Michael Richardson, Bacau – Marito Reis spent nearly 15 years in Indonesian prisons after he was arrested in 1980 for being a member of the clandestine underground movement supporting the small band of armed guerrillas fighting for the independence of East Timor.

With just a few days to go before the territory becomes a sovereign nation at midnight next Sunday after two and half years of transitional administration under the United Nations, Reis – the local official in charge of Bacau town and the surrounding district – reflects the sentiments of many other East Timorese when he says that he feels both elated and apprehensive about the future.

"I'm very, very proud," he said the other day on the balcony of his modest home perched on the side of a limestone cliff overlooking the town and the sea. "After 24 years of struggle, this is our prize."

But, Reis added, "I ask myself and our leaders what is going to be the content of this independence. We must now free the people from their poverty, illiteracy and many other problems."

When East Timor becomes the world's newest nation, it will also be one of the least developed and poorest – a legacy of neglect during more than 400 years of Portuguese colonial rule until 1975 and oppression during the 24 years of occupation by Indonesia. Sixty-three percent of East Timor's 825,000 people live on less than $2 a day. Unemployment is rife and set to become worse as the UN presence winds down and many foreigners leave.

One in two East Timorese over the age of 15 cannot read or write. Public health is poor, particularly in the countryside where more than three quarters of the population lives and tuberculosis, malaria, dengue fever and parasitic illnesses are common.

East Timor's average life expectancy is 57 years. Recent research by the World Health Organization shows that twice as many women die in childbirth in East Timor as anywhere else in the region. "Less than a quarter of East Timor's women have ready access to a health facility or a qualified midwife," said Teresa de Jesus Vas Cabral, an East Timorese midwife working with the WHO and the East Timor Health Ministry. "In part, this is because so much of East Timor's infrastructure, including roads, health clinics and hospitals, is still in a state of devastation following the violence of 1999, but it is also because there is a shortage of qualified midwives."

After the East Timorese voted overwhelmingly against a proposal for autonomy in Indonesia and thus for independence in a UN plebiscite in August 1999, the Indonesian military and the local militia groups they supported systematically looted and burned buildings and other property as they withdrew, taking tens of thousands of East Timorese with them into Indonesian-run western Timor. The scars of this violent departure are still visible in much of East Timor. But the United Nations has presided over a remarkable healing process, assisted by a coalition of international financial institutions, foreign governments, private aid agencies and the efforts of East Timorese themselves. The international community has invested $2 billion so far in restoring peace and starting to rebuild East Timor.

As a result, the towns and countryside have come back to life, although urban economic growth is heavily dependent on the diminishing UN presence and much farming remains barely enough for subsistence. Still, agricultural production has recovered to pre-1999 levels while the enrollment of 240,000 in schools exceeds the pre-1999 level of around 190,000 under Indonesia.

East Timor's council of ministers, working in close consultation with foreign aid donors, has agreed to allocate nearly half of the budget for the financial year to June 2003 to improving public health and education, while only 9 percent is being spent on defense.

"The ratio of spending on health and education is the highest for all countries – developed and developing – in the Asia-Pacific region," said Sarah Cliffe, the World Bank's chief of mission in East Timor. "The East Timorese have made huge efforts to put forward a sensible national development plan."

An international peacekeeping force has restored law and order throughout the territory. This has enabled the new institutions of East Timor to start functioning well ahead of independence. The nucleus of a public service department, judiciary, police force and army has been recruited and trained. A national public radio and television service are operating.

Contested elections with high turnouts were held peacefully for a constituent assembly in August and a president in April. The assembly, which produced a national constitution, is set to become East Timor's Parliament.

"Much remains to be done, but I believe the foundations are now solid for East Timor to grow and prosper," said the outgoing head of the UN transitional administration, Sergio Vieira de Mello, in a farewell address Friday.