Can Tourism Become the New Economic Driver for Timor-Leste?

 In Sea, Cyber/ICT, Australia, Environment, Regions, Energy

Bali is expect­ed to have a total of more than 6.7 mil­lion for­eign vis­i­tors in 2019. Such enor­mous num­bers are achieved by rep­u­ta­tion, word of mouth, and travel media such as the U.S. mag­a­zine Travel & Leisure, naming it one of the 10 best islands in the world to visit.

The rea­sons for Bali’s suc­cess are diverse. This one small island offers vis­i­tors bars and nightlife, unspoilt scenery, eco­tourism, trekking, beach­es, diving and snor­kel­ing, sea life tours, and a host of cul­tur­al attrac­tions and luxury resorts in a per­ceived safe envi­ron­ment.

Bali is vital to Indonesia’s eco­nom­ic sta­bil­i­ty. For Indonesia, tourism pro­vides a sus­tain­able – and grow­ing – income stream as oil and gas exports weaken. Since 2003, tourism has deliv­ered a long-term aver­age growth of rate of more than 3 per­cent per annum and is now worth more than $10 bil­lion annu­al­ly. It is esti­mat­ed that 20 per­cent of the Bali pop­u­la­tion, which is nearly a mil­lion people, are employed in, or depen­dent upon, the tourism indus­try for income.

Only 1,000 kilo­me­ters to the east of Bali is Timor-Leste.

Like Bali, it sits at the base of Southeast Asia, one of the most dense­ly pop­u­lat­ed regions on earth. Timor-Leste has unspoilt moun­tains, crys­tal clear waters, pris­tine beach­es, some of the best diving in the world on Atauro Island, and a pop­u­la­tion of 1.3 mil­lion with an aver­age age of 20 years old, com­plet­ing school and seek­ing work.

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Currently, the country’s dominant exports are crude petro­le­um (around 88 per­cent) and coffee (6 per­cent), and in the not too dis­tant future, if all goes well, increased oil and gas rev­enue from the Timor Sea’s Greater Sunrise fields.

Xanana Gusmão and the Timor-Leste gov­ern­ment deliv­ered an enor­mous win to their coun­try to secure the con­trol­ling share of Greater Sunrise, and it will pro­vide a secure finan­cial base for this emerg­ing nation. The genius of this pur­chase is that they have secured options that allow them to con­trol their own des­tiny.

Once oil and gas pro­duc­tion begins, the gov­ern­ment will have achieved their goal of build­ing a south­ern coast pro­cess­ing plant, and they would be in a posi­tion to sell their share in the func­tion­ing oper­a­tion for a siz­able profit if they decide to. There would be many inter­est­ed par­ties for such a deal and the prof­its would pro­vide a much-needed cash injec­tion for nation-build­ing projects.

These extrac­tive indus­try prod­ucts are par­tic­u­lar­ly useful because they offer a sig­nif­i­cant and fast boost to an econ­o­my – but they have a lim­it­ed lifes­pan as fields inevitably run dry. The Timorese people should quite right­ly see Greater Sunrise rev­enues as an oppor­tu­ni­ty to fast-track the build­ing of roads, hos­pi­tals, schools, and other essen­tial ser­vices. But there should be a sense of urgency to move on devel­op­ing this, fast. The global oil and gas cor­po­rate sec­tors are increas­ing­ly lead­ing the move away from carbon-based energy sources to renew­ables. This was evi­denced by Saudi Arabian Crown Prince Mohammad bin Salman’s deci­sion in November 2019, to list their nation­al oil com­pa­ny, Aramco, with less than expected uptake. Even Saudi Arabia, the world’s largest pro­duc­er of crude oil, has decid­ed to diver­si­fy away from oil.

Speak to any econ­o­mist who does not have an agenda that influ­ences them to ignore cli­mate sci­ence data, and you will hear that oil and gas are not ideal com­modi­ties upon which to be pre­dom­i­nant­ly reliant for a stable future econ­o­my.

On anoth­er front, the extrac­tive resources indus­try is increas­ing­ly driven by automa­tion, and research shows that employment in the sector is on the wane. Education is costly, and in a nation with lim­it­ed funds like Timor-Leste, I would like to see edu­ca­tion invest­ment direct­ed across diverse voca­tion­al careers that pro­vide longevi­ty and flex­i­bil­i­ty. Once there is a more highly trained work­force, this poten­tial­ly leads to the growth of a new rev­enue stream, where trained Timorese will work over­seas and send money home to their fam­i­lies, like the Philippines.

To help build a sus­tain­able, diverse econ­o­my, one sector that is vir­tu­al­ly invis­i­ble at the moment in Timor-Leste is tourism. This could be devel­oped now and con­tin­ue long after oil and gas have run their cours­es. Furthermore, it can employ men and women equal­ly, and it cap­i­tal­izes on the country’s abun­dant nat­ur­al resources – both human and phys­i­cal – with­out deplet­ing them.

Internationally, the tourism and hos­pi­tal­i­ty sector employs 70 per­cent women and 30 per­cent men, making it an extreme­ly pos­i­tive sector for a devel­op­ing and young nation like Timor-Leste.

Research shows that if you wish to build a pros­per­ous devel­op­ing nation, employ­ing women is the key. In late 2018, a study by the International Monetary Fund (IMF) con­clud­ed that bring­ing more women into a labor force brings more sig­nif­i­cant macro­eco­nom­ic gains to the econ­o­my than if you were to add the same number of male work­ers. The IMF report­ed that up-skilling and edu­cat­ing women, and so low­er­ing the gender gap, could increase a devel­op­ing nation’s GDP by up to 35 percent. Eighty per­cent of these gains come simply from new work­ers enter­ing the labor force; the remain­ing 20 per­cent stems from the results of gender diver­si­ty on pro­duc­tiv­i­ty.

As the gov­ern­ment of Timor-Leste rec­og­nizes in their Strategic Development Plan, 2011 to 2030, diver­si­ty of var­i­ous types in their grow­ing econ­o­my is essen­tial to the country’s long-term sta­bil­i­ty. This plan is a won­der­ful­ly detailed and well-thought-out doc­u­ment that pro­vides a blue­print for the Timorese people’s future.

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To sup­port this plan, I believe the Timor-Leste gov­ern­ment could commit to the tourism sector’s devel­op­ment through public-pri­vate part­ner­ships. Initial part­ner­ships could be with air­lines and inter­na­tion­al tourism oper­a­tors, which I am sure would wel­come the oppor­tu­ni­ty to be involved in such a promis­ing new market.

From the Bali expe­ri­ence, we know that tourism delivers multiple benefits: for­eign exchange, a market for local food prod­ucts and ser­vices, increased com­mu­ni­ty income, increased job oppor­tu­ni­ties lead­ing to low unem­ploy­ment, higher tax rev­enue, and a higher stan­dard of living. It also pre­serves and grows local craft and cul­tur­al prod­ucts.

If Timor-Leste could secure just 5 per­cent of Bali’s for­eign tourism, it could bring in 335,000 inter­na­tion­al vis­i­tors. With an aver­age spent of $1,000 per person that would bring in $335 mil­lion per annum. That level of tourism would create employ­ment for many thou­sands of people, per­haps tens of thou­sands. In turn, this helps bring increased job secu­ri­ty, greater prospects and sta­bil­i­ty amongst the country’s cur­rent­ly unem­ployed youth.

I am reas­sured to see that I am not alone in my views. In the past two weeks there have been two reports iden­ti­fy­ing tourism as a pri­or­i­ty sector for diver­si­ty and growth. The first is from the Australian Strategic Policy Institute (ASPI), the second is from the World Bank, in which International Finance Corporation’s Country Manager for Indonesia, Malaysia, and Timor-Leste, Azam Khan, suc­cinct­ly sum­ma­rizes the sit­u­a­tion:

The poten­tial areas for boost­ing pri­vate sector par­tic­i­pa­tion include agribusi­ness and tourism, which will sup­port eco­nom­ic diver­si­fi­ca­tion and help create needed jobs for people to real­ize their poten­tial. In addi­tion, the role of the pri­vate sector in improv­ing access to finance will help small and medium sized enter­pris­es, espe­cial­ly women-owned enter­pris­es, expand.

The Timorese people are quite right­ly incred­i­bly proud of their beau­ti­ful coun­try and what they have achieved in such a short time since inde­pen­dence. A grow­ing tourism sector would har­ness that enthu­si­asm and help pro­mote Timor-Leste to the world and share its story, beau­ti­ful sights, sounds, and cul­ture.

Sakib Awan moved to Timor-Leste in 2002 and found­ed the busi­ness, East Timor Trading with his wife, Neelo. He retired in 2016 and is now Chairman of East Timor Trading while living in Sydney, Australia.

Source: The Diplomat

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