Dili – Five years after his tiny nation voted in a UN referendum to end 24 years of Indonesian occupation, East Timor's president warned on Monday that the poverty-stricken country still faced major challenges.

"I must remind you again that this process [nation building] is a very difficult one," Xanana Gusmao said during a televised broadcast. "Building a nation implies working hard, making sacrifices, having the ability to distinguish what can be done now and what will take time."

East Timor, a former Portuguese colony, was devastated during a long war of liberation that followed Indonesia's December 1975 invasion. Some 200,000 Timorese and about 10,000 Indonesian troops died in the conflict.

The invasion was sanctioned by then-US President Gerald Ford and Secretary of State Henry Kissinger, who both visited Jakarta a day before the attack to discuss the matter with Indonesia's dictator, Soeharto.

Soeharto was ousted amid pro-democracy protests in 1998 and his successor allowed the United Nations to conduct a plebiscite in East Timor on August 30, 1999, in which 80 percent of the half island territory voted for independence.

In a final act of vengeance, withdrawing Indonesian troops and their militia auxiliaries destroyed much of the country's infrastructure and killed at least 1,500 people.

East Timor, which gained full independence in 2002 after a period of UN rule, remains Asia's poorest country. But the government has high hopes that an expected agreement with neighboring Australia over the exploitation of the Timor Sea natural gas reserves will bring major benefits for the 800,000 people in coming years.

"It has been five years since we achieved freedom. But sometimes people are a little frustrated with their daily lives, and might say: This freedom has not helped us move forward but instead it has made us go backward," said Gusmao, a former resistance fighter who was elected head of state two years ago.

Gusmao has been in the forefront of efforts to patch up relations with Indonesia. Ties between Jakarta and Dili have improved significantly in the past two years.

But international human rights groups insist that Indonesian military commanders must be punished for abuses in East Timor and have urged the United Nations to set up a war crimes tribunal akin to those for ex-Yugoslavia and Rwanda.