TL: Why should international investors and high-net-worth individuals consider investing in Timor-Leste?
Luís: After an initial stage as an independent state and with the assistance of numerous non-government organizations and private sector development agencies acting in the country, Timor-Leste has begun a series of reforms to address major development issues including health care, education and poverty reduction, as well as discussing solutions to attract investors to build the foundations for an economy less dependent on oil.
That being said, from hospitals to roads the government is basically creating everything from nothing (namely with public-private partnerships). As for the private sector, the Government has set up a series of legal mechanisms that are intended to attract foreign investment (e.g. tax exemption for certain type of investment).
The country itself it is full of natural resources (namely oil & gas) and it has a major touristic potential with amazing rural area, white and black sand beaches with amazing reefs where you can snorkel and amazing dive sites.
In political/economical terms, the country has very close relationships with China, Australia, Indonesia and Portugal. It is a member of the CPLP (Community of Portuguese Language Countries) and the Government has indicated that it is committed to join the Association of Southeast Asian Nations (ASEAN) by 2015.
On a special note, the Government of Timor-Leste has recently passed a law to create a Special Administrative Region (SAR) in Oecusse and establish a Special Zone of Social Market Economy. The project has many aspects -- infrastructure, industry, tourism, hospitals, university, airports, agriculture and possibly gambling. The latter hasn’t been confirmed yet but it could be a groundbreaking opportunity considering that Timor-Leste is surrounded by Indonesia, a 250M people market where gambling is not allowed.
The banking system is quite small but there are three solid international banks in the country (Portuguese, Australian and Indonesian). It should be pointed out that the costs of labor is quite low (minimum wage is $115) but will probably increase in the next few years.
TL: What is the most efficient and recommended procedure that needs to take place needed in order to open a new business in Timor-Leste? Also, what are the necessary requirements that need to be met?
Luís: In a developing country like Timor-Leste it is essential to seek legal professional assistance (law firm or a consulting firm). It is obviously possible to do it by yourself, but the bureaucratic process can be time consuming, especially if you do not speak any of the most common languages (Tetum, Bahasa and Portuguese).
Other than the bureaucratic process, opening a company/business in Timor-Leste depends a lot on the type of business you wish to implement but there are no major concerns out of the ordinary (e.g. deposit share capital; verify uniqueness of company name, register the name and file company statute at the Ministry of Justice; apply for a tax identification number; apply for temporary business license; obtain final company certificate).
TL: Where are the majority of international investors coming into Timor-Leste arriving from and why do you believe this to be the case?
Luís: In recent times I would have to say that China is probably the biggest investor in Timor-Leste, followed by Indonesia, Australia and Portugal.
Referring to Portugal, the investment is due to both historical reasons (Timor-Leste was a former Portuguese colony and Portugal helped in Timor’s independence process) as well as cultural (Portuguese is an official language in Timor and the legal system is similar to the Portuguese).
Australia and Indonesia are geographically the closest countries (the majority of goods are imported from these two countries) and they all have historical connections with Timor-Leste even if not for the best reasons (Indonesia occupied Timor-Leste in the 70’s and Australia and Timor-Leste are currently disputing an arbitration over resources in the non-delimited marine area between their coastlines known as the “Timor gap”). Notwithstanding their past, Australia and Indonesia have a solid presence in Timor-Leste and their current politic relationships are good.
As for China, although there are also historical reasons (especially with Macao), the main reason would have to be political. Timor-Leste needs almost everything in terms of infrastructure and the Chinese have the ability and the means to build it in an efficient way. For the SAR in Oecusse, government representatives visited Macau in the hope of attracting investment for the special zones project under development.
TL: Should an investor want to obtain Timor-Leste citizenship, what are the requirements that they need to meet and how long will it take for them to obtain citizenship?
Luís: Acquired citizenship can be obtained on parentage grounds, adoption, marriage, naturalisation or high and relevant services (after the independence process, citizenship was granted to individuals who contributed to the country’s independence).
Citizenship through naturalisation can be granted if the following conditions are met: i) be an adult in light of the law of Timor-Leste and the State of origin; ii) be a usual and regular resident of Timor-Leste for at least ten (10) years prior to 7 December 1975 or after 20 May 2002; iii) be able to speak one of the official languages (Portuguese and Tetum); iv) meet moral and civic standards for integration into the Timor-Leste society (criminal record); v) be able to manage oneself and provide for his or her subsistence; vi) know the history and culture of Timor-Leste.
TL: Is there anything else you would like to discuss? Please feel free to add any additional comments you have here.
Luís: I would just like to add that I honestly believe that Timor-Leste has a great future ahead. With the oil reserves, natural gas and amazing sights perfect for tourism, they have all the necessary elements to grow on a steady rhythm in the next few decades. While there are still some issues to resolve, the representatives of the people of Timor-Leste are fully aware of what they need to do to solve those problems and with the full cooperation of Europe, Australia and Asia, hopefully those problems will be gone.