Economy

Prior to and during colonisation, Timor was best known for its sandalwood. In late 1999, about 70% of the economic infrastructure of East Timor was laid waste by Indonesian troops and anti-independence militias, and 260,000 people fled westward. Over the next three years, a massive international program led by the UN led to substantial reconstruction in both urban and rural areas. By mid-2002, all but about 50,000 of the refugees had returned.

The country faces great challenges in continuing to rebuild the infrastructure and strengthen the infant civil administration. One promising long-term project is the joint development with Australia of petroleum and natural gas resources in the waters southeast of Timor.

East Timor also has a large and potentially lucrative coffee industry, which sells organic coffee to numerous Fair Trade retailers and on the open market.

Currently three foreign banks have a branch in Dili: Australia's ANZ, Portugal's Banco Nacional Ultramarino, and Indonesia's Bank Mandiri.

Petroleum Resources

Timor Sea petroleum resources were divided between Indonesia and Australia by the Timor Gap Treaty in 1989, which established guidelines for joint exploitation of seabed resources in the area of the 'gap' left by then-Portuguese Timor in the maritime boundary agreed between the two countries in 1972. Revenues from the 'joint' area were to be divided 50%-50%. Woodside Petroleum and ConocoPhillips began development of some resources in the Timor Gap on behalf of the two governments in 1992.

East Timor inherited no permanent maritime boundaries when it attained independence, repudiating the Timor Gap Treaty as illegal. A provisional agreement (the Timor Sea Treaty, signed when East Timor became independent on 20 May 2002) defined a Joint Petroleum Development Area (JPDA), and awarded 90% of revenues from existing projects in that area to East Timor and 10% to Australia. The first significant new development in the JPDA since Timorese independence is the largest petroleum resource in the Timor Sea, the Greater Sunrise gas field. Its exploitation was the subject of separate agreements in 2003 and 2005. Only 20% of the field lies within the JPDA and the rest in waters not subject to the treaty (though claimed by both countries). The initial, temporary agreement gave 82% of revenues to Australia and only 18% to East Timor.

Facts and Figures

• GDP:
  • Purchasing power parity: $370 million
  • Official exchange rate: $349 million
  • Real growth rate: 1.8%
  • Per capita (PPP): $800
  • Composition by sector:
    • Agriculture: 8.5%
    • Industry: 23.1%
    • Services: 68.4%
• Unemployment Rate: 50% (est.)
• Population below Poverty Line: 42% (est.)
• Inflation Rate (Consumer Prices): 1.4%
• Budget:
  • Revenues: $107.7 million
  • Expenditures: $73 million
• Agriculture Products:
  • Coffee
  • Rice
  • Corn
  • Cassava
  • Sweet Potatoes
  • Soybeans
  • Cabbage
  • Mangoes
  • Bananas
  • Vanilla
• Industries:
  • Printing
  • Soap Manufacturing
  • Handicrafts
  • Woven Cloth
• Industrial Production Growth Rate: 8.5%
• Exports:
  • Total: $10 million; note - excludes oil
  • Commodities:
    • Coffee
    • Sandalwood
    • Marble
  • Partners: Indonesia 100%
• Imports:
  • Total: $202 million
  • Commodities:
    • Food
    • Gasoline
    • Kerosene
    • Machinery
• Economic Aid - Recipient: $153 million
• Currency (code): US dollar (USD)