Subject: JP: Alkatiri on ET's business climate

The Jakarta Post February 21, 2001

Making business climate for E. Timorese welfare

One of the leaders of East Timor's Fretilin independence movement, Mari Alkatiri, is now Minister of Economic Affairs in the transitional Cabinet. Following are excerpts of an interview with The Jakarta Post held last month in Dili.

Question: Major economic potential for East Timor exists within the coffee and tourism industries. How would you ensure benefits for the Timorese?

Answer: The NCBA (America's National Cooperative Business Association) now has a hold on the coffee sector instead of the military.

Coffee is still our main export, we're trying to improve its quality and getting it certified as an organic product.

We inherited the NCBA (from the period under the Indonesian rule) and we're now trying to break the monopoly; we'll be negotiating with interested investors, including Brazilians and Portuguese.

We are also building bilateral cooperation with Australia, and are seeking more diversity (in markets).

What do you see as a fair deal regarding the Timor Gap Treaty?

The issue is still being negotiated with the Australian government, and (the agreement) is to be signed by the first elected government in East Timor. In the formal round of talks held last Oct. 9 to 13 our stance was clear, and we had a two way meeting to look for ways to resolve the differences.

We're now trying to schedule another informal round and a formal round of talks ... But our starting point is clear, that of a clean slate, the treaty signed with the Indonesian government is to be considered invalid because the United Nations never recognized integration.

And (we are also) determining maritime boundaries ... We are aware of our claims that if we apply current international laws it should be the medium line; 100 percent of resources should be for East Timorese.

In international law all overlapping claims should be resolved. Not only do we need them but (oil and gas) are our main resources.

Are you also going to establish rules to correct monopolies?

The main problem here is the lack of policies and a legal framework.

According to regulations here Indonesian laws should still be in place, with exceptions regarding human rights, but in practice they are not. Why?

The reason is because some people in the international staff don't really have the necessary capabilities. And how can laws be enforced without effective administration? Not only is a legal framework needed but also border control and adequate policing.

So the business environment has been a free for all situation?

Yes, over the past 10 months. Many who come here are not investors, they are just looking to make money. If approached for taxes they leave. For example, there is a consumer tax of 10 percent and a tax on imports, depending on the product, of up to 15 percent.

But we're trying to control the situation and make them pay tax, register properly and attract investment institutions. Of course, when you're trying to attract investors you can't have huge taxes.

As a Fretilin leader how do you see the party in the future?

The history of the people here for the last 25 years has been integrated with that of Fretilin. People know quite well who really started working for independence and who never changed policy.

We will definitely win the election. But we still think that to have a government which can be most effective, the best human resources will have to be placed in that government. We wouldn't be the majority and we want a government that will create peace and stability, a participatory government.

Fretilin's orientation is social democracy. How does a free business climate figure here?

In a time of globalization at every stage we need to clearly define how to create a complimentary situation between the private and state sectors. There is no doubt that education, health and rural development should be guaranteed by the state.

We need investors but we also need to improve the capacity of Timorese businesses. And we need to strengthen community economic enterprises as cooperatives. We need to balance the experiences of other countries. Socialism and neoliberalism have not resolved problems separately.

Given the fact that the economy was in the hands of the old families among Timor's elite how can Timorese business develop? Yes it is of course a problem. At least with Fretilin leadership we will give full priority to empowering community economies through micro financing for small enterprises. If Timorese do not develop (economically) there will be no one to buy the results of investment.

But maybe businesses would just rely on, say, Indonesian buyers.

Yes so we will regulate. I'll give you one example. In fisheries, for instance, some 10 companies have applied for permits. I have not approved one, for the simple reason that we should have the facilities, such as ports, here in Timor. They are only looking to cash in on profits for their respective countries. To create added value, jobs and more revenues we need the facilities here.

Those applying for permits come from Australia, Hong Kong, Maucau, Taiwan and Indonesia. (Ati Nurbaiti )

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