Subject: XG: Speech to Australian E Timor Business Council

[from scanned text - John]


Speech of H.E President Kay Rala Xanana Gusmão on the occasion of the Australian East Timor Business Council (AETBC) dinner hosted by The Hon. Dr. Meredith Burgmann

Parliament House

Macquarie Street, Sidney

12 December 2006

The Honourable Dr. Meredith Burgmann, MLC, President of the Legislative Council

The Honourable Reba Meagher MP, Minister for Youth, Minister Assisting the Premier on Citizenship

His Excellency Hernani da Silva, Ambassador of the Democratic Republic of Timor-Leste

Mr. Abel Guterres, Consul General of the Democratic Republic of Timor-Leste

Major General Michael Smith, AO

His Excellency Hamzah Thayeb, Ambassador of the Republic of Indonesia

His Excellency James Dominguez CBE AM, Ambassador of the Sovereign Military Order of Malta to South East Asia and the Far East

Mr. Rodney Lewis, President of the Australian East Timor Business Council

A crisis like the one in Timor-Leste, albeit avoidable, it can be considered as a natural occurrence in a situation of transition. Timor-Leste faced this crisis because it is going through a process of democratic transition and institutional building of a State starting from zero. Thus, we can call this crisis as a crisis of a State in its early stage of development.

In this crisis, our State and all its institutions have accepted their respective responsibilities. Last December the 10th, on behalf of the State as a whole, I apologized to our People for the mistakes we have committed.

We, those charged with governing our country, pursued our own personal, group or institutional interests, instead of the interests of our people as a whole. And we did not want to listen to each other, and we became distant at times when it was necessary to join forces to clearly, humbly and with clarity, discuss our problems and take steps to overcome them.

I recall that in the end of 1999 and during the entire 2000, we traveled from one country to another to mobilize the necessary support for the process already in motion in Timor-Leste. I used to stress that "our people will not embrace democracy with empty stomach".

Today, looking into all aspects of this crisis, which resulted in violence between youth groups and the destruction of goods and properties, we are reminded how easy it is for us to forget what we have promised to our people.

Our main responsibility now is to create jobs for the youth, and it is here that the private sector has a role to play.

These difficult months that we have faced made all the Timorese rethink that there should never again be violence in our country. So, we are committed to establish all the necessary conditions for stability and peace in the country.

About three weeks ago, during one of the National Dialogues sessions to bring about reconciliation among our people, one of the participants, not happy with the presence of the Australian troops in Timor-Leste, labeled them my "Australian brothers-in-law". So it gives me great pleasure to be here today among "relatives" and, more importantly business people who care about Timor-Leste. We would like to see you all investing in our country.

It is a duty but always a pleasure to be able to promote my country and to seek investment and development of opportunities on behalf of my people.

As you well know, in today's global village economy, the competition for foreign investment is intense. Therefore, creating conditions to attract investment - both national and foreign - is fundamental to the economic policy of Timor-Leste.

I was disappointed to learn that a study of the World Bank concluded that Timor-Leste is one of the most difficult countries of the world for the registration of companies.

Among 175 countries, Timor-Leste was ranked 174. Only Congo is worst than us.

This served almost as a wake up call for our Government. Prime Minister Ramos-Horta has stated his commitment to change this situation.

I am informed that Prime Minister Ramos-Horta is giving priority to the following four main areas:

1. Simplifying all legislation and administrative processes relating to domestic and foreign investment;

2. Simplifying the tax system and drastically decrease or abolish many of the taxes and duties;

3. Establishing insurances to business; and

4. Creating a secure environment.

Investment legislation

To help our Government with the efforts of changing the investment legislation, the International Financial Corporation (IFC), trough the annual study sponsored by the World Bank known as Doing Business, made one brief analysis to the Code of the Commercial Register (April of 2006) and to the Law on Commercial Societies (n°. 4/2004). The IFC assessment suggested some changes to those laws, which will improve the prestige of Timor-Leste in respect to the easiness to start a business.

The proposal to the Law of Commercial Societies is ready to be submitted to the Council of Ministers, and once promulgated, changes to the Code of Commercial Register will follow.

The Government is also reviewing all the legislation dealing with domestic and foreign investment, including the law that established Tradelnvest Timor-Leste so that it can become an efficient "one-stop- shop"

All these proposed changes are being carried out in consultation with the Timor Business Forum and the Association of Small Companies, World Bank and IMF. I hope that the Australian East Timor Business Council can also be actively involved in this important process of adjusting our legal business environment, making it more receptive to the needs of investment.

The Government has also taken further steps to change the attitude of public servants who deal with the investors and to simplify procedures, making it easier to invest in Timor-Leste.

In just over four months in office, the Government can be praised for managing foreign investors to again show interest in Timor-Leste. I have been informed that 25 projects, worth almost US$100 million that can create more than 2500 jobs, have been fast--tracked for approval.

The investors are from Japan, Korea, Australia, Portugal Kuwait, Singapore, Indonesia and Thailand. These are projects aimed at developing the important sectors of tourism, infrastructure, energy, fishing and agriculture.

The Government is negotiating with the Kuwait Arab Economic Development Fund for investment in the construction of projects worth up to USD600 million. The projects include roads, bridges, refineries and hotels

The US Millennium Challenge Corporation (MCC) recently selected Timor-Leste as an eligible country for funding in the next fiscal year 2007. There is now a plan to develop with MCC a five-year program of development assistance, with particular emphasis on infrastructure and private sector.

This will include an investment of USD180 million in the power sector to supply electricity to the entire country and to bring down the cost of electricity. Widespread access to inexpensive electricity will have a major impact on the business environment. The program will include USD 160 million invested in the transport sector to improve our 3.000 kilometers of national and district roads, and Dili Airport. It is expected that by 2015 a majority of the population have access to safe water and sanitation.

MCC also aims at enhancing good governance, promoting the health and education for the people, and sound economic policies to encourage entrepreneurship and stimulate economic growth. As a fledging nation we are still in the early stages of our learning curve, so we hope we can make the most of these opportunities, so that democracy can flourish in our country.


The tax system in Timor-Leste is a cumbersome combination of the Indonesian, Portuguese and Australian tax systems. At the moment, individuals and corporations are facing eight kinds of different non-oil taxes to formally operate in the country.

With oil and gas revenues now coming on-stream, we have a unique opportunity to eliminate costly and inefficient tax practices.

Prime-Minister Ramos-Horta has established a task force to review income taxes, with holding taxes, import and excise duties, sales tax, and service tax. The intention is to reduce and/or abolish most of the taxes.

Meanwhile, as an immediate relief, the Government has decided that all commercial and or industrial activities employing one or more national staff, whose taxes have been paid, will have their electricity bills reduced by 50% until 31st December 2006.


I am advised that Prime-Minister Ramos-Horta has initiated contacts to establish insurances schemes for business in Timor-Leste.

One option is to attract international companies to go to Timor-Leste and establish insurance company to support the business environment (and I hope that we can attract some strong interest in that direction, from Australia).

Failing that, our own Government will look into the option of establishing a National Insurance Fund that will assist companies affected by political upheavals.


There are currently 800 troops from Australia and New Zealand in Timor-Leste and this number will prevail until December (and beyond if we still required the same level of military presence). Australia has promised that the troops will not be further reduced below one battalion.

There are currently 800 troops from Australia and New Zealand in Timor-Leste and this number will prevail until December (and beyond if we still required the same level of military presence). Australia has promised that the troops will not be further reduced below one battalion.

The National Police of Timor-Leste (PNTL) has a total 3.000 officers. The Government is working together with the UN Mission (UNMIT) on the screening of these police officers. UNPol has a mandate to help PNTL recover its operational and institutional capabilities. We hope this can be achieved as soon as possible so that law and order can be enhanced and the population can recover their sense of security.

Needless to say that, this improvement of the security environment, will impact on the confidence of the business community.

Apart from the security measures provided by the international forces and UNPol, I initiated a program of National Dialogue to bring together various actors of the Nation to discuss and reflect on the causes, consequences, responsibilities and, above all, the lessons we all must learn from this crisis.

The National Dialogue complements the Government's program known as SIMU MALU, which provides material and logistic support to our internally displaced population and aims at encouraging them to return home.

During this process of National Dialogue, extraordinary meetings were held between senior officers of our Defense Force - F-FDTL, and our National Police - PNTL; myself, the President of Parliament and many other Members of Parliament, the Prime-Minister and many other Members of the Government, representatives of the Catholic Church and other religious congregations, leaders of Political Parties, youth leaders - all took part in this process of dialogue to overcome the crisis.

Members of the Diplomatic Corp accredited to Timor-Leste also took part in many of these dialogues where, men and women of Timor-Leste showed their courage to discuss openly the causes of the recent violence that shook our country and together find ways to ensure that it never happens again.

As a result of this hard work, primarily instigated by the Presidency of the Republic in partnership with the civil society, we have seen our soldiers and police officers, not long ago fighting each other, marching to the Government Palace, where they shed tears together and embraced each other, in a show of strength of our nation, one that succeeded to come into being, solely because it values all its sons and daughters, without any form of discrimination.

Also more then a thousand youths from the most troubled areas of Dili, and rival gangs, poured into the streets in a spontaneous celebration of peace, embracing each other, also shedding tears, showing how much this crisis has affected each and every one of us.

Ladies and Gentlemen

Dear Friends

If the measures of stabilization, tolerance and reconciliation are successful, and so far they appear to be bearing fruit, we predict an increase in economic activity in 2007. This will happen through the stimulation of the return of UN personnel, by the concerted efforts to increase public and private investment, and by the start of the Millennium Challenge Account.

The challenge incumbent upon all of us is to work together to transform the economy and to lift our population out of subsistence agriculture and poverty. At the mercy of subsistence agriculture, children cannot participate fully in school, families will always be susceptible to famine, and people will never save or start their own business.

Ladies and Gentlemen

Dear Friends

This recent movement for peace seen in our country led Prime-Minister Ramos-Horta to say (and I quote): it seems that peace, not war, is breaking out in Timor-Leste.

This show of unity and this courage to embrace each other, at times of deep national crisis are clear testimony that our people will never give up on peace.

As in the 24 years of struggle for freedom, we knew that we could not make it without the support of our friends abroad, the solidarity movement worldwide.

This recent history of our people also thought us that we must be humble enough to acknowledge that, although we have faith that Timor-Leste can become a prosperous nation, as well as achieving its goal of long lasting peace, we cannot do it, without you.

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