TRADE AND ENVIRONMENT DIMENSIONS IN TIMOR-LESTE SUB-REGIONAL WORKSHOP ON THE TRADE AND ENVIRONMENT DIMENTIONS IN THE FOOD AND FOOD PROCESSING INDUSTRIES IN SOUTH –EAST AND NORTH-EAST ASIA JULY 2006, JAKARTA INDONESIA Afonso A.J. Candido Mario F.C Ximenes

TIMOR-LESTE: A country to be discovered At the Crossroads of Southeast Asia and South Pacific

TIMOR-LESTE: Area

TIMOR-LESTE: in brief, based on 2004 data Geographic Size:15,007 km2. Population: 925,000 Currency: USD GDP:$339M GDP Grwoth1.8% GDP per capita:$366 Commercial Imports:$113.5M Exports:$7M Inflation rate:1.8%

TIMOR-LESTE: GDP by Economic Sectors, 2004 Sectors (% GDP) Agriculture, Forestry & Fisheries30% Public Administration and Defense23% Civil Construction16% Trade, Hotels & Restaurants 9% Transport & Communication8% Finance, Rents & Services7% Manufacturing3% Mining1% Electricity, Gas & Water1% Other Services1% TOTAL (*)100% (*) Excludes Oil & Gas

TIMOR-LESTE: Imports by Product Categories in 2004 Categories (% Import) Petroleum Products32.0% Machinery and Equipment15.0% Vehicles and Spare Parts 13.0% Food Products & beverages10.6% Construction Materials 5.0% Tabacco, etc. 1.9% Others22.5% TOTAL100%

TIMOR-LESTE: Predicted Areas Of Investment Oil and Gas Mineral Resources Agriculture and Agro-industry Forestry Fisheries Tourism Industry Economic Infrastructure

TIMOR-LESTE: Top 10 Import Market in 2004 Markets (% Import) Indonesia 53% Australia 18% Singapore13% Viet Nam4.6% Italy1.8% Portugal1.5% Denamark1.4% Thailand1,1% Japan1,1% China1.0%

TIMOR-LESTE: Export by Product in 2004 Category (% Export) Coffee 100%

Summary of Strenghts Natural Resources Endowment Stable Macro Political-Economy Low Rate of Inflation Strong and Stable Currency Government with Vision and Courage Sound National Petroleum Management Plan Suitable Climate for Agro-production and Tourism Strong Public-Private Leadership Rich Culture and Political History Well Known Public Personalities International Goodwill from Donors Democratic Society with Broad Political Participation Making Rapid Progress Toward Modern State Based on Rule of Law Favorable Location in a Fast Growing Sub-region

Summary of Weaknesses Weak and inadequate infrastructure Enduring negative legacy of recent history Small domestic market and limited purchasing power High degree of centralization of government services High rate of unemployment High labor costs compared to competing countries Lack of skilled labor & small labor pool Weak business legal and regulatory framework Incipient judicial and weak court system High transportation, communication and power costs Incipient financial sector with high interest rates Lack of business support services

TRADE LAWS Government Decree Number 7/2005 Of 27th of July 2005 on That created the Foreign Investment and Export Promotion Institute Government Decree Nº 6/ th of July Procedural Regulation for External Investment

1. Indonesian Law (According to UNTAET Regulation nº 1/1999): ENVIRONMENTAL LAWS FRAMEWORK (EXISTING) Ministry of Environment Decree on Guidelines on Coastal Water Quality Standards (1988) Regulation on the Control of Water Pollution (1990) Regulation on Environmental Impact Assessment (1993) Regulation on Hazardous and Toxic Waste Management (1994) Environmental Management Act (1997) Government Regulation on Marine Pollution and Degradation Control (1999)

2. UNTAET Regulations (Environment) Regulation Nº 17/2000 – Illegal Logging Regulation Nº 19/2000 – Protected Places 3. UNTAET Guidelines (Div.Environment ) GUIDELINE#1 - Environmental Requirements for Development Proposals GUIDELINE #2 - Mechanised Sand and Gravel Extraction from Rivers and Borrow Pits GUIDELINE #3 - Small Landfill Siting Guidelines (Environmental) GUIDELINE #4 - Interim Tibar Landfill Operation Guidelines GUIDELINE #5 - Prescribed Activities for Pollution GUIDELINE #6 - Environmental Screening GUIDELINE #7 - Storage of Fuel and Oil GUIDELINE #8 - Ambient Noise from Stationary Sources

4. DSMA Guidelines (New ) GUIDELINE#1 – An overview of the Environmental Impact Assessment process and guidelines GUIDELINE #2 – Development proposals and Pollution License application GUIDELINE #3 – Screening of development proposals GUIDELINE #4 – Scoping and preparation and Terms of Reference GUIDELINE #5 – Public engagement GUIDELINE #6 – Preparation of Environmental Impact Statements GUIDELINE #7 - Preparation of Environmental Management Plans GUIDELINE #8 – Issuance of Pollution Licenses GUIDELINE #9 – Issuance of enforcement notice and legal proceedings GUIDELINE #10 – Standards and best management practices 5. Timor Leste Environmental Law (New, for approval)  Pollution Control  Environmental Impact Assessment

Types of FOOD and FOOD PROCESSING Products Coffee Rice Coconut Oil and sub-products Aquaculture and Fish processing (future)Types of FOOD and FOOD PROCESSING Products Coffee Rice Coconut Oil and sub-products Aquaculture and Fish processing (future) Environmental Issues

Work in field and project face Problems : Water Pollution Waste (Wet and Dry Processing) Solution: Environmental management (team, database) Environmental Issues

Relation Trade and Environment Monitoring Policy

Conclusion Timorese environment law is still not in effect so creates difficulties for control Environmental prosecution not yet establish Technical expertise in the country is still small Equipment both for government entities and private sector is still scarce BUT Environment (DNSMA) is producing new Timor-Leste laws and forming guidelines with Prosecutor General Environmental (DNSMA) team expanding to all districts with equipment Food and food processing growing but still in time to control from the beginning, reflected by investment proposals evaluation also with environmental criteria. Food and food processing part of Timor-Leste future but in sustainable manner

Bayu-Undan: US $1.65bn, the Largest Investment in Timor-Leste Thank You OBRIGADO