns that despite rich resources of oil, natural gas, marble, and fisheries, the new country would run at an annual deficit of up to US$150 million forcing it to rely heavily on foreign aid.

"Without significant support over the next 25 years it has no chance. Within that period there is some small scope for beef export, fishing and tourism," said one foreign diplomat. The territory also has a crucial shortage of doctors, teachers and engineers needed to replace senior level Indonesian bureaucrats and professionals.

Development advisers in East Timor warn against the damaging impact foreign aid could have on the potentially new country where unemployment has left hundreds of young men loitering by the roadside with nothing to do.

In the short term political instability is having a dire effect on the economy. A strange air of excitement about the departure of some 20,000 migrant residents hangs over Dili.

Houses can no longer be sold because of a flood of properties on the market, and port authorities say around 800 cars have been exported, leaving the tree lined roads quieter than usual. Many locals see it as their chance to step into the shoes of businesses that have been dominated by the arrival of 150,000 other Indonesians under the rule of former president Suharto when high levels of inter-island resettlements were encouraged.

Even the ethnic Chinese community is pleased to be free of economic migrants. "We Chinese are close to the East Timorese because we were born here. Now maybe we can start all over and boost our trade again," says 27-year-old Lay Siuw Tjan, whose family has been in East Timor for three generations and who speaks the local Tetum language fluently.

The family runs the Sumber Laris general supply shop which is decorated with both pictures of Catholic saints and a Confucian shrine. Although specialising in holy statues, sugar, and honey, the Tjan family has also set up its own coffee packaging business.

Mr Tjan said his daily takings have dropped from US$175 to US$12 since President Habibie announced in January he was prepared to give the territory independence.

Most local Chinese have left for Darwin in northern Australia and have rented out or sold their shops to tough Chinese traders from the East Java town of Surabaya.

East Timorese here say they have not been able to build businesses because credit from the Regional Development Bank generally goes to Bugis, Padang and Javanese people living in East Timor. But aid worker Gilman Esposito do Santos says his fellow islanders have a bad track record on credit. Responsible lending is something that must be encouraged in the new East Timor.

"The bank managers do not trust East Timorese because there are some who are not serious about their businesses. Although I am East Timorese I am ashamed to say they have not paid back their loans," says Mr do Santos, who heads East Timor Aid and Development, which is partially funded by the Canadian government.

Mr do Santos promotes grassroots small business programmes which, he says, could be the key to the steady economic growth East Timor will need to stand alone.

Probably the most successful case is former guerilla leader Ma'Huno who now operates a marble business in Hera, 12 kilometres out of Dili. PT Marmer, the former marble monopoly owned by Suharto's daughter Titiek Prabowo, went bankrupt two years ago. "I am involved in marble to prove it is a viable business for local East Timorese," says Mr Ma'Huno.

The Suharto family, which clung to East Timor for economic and military reasons for the last quarter century, have dropped East Timor like a hot potato now that its financial future is uncertain and their exclusive access has been severed. A sugar mill planned by youngest son Hutomo Mandala Putra was cancelled and a cement factory project was also shelved.

With East Timor on the brink of economic collapse and political chaos, businessmen who were once successful are trying to change tack.

Oscar Lima, the director of real estate firm PT Surik Mas Loro Sae, says he will shift into coffee this year because he can no longer sell houses.

Hotelier Alex Samara has big plans for his white colonial style Hotel Turismo which overlooks Dili Bay. He wants to add 50 rooms, a swimming pool and a disco to the simple hotel. His niece plans to move from Hong Kong to help build the tourist business.

That is if political stability becomes a reality in the territory that has known only war for 24 years.

Macau casino chief Stanley Ho, who once owned hotels, taxis and other businesses in East Timor, recently met East Timorese independence figure Jose Ramos Horta. Business sources in Dili say Mr Ho wants to open a casino in the sweeping hills of Pasir Putih near a giant statue of Christ the King.

"A casino model development would be very dangerous. Many East Timorese are not working, and they are just sitting around or gambling. If there is a casino it will be a big problem," says Mr do Santos.

East Timor's richest resource may be the tens of thousands of exiles still living in Portugal, Australia and Europe, who are receiving good education and building up savings. If those people can be enticed back to help build East Timor, the territory may have a brighter future.

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