Exploring East Timor

In her presentation before the seminar, Macao Trade and Investment Promotion Institute (IPIM) Executive Director Gloria Ung stated that last year commercial trade between China and East Timor was higher than US$100 million (MOP799 million), and comprised mainly of exports of electrical equipment, machinery, cars and steel to China.
A seminar to promote business in East Timor brought together business people from Macau and Portuguese-speaking countries in order to discuss business opportunities in the young Asian country.
Organised by the Macao Trade and Investment Promotion Institute (IPIM) in cooperation with the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries (Forum Macao), the seminar tried to demonstrate East Timor’s strongest business advantages, with three entrepreneurs invited to share their experiences in the region, and give advice on how to invest in the country.
“East Timor is strategically located as the only Portuguese language country in Asia, and the seminar aims to present investment and development opportunities in the young country,” the East Timor Delegate at Forum Macao, Danilo Afonso-Henriques, told Business Daily, adding he hoped the shared experiences could help future entrepreneurs in the region.
Strategic location
Both Gloria Ung and Danilo Afonso-Henriques described East Timor as strategically situated in Southeast Asia, at the crossing between the Pacific and Indian Oceans, and rich in natural resources such as natural gas and oil.
“Our investment priorities are in tourism, the oil industry, precious minerals and construction materials. We’re also looking for investments in the agricultural sector and fishing, since 85 per cent of the population works in that sector. In fact we’ve worked for more than a year with Zhejiang province for commercial fishing exploration, since Mainland China is one of the biggest business partners with East Timor and its influence is growing,” the East Timor Delegate from Forum Macao told Business Daily.
IPIM’s Executive Director Gloria Ung also mentioned that the seminar was part of a strategy to implement a ‘go global’ direction, with Macau looking to intensity its singular advantages as a service platform for economic and commercial cooperation between Mainland China and Portuguese-speaking countries.
Business advantages
East Timor, a young country which got its independence from Indonesia in 2002, was described at the seminar as a developing country with business potential, with double digit economic growth last year and currently undergoing a government-led strategic development plan until 2030, in order to enhance its core infrastructure, human resources and the private sector in its strongest economic sectors including agriculture, tourism and the oil and gas sector.
“East Timor has developed a lot since its independence in 2002, with a great improvement in safety and stability. Its current development plan has seen the government make serious investments in infrastructure, making the country more attractive to foreign investment. Also the private investment law in East Timor is very simple and attractive in terms of customs taxes,” Goncalo Neves Lestro, a Portuguese lawyer and International Senior Associate at CRA Global told Business Daily.
Luring incentives
The representative from CRA Global, the first law firm to provide legal advice to foreign investors interested in doing business in East Timor, highlighted beneficial tax incentives as one of the policies by the East Timor government to attract investment, with a current maximum limit on corporate profit tax set at 10 per cent, and a customs tax rate of 2.5 per cent.
Current legal reforms also include an investment certificate for international investors, providing fiscal and customs benefits if an investment proposal is accepted by the East Timor Investment and Export Promotion Agency. According to data presented at the seminar, applications for the certificates take 30 days at a cost of US$20,000, allowing any investment to be made in 180 days after being approved.
“Timor has good advantages for investment such as a good fiscal customs structure, trade taxes are very beneficial, and the government is reforming investment law in order to put the country at the level of other countries with good business conditions,” Danilo Afonso-Henriques told Business Daily.
Spreading advice
One of the local Macau business people sharing advice on doing business in East Timor was Chan Kuok Sang, a representative of Ngai Tin Enterprise-Chelsea, a Macau registered company specialising in developing aroma products and fragrances. The local company started producing a medicinal oil based on the Fukui nut from East Timor, used for hair application and protection, and exported mainly to Mainland China.
Chan described how he made connections with East Timor producers through the Macao International Trade & Investment Fair (MIF), and has recently started exporting the product to Mainland China.
“When we started doing the product promotion, nobody knew about it and in the beginning it wasn’t easy to enter the Mainland China market. You need a lot of documents to enter so you need to make sure all customs documents are prepared. If only one or two documents are missing there’s no chance. However we’ve managed to use Macau as a platform to enter the Mainland China market and other world markets,” Chan stated in his presentation.
Subhash Mishra from NTM Industries Unipessoal Lda, a salt producing company from East Timor, believes that as new state, the country has “everything up to investment, especially in the hotel industry,” advising potential entrepreneurs to make sure they properly research the area they want to invest in, get to know the trade laws in the country and use IPIM for advice.
For lawyer Goncalo Neves Lestro the advice was as simple as “get to know East Timor, go there, know the people, even without any person on location create an entity in the country for future meetings, and know the area to invest in and the people connected to it.” Not everything is roses
However not all experiences are positive, with the President of the International Lusophone Markets Business Association (ACIML), Eduardo Ambrosio sharing the issues he had while importing coffee from East Timor.
“We’ve been involved in the coffee business in East Timor for 15 years, and faced many problems importing it from the country. There’s a lot of competition and the amount we can ship is very small. Also, East Timor needs better medical facilities, since most people have to go to Australia to receive health care, so it really needs investment for a major hospital in the country,” the ACIML president stated in the meeting.
Ambrosio also highlighted some issues doing bank transfers to the country, which can be very slow, and described how East Timor still needs a lot of investment in education in order to create more qualified human resources.