The New Political Economy of Timor-Leste

Timor-Leste’s economy concentrates on oil and gas revenues, which sustain most public spending but expose the country and its people to various forms of risks. While recent economic growth reflects stable recovery after COVID-19 crisis, the non-oil sector remains weak, with limited diversification, less investment, and high import dependence. Governance and institutional reforms are taking place slowly and steady yet challenges persist, which has negative implications for the participation and development of young population in the long run. As Timor-Leste moves toward ASEAN later this month, transforming its tentative economic growth and limited political structure into a sustainable and inclusive one, as well as exploring the possibility of e-commerce, e-banking and e-governance while mitigating the risk of cyber threats and crimes facilitated by electronic technologies, social media and online platforms will be crucial for its long-term stability and prosperity and the meaningful engagement of the young population in political and economic realm.

This presentation explores the evolution and challenges of building a formal land tenure system in Timor-Leste, a country where colonial legacies, conflict, and institutional fragility have left deep marks on land governance. It examines how large-scale initiatives—most notably the Oecusse Special Economic Zone and the Tasi Mane project on the South Coast—have shaped debates on land rights, displacement, and development priorities. Finally, it reflects briefly on the implications of Timor-Leste’s entry into ASEAN, considering how regional integration may influence both the trajectory of land policy and the pressures on land governance in the years to come.

Three years after its in-principle approval and fourteen years after its official application to join the regional organisation, Timor-Leste is about to become ASEAN’s eleventh member state. This accession marks both the end of a long political quest to join ASEAN and the beginning of a new journey to fully benefit from its membership. On 28 November, Timor-Leste will celebrate the 50th anniversary of its first declaration of independence. Against this background, revisiting the foundations, challenges, and prospects of its ASEAN accession provides an excellent opportunity to situate the country within Southeast Asia’s historical, geopolitical, and economic contexts. Interestingly, throughout the fourteen-year waiting period, most of the arguments cited as manifestations of ASEAN member states’ reluctance to accept Timor-Leste into the grouping were economic in nature. This presentation explores what we see as the main political and geopolitical factors. It also highlights the significant ongoing downturn in Timor-Leste’s relations with the ten other ASEAN member states. Today, Indonesia and Singapore are among the main supporters of Timor-Leste, notably through ASEAN-related training programmes for East Timorese diplomats and civil servants, as well as economic investments.