16 October 2013

HASATIL statement for World Food Day


This statement is available as PDF in English, Tetum, Portuguese and Bahasa Indonesia.

Today, October 16th, 2013, many nations around the world celebrate World Food Day. Unfortunately, in this world we're living in, a lot of poor people are hungry because they do not have access to food, while at the same time many wealthy people suffer from health conditions due to excessive food consumption or imbalanced food diet. Globally, there is enough food for everyone to consume, but it is unequally distributed.

The official theme of this year’s World Food Day is: “Sustainable Food Systems for Food Security and Nutrition.” This is an opportunity for us to question about:
  •  Non-sustainable food systems that produce poor quality food with low nutritional values, like the processed industrial products full of preservatives, salt, sugar (e.g. in instant meals) and industry-related pollutants.
  • Non-sustainable food systems that damage the environment by using a lot of energy and natural resources to produce industrial food, and causing many forms of pollution like plastics, cans and other materials used for wrappings.
  • Non-sustainable food systems that create social injustice as they do not give value to the work of the farmers but instead generate huge benefits for the agro-chimical industries.
  • Non-sustainable food systems that have altered our food habits, traditional cooking and culture to eat in season, and have lead us to consume a limited variety of food and to prefer unhealthy instant meals.
  • Non-sustainable food systems that promote an industrial agriculture model based on mechanization, the excessive use of pesticides, chemical fertilizers and water, as well as standardized "high yielding" seeds produced by laboratories at the expense of the variety of local seeds that are actually more adaptable. The result is a massive loss of biodiversity.
The HASATIL Network, a network of NGOs working to strengthen sustainable agriculture in Timor-Leste, promotes the concept of food sovereignty. Timor-Leste is a small island with its own food products that need to be promoted so that we do not depend too much on food imports. We must develop the agriculture sector sustainably through food diversification and the adoption of an organic and integrated agriculture model, like agro-ecology and permaculture, which follow the natural ecological cycles.

The message to the farmers:

Thank you for your contribution and the great efforts you make to produce good and healthy food. We should not abandon our local original food crops including the wild ones that saved us during our long struggle for independence. We must promote food diversification in our farms, to improve child nutrition and avoid dependence on a few crop species only.

The message to all of us consumers:

We must use our purchasing power to buy products which are healthy, which strengthen the domestic economy through the purchase of local products from small-scale farmers and which are not harmful to the environment. We must give higher value to our local products than to the imported ones and change this mentality consisting in considering eating rice as the only parameter that measures whether one has had his/her meal or not. There is a variety of food products much more nutritious than rice (carbohydrate), such as vegetables, fruits, beans, cassava, meat, fish, etc. We must not eat with the only objective to be full; we must know the nutritional value of the food we eat.

Our message to the Timor-Leste Government, which has an important role in guaranteeing that development benefit all Timorese people, of the current and future generations:

Food security must not be viewed from the quantitative aspect only. Every year we import huge amount of foods (especially rice) but our level of malnutrition remains high. We consume much more rice and much less fish than other countries . The Government should address the malnutrition issue from a qualitative aspect, and focus on food diversification and education about nutrition. Priority should be given to the development of the livestock and poultry sectors, fisheries, forestry rehabilitation and protection and rural infrastructure.

The Government should take measures to reduce food imports and regulate the import of chemical products that have bad effects both on health and the environment. The productive sector and small-scale sustainable co-operatives should be developed to substitute our economy that is heavily dependent on petroleum revenues.

The Government should promote a sustainable agriculture model that doesn’t depend on expensive inputs, benefit small farmers and contribute to nature enhancement like agro-ecology and permaculture.

At the international level, the UN Special Rapporteur on the Right to Food Sr. Olivier de Schutter has already shown that the future of agriculture is agro-ecology . Thus, we encourage Timor-Leste Government to build a sustainable food system for our nation, to guarantee our food sovereignty.

HASATIL Advocacy Team and Secretariat

  • La’o Hamutuk Institute
  • HAK Association
  • Haburas Foundation
  • Fokupers
  • Caritas Baucau
  • Kdadalak Sulimutuk Insitute (KSI)
  • Haburas Moris Organization (OHM-Maliana)

14 October 2013

Making the Business Activities Survey even more useful

The RDTL Directorate-General of Statistics (DGS) has published Business Activities Surveys for 2010 and 2011, and the 2012 edition will be released this month.  Two weeks ago, DGS invited users of this data to discuss possible changes for the questionnaire for the 2013 Survey,  which will be conducted in early 2014. After a lively discussion with MoF, ADB, SEPFOPE, ILO, UNFPA, La'o Hamutuk, the Australian Bureau of Statistics and others, DGS invited written suggestions. The rest of this blog is an abridged version of La'o Hamutuk's submission.

Suggestions for revisions to the Business Activities Survey

La’o Hamutuk, as a Timor-Leste civil society organization which tries to understand Timor-Leste’s economy and encourage sustainable, equitable development, is grateful for the invitation from the Directorate-General for Statistics to join the discussion about the Business Activities Survey (BAS). As you know, we often use DGS research and publications, including the BAS, and find them very valuable.

The BAS is essential to a solid understanding of Timor-Leste’s macro- and micro-economy. Enhancing the BAS could provide better information about critical issues here, including:
  • Import dependency (we have a 95% trade deficit)
  • The effect of public spending (which underlies about half our non-oil GDP)
  • The all-important productive, non-oil, non-state-funded, private sector (which is currently very small but needs to grow rapidly)
  • How much of Timor-Leste’s wealth stays in the country? (Most of the revenue from our declining petroleum reserves goes out of Timor-Leste.)
Large businesses comprise most of Timor-Leste’s GDP. As small businesses may have difficulty completing a sophisticated questionnaire, we believe that DGS’s current use of separate questionnaires for small and large businesses should continue, and our suggestions are for the longer one.

It would be useful to expand the portion of the economy covered by the BAS to include international agencies, non-profit organizations and public institutions, which are significant portions of Timor-Leste’s employment and economic activity. In addition, a separate survey of the informal sector, which involves more than 2/3 of the working-age population, would be invaluable in understanding how to develop our economy.

The BAS can help confirm or identify discrepancies in other data. Therefore, it is important to collect data independently as much as practical, rather than relying on other sources.

It would be useful to know what percentages of businesses are owned by foreigners and what percentage by Timorese nationals. Can the BAS find out what portion of equity is owned by Timorese entities and by non-Timorese? Since preferential contracting is one of the ways that the Government honors veterans for their service to the nation, it would also be interesting to know how many companies are owned by veterans, how they contribute to various sectors, and if their statistics are significantly different from non-veteran companies.

Some of the "Business Type" categories are too broad and should be disaggregated.

Are people who do unpaid labor (due to family obligations or in exchange for housing, tuition, a commission, etc.) considered as employees? They are a large part of Timor-Leste’s labour force.

At present, Timor-Leste’s non-petroleum export sector is very small, according to Trade Statistics reports (although we worry that some exports may not be counted in these reports). It would be interesting to ask what portion of sales of goods is to customers outside Timor-Leste or who intend to sell the goods overseas. Since expanding TL’s exports is often mentioned as a goal for economic development, this would provide a baseline from which it could be measured, expanding and/or cross-checking the Trade Statistics.

Approximately half of Timor-Leste’s “non-oil” economy is fuelled by public spending (90% of which comes from oil money). It would be useful to know, for each business, how much of their income comes from:
  • RDTL Government contracts or purchases
  • Other companies implementing RDTL Government contracts (to identify subcontractors)
For labour costs, it would be interesting to disaggregate Timorese and foreign nationals. In the 2011 BAS (page 5), 22% of total expenses are listed as “other expenses,” which would be good to disaggregate. For purchases, it would be interesting to know:
  • How much was imported directly by the business?
  • How much was produced overseas but purchased from a local importer or other business?
The BAS doesn’t ask directly about profits, but they can be calculated by subtracting outlays from income. Capital flight is a problem in all developing countries, and a particularly severe one here where our national wealth is finite and shrinking. Timorese businesspeople often complain about difficulties in raising capital, while foreign contractors repatriate large portions of public disbursements to their home countries. Is there a way for the BAS to ask how much money is taken out of the country by business owners, in addition to what they spend on expenses?

It would be good to ask if goods and materials purchased for capital investment came from Timor-Leste or from overseas.The current questions are not clear, and perhaps a category should be added to cover purchases of imported assets from a local supplier.

09 October 2013

LH protests contract award to CNI22

Last week, Timor-Leste newspapers published an Intent to Award nearly three million dollars in contracts for school furniture. La'o Hamutuk was astonished to see that more than $1 million will go to Chinese Nuclear Industry Construction Company No. 22, which had performed atrociously after it got a $300 million contract in 2008 to build Timor-Leste's power plants and national electricity grid.

We met with the Chair of the National Procurement Commission to express our concerns and wrote a formal protest letter (Tetum translation). The rest of this blog is adapted from our 8 October letter to President Aniceto do Rosario of the  National Procurement Commission.

Dear Excellency,

As we discussed last Friday, La’o Hamutuk has concerns regarding the Intent to Award two contracts totaling $1,047,559 to Chinese Nuclear Industry Construction Company No. 22 (CNI22) to supply school chairs and tables.

We believe that it would be inappropriate to award contracts to this company, with which Timor-Leste has had extensive experience. CNI22 may not be blacklisted by the World Bank or other international agencies, perhaps because they have never done business with them.  As a Chinese state-owned company, they may be protected against honest assessments by international agencies. However, this must not prevent Timor-Leste from learning from our own experience.

We are relieved that CNI22’s contract for the national electricity project is nearing completion. However, the company is looking for more of Timor-Leste’s money through this school furniture tender, the Suai Airport, and perhaps other contracts.  We hope that they will never receive another contract from Timor-Leste.

In mid-2008, CNI22 proposed to Timor-Leste to build a national electricity system involving three second-hand heavy oil generating stations and a national high-voltage grid. As reported in detail on La’o Hamutuk’s website and in our Bulletin, Timor-Leste awarded CNI22 a $367 million contract, the largest in the nation’s history, in October 2008. The project was seriously flawed in concept, design, implementation, community relations, and quality of work. The company repeatedly failed to meet its commitments regarding keeping on schedule, quality of materials, employing Timorese workers, worker safety, and environmental management. They refused to comply with directives from the supervising consultant and others.

After two years, when CNI22 had shown that it was incapable of building the power plants it had proposed, they were re-contracted to Puri Akraya Engineering, increasing the cost by hundreds of millions of dollars and delaying the project for several years.

You don’t have to take La’o Hamutuk’s word for this. For the last four years, Timor-Leste has hired ELC/Bonifica to supervise the power project construction. Their monthly reports describe CNI22’s “overall performance” as “poor” nearly every month. Last week, at a seminar in the Ministry of Public Works on this project, ELC Project Manager Massimiliano de Carli reiterated several times that: “The most important element in implementing any project is selecting the right contractor, appreciating their proved experience, skills and capabilities.” It is obvious to people with detailed knowledge of CNI22’s work on the electricity project that CNI22 should not have been selected, and we are puzzled that Timor-Leste wants to give them more business.

Outside observers were also aware early on. In December 2008, U.S. ambassador Hans Klemm sent a "sensitive" internal cable from Dili to Washington. Wikileaks later published the "for official use only" cable without authorization. It says:
In July 2008, news surfaced that the government would purchase two large electricity generating plants from a Chinese firm that would also be contracted to put into place a nationwide transmission grid. On this occasion, the government issued an international tender, although the widespread understanding in Dili was that the purchase had been agreed before the government announced the tender. Although observers described the tender announcement as insubstantial and technically inadequate, fourteen international firms submitted bids. The decision to award the contract to the Chinese firm again was made by the prime minister with very little consultation with line ministers. The power plants are old equipment (with some 40 years of service in China already behind them) that will be dissembled, exported and refitted in Timor-Leste. They will burn heavy oil that Timor will have to import. Experts describe the contracted installation of a national transmission grid within two years as a fantasy. The World Bank reportedly has urged the government to cancel the contract, absorb the penalty, and re-tender the project.
We also wonder what CNI22 knows about school furniture. The company’s description gives no indication that they work in this area:
During the past 50 years, CNI22 has completed more than 2000 construction and installation works, and the total construction area was over 2 million m2. Our company has undertaken a large number of construction works of power plants, factories, housing, airports, bridges, roads etc, and for the good quality of our projects and technology innovation, CNI22 is awarded more than 80 national and provincial and municipal prizes, including the construction engineering “Luban Prize”. CNI22 have offices in 39 countries, and we still have Projects under construction in Algeria, Sudan, Pakistan, Mongolia, Vietnam and East Timor. In the field of civil engineering, Our company possesses 8 grade-1 qualifications, including housing construction, electrical engineering, mechanical and electrical installation works, steel works, the installation of lifting equipment, blasting and demolition engineering and nuclear engineering and so on.
Finally, we encourage the National Procurement Commission to consider how contract awards can help Timor-Leste businesses grow, creating employment and keeping more of our national wealth in this country. Many Timorese companies can make chairs and desks appropriate for our schools, and this tender is a valuable opportunity to help them develop. Thirteen years ago, La’o Hamutuk and others raised this issue with the World Bank and AusAID, and the agencies made changes in procurement of school furniture to enable local companies to participate. Today, in this sovereign nation spending our own money, we should not throw away this opportunity.

CNI22 will import furniture from China, sending our people’s money outside the country. Their record gives ample reason not to trust the quality or timeliness of their promises.

Many large tenders here require skills, resources or experience that Timor-Leste companies do not yet possess, making it even more important to ensure that tenders which do not have such complex requirements, like this one, will use locally-made products rather than those imported from afar.

We encourage the National Procurement Commission not to award this or any other contract to Chinese Nuclear Industry Construction Company No. 22, and to develop a system of blacklisting companies which have shown bad faith, incompetence or other inability to meet their commitments.

La'o Hamutuk hopes that everyone who wants Timor-Leste's finite petroleum wealth to be used appropriately will pay close attention to procurement processes announced in the newspapers and the Ministry of Finance website and recently reopened Procurement Portal. Transparency is only useful if people are watching!

P.S. Al Jazeera later reported this story, based on La'o Hamutuk's information.