Zubaidah Nazeer, Dili – Former investment banker Derek Chua traded in his sharp suits for comfortable clothes so that he could cycle to work each morning here in Timor Leste's capital city.

The 33-year-old Singaporean, the finance director of Timor Leste's only general insurance company, first visited the country two years ago.

Now he is among a growing group of foreigners, including more than 300 Singaporeans, working in South-east Asia's youngest nation, drawn by its economic promise and a government that welcomes foreigners and foreign investment.

On the back of strong petroleum exports, Timor Leste's growth hit double digits in the last three years. The economy this year is expected to grow by 10 per cent for the second straight year.

The young nation still needs a suite of infrastructure and services to build up its economy. As a result, Dili is bustling with new developments and businesses.

Companies from China are putting up power lines in and around the city, as well as in government buildings such as the Presidential Palace. Traders from China run provision shops, as well as hotels and restaurants. Australian oil companies are involved in projects in the south.

Indonesia recently said it would do more to boost trade and infrastructure, and has indicated an interest in investing in Timor Leste's oil and gas sector.

Singaporeans are in businesses ranging from financial services to plantations and retail. One of them is Bill Tan, 68, who began his coffee export business after buying a 3,000ha plantation in 2005. He employs 140 workers at his processing plant and exports his arabica beans to European markets.

But being a pioneer in an undeveloped market has its challenges. These include the lack of regulations, insufficient infrastructure and a low-skilled labor force among the population of 1.1 million.

Getting in and out can be a challenge as well. There is only one airport, with flights to just three destinations from Dili – Singapore, Bali and Darwin, Australia.

Investors complain about the slow pace of doing business and lack of transparency. A businessman in land development said: "There is a lot of bureaucratic red tape and sometimes, agreements change, bogging down progress."

Collin Yap, 40, whose company, National Insurance Timor-Leste, celebrates its first birthday this month, said he started from scratch. "We worked with the central bank... The whole process of securing licenses and clearing government and financial checks took us 20 months," he said. "The key is to build rapport and show you are sincere."

Timor Leste's government says it is aware of these problems and is working to fix them. In a recent interview with The Straits Times, Economics and Development Minister Joao Goncalves listed the government's three priorities as building roads, ensuring a stable power supply and providing clean water.

Some of these projects would be paid out of the country's Petroleum Fund – a sovereign wealth fund in which surplus oil and gas income is deposited – that stands at $7.4 billion. The government has taken $450 million from this fund for a power plant in Dili.

Goncalves also cited investor-friendly rules like cutting company taxes from 30 percent to 10 percent and allowing companies to claim full depreciation costs in the first year. "We are looking at improving accessibility... We have devoted this year to make infrastructure development a top priority."

Against this backdrop, Timor Leste is seeking to become Asean's 11th member, even as other countries feel it is too soon. The worry is that it will not be able to catch up with its neighbors, which have spent the last few years removing tariffs and streamlining Customs procedures, among other things, to achieve Asean economic integration by 2015.

During an interview, President Jose Ramos-Horta gave assurances that his country, which has no external debt, was not expecting financial help from Asean states. Foreign Minister Zacarias da Costa said Timor Leste had a road map to grow together with Asean, so that it "won't be a burden" to the member countries. Asean membership, he said, would boost the country's image and allow it to learn from its neighbors.

"Some of the concerns raised are legitimate...We emerged from a conflict, but we have proven that we have managed to recover quickly," he said.

Timor Leste won independence from Indonesia in 1999 after a bloody struggle and a decisive referendum that was met with violence from militias allied with the Indonesian military. After a brief period of UN tutelage it became a formal country in 2002. Violence broke out again in 2006 and 2008 during protests. Ramos-Horta and Prime Minister Xanana Gusmao survived assassination bids by military rebels attempting a coup.

The country has since stabilized and will hold its third parliamentary and presidential elections next year. The United Nations peacekeeping mission of 1,500 personnel, installed after the crisis in 2006, will also be phased out after the elections.

Residents, too, are picking up their lives and are looking forward to changes. As Alfredo, a fishmonger, said: "We want foreigners to help with progress, but we also want better education for our children so they can contribute to big things in the country."