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Dr George Quinn
East Timorís new government is facing the first substantial test of its problem-solving capabilities. As many have predicted, unemployment is emerging as a pressing issue in the newly independent nation. Although undertaken in stages, the departure of the United Nations administration with its budget, staff and programs, is already starting to bite. Representatives of East Timorís fledgling indigenous business community report a downturn in activity, especially in construction. They predict that this will lead to a significant rise in unemployment unless the new governmentís Department of Public Works streamlines the calling of tenders for new projects.
Two new factors are exacerbating the unemployment problem. First, the pace of returns from the refugee camps of West Timor has quickened since shortly before independence in May. Over the last year, refugees have been returning home at an average rate of around 1500 a month, but for the past four months the monthly rate has risen to more than 2000. Early in July, a convoy of 227 trucks and buses took 1163 returnees back to their home villages in East Timor. This was the biggest single repatriation since last year. It is gratifying to note that the profile of recent returnees shows a steadily increasing (but still relatively small) number of ex-Indonesian civil servants and military personnel.
A second, much more ominous factor, is the slowly tightening grip of a new El Nino across the islands of Southeast Asia. With its relatively dry climate and irregular rainfall, the island of Timor is particularly vulnerable to El Nino. East Timor experiences a short monsoon from December to February. Along the south coast a second monsoon may arrive in the middle months of the year. At other times the weather is dry, and these dry periods lengthen during El Nino events. Already there are reports of poor crops, malnutrition and the threat of starvation in parts of West Timor. In the east, the recovery from the 1999 destruction of farm tools and animals has been rapid, but it is fragile. If the new El Nino develops as El Ninos have in the past, thousands of unemployed people will pour into East Timorís already economically stressed urban areas.
Although a border has now rung down between East and West Timor, the two halves of the island remain locked in a symbiotic relationship. Indonesiaís process of decentralisation and regional autonomy has prompted the provincial government of East Nusa Tenggara (Nusa Tenggara Timur or NTT) and the kabupaten-level governments, especially of Belu and Timor Tengah Utara, to look towards East Timor as a possible source of locally generated income (pendapatan asli daerah or PAD). Hopes are being invested in cross-border trade with new market facilities being built along the West Timorese border with Oecussi and with East Timor proper. But the development of this trade is being hampered by border formalities and by the heavy security presence on both sides. Predictably, smuggling between the two halves of the island is re-emerging with all the old vigour of colonial times. Motor spirit and domestic goods, in particular, are moving into East Timor from neighbouring areas of Indonesia in exchange for East Timorís precious United States dollars.
The chronic weakness East Nusa Tenggaraís economy is fuelling calls in some quarters for the government of Indonesia, and of East Nusa Tenggara, to press a claim on East Timor and Australia for Ďequalí access to the oil and gas wealth of the Timor Sea. At present this is no more than a very minor local voice. But resentment over the attention being paid to East Timorís economic reconstruction, and the relative neglect of the West, has the potential to exacerbate if economic conditions in West Timor continue to deteriorate. Installations in the Timor Sea could be very vulnerable to sabotage from nearby West Timor. Ultimately the only way to prevent this scenario from developing is for West Timorís economic plight to be addressed with the same single-mindedness that has been brought to bear on East Timorís problems.
WATCHPOINT: Timorís future security is an island-wide issue, not a partisan nationalist one.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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