Mariel Grazella, Dili – Indonesia and Timor Leste are keen for Indonesian state-owned enterprises (SOEs) to invest in Timor Leste to accelerate economic and infrastructure development, officials agreed recently.
State-Owned Enterprises Minister Dahlan Iskan said that he wanted to see more state-owned enterprises expand into Timor Leste, Indonesia's erstwhile province.
"Indonesia has over 100 SOEs. It is their duty to forge better collaboration between Indonesia and Timor Leste," the minister said during a recent visit to Dili.
Dahlan was in the Timorese capital for the launch of a local service by PT Telekomunikasi Indonesia (Telkom), which is slated to be investing US$50 million to provide telecommunications services in Timor Leste under the brand, Telkomcel.
The minister said that state-owned Bank Mandiri had also opened up shop in Dili, while state-owned construction companies PT Wijaya Karya and PT PP had won contracts in Timor Leste and were "ready to put real investment" into the nation.
Increased infrastructure development in Timor Leste was also attractive, Dahlan said. "Participating in tenders can, however, be more profitable than making investments, which carries risk. Contractors bear very low risks."
Timor Leste continues to face economic challenges ahead. Since formally gaining independence from Indonesia in 2002, the country has had its economy bolstered by a vast amount of humanitarian aid from several sources, including the UN.
However, the UN started to reduce its operations in Timor Leste toward the end of 2012 after safeguarding the nation's transition to democracy for 13 years.
Critics have said that Timor Leste must now wean itself from humanitarian aid and rely on local resources to develop its economy.
According to World Bank data, Timor Leste, dominated by the lower-middle income segment, had a gross domestic product (GDP) per capita of US$896.30 in 2011, much less than the per capita GDP of Indonesia, which stood at $3,494.
Prime Minister of Timor Leste Xanana Gusmao said that the nation and Indonesia must form deeper friendships given that they were neighboring countries. "The future of the peoples of these two nations is what counts."
Gusmao said that his officials would share their strategic development plan for the next 20 years with their Indonesian counterparts to give a clearer picture of local investment opportunities.
President Susilo Bambang Yudhoyono met Gusmao and Australian Prime Minister Julia Gillard last year to discuss boosting cooperation in infrastructure, transportation, communications and capacity building.
Trade volume between Indonesia and Timor Leste reached $271 million in 2011, with a surplus of $200 million going to Indonesia.
Gusmao said that Timor Leste would share its development plans with countries in the Southeast Asian region as well. "We will be touring several countries in the ASEAN region to share [our vision for] where we want to be headed," he said.
Timor Leste has made a bid to join the Association of Southeast Asian Nations (ASEAN) that has been backed by Indonesia, a founding member. The nations have been collaborating on an economic framework called "the Regional Integrated Economic Approach".
"We want neighboring countries to believe that we have a vision and are aiming to build our new nation and improve the lives of our people," Gusmao said.