Chapter 2 - Economic and social development
The East Timor economy
The Indonesian withdrawal from East Timor in
September 1999, accompanied by a campaign of violence, killings, massive
looting and destruction of property and infrastructure, forced transportation
of large numbers of people to West Timor and the flight of most of the rest of
the population from their homes, left the East Timor economy in ruin. This
section, therefore, largely describes the economy as it was prior to the
Indonesian withdrawal, the remains of which must serve as the foundations for
the economy of an independent East Timor.
DFAT submitted that East Timor has always been
principally a subsistence economy. Much economic activity occurred through
barter, which was not captured in GDP figures. Economic statistics for East
Timor were scarce and unreliable, as was detailed information about economic
activity. DFAT stated that:
Preliminary figures from the Indonesian Government Bureau of
Statistics (BPS) indicate that East Timor’s 1998 GDP was Rp1405 billion ($US148
million) using an average annual exchange rate of for 1998 of Rp9514/$US. GDP
per capita was approximately $US168 in 1998.
Largely reflecting conditions before the Indonesian economic
crisis, East Timor’s GDP (at current market prices) in 1997 was Rp996 billion
($US343 million). East Timor’s GDP accounts for a tiny 0.15% of Indonesia’s
According to the BPS, per capita GDP was Rp1.1 million ($US379)
compared with a national GDP per capita of Rp3.1 million ($US1,068). According
to the World Bank’s World Development Report (1997), only five African
countries have a lower GDP per capita than East Timor’s post-crisis $US168 per
capita. Pre-crisis figures would still place East Timor amongst the lowest 30
countries in the world.
In spite of the economic crisis, the Government reported
positive GDP growth for East Timor in 1997 and 1998 (4% and 0.6% respectively).
Indonesian Government statistics indicate that between 1987 and 1997, economic
growth averaged 10%, compared to the national figure of 6.8%.
According to BPS, East Timor’s GDP in 1997 was
dominated by five production categories, as follows:
33.6 per cent
19.8 per cent
18.0 per cent
7.8 per cent
7.2 per cent
There was little government investment in
agriculture and most farming was small-scale/subsistence. Other major sectors,
particularly administration and defence, were dominated by government budget
outlays, with roughly 50 per cent of the GDP being derived from government
Budgetary assistance from Jakarta
Inadequate Indonesian Government statistics made
it very difficult to establish the exact level of budgetary assistance East
Timor received from Jakarta. According to then Foreign Minister Alatas, East
Timor received $US50-100 million per annum in budget allocations and the
province only generated seven per cent of its own budget revenues. About a
third of Government budget documents for 1999-2000 gave a breakdown by province
and, from these, it was possible to verify approximately $US59.8 million (Rp449
billion) in revenues for East Timor. Using a combination of that figure and
best estimates for the remaining part of the budget, East Timor’s allocation
from the national budget was probably about $US122 million (Rp917.5 billion).
Establishing the actual, as opposed to budgeted, disbursement of funds to East
Timor was even more difficult, although probably it was significantly less.
The provincial government’s budget, which did
not have a direct correlation with line items of the national budget, indicated
that the vast majority of East Timor’s funding was centrally sourced. Local
income accounted for only 8.6 per cent of the provincial budget.
In a newspaper article dated 25 February
1999, Mr Horacio Cesar, a spokesman for Portuguese Foreign Minister Jaime Gama,
was quoted as saying that:
Mr Gama had been surprised to see that the current budget was
‘approximately that of a largish Portuguese municipality’.
After all the publicity about how much Indonesia was investing
in building roads, hospitals and infrastructures in East Timor, we were
surprised to see how small the budget was.
No figures were available on total foreign aid
or NGO spending on East Timor. Australia was the largest bilateral aid donor to
East Timor, with an aid budget of approximately $7 million for 1998-99.
Private investment spending in East Timor since
integration had been negligible: less than one per cent of total national
domestic investment approvals and only around 0.02 per cent of total foreign
investment approvals over that period. The actual investment level would have
been substantially lower as, nationally, only an average of 30 per cent of
approvals were implemented. One Indonesian Government report cited total
realised investment in East Timor in the last 23 years had been no more that
The Indonesian Chamber of Commerce and Industry
(Kadin) tried unsuccessfully to stimulate investor interest in East Timor,
especially in mining. Credit expansion remained very low and was concentrated
in small-scale (less than 10 workers) trading ventures and construction.
It was difficult to estimate unemployment or
underemployment rates in East Timor. Indonesian Government statistics indicated
an ‘open’ or visible unemployment rate of 3.5 per cent, though underemployment
was likely to be much higher, and a labour force participation rate in 1997 of
61 per cent.
Professor Hugo noted the relatively low levels
of unemployment indicated by the statistics, and explained that unemployment in
East Timor—as throughout Indonesia—was not really an indicator of poverty, ‘because
in Indonesia to be unemployed you have to be wealthy, because if you are not
employed you have to undertake any sort of work, regardless of how low it is in
productivity, how low it is in status, how many hours you have to put in’.
DFAT submitted that:
Despite the low numbers of educated youth, unemployment amongst
this group was an increasing problem due to limited employment opportunities. A
1992 survey of 15-29 year olds in East Timor concluded there was over 11%
unemployment in this age group province wide, reaching 29% in Dili. According
to Indonesian Government statistics, in 1996 76% of the 362,000 workers in East
Timor were employed in the agricultural sector. Employment in services,
including government, trade, hotels and restaurants accounted for a further
20%. Construction was the next largest sector of employment and manufacturing
and mining accounted for less than 4%. 
The indigenous workforce in East Timor is
largely unskilled, a factor which, with the departure of large numbers of skilled
non-East Timorese professionals, such as teachers, pose enormous human resource
problems, with negative effects on all areas of future development, including
education, the economy and government administration.
Land use rates in East Timor were low, with
agriculture limited by steep and rocky terrain, poor soil fertility and low
rainfall through much of the province. Farming was also disrupted by ongoing
security problems. Despite significant improvements over the previous decade,
East Timor’s rice yield was the lowest in Indonesia and crop yields for all
other crops (maize, cassava, sweet potato, soybean and peanuts) were amongst
the lowest in Indonesia.
Rural communities in East Timor were almost
entirely subsistence oriented; 1980 figures indicate that 94 per cent of
households outside the Dili district (and 87 per cent province wide) sourced
their food from ‘own production’.
East Timor, like the neighbouring province, Nusa
Tenggara Timur, was a food deficit region. Food shortages were seasonal and the
Indonesian Government’s State Logistics Agency, Bulog, distributed rice in East
Timor under its special market operations, as it did throughout Indonesia. In
1998, Bulog reportedly distributed 50,000 tonnes of rice.
Nevertheless, East Timor regularly experienced
periods of food shortage. The poor security situation and lack of
infrastructure meant that links between production areas and markets were
easily disrupted, making Dili, in particular, susceptible to food shortages and
An AusAID fact-finding mission to East Timor in
March 1999 found that while food supplies in East Timor were at that time
adequate, ongoing localised shortages continued to occur as the result of
Although the coffee industry declined
significantly with the departure of the Portuguese, production of high grade
organic arabica coffee (which attracted a premium of 40 per cent over
international prices) was still East Timor’s most successful cash crop. It was
the major income source for between one-fifth and one-third of the population,
with coffee production in 1999 estimated to reach 13,000 tons and earnings to
reach around $US12 million. Coffee was exported to the United States,
Australia, New Zealand, Italy and the Netherlands. Coffee yields were
relatively low and the industry significantly underdeveloped, hamstrung by a
shortage of plantation workers and the effects of low prices commanded by the
coffee monopoly PT Denok during much of the 1980s and 1990s. Industry experts
thought there was a significant potential to expand the industry. It was
estimated that with rehabilitation of existing plantations and the conversion
of another 40,000 hectares to plantation (currently 55,000 hectares),
production could triple within a decade and yield up to $US50 million per annum
East Timor’s coffee industry, its only source of
foreign exchange, was seen by UNTAET as the key to rebuilding the devastated
The territory’s coffee was produced almost entirely by some 17,500 small holder
It was the territory’s largest commercial industry. The 1999 coffee harvest largely survived intact,
although about 600 tonnes worth about $A1.8 million was looted from warehouses
in Dili. Most of the harvest was stored and could be removed from storage and
processed, although only by ‘dry’ processing, as the equipment for the more
profitable ‘wet’ processing was destroyed. The industry is expected to recover
USAID had provided assistance to the coffee industry
by establishing, in 1994, the non-profit National Co-operative Business
Association (NCVA) to buy and process the coffee. The estimated harvest for the
year 2000 was 8,000 tonnes, worth around $A30 million. The Norwegian Government
made a grant for road works to enable the crop to be taken from the prime
growing area around Ermera to Dili.
At the insistence of the IMF, from 14 March 2000, an export tax of five per
cent was imposed on coffee as part of the initiation of a tax and financial
system for the country.
The impost was opposed by the World Bank and most of the National Consultative
Council, on the ground that it was regressive and an added obstacle in the
process of rebuilding East Timor’s rural economy.
Historically, livestock had been an important
source of rural wealth in East Timor. Livestock holdings, particularly of
cattle and pigs, fell substantially after 1975 and had never fully recovered.
Small-scale fishing was not widespread amongst
the East Timorese, who were not traditional seafarers, with an estimated
400-700 tons produced per annum. According to Indonesian Government estimates,
East Timor had the potential to produce 630,000 tons of fish and marine produce
from 102,000 square kilometres of coastal and EEZ waters. However, large-scale
fishing would need additional port infrastructure.
Other commercial crops
There were small-scale areca nut, candlenut and
kapok plantations in East Timor. Rubber had been grown in small quantities in
the past. Other possible commercial cropping opportunities included coconuts,
vanilla, cashew nuts, cloves, abaca palm, pineapple and aquaculture.
Mining and energy
Mining has been restricted to sand and stone
quarrying for the construction industry and accounted for only one per cent of
East Timor’s GDP. However, past geological surveys have indicated promising
deposits of manganese, marble, copper, gold, silver, iron, oil, natural gas and
coal. Marble quarrying was also a possibility.
Timor Gap oil
This topic is dealt with in Chapter 4.
The manufacturing sector in East Timor accounted
for just three per cent of GDP in 1997, mainly concentrated in very small scale
handicraft production (weaving), food processing (coffee, salt and bakeries)
and the construction industry (bricks, tiles). The best prospects for expansion
were in resource-based processing activities, especially focused on estate
crops, such as coffee and coconuts.
Infrastructure and construction
DFAT submitted that:
The Indonesian Government has invested considerable effort in
developing infrastructure in East Timor—including irrigation, roads, bridges,
water supply systems, schools, housing improvements and waste/garbage disposal.
The Indonesian Government has spent approximately $A18.8 million since integration
on public works.
Additional information provided by DFAT showed
that the amount of $18.8 million was up to 1992. Nevertheless, this was a
paltry sum spent on infrastructure over a period of 17 years.
According to DFAT, East Timor had some 2,700km
of asphalted roads. There was a sealed coastal road, which circled most of the
province and sealed roads linking Dili with all the district centres. The
roads, including those into West Timor, were capable of taking heavy vehicles.
However, many of the roads were of poor quality and were regularly washed away
in the wet season.
East Timor had six airports; the Dili (Comoro)
airport was usable by C130 and passenger aircraft as well as helicopters but
was limited by its pavement, which was rated unsuitable for high-pressure type
aircraft. There were three very small ports; Dili, Com and Hera. Dili port
could not accommodate ships over 100 metres in length, eight metres in draft
and over 5,000 dead weight tonnes; it had a berthing limit of 180 metres, which
would make it difficult to berth even two ships at once. Improvements to
shipping services in East Timor had been difficult because of the limited
infrastructure and lack of profitability of small trading volumes.
The 1990 population census showed that only 16
per cent of households in East Timor had electricity. An AusAID report noted
that in 1997, 80 per cent of urban households and 20 per cent of rural
households had electricity. Outside of Dili, electricity was generated by
diesel generators using fuel heavily subsidised by the Indonesian Government,
as elsewhere in Indonesia. Prior to September 1999, there were 60 power
stations in East Timor: by August 2000, 30 were back in operation after
the destruction that accompanied the Indonesian withdrawal.
There was not a significant indigenous
mercantile class in East Timor and some 75 per cent of the formal economy was
controlled by non-indigenous residents, including ethnic Chinese, Bugis and
Makassans. Historically, traders had been non-indigenous migrants and most
services (shops, banks, utilities, transport) were staffed by non-East
Although there were several banks, both national
and local, the banking sector was dominated by the government-owned Regional
Development Bank. Financial services were almost completely controlled by
non-East Timorese. The Portuguese Banco Nacional Ultramarino was the first bank
to re-open in East Timor after the Indonesian withdrawal when it opened in Dili
on 29 November 1999.
The United States dollar was established by
UNTAET as the official currency for East Timor on 24 January 2000. Following a
decision at a special session of the National Consultative Council, East
Timor’s Central Payments Office, the forerunner of a central bank, was
established on the same date. The Indonesian rupiah was also recognised as
currency for a transitional period.
Outside Dili, transport facilities were limited
to local buses and minibuses. Merpati was the only carrier flying to East Timor
and operated several flights per week between Jakarta and Dili via Bali and
flights between Kupang and Dili. Bus and boat services to West Timor and
elsewhere in the archipelago were also available.
On 25 January 2000, Air North Regional Pty Ltd
began the first commercial airline service between Darwin and Dili, with eleven
return flights a week.
Qantas subsidiary Airlink began regular flights in May, and Merpati has resumed
flights to Dili from Kupang and Bali.
Basic telecommunications and postal services
were available, including fax and Internet services. The East Timor Postal
Service was re-opened on 28 April 2000.
East Timor had television and radio services, a
daily newspaper Suara Timor Timur, and a weekly newspaper, the Timor
Post. The office and printing plant of Suara Timor Timur were
destroyed by the militias before the 30 August 1999 ballot, and no newspapers
were published from then until 21 January 2000, when the first issue appeared
of Lalalok (Mirror), a photocopied weekly newspaper published in Tetum. By August 2000, Suara Timor
Timur had been revived as Suara Timor Loro Sae.
East Timor’s retail sector was small and
rudimentary and consisted mainly of small family-owned shops.
Prior to 1975 there had been a small but
successful tourism industry centred on a weekly flight from Darwin to Baucau.
East Timor had some good beaches, and Portuguese-style villas in cooler
mountain temperatures were also an attraction. Although an estimated several thousand
visitors from Australia travelled to West Timor annually, most bypassed East
Timor and went on to destinations elsewhere in Indonesia. The hotel industry
had survived in East Timor during the Indonesian period by catering for
travelling officials and NGO workers. Tourism is regarded as a potential source
of income for East Timor. There has been speculation about the establishment of
a casino to attract visitors.
Under Portuguese and then Indonesian rule, the
East Timorese economy had little opportunity to develop its potential. In fact,
coffee, the main cash crop, became less profitable under Indonesian rule than
it had been under the Portuguese. Widespread illiteracy and poverty are still
formidable barriers to economic development but, with international support,
they can be overcome. Oil revenues will also in the longer term provide East
Timor with regular income. It is inevitable that East Timor will be dependent
for a long time on foreign aid. However, provided that security issues can be
resolved and competing political factions can work together in the interests of
the country, East Timor should ultimately realise its economic potential.
Although foreign investment will play an
important role in East Timor’s economic development, care will need to be taken
to ensure that such investment is in the interests of the nation and its
people. With the new nation struggling to find its feet after a long and
painful birth, it is likely to be subject to commercial exploitation if
government does not take steps to prevent it.
Dr Robert Murfet drew attention to the
importance of giving priority in reconstruction to establishing who owned what
land: ‘You can very quickly regress back into a state of disarray when you have
arguments about who owned what back through history’. On 28 April 2000, Mr
Vieira de Mello said the records of property and land ownership were badly
damaged during the post-ballot violence in September 1999. ‘Land acquisition is
one of our nightmares. There are no records of who owns what and where.’ Mr de
Mello said UNTAET had sought the assistance of the Indonesian and Portuguese
Governments to re-establish the records, and that an Independent Land and
Property Commission would be set up to address the problem: ‘Without this, it’s
difficult to invite foreign investments. Once this is settled and the current
security is maintained, we will invite businessmen from Malaysia and from the
region to invest in East Timor.’
On 22 May 2000, Australian barrister and former
Northern Territory Chief Magistrate Ian Gray accepted an offer to run UNTAET’s
Land and Property Commission, with the task of designing and implementing a
system to resolve disputes and claims over land. His six-month term was
effective from the beginning of June. Mr Gray, a former Commissioner on the
Council for Aboriginal Reconciliation between 1995 and 1997, said his brief was
to, ‘achieve certainty in relation to land ownership, occupation and use’ as
soon as possible. ‘This will necessarily involve wide and deep consultations
with the East Timorese people as to the systems which have traditionally and
customarily operated in both the country and the towns and what they want to
operate from now on,’ he said. ‘Implicit in the job is that the sooner there is
certainty over land, the sooner there will be economic stability and the
opportunity for greater job creation.’
At the hearing on 18 November 1999, Mr Abel
Guterres indicated that the claims to ownership over extensive real estate by
former President Soeharto and his family would not be recognized by a
government of independent East Timor.
CNRT policy on this issue had been announced in March 1999 in Dili by CNRT Vice
President David Ximenes, who said that properties acquired illegally after
Indonesia’s 1975 invasion would be given back to the people of East Timor. At the same time, Mr Xanana
Gusmão made clear that land legitimately acquired by foreigners would be
protected, a policy he reaffirmed in Jakarta on 1 May 2000.
Professor Graeme Hugo drew attention to the
official Indonesian statistics on mortality, which showed that the life
expectancy at birth in East Timor was lower than elsewhere in Indonesia. The
latest figures, for 1996, put life expectancy at birth in East Timor at 59 for
males and 62 for females, in each case about five years lower than the
Indonesian average. About 10 per cent of babies died in their first year, an
indication of very low standards of living for the people in the area.
The level of fertility in East Timor, at 4.4 per
woman in 1997, was substantially higher than the Indonesian national average.
The comparable figure for Indonesia at that time was 2.7. The proportion of
women using family planning was lower in East Timor than in any other province
of Indonesia. The high fertility was one of the major factors in the very rapid
growth in population.
All of the major indicators of poverty showed
East Timor at or near the bottom of the list of Indonesian provinces. The
percentage of the population that died before they reached the age of 40 was
significantly higher in East Timor than in Indonesia as a whole. The illiteracy
rates were by far the highest. The percentage with access to clean water was
low but at about the Indonesian national average. There was more difficulty in
getting access to medical facilities and there was a higher proportion of
infants with low levels of nutrition. In the basic variables for which the
Indonesian Government collected statistics, East Timor was at or near the
bottom in every indicator. The only other comparable province was nearby West
AusAID told the Committee that the pattern of
health problems in East Timor reflected its high poverty levels. The common
diseases were respiratory infection, malaria, influenza, diarrhoea,
tuberculosis and skin problems. Infant and maternal mortality rates were among
the highest in Indonesia. While there were many health centres, their quality
and location meant they were under-used. AusAID warned early in 1999 that
without significant donor support, rural health services were likely to
deteriorate with the departure of non-East Timorese health staff (particularly
doctors) who predominated at district level and above. The Mercy Hospital for Women
said that the dominant causes of death during 1995 were infectious diseases:
tuberculosis (15.7 per cent), malaria (11.8 per cent),
diarrhoea (5.9 per cent), urinary and respiratory tract infection
(5.9 per cent) and broncho-pneunomia (4.1 per cent).
AusAID had not given much direct support for
health in East Timor. Australia’s main contribution in this field had been
through water and sanitation projects. An AusAID-funded water supply and
sanitation project significantly increased access to water and sanitation
facilities in 150 villages. AusAID estimated that the percentage of the
population with access to water and sanitation facilities in 1999 was 66 per
cent and 55 per cent respectively.
The major health problems were mostly related to
water and sanitation. In 1993, the Indonesian Government estimated that 53 per
cent of the population in East Timor did not have access to safe water. Most
districts (30.7 per cent) obtained their water from running springs. Access to
clean water in rural areas was particularly bad, although the percentage of
people with access to running water in the Dili district had also decreased in
recent years. Although 45.8 per cent of the East Timorese population had access
to private sanitation facilities, 43 per cent did not have adequate
In 1999, AusAID was funding ($A1.6 million) only
one project—technical assistance in support of the Indonesian National
Tuberculosis Program in East Timor and Flores Island from June 1998 to June
2001. Activities included training health workers, public information,
community outreach and operational research in tuberculosis drug resistance.
National Tuberculosis Program in
On World Tuberculosis Day, 2 March 2000,
UNTAET stated that tuberculosis was one of the major public health issues in East
Timor. The World Health Organization estimated that between 10,000 and 15,000
people in East Timor were infected with tuberculosis. This estimate was
calculated after the evacuation of East Timorese to Darwin in September 1999.
At that time, it was established that three per cent of evacuees from different
age groups carried the disease. The National Tuberculosis Program of East Timor
resumed in February 2000 under co-ordination of the Interim Health Authority
and combined an immunization program and a program of treatment of infectious
cases. As at 24 March 2000, 557 patients had begun treatment in Dili, including
161 who were smear positive. In the other regions, there were fewer than 50
tuberculosis cases registered. According to the Program, it was expected that
all the regions would have clinics or hospitals equipped to work on
tuberculosis by the end of the year 2000.
Poverty, lack of clean water and sanitation,
military oppression, inadequate health facilities and a lack of medicines and
drugs all contributed to widespread health problems and a lower life expectancy
for the East Timorese people. Health has always been a priority task for
UNTAET. Although establishment and staffing of medical clinics and hospitals
will help to treat health problems, fundamental improvements in health will not
be achieved until the underlying socio-economic problems, which contribute
significantly to poor health within the East Timorese community, are resolved.
4.1: National Indicators of poverty, 1999
population dying before age 40
Percentage of adults illiterate
Percentage with poor access to clean water
Percentage greater than 5 km to medical
Percentage of infants with poor nutrition
Source: Professor Graeme Hugo, submission.
4.2: Indonesia and East Timor: Health indicators
Access to health facilities
Access to clean water
Calorie consumption per
day per person
Children with under
Anaemia among pregnant
Medical officer present
at birth (%)
Penbangunan Manusia Indonesia, 1996.
Professor Graeme Hugo told the Committee that,
in East Timor, the nought to four age group made up 18 per cent of the total
population in 1990, compared to only 11.7 per cent in Indonesia and
7.5 per cent in Australia. The number of children coming into the
school age groups at a time of great disruption and a lack of services
represented a huge challenge for future development. Given the importance of human
resource development as a fundamental element of economic and social
development, Professor Hugo argued that this should be a priority area for
Australian aid to an independent East Timor.
The rates of illiteracy were very high for all
age groups. In Indonesia as a whole, illiteracy was mainly concentrated in
older age groups. But, in East Timor, a fifth to a quarter of young adults were
illiterate; four or five times more than in the rest of Indonesia. There were
few schools during the Portuguese period so Indonesia had started from a very
low base. Nevertheless, statistics for 1992 showed two-thirds of East Timorese
had not completed primary school. East Timor was conspicuous in terms of the
very low proportions of those aged seven to 18 going to school. This was due
partly to the residual effect of poor education provision over a long period of
time but, even in 1998-99, the actual number going to school was very low.
AusAID told the Committee that illiteracy rates
in East Timor were high at 56 per cent of women and 39 per cent of men.
After 1975, Bahasa Indonesia had been the sole medium of instruction and
communication, following a ban on the use of Portuguese and local languages in
schools and throughout the administration. Despite this, according to an AusAID
report, in 1997, only 65 per cent of the population were conversant in Bahasa
The vast majority of teachers prior to Indonesia’s withdrawal in 1999 were
non-East Timorese, who left before or after the 30 August 1999 ballot. By then,
high schools were much more affected than the primary schools because high
school teachers had been predominantly drawn from other parts of Indonesia. The training needs of East
Timor were vast and spanned basic primary, secondary and tertiary levels, vocational
training, training for government administrators and upgrading for teachers and
Australian educational assistance to East Timor
prior to September 1999 had been a sub-set of the development assistance program
for Indonesia. Education and training assistance to Indonesia had been mostly
directed at the tertiary level. A 1997 Program Planning Mission concluded that
a move into basic education would be appropriate. This was both because of the
extent of structural change under way in this sector, and the magnitude of
Indonesia’s needs. In response to this recommendation, a Basic Education
Adviser was placed in Nusa Tenggara Timor (Kupang), with responsibility for
identifying activities for possible AusAID funding in that province and East
Timor. The Partnership for Skills Development, with an Australian budget of
$A3.4 million, was to run from July 1998 to June 2003 to provide East Timorese
with a range of training opportunities, especially vocational training. Future aid interventions were
to focus on basic education and vocational training.
The Second Indonesia Australia
Polytechnic Project, with an Australian budget of approximately $A30,000, ran
from January 1992 to January 1997 and supported a number of polytechnics in
Indonesia, including the one in Dili. Activities included upgrading teaching
facilities, course development and teaching practice development.
Since 1994, eleven students from East Timor had
been awarded scholarships under the Australian Development Scholarships
program, which provided post-graduate scholarships for Indonesian students to
study in Australia.
APHEDA (Australian People for Health, Education
and Development Abroad) had supported education projects in East Timor since
July 1998 in alliance with the Mary MacKillop Institute for East Timorese
The MacKillop Institute literacy program, Mai Hatene Tetun, had the
capacity to be the foundation program for the teaching of reading and writing
in Tetum, the most widely used indigenous language. The program had been initiated
in 1994 at the request of Bishop Ximenes Belo. By mid-1999, it had been
established in 42 diocesan schools of the Dili diocese. The teachers who were
teaching it had co-operated in two workshops. The program had been completed to
the end of year three, the first three years of school. Preparations were in
train for completing the programs for years 4, 5 and 6. The program
included teachers’ manuals and teachers’ notes. The teacher training component
was important as there had been no teacher training for primary education in
Timor for some time. It was envisaged that a secondary school program would
also be produced. UNICEF had shown interest in the program.
Sister Susan Connelly of the MacKillop Institute
said that, although it had not yet been decided as to which languages would be
used in schools, Tetum would be one of those used because it was the language
of two-thirds of the population and it was understood throughout East Timor.
Tetum had been chosen for that reason from among the fourteen other languages
spoken on the island.
The stories for the literacy program were written by Timorese people, in Timor
and in Australia. Because it was an unwritten language much work was required
to decide questions of vocabulary, grammar and spelling.
All the basic materials and publications,
including artwork and text, that had been produced for the Tetum literacy
development program; that is, school books for grades 1 to 3 prepared by the
Mary MacKillop Institute, were held in Australia. So, although all the
publications that had been distributed to the schools in East Timor were
destroyed, the program could be revived when the material had been reprinted
and redistributed. The teacher training support that had been conducted as part
of the program retained its relevance for teachers who were able to return to
their schools. In Baucau and in some of the regions in eastern East Timor, the
schools had never stopped functioning, in contrast to the rest of East Timor, where
there had been such destruction that there was literally not a pencil left. In the Lospalos and Viqueque
regions, most of the schools had been destroyed. 
Whether Tetum, Portuguese, Indonesian/Malay or
English would be used in the schools was a fundamental political question for
the Timorese leadership.
On 23 March 2000, UNTAET announced that 92 per
cent of East Timorese children who had attended primary school in 1998-99 had
returned to school. More than 147,000 children were being taught by almost 6,400
teachers across East Timor. The total number of schools registered by UNICEF
stood at 686 (compared to 800 before 30 August 1999). Schools had been
rehabilitated with the efforts of UNTAET peacekeeping force, Interfet and the
United States Navy. UNICEF and its implementing partners had distributed two
hundred and fifty metric tones of roofing materials for primary schools across
East Timor. There was no standard curriculum yet in East Timor. Depending on
the region, classes were being taught in Tetum, Bahasa Indonesia, Portuguese or
English. UNTAET was planning to establish a standard curriculum by October when
a congress of teachers was to be held in the territory. With most of the territory’s
140 secondary schools in ruins, higher education had effectively been halted,
according to UNICEF.
Ms Alison Tate, of APHEDA, said that educators
and students, with whom she had held discussions in East Timor, had seen
English language training as a fundamental vocational need, because the main
employers under the Transitional Authority would be the United Nations and
international non-government organisations, most of whom spoke English. Australia had technical
expertise to offer in the development of English as a second language and in
The redevelopment of the education system in
East Timor required significant input from the East Timorese who had been
involved in the education sector. The CNRT education task force had been
considering the development of a new national curriculum at primary and high
At a political level, there was unwillingness to incorporate an Indonesian
curriculum for a high school system. The East Timor Strategic Development
Planning Conference, which was hosted by the CNRT in Melbourne in April 1999, had
looked at future planning, and adopted as strategic goals the reintroduction of
Portuguese language and literacy programs and intensification of the teaching
APHEDA had been approached for technical input
from Australian educators for materials, curriculum and teacher training
methodology at secondary and primary school levels. Ms Tate said that UNICEF had
already conducted a ‘needs’ assessment of what would be required for rebuilding
or repairs to schools and of the human resources available in regional areas.
Some State and Territory Governments have
pledged support for the education system in East Timor. On 4 April 2000,
the Australian Capital Territory Legislative Assembly committed itself to help
repair East Timor’s schools. The commitment was made in response to an address
to the Assembly by the education spokesman for the CNRT, Fr Filomeno
Jacob, on practical ways in which Australian governments could help.
On 11 August 2000, the Victorian Government
pledged significant financial support to help rebuild the education system of
East Timor, including sponsoring the first teachers’ congress in independent
East Timor and providing practical support. Education Minister Mary Delahunty
said financial assistance included the provision of a heavy duty photocopier,
to be shipped from Darwin, $65,000 to assist Timorese teachers to attend the
congress in Dili,·and paper, pens and books for teachers attending the
congress. Ms Delahunty said: ‘There is a concerted effort from governments
around Australia to help create a new education system in East Timor and this
initial assistance from Victoria will provide for the launch of a new
curriculum. Basically we will be asking the East Timorese what assistance they
want, that we can provide.’
Ms Delahunty visited Dili on 12-13 August and met Xanana Gusmão and Education
Minister Fr Filomeno Jacob. She said Victoria was considering education aid to
East Timor, such as teacher training, school equipment and ‘twin school
relationships’. She said her department would examine ways to help the country
rebuild its secondary education system.
Dr Dennis Shoesmith proposed practical ways that
the Northern Territory University and Darwin could contribute to the
strengthening of the capacity of the East Timorese people to establish a viable
The university in Dili has been destroyed, and I acknowledge
that a rehabilitation of that institution would mean building it from nothing.
But there has to be a university in Dili eventually, because the contribution a
university in Dili could make is crucial. One of the things that East Timor
will need in the future is a trained, educated population that can contribute
to its self-governance and its development.
Dr Shoesmith argued that the Northern Territory
University had advantages in this situation that were not shared by larger
universities in southern Australia. It was close to East Timor and there was an
East Timorese population resident in Darwin, and the scale of the university in
Darwin was appropriate to the rehabilitation of a university in East Timor. It also offered courses across
the whole spectrum, from vocational education and training (VET) to PhDs. In
VET training, it already had experience in delivering programs in eastern
Indonesia and had collaborative arrangements with universities in Malaysia and
elsewhere. A partnership between the university in Dili and the university in
Darwin, with staff exchanges, joint projects, the training of the first
generation of civil servants, administrators and media people in East Timor,
would be a very practical contribution. The university was not able to
co-ordinate a large-scale development program to East Timor, but it could
co-ordinate aspects of it that would be productive in the long term in helping
the East Timor. That would require financial support from Canberra, as the
university did not have the financial resources to pay for such programs, but
it had the personnel, the infrastructure and the expertise to make useful
4.3: Percentage inhabitants aged 5 years and above according to
age group and usual
language in the year 1990
Able to speak
Unable to speak
Source: Biro Pusat Statistik, 1992b.
4.4: Percentage of illiterate inhabitants aged 10 years and above
according to age
group and sex in the year 1990
Biro Pusat Statistik, 1992 b.
4.5: Percentage of population 10 years and above by education and sex
Total East Timor
Never been to school
Not completed primary
Source: Biro Pusat
It is crucial for the development of the East
Timorese community and economy that education be made available to all East
Timorese children. It will obviously take time to re-establish schools, not
just their physical structures but also the provision of teachers, equipment
and curriculum material. It will be through education that the East Timorese
will eventually be able to take over all the administrative, technical and
professional functions of government in all its manifestations.
Australian governments and institutions should
do all they can to assist East Timor to develop its education system, given
possible language constraints. The Committee notes a difference of opinion
between the CNRT leadership, who prefer Portuguese for East Timor, and younger
East Timorese, who have been taught in Indonesian and who have no knowledge of
Portuguese. As mentioned elsewhere in this report, the languages to be used in
schools should have the broad support of the East Timorese people.
Given that illiteracy is widespread in East
Timor and that few people have had more than a rudimentary education, education
should be made available to teenagers and adults. In fact, their participation
should be encouraged. Illiteracy, if not dealt with, will continue the
impoverishment of much of the population, which will make it more difficult for
the nation to develop a society and an economy able to survive in the modern
Vocational education will also play an important
role in the development of the East Timorese economy by giving East Timorese
new vocational skills that will broaden their employment options and give them
more fulfilling lives.
The rule of law
From the outset, witnesses emphasised the need
for the United Nations administration to establish the rule of law in East
On 15 September 1999, Lieutenant
General John Sanderson, representing Paxiquest, argued that establishing an
effective justice system as a precursor to, or in parallel with, the
establishment of government was essential for the success of the international
peace operation in East Timor.
He told the Committee:
The Cambodian mission was a paradigm in the sense that this was
the first time the United Nations had undertaken that full transition authority
role. The object of it was to hold Cambodia in a state of suspense by
controlling all the key institutions of governance whilst the Cambodians worked
out a new foundation in law for the relationship between the government and
I believe it was a very successful operation in terms of the
bandaid that was given. But what we failed ... to lay the foundation for the rule
of law and justice in Cambodia. So, to all intents and purposes, some people
are very satisfied with the governance institutions that have been established
in Cambodia and some are terribly dissatisfied because they still have the
hallmarks of a one-party state. In other words, the police and judiciary are
responsive to the party rather than to the people and the law. There is that
flaw in the Cambodian operation. That is the message that we have been trying
to get across.
Mr Mark Plunkett, also of Paxiquest, in his
submission to the Committee, set out a blueprint for a comprehensive rule of
law campaign plan.
Drawing on her experience in Cambodia and East
Timor, Ms Sue Downie also urged that priority be given to establishing the rule
of law. She said that in East Timor, the United Nations will have the
opportunity to plan and implement strong state building measures in East Timor:
‘without rule of law you cannot build schools, because they will be vandalised.
There is no point in training teachers if they are going to be corrupt’. Ms Downie recognized that it
would be a long, slow process, first adopting rules and laws and training
police, court officials, prosecutors, prison officials and officers. It would
have to take place in addition to, and perhaps at the same time as,
re-establishing and rebuilding the shattered infrastructure. The rule of law
had not been established in Cambodia before the departure of UNTAC. East
Timor’s leaders would have to address three points which Ms Downie thought
Cambodia’s current leaders have failed to do: ‘that is, impunity, nepotism and
corruption. This comes back to rule of law. Without rule of law you cannot
combat those three issues that have caused such problems in Cambodia’.
UNTAET has given priority to re-establishing the
judicial system. New South Wales Attorney-General Jeff Shaw reported, following
a visit to East Timor in April 2000, on the process of establishing a court
system to deal independently with criminal and civil cases. He wrote: ‘In light
of the pressing need for people with the skills and training, the destruction
of court houses, burnt law libraries, scarce resources and multiplicity of
languages (the traditional Tetum, Portuguese, English and Bahasa Indonesian),
this is a formidable challenge’. UNTAET had reinstated Indonesian law on a
transitional basis, as the law which potential judges and legal practitioners,
East Timorese men and women educated in Indonesia, understood after a period of
24 years of Indonesian rule. That law was modified so that it did not apply
where it conflicted with internationally recognised human rights standards (for
example, Indonesian laws in respect of anti-subversion, national security and
defence had been abrogated). Capital punishment had been abolished. Eight
judges had been appointed to the District Court in Dili, on the basis of a
two-year probationary period. Prosecutors and public defenders had also been
appointed. They were mostly young, Indonesian-educated lawyers without
substantial practical experience who were going through intensive training,
with the unavoidable result that the backlog of criminal trials was growing.
Several witnesses drew the Committee’s attention
to the seminal role played by the rule of law in democratic societies and the
need to establish at an early date the rule of law in East Timor. There has
been criticism of UNTAET for not moving fast enough to give effect to the rule
of law, as there has been of other areas of UNTAET’s administration. However,
delays are inevitable. In establishing a new nation from the rubble of the
post-ballot scorched earth policy of the militias and TNI, it has taken time to
put in place a legal system and the appointment and training of personnel who
will run it.
In a society that was racked with violence for
25 years and where arbitrary arrest, detention, torture, rape and
execution of East Timorese people were carried out without regard to the rule
of law, it may be difficult, in some cases, for East Timorese to come to terms
with the concept of rule of law. It is therefore important for the legal system
to gain quickly the respect and support of the population so that people
automatically turn to the legal system for redress rather than resort to
Portugal and Portuguese
Ambassador Justo da Silva told the Committee on
13 August 1999 that Portugal had already set up a commission, which
had done preparatory work on civil administration, education and related
matters, in anticipation of making a contribution to the United Nations
administration in East Timor. He said Portugal accepted that it had obligations
and anticipated continuing co-operation with East Timor for a long time, and
that it would be in the first rank of international aid donors.
Following the United Nations and the World Bank
meeting on aid to East Timor in Tokyo on 17 December 1999, Portugal pledged
$US50 million to pay for the establishment and running of the territory’s new
During a visit to Dili on 3 December 1999, the Portuguese Foreign Minister, Mr
Jaime Gama, announced that Portugal planned to spend 75 million euros on aid to
East Timor until 2003, having already spent between 55 and 60 million euros
since May 1999.
Mr Gama said at the European Union Foreign Ministers meeting in Luxembourg on
14 June 2000 that Portugal would make $US100 million available during 2000 as
part of the international initiative to reconstruct the territory. By the end of August 2000,
Portugal had become in dollar terms the single most important contributor of
aid to East Timor.
The Banco Nacional Ultramarino was the first
bank to re-open in East Timor after the Indonesian withdrawal when it opened in
Dili on 29 November 1999, making payments in escudos, which remained a
recognized currency in the territory until the United States dollar was made
the official currency on 24 January 2000.
Prime Minister António Guterres visited East
Timor during 22-26 April 2000.
In the course of the visit, Mr Guterres pledged a monthly subvention of 50,000
euros to Falantil, the military wing of the CNRT. Defence Minister Castro Caldas
announced at a meeting of European Union Ministers in Luxembourg on 13 June
2000 that the Portuguese Navy would send a mission to East Timor to prepare the
creation of a naval school and begin crew training for two patrol boats to be
provided by Portugal.
Portugal and Portuguese citizens had been the
biggest contributors to the CNRT since its founding, according to an accounting
report setting out details of spending by the CNRT since its founding in April
1998. The report was presented by Mr Gusmao to a CNRT congress in Dili on 21
For the financial year 2000, the Portuguese Government provided 240 million of
the 300 million escudo CNRT income.
On 11 February 2000 in Dili, CNRT President Mr
We will keep Portuguese as the official language. Our position
is clear that the official one will be Portuguese because it is part of our
heritage. It is a political decision and the youth have to agree with this. We
understand very well the concerns of the youth. If the Portuguese left many
years ago, the Dutch would have taken this area and we would have become
Indonesia. We have them to thank for our own identity.
The announcement of the official language came
just before Portuguese President Jorge Sampaio visited East Timor. During his
visit, from 13 to 16 February, the President discussed reconstruction and
security matters with UNTAET, Interfet and the CNRT.
According to the 1990 population census, only
3,000 East Timorese identified Portuguese as the language spoken at home,
although a significantly larger number understood it and it remained popular
among the diaspora. English was not widely spoken, although university
graduates more often spoke English than Portuguese.
Virgilio da Silva Guterres, chief editor of the
first independence-era newspaper, Lalalok (Mirror), stated on 21
CNRT keeps Timor Lorosae people in the dark. The people eagerly
await to hear CNRT's plans for kick-starting the economy and political
reconciliation, but to no avail. To date they have kept silent and have yet to
clarify their stance on these important matters. In the case of language and
currency, it’s clearly the matter of a tiny minority trying to impose their
will on the majority. While Tetum is the lingua franca, these political elites
insist on Portuguese. 
Mr Gusmão’s announcement was in accord with the
decision of the CNRT’s East Timor Strategic Development Planning Conference
held in Melbourne in April 1999, which had adopted the strategic goal of
reintroducing of Portuguese language and making it an official language of the
new state. The policy demonstrated continuity with the language policy
formulated by Fretilin in 1974 in anticipation of independence, that Portuguese
was to be retained as the official language.
On 13 February 2000, Mr Vieira de Mello
stated in Dili, after meeting President Jorge Sampaio of Portugal, that he
expected Portugal and other countries of Portuguese Official Language would
have a very important role to play in education. He also noted the anxiety of
the youth of the generation, who grew up under the Indonesian administration
and were educated in Indonesian. He said that it was necessary, whatever the
final decision was on the language of education, that through the mechanism of
the National Consultative Council it receive the unanimous support of the
During an official visit to Brazil, Mr Gusmão
received assurances of assistance from President Fernando Henrique Cardoso and
the National Council of Brazilian Bishops, including teachers and teaching
materials for institionalization of the Portuguese language. Mr Gusmão addressed the
assembly of the Community of the Portuguese-speaking Countries (CPLP) meeting
in Maputo, Mozambique, on 18 July 2000, which issued a declaration that
East Timor would join the CPLP as its eighth member once it gained full sovereignty.
The Committee believes that it is for the East
Timorese themselves to decide which language(s) should be their official
language(s) and which languages should be taught in schools. Undoubtedly, as
the most widely spoken local language, Tetum will continue to be used
throughout the country. With regard to foreign languages, the East Timorese
must balance the heritage value of Portuguese against the practicalities of
both Indonesian and English, the two languages most understood in the region.
As indicated by UNTAET, whatever decisions on language are taken, they should
have the support of most East Timorese.
Role of the Catholic Church
Bishop Kevin Manning referred to the rapid
growth in the proportion of Catholics in the population of East Timor from
around 250,000 in a population of 700,000 in 1975 to 750,000-800,000 in a
population of 820,000 in 1999. He said:
One has to question the miraculous upsurge in numbers. This type
of thing has happened in other countries where people have jumped onto the
coat-tails of the Church because she was the one who was fighting for social
justice. It was a rallying point ... When I was in Jakarta two years ago, I
spoke with the Pro-nuncio and he suggested that a lot of the adherence to
Catholicity was because they saw the church as a leader for human rights.
Bishop William Brennan explained that, in
accordance with the Indonesian state ideology of the Five Principles, Pancasila,
the first principle being belief in One God, the Timorese had had to make a
choice between Catholicism and Islam. They chose Catholicism, in his opinion,
because that was the religion of the Portuguese: ‘The Portuguese were very
effective colonisers in transmitting a culture that people accepted and
identified with and loved, even though individual Portuguese and governors were
nasty people. The whole cultural totality was something that they bought quite
Although it had been an enormous educational
task to catechise 300,000 or 400,000 adults in a short time, Bishop William
Brennan thought that in such a poor country they would stay with the Church
once East Timor became independent, as perhaps would not be the case in a more
Bishop Hilton Deakin explained that the reaction
of the Indonesian Catholic Church had been to look at the situation in East
Timor from a very strong Indonesian point of view. Initially, in 1975, the
Indonesian bishops had come out in a very strong condemnatory manner over what
the Indonesian military (ABRI) was doing in East Timor. ‘But they were sat on
very quickly. Any conversation that has been held since then has been much
quieter ... I have met Indonesian bishops and asked them about East Timor. They
say, “East Timor, where’s that?”’
The Australian Catholic Social Justice Council
had secured an AIDAB grant from the Australian Government to help Bishop
Ximenes Belo establish the Dili Catholic Commission for Justice and Peace. Bishop Brennan explained:
The setting up of a Justice and Peace Commission gave the Bishop
at least some staff to handle all of these inquiries that he was getting. As I
say, he was the only one the people could turn to because he was head of the
Bishop Brennan said that Bishop Belo had always
been shown great respect by the Indonesians. The military commanders had held
him in high regard and shown him respect, and he had been able to get
information from them. When he was given names of people who had disappeared,
he was able to go to the chief of police, or to the governor or to the military
commander and find out what they knew about them, at least whether they were in
detention and when they might be released.
Bishop Deakin said that for a long time there
was only one bishop in East Timor, and because nobody else could talk publicly,
he became, in a sense, ‘the keeper of the flame’. He had been pressured by a
great number of people in and out of the Church to be quiet: ‘They said, “Mind
your own business. You shouldn’t be interfering in politics,” and all that sort
of thing. One looks back now on what he did and wonders how anybody could say
anything like that. There are now two or maybe three bishops in East Timor. It
is developing a hegemony, a leadership and an identity all of its own, and it
will be that much more Timorese as a result’.
Bishop Brennan said that Bishop Belo had been
the only significant non-Indonesian figure, which was another reason why the
people had flocked to the churches and why they had flocked to the Bishop to
help them. Although the governors were East Timorese, they were employed by the
Indonesians, and were not trusted by the people to the extent that the Bishop
The Catholic Church was also the only place
where Timorese could speak their native language in public. Indonesian was the
only official language, so the Tetum language was not allowed to be spoken in
public, except in church.
The Committee was told that many of the Catholic
clergy in East Timor had been implacably hostile to the Indonesian military and
encouraged passive resistance and the independence movement. The Church made
little effort to come to terms with the Indonesian administration and tacitly
supported the resistance. The clergy enjoyed a high level of respect among the
people, analogous to the situation in pre-World War One Ireland or in Poland before
the end of the communist regime, and constituted a ‘theocratic’ counter to the
A different view was put by Mr John
Scott-Murphy, of Caritas Australia, who said that, in his experience,
independence was not a religion-based issue. The Church itself was split on the
issue of independence. There were many people in the Catholic Church in East
Timor who did not support independence. There were many people in the Catholic
Church throughout Indonesia who supported independence for East Timor but
others did not.
Bishop Manning said that he hoped that the
Church would not play a big part in the government of East Timor, but that the
people would be allowed to determine that for themselves. The Church was there
to give advice and to help wherever it could, but it had to listen to the voice
of the people. He noted that Bishop Belo had always been very careful not to
involve himself in governments: ‘He has walked a tightrope. He has given very
good spiritual advice, but he has tried to keep himself above political
statements, and I believe that he will continue to do that’.
President of the National Council of Timorese
Resistance, Xanana Gusmão, announced during a visit to São Paulo, Brazil, on
1 April 2000 that the new government of independent East Timor would be
secular, although the Catholic Church would play a strong role: ‘We will have a
secular system, but the Church will play a role, not only in the transition,
but also in independence, reinforcing our effort to consolidate the process,
stabilising it, and bringing it to fruition ... In education, the Church will
also have an important role’. He said Bishop Ximenes Belo would not become
directly involved in the government.
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