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Future clouded by economic questions

American Reporter - August 1, 1998

Andreas Harsono, Dili – The most likely transition from being only a "province" of Indonesia to being either an independent state or an autonomous area would pose enormous challenges for the relatively small East Timor.

All sectors would face the same basic questions. How to pursue development while ensuring the economy grows rapidly enough to provide job opportunities and generate incomes? How to achieve long-term growth and promote social welfare? Many Indonesian economists and officials point out that the area is relatively fertile but has an underdeveloped agriculture-based economy; they worrythat an independent East Timor would only join other small and poor island-states in the South Pacific.

Another crucial problem for the East Timorese is human resources. The former Portuguese colony, which was taken over by Indonesian troops in 1975, has less than two dozen East Timorese doctors. Indeed, it has more economists, lawyers, engineers or journalists, but questions remain about how well trained those are.

"When Sukarno declared Indonesia's independence in 1945, many people also asked the same question. Sukarno just went ahead and today Indonesia has many doctors or whatever," says student leader Lamberto Viana of East Timor University in Dili, referring to Indonesia's founding father and first president Sukarno.

Viana says that pro-referendum East Timorese have set up teams to discuss various technicalities such as the armed forces and economy. "If Indonesia could do it, why couldn't we? Number one, you have to have the territory and the people. Other issues will follow [that lead]."

"Our country is small. But it is large enough to feed 800,000 people," says Metta Guterres, the assignment editor of the Suara Timor Timur daily, the only newspaper in East Timor, adding that the East Timorese, for instance, are prepared to take over businesses from Indonesian immigrants who may be leaving the area.

Guterres has his reason to study the region's retailing. According to Indonesian economist Mubyarto of the Gajah Mada University, more than 90 percent of street commerce, and almost 80 percent of large-and medium-sized businesses, are in the hands of Indonesian immigrants.

But advocates of close ties with Indonesia like East Timor governor Abilio Jose Osorio Soares and social worker Florentino Clementino argue that joining Indonesia – which controls the western part of the island of East Timor as well as other surrounding islands – will strengthen the economic foundation of East Timor.

The Indonesian government, according to Indonesian statistics, has channeled around $2.5 billion between 1975 and 1996 into the East Timor economy. The results have been quite surprising. The average economic growth in the area was a very healthy eight percent per year between 1980 and 1992. Gross domestic product per capita has increased from $60 in 1975, during the Portuguese rule to $80 in 1991.

The Indonesian government has also constructed 1,400 kilometers of new roads, giving the territory a total of 3,795 kilometers of roadways that link all districts and sub-districts within the capital, Dili. In stark contrast to the Portuguese colonial rule, Indonesia has built 579 primary schools, 71 high schools, one new polytechnic school and Viana's university.

Critics say the infrastructure's development mainly helps to mobilize Indonesian troops in the area. Other question whether economic development, however modern, is worth the suffering of the East Timorese. Is it worth countless instances of torture, killing, kidnapping and rape?

The London-based Timor Link newsletter published in June a report on the economic outlook for an independent East Timor. The report noted that the Indonesian effort has failed on the grounds that it mostly advanced Indonesian immigrants, created environmental degradation and produced monopoly ownership of former Portuguese coffee plantations.

Coffee, East Timor's most reliable export commodity, was until recently under the control of a military-backed company, PT Dhenok Hernandes Indonesia. But now big coffee plantations left by the Portuguese-owned Sociedade Agricola Patria e Trabalho and the smaller plantations have been monopolized by ousted Indonesian president Suharto's cronies and children.

The report suggested that East Timorese macroeconomic policy should be based on a "phased export-oriented economy" to overcome such problems. That policy has three priorities. First, it should permit land reform and agricultural expansion to revitalize the country's agriculture base, which includes coffee, cocoa, cashew and sandalwood trees. The expansion should also also include rice and maize agriculture as well as fishing in the Timor waters, the report said.

Secondly, an independent East Timor should develop sugar plantations. The third priority of the report is the development of a manufacturing and industrial base similar to those of Singapore and Hong Kong.

Meanwhile, oil and gas from the internationally-disputed Timor Gap zone should also be placed on the agenda. Petroleum reserves in the area located in waters north of Darwin, in northern Australia, have been estimated to be be between 500 and 700 million barrels, and there are 50,000 cubic feet of natural gas.

It is estimated that 29 million barrels will be produced over the next four years, whose output will flow to both Indonesian and Australian oil companies. If the oil were to be sold at $13 per barrel, it would generate an annual revenue of nearly $100 million.

Anti-Indonesian organizations demand that until an internationally acceptable resolution of the East Timor conflict is achieved, the funds currently destined for Indonesia should be placed in a special trust fund for the people of East Timor.

"The East Timorese people will continue challenging the unjust arrangements of the Timor Gap treaty," Nobel laureate and East Timor spokesman Jose Ramos Horta said in late July. "They will undertake all necessary legal actions ensuring them a just share in their natural resources. They will do their utmost to recover the proceeds of the exploitation of their natural resources that may be misappropriated by others."

"Xanana and other leaders have their plans. We're not worried at all," says student leader Antero Benedito da Silva, referring to East Timor's most popular leader, Xanana Gusmao, who is currently serving a jail term in a Jakarta prison.

Viana, although he admits to not knowing all the numbers, says that it won't be difficult to build East Timor's economy. "We could cooperate with other foreign countries," the student leader says. "East Timor is a part of the international community. It has an abundance of natural resources. [Yet] it's difficult to feed less than one million people here."