World Bank approves new strategy to support Timor-Leste

WORLD BANK GROUP: World Bank approves new strategy to support Timor-Leste

Washington DC, Sep 21, 2009 (M2 PRESSWIRE via COMTEX) -- As Timor-Leste celebrates 10 years of independence, the World Bank's Board has approved a new strategy of support to the country that focuses on sustaining economic growth and building employment opportunities, especially for youth.

The overall objective of the 18-month strategy, which was developed through a broad process of consultation with government, civil society and other stakeholders, is to support the Government of Timor-Leste to convert its oil wealth into policies and programs that preserve stability while laying the foundations for sustained growth in non-oil sectors.

It targets four key areas of support to Government to achieve this: formulating a new national development strategy; building capacity to implement the new strategy; putting in place short-term social and economic stabilization activities; and securing long-term economic growth. This includes a multi-year public employment program; health and education support aimed at increasing public service delivery; further support for the management of petroleum revenues and programs to enhance private sector activity.

'Timor-Leste has achieved solid economic growth over the last two years,' said World Bank Vice President Jim Adams.

'This is no small achievement in difficult times - nationally and globally. Through the dedicated efforts of all sectors of Timorese society, social stability has been restored and an environment of economic growth is being fostered. Government spending has increased markedly and this is bringing benefits to poor people across the country.

'There is of course a long path ahead but with the dedication of the people of Timor-Leste being applied to address the challenges, we see a bright future.'

With three quarters of the population engaged in subsistence farming and the majority of the population aged under 24, the Bank's

'Interim Strategy Note' puts particular emphasis on helping the country improve agricultural productivity and tackling youth unemployment and alienation.

It highlights the need to bring short and long-term approaches together in a disciplined and accountable development process 'that addresses the roots of conflict and prevents a further relapse of the kind experienced in 2006'.

Mr Adams noted that Timor-Leste had implemented its national recovery strategy even in the face of assassination attempts on the President and Prime Minister in 2008. As a result:

- Thousands of internally displaced people have been resettled using Government-provided funds to reconstruct housing and rebuild livelihoods

- Hundreds of schools have continued to be built, rehabilitated or expanded allowing for tens of thousands more children to attend school

- Job creation programs are beginning to bring about much-needed local income generation, especially in poorer rural areas

- A pension scheme for veterans has been put in place as well as pensions for the elderly and disabled

- Non-oil GDP growth reached an impressive 12.8 percent in 2008

- Budget execution accelerated from US$65 million in 2005 to US$551 million in 2008, reflecting stronger financial management and strategic planning systems in the Ministry of Finance and other agencies.

Permanent URL for this page: http://go.worldbank.org/8HR4EIU6M0

CONTACT: Elisabeth Mealey, World Bank Group Tel: +1 202 458 4475 e-mail: emealey@worldbank.org Aleta Moriarty, World Bank Group Tel: +61 2 9235 6500 e-mail: amoriarty@worldbank.org

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World Bank Doing Business Report 2010 ranks Timor-Leste in top twenty for Tax reforms

The World Bank Doing Business Report 2010 has recognised Timor-Leste as the world’s top reformer in the area of “Paying Taxes” with its’ global ranking moving from 75th to19th place over twelve months. Timor-Leste moved past 54 countries in one year to rank in the top twenty among 183 countries evaluated on their taxation services globally.

Rainer Venghaus from the World Bank Groups’ International Finance Corporation said “In the face of the global economic crisis, the easing of the tax burden and compliance processes on businesses reflects the Government of Timor-Leste's ongoing commitment to improving the private sector environment.”

Reforms to the nation’s tax system, implemented by the Ministry of Finance, have made Timor-Leste a conducive setting for doing business.

The Country’s Tax Law reform established in 2008 by the IV Constitutional Government boasts one of the lowest tax thresholds in the world and was aimed at fostering a positive tax regulatory environment for national and foreign investment.

Timor-Leste increased by nine countries in the overall doing business category to rank #164.

In 2008, 1,320 micro businesses and 3,155 companies were issued business licenses; A strong indicator that the private sector has been strengthened by the new business friendly environment.

Dealing with construction permits increased by ten countries ranking #87, which is reflective of the 339% increase in major and minor capitol development carried out in 2008.

Starting a business remained steady but the cost percentage per capita of 4.1 in starting a business still remained significantly lower than most countries in the East Asia and Pacific region, which averaged 25.8.

Reduced rankings included ‘Employing workers,’ ranked #89, which is evaluated on the difficulties that employers face in hiring and firing workers. Lack of skilled work force is being addressed by committing the largest budget allocation for training and scholarship programs since independence to up skill workers cross sectors. ‘Trading Across Borders’ has lowered one point due to the implementation of new customs regulations and reforms.

“Getting credit” has always been a challenge for Timor-Leste as a newly established nation. The Government is negotiating with the ANZ bank in Australia and the Ministry of Finance in Portugal to provide advisors to address this situation.

‘Protecting investment ’,‘Enforcing contracts’ (which deals with bankruptcy) and “Registering Property” continue to rank at the bottom of the scale but are currently being addressed through judicial reforms.

The new civil code has been completed and is awaiting approval by parliament. The land package law has completed the consultation stage in the 13 districts and is expected to be passed in 2010. All legislative reforms were formulated to ease doing business in Timor- Leste and should have an impact on indicators for ‘Doing Business 2011.

Ágio Pereira, the Secretary of State for the Council of Ministers and Official Spokesman for the Fourth Constitutional Government noted, “The report is a very fair and positive assessment of our nascent private sector.’

‘While we have made some extraordinary milestones in areas like tax reform with an increase in overall ‘doing business performance’, the report is also representative of those areas which we are currently reforming to ensure improvements in the overall business regulatory environment. We are confident the Gusmão Government national agenda is on par with implementing those reforms critical to transforming the private sector.” ENDS

MEDIA RELEASE Díli- September 15, 2009 - The Spokesperson of the IV Constitutional Government, The Secretary of State for the Council of Ministers - For More Information Please Contact: Ágio Pereira +670 723 0011; E-mail: agiopereira@cdm.gov.tl

Red more: Doing Business 2010: Pacific Islands Pick up Pace of Easing Business Regulations The Pacific island economies continued to pick up the pace of reform. Timor-Leste, Papua New Guinea, Tonga, Vanuatu, and Samoa reformed in areas including paying taxes, enforcing contracts, getting credit and starting a business. Three economies from the region-in order, Singapore, New Zealand, and Hong Kong (China)-led the world in ease of doing business.