Subject: TLGOV: Closing Remarks by Prime Minister at TLDPM -May 2004

REPÚBLICA DEMOCRÁTICA DE TIMOR-LESTE TIMOR-LESTE AND DEVELOPMENT PARTNERS MEETING Closing Remarks by Dr. Mari Alkatiri, Prime Minister On Wednesday, 19 May 2004

Excellencies, Vice President Kassum, Ladies and Gentlemen

We have come to the final phase of this Meeting between Timor-Leste and our Development Partners. The discussions during the past day-and-a-half have been frank, fruitful and productive. We are pleased that our dialogue with you, our development partners, is helping to further strengthen our partnership in assisting our people.

Prior to this Meeting, we had the opportunity to attend the TFET Council Meeting on Monday afternoon. It too provided a forum for a candid exchange of views between the Government and the development partners that contributed to TFET, as well as the World Bank and the Asian Development Bank, who administered the trust funds. We feel gratified with the very positive views expressed about further cooperation at that meeting.

Yesterday, some of you raised a number of issues. I will reiterate the responses on these this morning:

1. Translating legislation into actions

We will continue to put our best efforts to implement the laws and regulations on the ground, as we develop the capacities of the various agencies. The law on the Provedor for Human Rights and Justice has been passed by the Parliament and promulgated by the President. Also, we have made provision in the budget for establishment of the office of the Provedor and my Adviser on Human Rights has organized some preliminary information campaigns on the role of the office. The Parliament is responsible for the appointment of the Provedor. Once appointed, the Provedor will be responsible for the operation of the office including receiving complaints, conducting investigations, taking remedial actions and reporting on the work of the office to the Parliament. We will encourage the Parliament to proceed with the appointment of the Provedor expeditiously and provide the necessary support to the office of the Provedor, while recognizing the autonomy of these entities.

2. Clear Roles of PNTL and FFDTL

The organic laws on the PNTL and F-FDTL have been approved. Also, the Organic Law for the Office of the President of the Republic has been approved by the Parliament. The definition of the roles and responsibilities may be better clarified after the establishment of the Council of State and the Supreme Council of Defense. The Office of the President of the Republic has the responsibility to initiate the establishment of these Councils for approval by the Parliament. In this regard, we will encourage the respective state organs to fulfil their mandates in the next fiscal year and provide assistance as appropriate.

3. Justice Sector Institutions

We are fully aware of the mammoth task in building the justice sector institutions virtually from scratch. Even in more established countries, full development of such institutions takes a decade or longer. We have been able to establish the relevant institutions and will complete the related laws and establishment of the Superior Councils for the Public Prosecutors and Public Defenders during FY2004-05. Strengthening these institutions will take much longer. Our top priority is to improve the operation of the District courts through, among others, the engagement of international Judges, Prosecutors and other legal personnel. We appreciate the modest support so far by our partners including Portugal and Norway through the UNDP project, and the promised funding to the sector from Australia. We seek additional support from development partners to make the rule of law in the country a reality in the near future.

4. Petroleum Fund

As indicated yesterday, we intend to establish the petroleum fund during the next 12 months. The fund will be established after ample consultation with all stakeholders including development partners. It will be based on the principle of inter generational justice, and would include adequate governance provisions for savings, investments, and utilization of the income and principal. The arrangements are expected to be transparent with adequate safeguards.

To date, the Government operations with regard to Timor Sea revenues have been consistent with the principles of the so-called “Extractive Industries Transparency Initiative”. We intend to utilize these very same principles after the petroleum fund has been created. This will oblige the Government to divulge completely the effective payments by operators to the Government.

The IMF and the Government of Norway will provide technical support in regard to the establishment of the petroleum fund, which is one of the actions to be implemented under TSP III.

5. Private Sector

We are proceeding with a package of laws and regulations to create the enabling environment and framework for the private sector, both domestic and international, with due attention to the operation of institutions necessary for implementation of the framework, including in particular, activities aimed at stimulating new investment and expanding employment opportunities. Key legal instruments to be finalized and/or approved in the next fiscal year include the company and investment laws; insurance, bankruptcy and insolvency, cooperatives, the banking system, contract and collateral laws; key regulations relating to land and property, and further regulations on the leasing of Government and private property. Activities related to the land and property registry, cadastre registry, and land and property dispute mediation mechanisms will be pursued with the objectives of creating a private market in land and property sales, increasing the number of confirmed land and property titles, and commencement of concessions, licensing for use or operation.

Also, we are preparing to establish an Investment and Export Promotion Agency as the unique provider of information with a view to attract direct foreign and national investment that will contribute towards the creation of new jobs. Local entrepreneurship is being developed through a national program of entrepreneurship.

Simultaneously, we will tackle some of the practical bureaucratic hurdles that businesses face in their day-to-day operations. We will transfer the business registration to the Ministry of Justice during FY2004-05. Also, the introduction and full implementation of the ASYCUDA system should speed up the clearance of goods in customs and reduce the scope for bureaucratic delays and costs.

6. Corruption

As I have said many times, we have “zero tolerance” for corruption, and misuse or misappropriation of funds. Our recent actions confirm this. The organic law for the Office of the Inspector General will be presented to the Council of Ministers early in the next fiscal year. The office, which functions under my office, will be fortified in its role of internal auditor of the Government, to continue its program of inspections and disseminate its reports, without duplicating the functions of the Office of the Provedor. The Office of the Inspector General will vigorously report suspected criminal acts or acts of bad-faith to the Prosecutor General, within the prescribed procedures.

The Office of the Inspector General together with the Office of the Provedor, in conjunction with the disciplinary procedures under the recently approved Civil Service Statute would provide adequate safeguards against corruption and abuse of power in the public service.

We welcome the proposal by the World Bank to assist us in undertaking diagnostic surveys on bureaucratic obstacles.

7. Capacity Development

As the Vice Minister of Planning and Finance indicated this morning, we recognize that formulation of the medium-term capacity development strategy is more complex than we initially visualized. Our Capacity development and Coordination Unit will work with Ministries, Agencies and independent entities and UNMISET, UNDP and other partners to prepare the draft strategy over the coming months. It would focus on institutional capacity development by each entity including exit strategies for foreign advisers. We welcome the active participation and support of development partners in this process.

We welcome the proposal by the World Bank to work with the Government and other partners to formulate and implement a comprehensive human resources development program for the Ministry of Planning and Finance. This may be a good model to follow for strengthening the capacity of other Ministries and Agencies.

Now let me turn to the medium term fiscal outlook and the favourable response from you, our development partners, on our request for extending budgetary support under TSP at current levels for FYs 2005-06 and 2006-07. We will work with you to translate these into concrete pledges at the next Meeting with Development Partners.

As mentioned by the Vice Minister this morning, we plan to complete the Sector Investment Programs or SIPs for the 14 sectors by August. I wish to emphasize that we view this as a joint exercise of the Government and our development partners. We plan to integrate the SIPs into the Combine Sources Budget framework in the FY2004-05 Mid-Year Budget Update, and into the FY2005-06 Budget and the medium-term expenditure program.

The SIP exercise will also provide us with the opportunity to explore in concrete terms the desirable alternative modalities to TFET that may be appropriate for development partners to channel their future support to Timor-Leste outside the CFET budget. We plan to undertake these explorations jointly with development partners to evolve a mutually acceptable framework to coordinate the partner support, with adequate flexibility to accommodate partner preferences.

In conclusion, I wish to express on behalf of my Government and the people of Timor-Leste, our warm appreciation for your understanding and continued support to the development of our country. We will strive to do our best to fulfil the expectations of our people and our development partners.

For those of you leaving today, I bid you bon voyage.

Those of you staying for a few days do take time and go to the beaches and the countryside and enjoy the warm waters and beautiful scenery.

Thank you.


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