Ainslie Chandler – Despite its war-ravaged past, East Timor has all the hallmarks of a tropical paradise. Swaying palm trees, pristine beaches, coral reefs, misty mountains, hot springs and stunning architecture are dotted around the chaotic landscape that is the world's newest nation.

Decades of war and neglect have taken a great toll on the former Portuguese colony, razed when the Indonesians left after 25 years of occupation in 1999. Most people still live in poverty but the nation is slowly being rebuilt. Many are optimistic that tourism could be the nation's saviour.

I arrived in Dili in five-star luxury, with about 75 other guests aboard the cruise ship Orion, the first cruise line to visit the country after it was declared independent in 2002. After a warm welcome by local dancers, we were herded on to a guided minibus tour of Dili, run by fledgling tour company Timor MegaTours.

Our first stop was the city's famous statue of Christ at Cape Fatucama, about 7km from the city centre.

The bumpy road to the statue winds around the coast, past stretches of ivory beach dotted with traditional fishing boats and dozens of restaurants, empty but for staff fighting a losing battle against the encroaching dust and sand. Pigs and goats scratch in the dirt by the roadside huts and stalls, scattering as cars and buses chug past.

Dili's towering monument to Christ, a present from the Indonesian government during the 1990s, stands with its arms outstretched to Jakarta. If you are relatively fit, climbing the hundreds of steps up to the statue affords fantastic views of the coastline and back over the city.

But our tight schedule did not allow time for the climb, so we jumped back on the bus and headed for the Santa Cruz Cemetery near Taibesi, the scene of one of the most enduring episodes in the country's recent history.

Footage of the massacre of more than 300 mourners by Indonesian soldiers within the walls of the cemetery opened the eyes of the world to the plight of the East Timorese in 1991. A walk through the cemetery also reveals the legacy of generations of war – thousands of young families simply wiped out.

The site of President (and former resistance leader) Xanana Gusmao's new home was next on the agenda but we only got a fleeting glimpse of the construction site as we drove past – suspicious looks from security guards enough to move us along. Gusmao is revered in East Timor and his likeness is a common sight on the side of buildings around Dili.

Driving through the CBD, we headed past the President's office and were told by our enthusiastic guides only the bottom floor is used because the upper level has no roof.

This is true of many of the city's buildings. Burnt-out shops and offices remain full of gaping holes where window panes and roofs once sat, with the impact of widespread looting and destruction by pro-Indonesian militia in the wake of 1999's vote for independence still apparent.

Shopping in Dili is limited – most stock imported Indonesian goods, including cheap CDs and DVDs. The tais markets are reminiscent of Bali's market stalls, offering traditional brightly coloured tais fabric, jewellery and souvenirs at bargain prices.

One legacy of the thousands of United Nations staff and peacekeepers who lived in Dili from 1999 until this year are the hundreds of taxis that work the centre of the city.

The once-busy taxi drivers seem to patrol the city centre in plague numbers, tooting happily at tourists in a bid for business. Most will take you between any two points in the city centre for $US1 (the US dollar has been adopted as East Timor's currency and it is illegal to use anything else). Much of Dili's infrastructure is in need of repair. Open drains run alongside cracked footpaths, giving the air an unpleasant and pungent odour in some parts of town.

Road rules are non-existent, cars always have right of way and the drivers communicate by horn, making walking the CBD an interesting, if harrowing, experience.

After a night on board the Orion, we were dropped at the lush, green haven of Baucau, west of Dili, for day two of our Timor adventure.

Fishermen in traditional boats unloaded their catch on the sand as we were run to shore by the ship's zodiacs before embarking on another Timor MegaTour.

The dilapidated bus transported us up to the Baucau town centre, about 10 minutes inland on a winding road bordered by traditional homes and tropical greenery.

A favourite with tourists is the eerily grand – and pink – Pousada de Baucau, formerly the Hotel Flamboyant. The huge building was used as a torture chamber and military headquarters during the Indonesian occupation but is now a working hotel.

Another favourite is Baucau's Mercado Municipal market building, a massive Portuguese structure raised on stilts.

Unfortunately, our whirlwind tour of East Timor's second-biggest city did not permit us to explore the area, so it was up into the mountains to see the village of Venilale. Thatched-roof homes and smiling children lined the narrow road that winds up through the lush hills and valleys south of Baucau.

An impromptu stop at a weekend roadside market at Garivai caused a commotion among local children, who clamoured to have their photo taken, some of the more savvy ones asking for a dollar for the right to capture their image.

The contrast between the tourists – clean, pale and pudgy with days of overfeeding – and the impoverished locals buying and selling at the markets could not have been more stark.

Back on the bus, we headed farther into the mountains, passing countless traditional tiered fields being worked by Timor ponies.

A quick stop at roadside caves which served as ammunition stores for Japanese troops during World War II and it was on to our final destination, Venilale. The humble town is home to some spectacular Portuguese architecture and a big orphanage run by nuns, the result of decades of fighting in the area.

While Dili and Baucau are interesting places, visitors will find there is little to do once you have seen the major sights. Most East Timorese speak Tetum, which shares official language status with Portuguese.

The Government is developing museums and other historical attractions but for now most tourists hire a 4WD and head into the wilderness.

Hot springs near Morobo are popular and tacklling East Timor's highest peak, Mt Ramelau, is a must for climbers.

Another favourite is the island of Atauro, a two-hour ferry ride from Dili, home to some spectacular coral reefs and diving opportunities.

Despite its lack of infrastructure and a strong language barrier, East Timor has much to offer the intrepid tourist. Diving enthusiasts have already discovered the coral reefs and hundreds of Portuguese tourists come back each year.

If you don't mind hot weather, some unsavoury smells and having to hunt for a Western toilet, the sunsets are spectacular, the people are friendly and the stunning scenery untouched by developers is a rare treat.