Subject: XG: On the occasion of the Development Partners Meeting

OPENING REMARKS BY HIS EXCELLENCY PRESIDENT KAY RALA XANANA GUSMÃO

On the occasion of the TIMOR-LESTE AND DEVELOPMENT PARTNERS MEETING Dili, 4 June 2003

I wish to begin by greeting the friendly attendance at this meeting of the development partners of Timor-Leste. Your presence gives us the confidence to face yet another year of challenges and responsibilities.

I also wish to greet the Government of Timor-Leste for co-hosting this meeting with the World Bank, for it enables the in-depth debate on the country’s needs.

Independence brought us a national government, rights and freedoms, and increased expectations and demands for fulfilling these immediately from all quarters, beginning from the top in the public service down to the districts, sub-districts, villages and hamlets. Independence does not mean rights alone but also obligations, to contribute one’s share for the wellbeing of society. From the top to the grassroots, we have to transform our mindset of waiting for “manna” from the donors and the Government, and start to take control of our lives, our development and our destiny. No doubt, we will need help from others for some time to come, but we too need to exert ourselves to do our utmost to make the best use of the modest resources we have on hand and the help we receive.

I am informed that we have made considerable progress on planning. But it is not enough. We need to show more substantial progress in implementing the plans we made, in delivering education and health services to our people, in making available improved seeds and implements to our farmers, and in arranging for sale of their products at reasonable prices. The barometer of progress is not how much money our development partners gave or what the Government budget is, but whether our youth and veterans have remunerative jobs, how much our people have produced and whether they are able to sell it, whether there is “food in the pots” in the villages during the lean months, whether our children are attending school, and if our people are receiving quality health care. We need to mobilize and involve our people “as agents of change” in transforming their lives and building a better future for themselves, their children and the nation, rather than victims receiving “alms” from the Government and the donor agencies.

I have attempted to read and understand the documentation prepared for this meeting. Please bear with me whilst I try to approach a few of the issues, which I deem crucial and require your wise input. And by this, I mean the partners with extensive experience of co-operation as well as the members of our country’s Government who have done their utmost during the past fiscal year to implement their annual programme, despite the difficulties of which you are all aware.

The concept of ‘poverty reduction’ which is always on the tip of our tongues, has almost become the duty of every citizen at national and international level and, all the more so when the Millennium Development Goals are its guiding light.

This first year of our political process has advised us, nonetheless, to think more carefully on how we assess our reality with objectivity. It is a reasonably complex reality in that it encompasses the interaction of numerous factors that contribute to the social, political and economic climate of the country.

This first year of an independent State management enabled us to pay greater attention to the time dimension of the plans, the programmes and the priorities. The Millennium Development Goals will not be achieved in five years and, least of all, in one or two years. The year 2015 is the intended deadline for implementation of the plan. We too, have a long-term Vision expressed by our People with a deadline for the year 2020.

The fact that we are ‘globalised’ in this thought should not mean that we have to follow the same action pattern to attain the right to say that we are walking towards the same end.

Reality in, or of, Timor-Leste suggests that we should adopt a different approach although keeping the same guiding lines of the Millennium Development Goals and of the Strategic Vision of our People. The reason for this is that although this global combat against poverty shares some of the indicators common to all developing or underdeveloped countries, there is a demanding need in each country to be familiar with and learn to tackle problems which are very much its own.

Timor-Leste came out of a brief yet devastating period of violence. Before this, from 1990 to August 1999, the average annual economic growth was 5 - 6 %. As a result of September 1999 it is estimated that the economic growth fell to minus 38%. During the period of the UNTAET mission economic growth rose to:

v 1999 2000 15.4%

v 2001 2002 18.3%

However, these figures fell again upon the end of the mission:

v 2002 2003 (minus) 5%

v 2003 2004 (minus) 2% (projection)

This is to say that, although education and health are two fundamental pillars of development in a country in terms of capacitating human resources both mentally and physically, there is an imbalance in the establishment of priorities in the current development plans.

At present, the focus on poverty reduction cannot be centred in its abundant analysis, on these two pillars of national development, in particular when looking at the long-term.

Poverty reduction must be considered in the audacious designing of specific actions that have a multiplying effect so that economic growth may spread confidence. This is the ‘sine qua non’ prerequisite to follow-up and support efforts to stabilise the social and political process.

Without a high level of confidence motivation in economic growth which means that people feel they cannot have an income or be paid for their work in the fields or any other sector the stability issue will be a permanent obstacle and have a potentially damaging effect, which is still vivid in our memories. Therefore, I deem that greater attention must be paid to agriculture and to small and medium-sized industries.

Much is said about the level of poverty and the unemployment rate in Timor-Leste, crafting the idea within us, the East Timorese, that agriculture is not employment. Maybe because agriculture, as a whole, is yet to be considered a conventional and one of the most sustainable sources of income.

Timor-Leste is an agricultural country with great potential to become self-sufficient. I noted with satisfaction the comprehensive and objective section on the agriculture sector within the National Development Plan. However, we now urgently need a phased programme able to guide towards self-sufficiency in basic agricultural commodities in five to seven years. This would avoid the current non-sustainable situation of importing basic food products, which could be produced locally. The people complain that their produce are either not sold or are sold at ridiculous prices. This prevents most of the population from having the purchasing power to buy other commodities or the cash to pay the primary school fee of fifty cents monthly per child.

I noted there is an intention to promote food security, which may mean there are enough funds to purchase food for the populations affected by the rain cycle. This is a great intention but it will not fully meet the needs of the whole population. From the experience in other countries, we are aware that the policy of subsidies harms the finance management of the State. However, I hope adequate solutions are found to this problem, which affects the people’s daily lives and leaves them with no other hope than for jobs to be created in the rural areas even if temporary but providing a cash income.

One proposal could be for the funds allocated for food security be re-allocated for the purchase, storing, processing and distribution of agricultural products namely rice, corn and beans not only to guarantee some price stability but also to assist affected areas. This mechanism, so needed under the present circumstances, would motivate farmers to produce more and better rather than limiting themselves to the self-consumption of their produce, as they could not envisage their sale. If this is to be possible, then, when such a mechanism is well implemented or simultaneous to its implementation, the private sector would gradually take on this undertaking and the State would release itself totally, or partially, from this task of assisting the population.

In addition to generating this motivation in the agricultural sector, it is necessary to advance the small and medium-sized industry in an effort to create permanent and sustainable employment and thus avoid further imports. The initiative of granting micro-credit is commendable but it does not respond to the needs of economic growth because it is restricted to the establishment of small restaurants, which are empty most of the time and, kiosks full of Indonesian products and a few bananas hanging from window ledges; at the same time, the traditional markets are becoming crowded with people coming from the hinterland trying to find means to pay the fifty cents school fee for their children.

Much is said on the need for foreign investment and the increasing concern to create jobs given the lack of employment for the youth. The crucial problem here is embedded in two contradictory and distinct issues. One is the lack of vocational skills amongst the youth; this is easier to solve as long as the investment made is implemented alongside a vocational training programme tailored to the work the youth is employed to perform. This is also to be taken into account in the multi-annual plans of the education sector, in particular the vocational training schools, according to the labour force needs of the country. The other conflicting issue is in relation to foreign investment and is apparently harder to solve. It is the question of the high salary levels in Timor-Leste when compared to the rest of the region.

Great courage is needed to change this situation if we intend to create incentives for investment because, in principle, the country will benefit from the influx of capital and technology and the possibility of job creation but it will not be able to offer a reasonable purchasing power within the domestic market. Obviously, such a production will be targeted towards external markets; however, the high salaries and taxes are disincentives to an investor who has to consider service and product competitiveness.

Ladies and Gentlemen,

Please bear with me for a little longer whilst I raise a number of issues regarding state building for I deem them to be necessary and timely after experiencing this first year of independence.

I noticed in various documents a reference to decentralisation, local governance and local authorities. The Presidency also carried out a consultation through a mechanism of dialogue with the population from the sub-districts to the districts. This culminated in a National Dialogue held in Dili open to those governing, in the Government and in Parliament, to Civil Society and intellectuals.

The initial reaction to this is mostly one of raising the issue of financial constraints and a concern for the lack of available human resources. This is understandable and, therefore, acceptable.

However, we feel that extending this not clearly defined structure of governance will hinder the dynamic and capable development of the State itself. This dynamic and capable development must be based on the democratic participation of our people in resolving their problems because they will have a comprehensive understanding of their rights and duties as citizens.

The population must be guided to understand that abiding by its duties will bring as a natural outcome the attainment of their most basic rights, as individual citizens and as a community. This will also lead the people to undertake a necessary change of mentality; one it was used to, that of expecting the State to solve their every need and problem.

It is fundamental that basic conditions be created at the beginning of the establishment of a new State, to enable the people to feel they are the main actors in this development process. It is here that lies the real need for genuine decentralisation. It is also here that that lies the need to avoid viewing decentralisation as a mere extension of the bureaucracy of the central government.

Some papers mention legitimising local authorities whilst others mention legitimising the role of village chiefs (‘chefes de suco’). Our people’s perception and one of the most legitimate ones is that, in order to safeguard the bodies that represent the central government, the other local government authorities must be legitimised by an electoral process. This is the only way to achieve a genuine synergy between the responsibility of chiefs or representatives and the duties of the communities themselves.

Likewise, only thus, can we create an environment conducive to collective responsibility in solving numerous problems, avoiding small or petty problems growing into major serious ones that require action from other higher instances and leading to continuous over-crowding of our prisons.

However, elections mean funds and mentioning funding involves receptiveness from our partners in the building of this State according to the democratic values of participation and social harmony.

We are aware that the Government is initiating a study on this issue; the National Dialogue Secretariat is drafting the final document to be submitted to Parliament and the Government, interested NGOs and Agencies and disseminated in every hamlet and village for a better understanding of the concept and mechanisms in light of the Constitution.

In regards to the building process of the Rule of Law and, apart from the judicial system, which is regrettably yet to be fully established and still in need of great attention and close interest, there are two other institutions that can also assist to imprint rigour to the State Institutions.

I refer to the Office of the Inspector-General and to the Office of the Ombudsman for Justice and Human Rights (Provedoria de Justiça e Direitos Humanos). We have noticed that the Office of the Inspector-General is still poorly equipped in human resources and skills, and is still unable to respond to situations where appropriate investigations are warranted.

The Provedoria (Office of the Ombudsman for Justice and Human Rights) is yet to be established and needless to say, it still requires human resources able to achieve its mission. The Provedoria must be perceived by the public as a genuinely independent body, accessible to all and through which, citizens can file their complaints against bad governance and abuse of power.

Thus, the Provedoria must become the means through which the people can seek appropriate redress of actions that do not abide by transparent governance and, consequently, the driving force to enhance trust between those who govern and those who are governed.

To conclude, I would like to suggest that, with regards to the technical assistance provided by our development partners, there should be greater thoroughness in the recruitment of experts so as to avoid situations where expectations on the transfer of knowledge and skills are not met. I must, nevertheless, commend the dedication and effort of many experts whom we consider to be capable professionally and useful in the capacity-building process of our human resources.

All these issues draw our attention to a simple reality. That is, this is no time for our development partners to ease their support to the pressing needs of our country. It is, in fact, the appropriate time to consolidate this new development partnership.

I wish you all a pleasant and productive visit whilst here in Timor-Leste during the next day and a half of work. I am confident that you will reach a consensus on continued support to our nation building efforts and in empowering our people to look ahead to the enormous challenges for sustainable development.

Thank you all very much.


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