Subject: FEER: Aiming High: The Story of an Ambitious Timor Businessman

Far Eastern Economic Review Issue cover-dated March 21, 2002

Aiming High

An ambitious Dili businessman has his sights set on a new airline for his brand new country

By Margot Cohen/DILI, EAST TIMOR

MOST ENTREPRENEURS would never dream of making the leap from running a laundry to running an airline. But that's exactly what Jerry Desousa has up his sleeve in East Timor, where the economy of a brand new country is up for grabs. "You don't just sit and wait for something to happen," says the 49-year-old businessman, who returned to his native land from Australia two years ago.

As one of the few Timorese entrepreneurs with solid corporate time overseas, Desousa knows that the international community is counting on East Timor to start weaning itself off foreign aid. The first step is shedding passive habits acquired during 23 years of repressive Indonesian rule.

Desousa first made his mark back home by winning the housekeeping contract for Crocodile Alley, the Dili base camp for the officers of the United Nations' peacekeeping forces. His war-room is the laundry, where his staff churns out fresh fatigues for officers from 22 countries. Their quarters are immaculate, evidence of Desousa's constant efforts to upgrade quality and efficiency. And that quest doesn't stop at the camp gates. While other businessmen have aimed to make a quick buck from the UN, Desousa is in for the long haul. He has a 200-room Dili hotel project in the works, for example. But his biggest ambition is to run East Timor's first national airline. "It would put East Timor one step ahead," he says.

Born to a poor family in the district of Baucau, Desousa was working as a car mechanic when civil war erupted and he fled to Australia in 1975. He taught himself English from newspapers and took a correspondence course in hotel-management. In 1996, he founded Australia Pacific Management Services with two partners. The $12-million private firm specializes in property and maintenance.

Now, in pursuit of his dream of a national airline, Desousa has turned to Vincent Aviation, a small carrier in New Zealand that has been transporting the New Zealand defence forces to East Timor's Suai town for the past 18 months. Desousa says he has already lined up two corporate backers in Singapore and Malaysia who can provide financial backing of up to $12 million, but declines to name them. And to prove his commitment to his native land, Desousa is offering the East Timor government a 10% share of the new airline at no cost.

With the international airline industry still reeling from the September 11 attacks on the United States and per-capita income in East Timor at no more than $300 a year, the plan might seem bizarre. But current carriers enjoy a near monopoly. Indonesia's Merpati has been running daily flights from Dili to Denpasar, Bali, with a $240 return fare, while Australia's Air North has been flying daily between Dili and Darwin for $390 per round trip.

The new government welcomes the prospect of competition, particularly since it won't be footing the bills. Then there's the prestige. "It's better if people see that East Timor has its own airline, to promote its identity," says Ovidio de Jesus Amaral, minister of transport and communications.

But flying has financial perils. Last year, two start-up airlines with Indonesian backers ran a few flights from Dili to Denpasar, but their operations were snuffed out after Merpati dropped its ticket price to $200 return. When the coast was clear, Merpati immediately bumped its price back to $240.

Merpati must negotiate a new deal with the government after May, since its current terms were negotiated with the UN. Rattled by news of Desousa's plans, Wahyu Hidayat, president-director of Merpati, says that the carrier might be willing to pay some royalties to the Timorese government to dissuade them from setting up a national airline. "What I suggest is, we work together. This is distribution of risk," he says.

But Desousa's partners have their own ideas. While the goal over the next five months is to buy a 120-seat Boeing 737-300 jet for daily runs to Darwin and Denpasar, a less glamorous option is to rely on the 19-seat Beechcraft turboprop already operated by Vincent Aviation. "Every small country wants to see a Boeing with their name on the tail," says Peter Vincent, owner of Vincent Aviation. "My feeling is, it's better to walk before we run."

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