Sinál perigu sei iha konsekuénsia

Link to this blog in English

Dadus sira foin dadaun ne’e ladún fó korajen ba futuru finansiàl ba nasaun ne’ebé depende ba esportasaun petróleu ida ne’e. Problema ne’e la’ós de’it tanba presu mina-rai ne’ebé nafatin maizumenus $40/barríl, maibé merkadu finanseiru mundiál ne’ebé monu, no mós dollar Estadus Unidus ne’ebé sa’e (halo ita nia investimentu iha moeda sira seluk lakon nia valór) tolan tiha rendimentu potensiál sira hosi Fundu Petrolíferu Timor-Leste. Retornu investimentu husi Fundu Petrolíferu nian iha 2015 negativu tokon $21. Bainhira ita tau hamutuk ho rendimentu ki’ik hosi fa’an petróleu no gas no levantamentu boot hosi Fundu Petrolíferu atu finansia orsamentu estadu nian, entaun Fundu Petrolíferu hahú monu ona – iha Janeiru nia rohan, Fundu Petrolíferu nia saldu iha biliaun $16.04, saldu ida ne’ebé menus liu dezde Abril 2014 no menus biliaun ida kompara ho fulan ualu liu ba.

Ema sira ne’ebé servisu iha setór petróleu no finansas nian sempre hatudu sira nia optimizmu, no sira espera katak sira loos hela katak presu mina-rai sei sa’e tan, merkadu finanseiru sei sai di’ak, no dolar Estadus Unidus sei estabiliza hasoru moeda sira seluk. Karik buat hirak ne’e mak akontese, saldu Fundu Petrolíferu nian sei monu tun neineik liu. Maske nune’e, Fundu sei bele de’it hahú sa’e bainhira polítiku na’in sira iha fuan boot no hare ba tempu naruk liu tan atu hakotu despeza públiku nian ba iha mega projetu sira ho benefísiu ne’ebé hamosu hela duvida – ita seidauk hare planu ohin loron nian ne’ebé hakarak atu muda diresaun.

Maske nune’e, fatór ida iha buat hanesan ne’e labele troka ona; buat ne’e labele muda tanba finansas global ka orsamentál ne’ebé prudente. Ita nia rezerva petróleu no gas ne’e labele renova fali – bainhira ita fa’an ona, sira labele iha tan. Vice Ministru Finansas foin lalais ne’e fó hanoin ba ofisiais sira seluk atu lalika preokupa ba presu mina-rai ne’ebé tun tanba 90% hosi Timor-Leste nia riku-soin petróleu no gas ne’e ita supa no esporta tiha ona.

Realidade mak, hanoin ida ne’e ho esperansa demajiadu liu. Tuir deklarasaun rezerva ne’ebé foin lalais ne’e publika hosi Santos, parseiru ida iha projetu Bayu-Undan, 93.3% hosi Bayu-Undan nia depózitu “provadu” ne’e fura hotu ona. Timor-Leste nia kampu seluk ba produsaun mina-rai, Kitan, taka ona. Maske Greater Sunrise bele dezenvolve iha loron ruma, maibé disputa fronteira ne’ebé la hatene bainhira mak hotu ne’e, ulun toos ba LNG namlele ka dada kadoras no duvida balu ba profitabilidade bele han dékada balu tan atu resolve.

Iha tempu ne’ebá, karik ita nia Fundu Petrolíferu sei labele eziste tan. Karik ita kontinua atu aseleira despeza estadu nian, subar tiha kustu total sira hosi empréstimu nian, osan hosi ne’ebé mak ita sei hetan atu selu fila fali ita nia tusan? Oinsá ita sei halo manutensaun ba ita nia estrada no aeroportu foun no furak sira ne’e? Buat ida importante liu mak, bele ka lae ita nia mestre/a, doutór/a, polísia, funsionáriu/a públiku sei kontinua atu serbí ita nia povu bainhira laiha ona osan atu bele selu sira?

Tinan barak ona La’o Hamutuk fó avizu kona-ba buat fundamental hosi Timor-Leste nia frajilidade fiskál, no ami satisfás no sente triste atu hare evidénsia sira hosi fonte barak ne’ebé fó konfirmasaun loos ba ami nia predisaun sira ne’ebé ladún furak ba Timor-Leste.

Maibé ukun na’in sira nia ulun seidauk nakloke. Buat saida mak bele halo sira hodi bele hare sor-sorin, atu bele hare liu dook duke semana oin ka ba eleisaun tuir mai? Bainhira mak sira bele realiza katak ema liu tokon ida, ne’ebé la’ós de’it hosi sira nia maluk ka sira nia grupu besik sira, depende ba sira atu halo dezenvolvimentu ida ne’ebé ekilíbriu no sustentável?

------------------------------------------------

P.S. Loron ida hafoin La’o Hamutuk publika artigu ne’e, jornál lokál sira fó sai katak Autoridade Nasionál ba Petróleu (ANP) hateten katak ConocoPhillips sei halo “perfurasaun foun” 5-7 durante ba tinan rua oin mai atu “mantén produsaun to’o tinan 2020.” Maibé ANP la esplika sai katak posu foun sira ne’e presiza halo atu supa sai restu petróleu no gas hosi kampu Bayu-Undan nian, no sei la fura kampu foun. ANP nia deklarasaun katak iha “rassio atu susesu ne’e 90%” hosi posu sira ne’e bele loos tanba kampu ida ne’e ema hatene momoos ona, maibé laiha ligasaun ba posibilidade atu hetan rezerva petróleu foun ne’ebé bele aumenta Timor-Leste nia reseita iha futuru.

Tuir mai, perfurasaun foun sira ne’e sei kusta dolar tokon barak liu tan. Kompañia sira sei “rekopera” despeza ida ne’e hosi produsaun Bayu-Undan – nune’e maioria kustu sira ne’e sei kua hosi reseita ne’ebé sei mai ba Timor-Leste.

Ami la hatene karik artigu ida hanesan ne’e mai hosi ANP ne’ebé hakarak atu kria konfuzaun iha públiku, ka husi inkompeténsia jornalista nian, maibé la duvida katak artigu ida ne’e konfunde leitór jornál sira ne’e. Espera sira nia lider sira hatene di’ak liu tan.

Indicators have consequences

Liga ba artigu ida ne'e iha Tetum

Recent data have not been encouraging for the financial future of this petroleum-export-dependent country. Not only are oil prices still around $40/barrel, but the declining global stock market and the rising U.S. dollar (which caused our investments in other currencies to lose value) swallowed any potential income from Timor-Leste's Petroleum Fund -- the return on the Fund's investments in 2015 was negative $21 million. When combined with low revenues from oil and gas sales and large withdrawals to finance the state budget, the balance in the Petroleum Fund has begun to fall -- at the end of January it was $16.04 billion, the lowest since April 2014 and a billion dollars less than eight months ago.

Oil and finance professionals are invariably optimistic, and we hope that they are right that oil prices will rise again, the stock market will improve, and the U.S. dollar will stabilize against other currencies.  If this happens, the Fund's balance will decline more slowly. However, it will only begin to increase if politicians are brave and far-seeing enough to sharply curtail public spending on wasteful mega-projects with dubious benefits -- a change of direction not visible in current planning.

Nevertheless, one factor in this equation is immutable; it will not change due to global finances or prudent budgeting. Our oil and gas reserves are non-renewable -- once they are sold they no longer exist. The Vice-Minister of Finance recently advised Ministers and other officials not to worry about oil prices because 90% of Timor-Leste's oil and gas has already been extracted and exported.

In fact, even this may be too hopeful. According to the latest reserves statement from Santos, a partner in the Bayu-Undan project, 93.3% of Bayu-Undan's 'Proved' deposits have already been extracted.  Timor-Leste's other recently producing field, Kitan, is already shut down. Although Greater Sunrise may rise some day, the unpredictability of boundary disputes, floating/pipeline obstinacy and dubious profitability could take decades to resolve.

By then, our Petroleum Fund may no longer exist. If we continue to accelerate state spending, hiding the full costs by borrowing, where will the money to repay the debts come from? How will we maintain our nice new roads and airports? More importantly, will teachers, doctors, police and civil servants continue to serve the public when there is no money to pay them?

La'o Hamutuk has warned about Timor-Leste's fundamental fiscal fragility for several years, and we are gratified and saddened to see evidence from many sources confirming our dire predictions.

But decision-makers' heads remain in the sand. What will it take to make them look around, to see beyond next week or the next election? When will they realize that more than a million people, not only their cronies or interest groups, depend on them to advance equitable and sustainable development?
--------------------------------------------

P.S. The day after this blog was published, local newspapers reported the National Petroleum Authority (ANP) saying that ConocoPhillips will drill 5-7 "new wells" during the next two years to "maintain production until 2020." They failed to explain that these new wells are needed to extract the last bits of oil and gas from the Bayu-Undan field, and will not tap into any new fields. ANP's assertion that the wells have a 90% probability of success may be true because this field is already well understood, but it has nothing to do with looking for new petroleum reserves which could enlarge Timor-Leste's future revenues.

Furthermore, drilling these new wells will cost many millions of dollars. This cost is 'recoverable' from  Bayu-Undan  production -- so most if it will be subtracted from revenues which would have come to Timor-Leste.

We do not know if articles like this result from ANP obfuscation or journalistic incompetence, but it's no wonder that the newspaper-reading public is confused. Hopefully their leaders know better.

Solidarity Should be Shown

Last Tuesday, several thousand Timorese citizens rallied peacefully in front of the Australian Embassy in Fatuhada, Dili, to urge the Australian Government to comply with international law and respect Timor-Leste's sovereignty by negotiating a fair maritime boundary or allowing the issue to be decided by an impartial court or arbitration. As in previous protests on this issue in 2004. 2005 and 2013, there was no violence or threats; passers-by mingled with participants, and demonstrators obeyed strings which delimited areas they were not supposed to enter. In fact, police and embassy security were more respectful than at previous protests and kept their distance; the crowd largely controlled itself.

Although strong views were expressed ("Governu Australia ... Na'ok-teen" was a frequent call and response) and speakers were eloquent and vociferous, most participants turned their backs to the embassy, preferring to face the stage. A few speakers appealed directly in English to Ambassador Peter Doyle's conscience, but the sound system was probably not loud enough to cross the street and walls. We expect that his plainclothes staff have passed on the message, although organizers had written to him the day before.

Many Timorese expressed their appreciation that international solidarity is continuing to support Timor-Leste in this phase of its independence struggle, as activists around the world had done during 24 years of struggle against Indonesian occupation. Unfortunately, the solidarity was more virtual than visible -- fewer than ten malaes attended, and not a single Australian national. (There were a lot of people there, and we could be mistaken -- apologies to any Australians who passed unseen in the hot noonday sun.)

La'o Hamutuk has talked with many Australians, both here and in Australia, who support Timor-Leste's right to a fair maritime border with their country.  But unlike at previous rallies here, they did not make an appearance, although protests and well-attended conferences in Australia during the last few months attest to their integrity and determination. We understand that people who work for the Australian government, the programs it funds, or the United Nations have had to surrender their freedom of speech on these issues, but many others have not.

We hope that the warning messages distributed by the Australian Embassy (left), the U.S. Embassy (right) and the United Nations (below) didn't scare people away. Australia told its citizens to "avoid spontaneous gatherings, demonstrations, protests, street rallies and other large public gatherings," while the United States warned that "Even demonstrations intended to be peaceful can turn confrontational and escalate into violence with little or no warning. U.S. citizens should avoid areas of demonstrations, and exercise caution if in the vicinity of any large gatherings, protests, or demonstrations."

The United Nations, which has worked hard to support human rights, sovereignty and democracy in Timor-Leste, sent an internal 'broadcast' to its staff the day before the demonstration that "Although the event is announced as a peaceful protest, such issues can always deteriorate and develop into something less organized. Therefore UNDSS is as usual reminding staff members and dependants (sic) to avoid large crowds and gatherings as this could always have potential to turn into a mob."  As all UN staff sign contracts agreeing not to participate in such events, this may have been unnecessary. A second UN 'security broadcast' on the morning of the protest expected "some traffic disturbance" and reminded "staff and dependants to avoid getting caught in a crowd as it can always change into a mop (sic) with short notice. PNTL is at the scene."

Last November, citizens all over the world rallied to urge governments to do more to prevent  changes to the climate. In Melbourne, Pacific Islanders joined thousands of Australians and others to voice their alarm at impending disaster if Australia, the United States and other fossil-fuelled industrialized nations do not change their direction. Nobody told people to stay away or to be afraid of violence, mobs or confrontation.

Respect is not only about a fair maritime boundary, it's also about respecting Timorese people's dignity, character, self-control, humanity and rights to peaceful expression.

For more photos of the Dili demonstration, as well as other information and background on the maritime boundaries dispute, see La'o Hamutuk's website. The most recent material is toward the bottom of the page.

MKOTT Deklarasaun ba Governu Australia

Liu tinan 40 ona Australia goza reseita hosi rekursu mina-rai no tasi nian iha area Tasi Timor ne’ebé loloos tuir lei no prinsipiu internasionál nian pertense ba Timor-Leste. Iha inísiu kedas Australia buka argumentu oi-oin atu justifika sira nia kaan-teen ne’e. Hanesan iha 1972, Australia halo akordu ho Indonézia atu define sira nia fronteira. Argumentu falsu ba “plataforma Kontinental” hosi Australia halo sira okupa, domina no nauk hosi povu Timor-Leste.

Iha 1974, Kompañia mina-rai sira Australia nian deskobre kampu gas Greater Sunrise. Atu halo fasil sira hodi hetan riku-soin hosi Greater Sunrise no seluk tan iha Timor-Leste nia territóriu, Australia suporta invazaun Indonézia nian mai Timor-Leste iha 1975 ne’ebé oho besik ema 200,000.

Bainhira Timor-Leste manán independénsia hosi okupasaun ilegál hosi Indonézia, Australia nafatin hakarak atu hetan porsaun balu hosi riku-soin povu Timor-Leste nian liu hosi obriga Timor-Leste atu rekoñese direitu balu Australia nian ba iha kampu mina-rai Elang Kakatua,  Bayu Undan, Greater Sunrise no mós halo Timor-Leste tenke lakon nia direitu ba kampu mina-rai Laminaria, Corralina no Buffalo ne’ebé to’o ohin loron sei sai area disputa entre rai rua nian.

Ema Australia barak mak hanoin katak sira nia Governu mak laran luak liu ba povu Timor, maibé buat ne’e la loos. Dezde 1999, Australia fó maizumenus biliaun $1.7 liu hosi programa asisténsia militár no sivíl nian mai Timor-Leste liu hosi mekanizmu bilateral no multilateral nian. Maibé, durante tinan sanulu resin ne’e hanesan, Governu Australia mós simu osan besik biliaun $5 hosi reseita sira hosi kampu petróleu no gas ne’ebé loloos pertense ba direitu Timor-Leste nian. Tanba ne’e, liu biliaun tolu ne’ebé Timor-Leste “fó” ona ba Australia halo Povu Timor-Leste mak sai Australia nia doadór boot liu, la’ós Australia mak Timor nia doadór boot.

Ho buat injustisa lubuk ne’ebé Timor-Leste enfrenta hela hosi okupasaun Australia nian ba Tasi Timor, nune’e, Movimentu Kontra Okupasaun Tasi Timor (MKOTT) husu ba Governu Australia hanesan tuir mai ne’e:

1. Australia tenke respeita no trata soberania no dignidade nasaun Timor-Leste nian hanesan sira halo ba nasaun sira seluk iha mundu.
2. Australia tenke fila ba mekanizmu disputa fronteira maritima nian tuir jurizdisaun Tribunal Internasionál ba Justisa (International Court of Justice) no Tribunal Internasionál ba Lei Tasi nian (ITLOS).
3. Australia tenke halo negosiasaun ho Governu Timor-Leste ho vontade ne’ebé di’ak.
4. Australia labele kontinua argumentu kona-ba “Plataforma Kontinental” ne’ebé la válidu ona.
5. Australia nudár nasaun boot labele uza nia podér ekonomia no polítika iha rejiaun ne’e atu kontinua nauk futuru Timor oan sira nian.

Viva Timor-Leste!
Viva Povu Maubere!
Abaixu Okupasaun Australia ba Tasi Timor!

Reprezentante Movimentu,
Juvinal Dias, Reprezentante Sosiedade Sivíl   
Faustino Soares, Reprezentante Universitariu  
Jorge Alves (Wemoris), Reprezentante Veteranu

Dili, 23 Fevreiru 2016

Boye in prison, appeals sentence

Updated 30 January 2016
Nigerian-American lawyer/adviser Bobby Boye, convicted of defrauding Timor-Leste of more than US $3.51 million, has begun serving his six-year prison sentence.  With time off for good behavior, he will get out on 18 February, 2021.

Last April, Boye pleaded guilty as part of a plea-bargaining process, avoiding a trial which would have exposed information about his crimes to public scrutiny.  He also promised to repay Timor-Leste for the damage caused by directing Timor-Leste Government contracts to his nonexistent company, which the court said was  $3.51 million.  La'o Hamutuk estimates that Boye's scams cost Timor-Leste about fifty times that amount, although the court and the prosecutors did not respond to our suggestion.

Although he admitted his guilt and promised to repay, Boye was apparently surprised that he received the maximum prison time under federal sentencing guidelines. After the sentence was handed down and explained by Judge Freda Wolfson on 15 October 2015, he fired his taxpayer-paid public defender and hired a private lawyer.

On 16 November, Boye's new attorney Michael Confusione told the court that he intends to appeal the sentence, arguing that it should be little to no jail time because Timor-Leste received services in return for the fraudulent payments Boye extracted.

On 25 November, Confusione and prosecutors filed motions back and forth about expediting the appeal process, which was denied.

On 21 January 2016, another set of motions debated whether the appeal should be summarily dismissed. Confusione argued that the long sentence is a "miscarriage of justice," which prosecutors argued was "wholly unsupported by any argument, any case law, or any facts."

Boye's attorney filed a 49-page appeal brief and supporting documents on 25 January. On 28 January, a three-judge appeals court panel rejected his appeal and upheld the lower court verdict and six-year sentence.
 
La'o Hamutuk has collected the key documents in the appeal process here.

La'o Hamutuk continues to hope that the competent Timor-Leste authorities will investigate who else was involved with Boye's crimes, especially Timorese officials, and take appropriate action to prosecute them.  We have compiled a lot of information about these crimes and the U.S. legal process at http://www.laohamutuk.org/econ/corruption/Boye/14BoyeCase.htm, which we will continue to update.

Hyundai E&C’s history of corruption

On 12 June 2015, Timor-Leste's National Procurement Commission announced that it intended to award the contract for the design and construction of the Suai Supply Base to the consortium of Hyundai Engineering & Construction Co., Ltd and Hyundai Engineering Co., Ltd.  The contract was signed on 27 August 2015, and the project primarily involves constructing a 3.3 km concrete seawall, with construction expected to be completed by September 2018. This is the largest contract in Timor-Leste’s history – $719 million – more than the total that the country has spent on education since independence in 2002.  Timor-Leste's Audit Court invalidated the contact, reportedly because of Hyundai's record and irregularities in the procurement process, but the Government is appealing the ruling.

Hyundai E&C (HEC) is the largest engineering company in South Korea, and is among the fifteen largest international contractors in the world. It employs 60,000 people and has annual income of more than $16 billion dollars. The company wields considerable political influence in South Korea as one of the major chaebol (family-run conglomerates) which dominate Korean business and politics; its former CEO, Lee Myung-Bak, was the President of Korea from 2008 to 2013.

Since 2012, Hyundai E&C has been sanctioned many times for collusion by the Korean Fair Trade Commission (KFTC), the government body in charge of investigating and prosecuting corruption cases and anti-competitive practices involving Korean businesses. This article contains links to Korean Government documents, and also uses Korean media articles as secondary sources. Some links are in English, while others link to Korean language documents.

HEC has most often been charged with bid rigging, where nominal “competitors” secretly agree in advance who will win specific contracts, while also conspiring on what prices to bid to maximize profits for the winning (lowest) bidder. This causes the people to have to pay much more for infrastructure.

One major scandal involved contracts for the construction of a second subway line in Incheon. In January 2014, KFTC issued a press release (Korean) announcing fines of ₩132.2 billion won (around $120 million) for 21 companies. Another KFTC document (Korean) shows that HEC itself was fined ₩14.74b ($13 million).

In April 2014, the Public Procurement Service (PPS) banned (Korean) Hyundai E&C and other companies from bidding on government contracts between May 2014 and May 2016. However, HEC appealed (Korean) PPS’s decision to blacklist them, and the pending appeal allowed the company to continue to bid for contracts while the case was in progress. The appeal was never decided.

In a separate ruling in December 2014, Seoul High Court ruled (Korean) that Hyundai E&C and the other companies did not have to pay fines in relation to the Incheon Subway collusion, but the blacklist remained in effect. The Court decision was only about the fines in the Incheon case -- HEC has also been convicted in many other collusion cases, and those fines and sanctions still stand.

13 July 2015: President Park Geun-hye
calls for special pardons to mark the
70th anniversary of Korea's
independence from Japan.

Finally, on 15 August 2015, the Korean Ministry of Land, Infrastructure and Transport announced (Korean) that, as part of amnesties issued for the 70th anniversary of Korean independence, the government had lifted the ban on the construction companies’ bidding for government contracts “to promote national unity and economic vitality.” However, the press release also said that fines and criminal convictions for corruption would remain in place.

La’o Hamutuk previously circulated a JoongAng News article which said that HEC had been blacklisted by the Korean Government for collusion. Even though the ban technically never came into effect, HEC was convicted of corruption in 2014 and banned from bidding for public contracts for two years. Although they were un-blacklisted for this case in August 2015 (two months after Timor-Leste decided to award them a $719 million contract), HEC has been penalized for many other corrupt and criminal activities.

The Four Rivers construction project, which began in 2009, led to a major scandal in which several major construction companies were indicted in 2013. HEC was fined ₩22b ($20 million) by KFTC, and the Supreme Court upheld the fine (Korean) in December 2014. In addition, media including Korea Times Daily, KHL Group and Korea Economic Daily reported in late 2013 that HEC and several other companies were to be banned from bidding for government contracts by the Public Procurement Service for 15 months over the Four Rivers scandal.

Hyundai E&C has been fined many other times. Indeed, The Korea Times wrote on 8 December 2015 that KFTC has fined HEC a total of ₩182.4b ($165 million) since 2010.

• In March 2014, HEC was fined over ₩10b ($9 million) for bid rigging in relation to Daegu metro and Busan subway contracts.
  
• In April 2014, the Korea Herald reported that HEC had been fined ₩13.3b ($13 million) for bid rigging in relation to the Ara Waterway project.
  
• In April 2014, KFTC announced (Korean) that they had fined HEC ₩13.4b ($13 million) for collusion in relation to the Kyungin canal project. K-Water (the Government agency for water management) also blacklisted HEC for nine months.
  
• In July 2014, media including Yonhap News reported that a record fine of ₩435.5b ($420 million) had been imposed on a group of 28 companies for colluding over contracts for building a high-speed rail system in Honam. According to JoongAng News, HEC’s individual fine was ₩59.8b ($58 million).
  
• In October 2014, Yonhap News reported that HEC was fined ₩6.3b ($6 million) for colluding on bids for a construction project in Youngilman port in Pohang.
  
• In May 2015, HEC was one of 22 companies fined ₩175b ($160 million) by KFTC for colluding over gas pipeline and office construction contracts in 2009 and 2011. Yonhap News reported that HEC was fined ₩36b ($32.5 million) in relation to this case.

Large corporations have often abused the disproportional political power they hold in South Korea. Hyundai E&C has sometimes managed to evade penalties by filing appeals and receiving pardons, but the company has a long record of convictions for corruption. The people who manage Timor-Leste’s people’s money should ensure that every company receiving a government contract meets standards for integrity and has no record of criminality. If not, our limited management experience and capacity could allow corrupt foreign companies to steal the money we have saved from our people’s oil and gas wealth.

La’o Hamutuk hopes that this article will help Timor-Leste’s judges and policymakers decide whether to award nearly a billion dollars to a company which has repeatedly flouted the law and the public interest.
----------
Update: On 16 June 2016, Hyundai E&C announced that it had given up waiting for Timor-Leste's appeals court to overrule the Audit Court decision and that it was withdrawing from the project. 

TL's Human Development Index dropping, but data is lacking

The United Nations Human Development Program (UNDP) just released its 2015 Human Development Report, with statistics and rankings for nearly every country in the world. The report calculates a Human Development Index (HDI) – combining measures of income (GNI per capita), health (life expectancy) and education (years of schooling) – to assess how people are doing. The results are discouraging for Timor-Leste: our HDI is 0.595, ranking 133rd out of 188 countries and territories. Even worse, our HDI has dropped steadily since 2011.

Download the report text,  statistical annex (Excel),  Country Profile for Timor-Leste, and Explanatory Note for Timor-Leste.

Although the HDI was created as an alternative to Gross Domestic Product (GDP) which would consider quality of life as well as money, it does not work this way for this country. Unfortunately, UNDP has no health or education data newer than the 2009-2010 Demographic and Health Survey (DHS). Progress in education in the last six years is not shown, while progress in lifespan is based on a statistical model. Therefore, changes in HDI for Timor-Leste primarily reflect changes in Gross National Income (GNI) per capita, which has been falling since 2011 as oil and gas production drops because the fields are being depleted, exacerbated by last year’s drop in market prices.

Nevertheless, the new Human Development Report is more accurate for this country than the one issued last year, which included overly optimistic projections for GNI. UNDP improved its estimates after discussions with La’o Hamutuk, and the new report also revises Timor-Leste’s HDI for past years. The heavy black line on the graph at right shows Timor-Leste’s HDI trend from the 2015 report. HDI has dropped since 2011 because GNI pc (dotted black line) has been falling.  The thinner red solid and dotted lines show the erroneous values UNDP reported in 2014, which the Government said “confirms good progress”.

Unfortunately the 2014 report was incorrect. With new data and better methodology, the 2015 report shows that Timor-Leste’s global HDI rank is 133, and it has been 132 or 133 every year since 2010, indicating no progress. UNDP calculates an “average annual HDI Growth 2010-2014” for each country. Timor-Leste’s value of negative 0.22%/year is among the worst – only five other countries (Cuba, Libya, Jamaica, Syria and Central African Republic) are losing human development as rapidly as Timor-Leste.

In addition to its narrative report and analysis, the Human Development Report (HDR) includes a statistical annex with valuable information on nearly all countries regarding health, education, economy, inequality, labor, gender, poverty, population, environment and other topics. Unfortunately, some of the information on Timor-Leste is outdated – for example, Multidimensional Poverty comes from the 2009-2010 DHS. We hope that the imminent publication of the 2015 census, Livings Standards Survey and 2016 Demographic and Health Survey will improve knowledge and policy-making about Timor-Leste’s current situation.

The 2015 HDR focuses on how work can enhance human development. Unfortunately, labor statisticians exclude subsistence farmers and fisherpeople from the labor force, limiting the relevance of this report for the more than 2/3 of Timor-Leste’s adults who are outside the formal economy. According to the HDR, Timor-Leste’s “labor force participation rate” of 37.9% is the lowest in the world.

Users of UNDP’s statistical data for Timor-Leste (and the World Bank’s World Development Indicators which is the source for many of them) should be careful. For example, UNDP reports that Timor-Leste spent 1.3% of its GDP on health (the lowest in the world). However, it lists public spending on education as 9.4% of GDP, the sixth highest in the world. Unfortunately, the education figure is wrong – it should be 2.7%, which ranks us 137th out of 160 countries with data. UNDP and the WB apparently calculated education as a percentage of non-oil GDP, ignoring the nearly three-quarters of Timor-Leste’s current economy which is based on petroleum activities.

Such data errors can be propagated in other reports.  For example, the U.S. government’s Millennium Challenge Corporation recently released annual scorecards for MCC candidate countries. Timor-Leste’s “Health Expenditure” rating plunged from 85% in last year’s scorecard to 4% in the latest one. We are disappointed that RDTL spends a little less on health each year, but this drastic drop results from correcting previously erroneous statistics.

Natural human optimism (and politicians’ wish to take credit for improvements) sometimes leads to conclusions which are not justified by facts. In another example, last month the Government celebrated that “Timor-Leste is one of only nine countries estimated to have reduced its Maternal Mortality Ratio [MMR] by over 75% since 1990.” Unfortunately, there is no data to show this. The government press release was based on an article in The Lancet which summarized a 200-page UN interagency report Trends in Maternal Mortality: 1990 to 2015. As that report says, “Timor-Leste had little to no country-level data.”

More specifically, the report uses a statistical model to extrapolate Timor-Leste’s maternal mortality rates over a 25 year period from two data points in a single year: the 2010 census and the 2009-2010 DHS. The authors assume that changes in GDP (mostly going into the Petroleum Fund in our outlier economy), fertility rate and the fraction of births attended by a health professional must have prevented women from dying in childbirth, but they had no actual information. (See Q&A on the report and Timor-Leste country profile.) According to a UN expert who works here, “maternal mortality still is a serious problem in Timor-Leste” and the interagency group’s estimate of 215 (range 150-300) maternal deaths per 100,000 live births is probably too optimistic – the 2010 census and DHS figures of 570 and 527 could be closer to reality. We await better information from the 2015 Census.

As Timor-Leste's oil and investment income declines, we are at a crossroads and face many critical decisions. Policy-makers need accurate and up-to-date evidence to inform their actions. The government has spent a lot of money over the last eight years, but the benefits for the impoverished rural majority are not yet clear.  We need to know where we are today in order to decide in what direction to go … and we need to change direction if we don’t want to end up where we are headed.

Timor-Leste’s health care and education systems do not yet respond to the needs of most of our people, and the government allocates lower funding to them in each year’s State Budget.  It would be a shame – a crime – if misleading statistics are used to justify policies which will not improve the lives and the futures of the excluded majority: women, children, farmers and the rural poor.