CAN TIMOR-LESTE RELY ON ITS ENDOWMENT-BASED SECTORS TO ACHIEVE THE - PowerPoint PPT Presentation

CAN TIMOR-LESTE RELY ON ITS ENDOWMENT-BASED SECTORS TO ACHIEVE THE SDP TARGETS?

Factors to take into consideration 2 400 100% 90% 350 Monthly Average Manufacturing Wage (USD) 80% 300 70% 250 60% 200 50% 40% 150 30% 100 20% 50 10% 0 0% Philippines Timor-Leste Fiji Thailand Cambodia Indonesia Monthly Average Manfacturing Wage (USD) literacy rate (%) Primary School Enrollment (% net)

GDP by Sector in 2010 3 Manufacturing Financial & 3.1% Other sectors Insurance Transport & storage 4.0% 1.7% 4.3% Information & Communication 5.1% Agriculture, Forestry & Fisheries Accom & 21.4% Restaurants 3.9% Construction 7.3% Mining Real Estate Activities 0.2% 11.6% Public Administration, Health, Education & Social Work 21.5% Retail & Wholesale 15.9%

Employment by Sector in 2010 4 Other sectors Manufacturing Transport & 6.0% 3.2% storage 3.2% Information & Communication 0.8% Construction 5.2% Agriculture, Forestry & Fisheries 50.4% Retail & Wholesale 17.5% Public Administration, Health, Education & Social Work 9.5% Prof, Scientific, Accom & Mining administrative & support Restaurants 0.4% 3.2% 0.8%

2030 Targets 5 13000 14.0% 12187 13.0% 12000 12.0% 11000 11.0% 10000 10.0% 9000 9.0% 8000 8.0% US$ (Millions) 7000 7.0% 6000 6.0% 5000 5.0% 4000 4.0% 4091 3000 3.0% 2000 2.0% 1000 1.0% 0 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Nominal GDP Real GDP Inflation (right axis)

Population & Labour Projections 6 2010& 2030& Total&Popula*on& Total&Popula*on& 1,800,000& 1,142,500& Popula*on&15164& Popula*on&15164& 1,112,400& 596,400& Labour&Force& Labour&Force& 660,100& 262,000&

How to estimate potential? 7 � Agriculture � Upstream oil & gas � Intensification � Revenues – Petroleum fund � Extensification � Future potential - ANP � Country case studies � Downstream oil & gas � Tourism � Timor Gap projections � Fiji � Vanuatu

Agriculture 8 � Crops – Extensification, Intensification � Cash Crops – Extensification, Intensification � Livestock – Extensification, Intensification � Fisheries – World average fish consumption � Forestry – Indonesia comparison

Tourism 9

Upstream Oil and Gas 10

Downstream Oil and Gas 11

Potential in 2030 – Scenario 1 12 Employment by Sector Non-oil GDP by Sector Tourism 2% Agriculture Agriculture 13% 16% Tourism Petrochemical 4% 0.2% Other sectors Petrochemical 56% 27% Other sectors 82%

Potential in 2030 – Scenario 2 13 Non-Oil GDP by Sector Employment by Sector Agriculture 18% Agriculture Other sectors 22% 31% Tourism Tourism 11% 6% Other sectors 71% Petrochemical 40% Petrochemical* 1%

Findings & Policy Recommendations 14 I. There is significant growth potential in the agriculture, tourism and petrochemical. The GovTL should therefore prioritise these sectors by preparing sector specific short- and medium-term plans and investment strategies that are based on detailed cost-benefit assessments II. Apart from the macroeconomic benefits, a more productive agriculture sector has the potential to lower malnutrition rates, reduce inflationary pressure on food items and control population migration from rural to urban areas. Agriculture should therefore be prioritised in the short- term.

Findings & Policy Recommendations (2) 15 III. In line with experiences from other resource rich economies, the service sector is likely to play a key role in Timor-Leste’s future economy. Services are based on human capital. Education and training of the future labour force is therefore of utmost importance. Improving labour productivity will also determine whether Timor-Leste can diversify its economy in the long run. IV. The petrochemical projects provide high GDP income, but few employment opportunities. Timor-Leste should therefore invest in these projects as long as they have a positive net present value. V. To boost private investment, the Government should clarify property rights. Apart from providing collateral for the financial sector, a land law would also provide security for investors and enable on-shore oil/gas and minerals explorations. The sooner Timor-Leste knows how much natural resource wealth it can rely on to support its economy, the easier it will prove to plan accordingly.

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