LH comment on Strategic Development Plan

[Pajina ida ne'e iha Tetum.]

This is a summary of La’o Hamutuk’s initial analysis of the proposed Strategic Development Plan (SDP) (also Portuguese). Although we only received the 230-page document only five days ago, the Government demands that Parliament approve it today, so we hope to inform their discussion and the Development Partners Meeting. The following are important points in our 13-page commentary (also Tetum), which also identifies omissions, errors and invalid assumptions in the SDP:

• The Strategic Development Plan (SDP) is an important document, and is greatly improved over the version circulated last year. However, it is a large document, with many new ideas, and deserves thorough discussion before being enacted. We find it irresponsible that the Council of Ministers approved it after an all-night meeting, and it would be unconstitutional for Parliament to approve it less than a week after they received it.
• The Plan includes a welcome focus on social capital, not only physical infrastructure as pervaded last year’s discussions. We hope that future budget priorities reflect this, and that some of the 52% of the 2011 State Budget allocated to physical infrastructure will be redirected to education and health.
• We agree that a plan is not a budget, but it needs to be more than a dream, and should include more information about what it will cost and where the money will come from. In particular, we are concerned that the SDP will be financed by taking out loans, but there is only a passing reference to this in the document, with no specifics.
• The SDP totally ignores Timor-Leste’s mammoth trade deficit, with little priority to reducing imports. It includes incorrect information about school enrollment, inflation, and petroleum dependency. It is unjustifiably optimistic regarding possible future oil discoveries, exports to ASEAN, reducing population growth,.
• The SDP should focus more on human and intellectual infrastructure for education (buildings are not enough), improving the quality as well as the quantity of education, and supporting the needs of Timor-Leste and our people, not just possible employers.
• The SDP’s positive discussion of environmental protection is threatened by a number of environmentally dangerous projects currently underway with no environmental review.
• More analysis, information and priority should be given to renewable energy.
• Land laws must recognize colonial injustices, and titling systems should not endanger land rights or discriminate against cash-poor farmers. More consultation is needed on the Land Law, and the Law and the SDP should consider the true value of land for people, not only its use by investors.
• Economic justice for all our people, not only the eradication of extreme poverty, should be the plan’s economic objective.
• Agriculture should promote food sovereignty. Organic, sustainable agriculture, growing products for local consumption, should be the priority, and farmers must be involved at every level of decision-making and implementation. The “Green Revolution” model of industrial, high-input agriculture has severe negative impacts in the long term.
• Timor-Leste needs a broader vision of economic development. Since there is consensus that Timor-Leste needs to move away from oil-dependency in the long-term, we are disappointed that petroleum processing is the only industrial development discussed. What about agricultural processing, or light industry to replace imported products? The capital-intensive oil industry will provide few jobs for anyone, including Timorese. Allocating most of our intellectual and financial resources to the petroleum sector obstructs moving to a non-oil economy after oil and gas reserves are used up in 13 years.
• Current processes to revise the Petroleum Fund Law, create the TimorGAP national oil company, and invest heavily in feasibility studies for the Tasi Mane Petroleum Corridor contradict the goals of the plan and exacerbate our dependence on petroleum and the danger of long-term economic instability. They need to be undertaken with more care, and balanced against ideas and needs of other sectors.
• Increasing tourism requires more effort than merely building physical infrastructure.
• Private sector investment should provide benefit, not use up people’s resources. Tax cuts, special economic zones and other favors for foreign businesses are unlikely to produce advantages for our people. State investment in business activities, such as Tasi Mane and rice importation, needs more careful analysis of its costs and benefits.
• The security sector plans should serve the national interest. Human and budgetary resources spent on F-FDTL can be reallocated as external threats become smaller.
• Public Sector management and good governance will be strengthened by designing institutional structures to resist corruption, and by having all state agencies use strengthened, government-wide systems for budgeting, procurement, hiring, salaries and public information.
• Although the Macroeconomics section is better than earlier drafts, it is still weak, and needs more focus on the temporary nature of non-renewable resource wealth revenues. It should be more honest about oil dependency, inflation, population growth and plans for future spending and borrowing to finance this plan.
• It is inconceivable that Timor-Leste can achieve real, long-term, annual non-oil GDP growth of 11.3%, higher than any country in recent history. Other than China, the best performing countries have grown 6.5% - 7.5%, and it is wishful thinking to expect Timor-Leste to grow nearly twice as fast as they could. Current rapidly escalating levels of public spending, the primary driver for our economy, are impossible to sustain.

Additional information and analysis, including the proposed SDP and the full text of our comments, is available from La’o Hamutuk’s website in English and Tetum, which we will continue to update.

Strategic Development Plan & proposed laws online

La'o Hamutuk has scanned and posted the Portuguese-language, 234-page proposed Strategic Development Plan that the Government presented to Parliament this week.  The Prime Minister has urged Parliament to approve it on Monday, 11 July, before the Development Partners meeting.

For the SDP documents, and more information, click this link.

Update: On Thursday afternoon, the SDP was posted to the Government portal website in English (16 MB) and Portuguese (4 MB).
 
On 11 July, as Parliament began debating the Plan, La'o Hamutuk circulated our preliminary analysis.

Earlier this week, Parliament received two other important legislative proposals which were passed by the Council of Ministers in June, and we have posted the Portuguese texts and explanatory memoranda, and translated them into English. Scroll up from the links below for background, analysis and other documents:
Revision to the Petroleum Fund Law

Regime for taking on external debt

Aprezentasaun Budget and Economy

On July 5, La'o Hamutuk made a presentation on Timor-Leste's Economy and State Budget to the conference on Knowledge, Attitudes and Skills for Timor-Leste’s Development organized by UNTL and Victoria University at Dili Convention Centre. We have posted our presentation, which discusses hard realities relating to economics, budget and development in Timor-Leste to our website in English and Tetum.

Iha loron 5 fulan Julhu, La'o Hamutuk fo aprezentasaun ida kona ba Ekonomia no Orsamentu Estadu iha konferensia kona-ba Konhesimentu, Atitude no Kapasidade ba Dezenvolve Timor-Leste, organiza husi UNTL no Universidade Victoria iha Merkadu Lama. Ami tau ona ami nia aprezentasaun iha web iha Tetum no Ingles. Nia diskuti realidade kona-ba ekonomia, orsamentu estado no dezenvolvimentu iha Timor-Leste.

Is China aiding Timor-Leste, or vice versa?

Yesterday, the Macauhub news service published East Timor signs agreements with China for aid and to boost cooperation.The article begins "The government of East Timor Friday in Dili signed two agreements with China for Chinese aid to Eat Timor’s development ..." and ends "In 2010 trade between China and East Timor totalled US$43.08 million, which was a year on year rise of 80 percent."

"Eat Timor" in the first sentence may be appropriate. The last sentence is more misleading.

Virtually the entire $43.08 million is partial payment for the ill-fated national electricity project that the government of Timor-Leste is buying from China Nuclear Industry 22nd Construction Company (CNI22).

According to the budget execution report, Timor-Leste spent $89,995,951 on the national electricity project during 2010. Of this, $40 million went to PT Puri Akraya Engineering (PAE, the Indonesian company to which the power stations were reassigned from CNI22 last September) on 30 December, and about $2 million went to ELC/Bonifica, the Italian joint venture which is supervising the construction. The remainder, minus a few thousand dollars in administrative costs, would have been paid to CNI22.

According to ELC/Bonifica, RDTL's payments to CNI22 during 2010 totalled $45.01 million.

If the Macauhub article is correct, there is no trade between Timor-Leste and China other than our Government's purchase of the electricity system from a Chinese company.

LH submisaun kona-ba Lei Anti-Korupsaun

Iha loron 16 Junu, La'o Hamutuk fo submisaun ba Komisaun C, Parlamentu Nasional, kona-ba esbosu Lei Anti-Korupsaun. Ami nia pontu prinsipal hanesan ne'e:

• Korupsaun parte husi Malisan Rekursu
• Importansia atu estabelese padraun prevensaun ne’ebe maka’as.
• Konflitu ba interese
• Definisaun statutu Funsionariu Publiku la klaru.
• Kodigu Penal tenke koresponde ba Lei Anti Korupsaun.
• Lei bele foka liu ba korupsaun nivel altu duke korupsaun nivel kiik.
• Komentariu ba artigu balun, inklui
•    La limita masimu pena multa nian ka aumenta ba $100,000,000.
•    Inklui "familia nukleu" iha artigu kona-ba Enriquecemento Illicito
•    Hasai artigu fo prioridade ba kazu korupsaun iha tribunal
•    Fo protesaun metin liu ba sasin no informador
•    Fo sansaun makaas liu ba korupsaun sistematiku nian
• Estadu iha direitu atu prende eransa koruptor.
• Justisa sosial

Atu hetan informasaun tan, bele liga ba iha ne'e.

LH husu Prezidente atu sura didiak risku no legalidade TimorGAP

Iha 25 Maiu, Konseilu Ministru Timor-Leste nian aprova Dekretu-Lei atu kria Kompania Mina-rai Nasional ho naran Timor GAP, EP (hodi troka naran PETRONATIL). Prezidente Jose Ramos-Horta tenke deside atu promulga ka veta ba Dekretu-Lei ne’e.

Iha nasaun seluk, kompania mina-rai estadu nian ne’e dala barak akompanha ho pratika anti-demokrasia no illegal, korupsaun, estragus ambiental no konsekuensia negative seluk-seluk. La’o Hamutuk fiar katak kria kompania mina-rai nasional sei fo impaktu ba futuru Timor-Leste no tenke halo ho kuidadu, no tuir maneira Konstitusional.

Tamba ne’e, ami hakerek karta ida ba Prezidente (Ingles) husu nia atu foti desizaun ne’ebe matenek ne’ebe sei benefisia povo Timor-Leste tomak no salvaguarda rekursu naun-renovavel ita nia nasaun nian. Ami nia karta ne’e akompania ho submisaun (Ingles) ne’ebe ami haruka ba Sekertariadu Estadu Rekursu Naturais iha Novembru tinan kotuk kona-ba esbosu tuan legislasaun ida ne’e, tamba ami seidauk hetan versaun final. Ami nia submisaun foti pontus importante sira hanesan tuir mai:

• Kompania Mina-rai Nasional ne’e perigozu, no ita tenke aprende husi falansu no susesu husi rai seluk.
• Kompania Mina-rai Nasional tenke estabelese husi lei Parlamentu, laos dekretu lei Governu nian.
• Kompania Mina-rai Nasional tenke serve povo Timor-Leste.
• Kompania Mina-rai Nasional tenke tuir regulamentu ba ajensia estadu nian.
• Kompania Mina-rai Nasional presiza atu transparante no akuntavel.
• Kompania Mina-rai Nasional tenke dezeinha atu prevene korupsaun.
• Kompania Mina-rai Nasional labele hetan poder ne’ebe maka’as liu fali saida mak nia hakarak.
• Kompania Mina-rai Nasional nia lukru tenke ba liu Fundu Petroleu, laos investe deit iha kompania.
• Kompania Mina-rai Nasional labele hetan poder atu halo impresta ka fan asoens (bonds)/obligasi.

Tuir ligasaun ida ne’e atu hetan informasaun no analiza tan kona-ba asuntu ne’e.

LH asks President to weigh TimorGAP's risks and legality

On 25 May, Timor-Leste's Council of Ministers approved a Decree-Law to create a national oil company (NOC) named Timor GAP, EP (the name has been changed from PETRONATIL). President Jose Ramos-Horta is deciding whether to promulgate or veto this Decree-Law.

In other countries, state-owned oil companies are often accompanied by anti-democratic or illegal practices, corruption, environmental destruction and other negative consequences. La'o Hamutuk believes that creating an NOC will impact on the future of Timor-Leste and must be done in a careful, Constitutional manner.

Therefore, we wrote a letter to the President (Tetum original) urging him to make a wise decision which will benefit all of Timor-Leste's people and safeguard our nation's non-renewable resources.  Our letter was accompanied by the submission we made to the State Secretariat for Natural Resources last November about an earlier draft of this legislation, although we have since obtained the version approved (Portuguese original) by the Council of Ministers. Our submission raised the following main points:

• National oil companies are dangerous, and we should learn from failures as well as successes.
• The NOC should be established by Parliamentary law, not decree-law.
• The NOC should serve the people of Timor-Leste.
• This Decree-Law must be written clearly.
• The NOC should follow the rules for state agencies.
• The NOC needs to be transparent and accountable.
• The NOC should be designed to prevent corruption.
• The NOC should not be given more power than it needs.
• The NOC’s profits must be paid into the Petroleum Fund, not reinvested in the company.
• The NOC should not be empowered to borrow or issue bonds.

Follow this link for more information and analysis about this issue.