30 Sep 2003 12:46:00 GMT E.Timor seeks nation-building investments-Gusmao

SINGAPORE (Reuters) - East Timor, struggling to make democracy work after independence, is battling poverty and badly needs investment in basic institutions to support nation-building, President Xanana Gusmao said on Tuesday.

"How to build good government, strong policies to combat corruption, and how to offer society a good judicial system. These are the big challenges of nation-building in Timor-Leste," Gusmao told a meeting of Southeast Asian industry leaders in Singapore.

Gusmao was in Singapore to receive an award from the Paris-based International Herald Tribune newspaper and spoke of East Timor's challenges after years of foreign occupation.

The concept of citizenship was still being developed in the world's newest independent state, he said.

East Timor is one of the world's poorest countries, with 40 percent of its people unable to meet basic needs, according to aid agencies. The average person subsists on U.S. 50 cents a day.

It won independence from Indonesia after pro-Jakarta militia responded with a wave of violence to a 1999 referendum that called for East Timor to secede.

Gusmao, initially a reluctant leader, was faced with the onerous task of rebuilding the territory from scratch.

As the country revives infrastructure mostly destroyed by the militia, he said foreign investors should look to East Timor for opportunities to start up factories and businesses.

Rich in petroleum resources, East Timor has yet to reap money from its oil and gas wealth as it will collect royalties starting only next year.

East Timor and Australia earlier this year put into effect the Timor Gap Treaty, which will give it 90 percent of oil and gas royalties from fields in a jointly-owned zone in the Timor Sea.

Gusmao said he sought from countries such as Singapore expertise on establishing a legal framework to facilitate investments as the country had little experience and knowledge.

"We have the best coffee in the world but we cannot compete with Vietnamese coffee," Gusmao said.

"We are at the beginning and we are trying to connect to many others to help us."

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