Tuesday 31 January 2017

Maun Xanana's Open Letter to Emilia Pires

Maun Xanana's Open Letter to Emilia Pires

(translated from the original Portuguese version)

Dear friend

I know you're going through the most difficult time of your life! You know very well that I do not understand anything about laws, because while I was in the mountains, I was not allowed to take law courses abroad and especially in Indonesia as were other respected Timorese people, with the latter filling in most of the positions of our MIGHTY judicial system.

You know, Emilia, I admire these people! They do not understand Portuguese but judge under laws written in Portuguese and sign judgments when they themselves do not understand what is written in them. I remember when I went to testify, I was faced with a perplexed judge who did not understand the article of the Procurement Law I was reading out to him, and he told me to shut up twice.

But that is not why I am writing this letter to you.

What I am doing is not an attempt to reduce the heavy pressure you have on your shoulders, weakened by the deficiency of your leg. My intention is only to look back in time, so that you never forget your primary role in this still fragile process of building our State. Among the people I saw during the trial, like your accusers, I noticed the presence of some who did not defend the independence of the country. How times change, right Emilia?

The people who accompany me or have accompanied me in the IV and V Governments are or have been nicknamed the Xananistas, and for the pleasure of the gods of 'greediness' they are all accused of being corrupt! Do you know why? Because I am the Soeharto of Timor-Leste! And you were all influenced or corrupted by my corrupt ideology. And some even sent congratulations to the RDTL justice practitioners because they 'got' many Xanana ministers into the Courts!

The members of the Government whom I most valued, in the IV Government were, among others, the two of you, Lúcia Lobato and Arcângelo. Lucia did everything to improve the working and salary conditions of the judicial system and its agents ... she was punished, either out of ignorance or chauvinism!

Arcângelo suffered political and psychological pressure from a trail for nothing! Wrong from a trial to prove the iniquity of the values of injustice!

Those will read this, will say that I am trying to defend you! No, for God's sake, the point is that I myself am on the list. The Public Prosecutor’s advisor said so, and some are bragging about it! One of your accusers seems to have been assigned to gather data about me ... and this one even brags about her role as a sorceress of justice! Nowadays, they all feel this way ... powerful, exemplary, sober and upright ... in a ghostly perception that they have the State in their fists! Little do they realize that they do not even understand what a State is !!!

I state this - that they do not understand what a State is - with two concrete and abhorrent cases:

Firstly, when I testified in defence of a Police Commander, who had been subjected to humiliating vexation by justice practitioners in Timor for many years, even though he was recently found innocent. He had been arrested on charges of violating the human rights of Indonesian citizens who were detained by us on the eve of UNPOL's final withdrawal in 2012. These Indonesian citizens were drug traffickers who came to Dili to receive contraband from Colombia, and transport them to Indonesia, making Timor-Leste a 'free' transit point for this transnational crime. Because we were working in coordination with the Indonesian Anti-Drug Department, I instructed to hand over these Indonesian citizens to this Department. The accusation against the Police Commander was for violating their human rights because they were not allowed to use their rights of defence. (I know that you are watching over your case, in the various processes that you sent to the Court and that they simply archived). The other charge was to deny access to these individuals from justice, as if we had just released those men, even though we had proved that they were tried in Indonesia and convicted. And you know, Emilia, the practitioners of Justice in Timor claimed that only they had the competency to defend the sovereignty of the RDTL.

The second case, much more recent, simply shows the lack of consciousness of these practitioners of Justice. In a separate testimony statement, I reported that a Korean citizen, Timorese passport holder, was detained in Indonesia and would be deported because the document had already expired two years ago. I alerted the Court (where there were Honourable Judges and illustrious Prosecutors) of this problem for the State. When the man arrived in Timor he was questioned and confessed that, years ago, he had entered Timor illegally through the border. And that he had paid a Village Chief in Dili the sum of $4,000, which was able to produce a birth certificate, named after a deceased Timorese, from which he was granted a Timorese passport, which he used to return to Indonesia, where he was detained. You know, Emilia, cases like this do not affect the State, from the perspective of the practitioners of Justice!!! But the best is this - the Korean was put on a plane and returned to Korea, while the Village Chief can still produce more false certificates and get fake passports!

Imagine, Emilia! They will save this State and, therefore, the country! From what ... I do not know! The important thing is to think or imagine that they are going to save the country. Some foreigners and East Timorese (of 'much' goodwill and in the fullness of their convictions) already put forward some names ... rocky, redundant and spectacular - imagine, Emilia! Only they will be able to save the country ... from the bonds of Xanana's corruption!

The world turns around and around and makes people dizzy… less prepared to endure with the vagaries of and, better still, due to, human… nature!

In short, they are the skeleton of the trade ... of a ruler, who has to submit to those practices of ignorance ... from the wise-men of law. There is an almost demonic pleasure to put the rest under the deciding power, no matter whether it is from an act of justice or a contempt of morals and ethics. (Speaking of morality and ethics, there are also some reverend persons in cloth who criticize the corruption of Xanana's ministers, but are not aware that everyone knows that they are gambling on the internet and lose a lot of money (it is thought that this lost money may have come from the public concessions that the State gives to the Church), and these saints have turned to loans from private individuals amounting to a handsome amount of more than a million US dollars. Poor Pope Francis who may not be aware of this!

Oh, what a bummer! It's true, I'm running away from my intention to look back in time ...

I want to remind you, if you have forgotten, of the pitiful conditions in which the Ministry of Planning and Finance was when you were given the responsibility to lead that governmental institution! I know that as you read this, you will remember all the rubbish paperwork, without order nor files!

And your first year was to clean the dust that was making everyone cough ... organize the files, separate the different departments and sections, plan the activities of each responsible person and each individual. Do you remember that it cost a lot of effort? Of the obstacles encountered due to party affiliations that, at the time, dominated the public administration, including the Ministry of Finance, of course?
And even more so when it was the introduction of a modern financial system!!! What did you do, Emilia? Was it not to introduce in a young country, a recent State, a spectacular innovation? I'm proud of that !!! Others, the enemies of Xanana, do not even know what that is!!! But it does not matter!!!  

All your capacity to think, to act, to produce, to create ... was revealed in the transformation of, at the time, a weak and disorganised institution, but extremely important and crucial for the State, into excellent undeniable productivity, with an efficiency proven by its agents and the just trust of the international community!
And were there not so many episodes that we faced together, Emilia! Even with your limping leg, you were never intimidated with the threats that you faced! You are Brave, you are very courageous!

Do you remember Kuwait? Where and when the Sheik threatened us that “there would be no meeting if we did not agree previously to sign a statement where it would be recorded that we would 'honour' the 'agreements' or 'contracts' with certain companies”? That we knew were fictitious? Where you had to resist all afternoon and part of the night Kuwaitian pressure? That pressure or feeling that we may not have the return trip?
I admire your cleverness! Because we knew that we were going to face challenges of this kind, you were simply unequalled by taking that Australian / Arab person, who helped us immensely out of that trouble ... which could even have cost us our lives! Uffffff ....

Do you know what I think today, Emilia? We were really silly and I do not know if you, more than me, or me, more than you!!! What is certain is that we were stupid ... with all the letters, written and read!!!

You see, Emilia, if I'm not right! Instead of being convicted for a crime you did not commit, of economic participation in business, or something like that, if we had the genius to conclude that it was a great opportunity - if it was not! - to receive ... millions of dollars, in exchange for silence and collusion, I do not believe that, today or in the future, these practitioners of Justice in Timor-Leste would ever have guessed that ... we are rich ... at the expense of denying the interests of the our dear country!

Because, for me, economic participation is receiving a share of a 'business'. If your husband had appeared as a “broker”, then, yes, I can agree that there was an intention to appropriate the State money. I know many in Timor! And they are considered honourable people, these “brokers”! Your husband was the owner of the factory ... sells and gets paid ... there is not what is usually called here 'komisi' or 'commission', which belongs to the language 'brokery'.

When I said that practitioners of Justice would never know that we both sold our souls for money, it is because a lot of people know that the President of the Court of Appeal received money from a company that had a project from the Court that was never finished due to lack of funds, because a good amount was given to the needy President of the Court of Appeal ... Only the Public Prosecutor's Office does not know ...
Moreover, this President gave another project to his brother, rejecting the result of the public tender that his employees presented to him with another successful vendor! Wonderful ... that's how justice works in RDTL! And this His Excellency does not accept merit based public recruitment... because then, it is necessary to feed the relatives of Ainaro, for sure ... and to that effect, we must recognize, we call it ... an act of justice!
And many people already understand why the Public Prosecution 'pretends' that it does not know... of those practices of economic participation in business, by the President of the Court of Appeal, who received money in return of given the project! Because the Public Prosecution is afraid of retaliation... obviously, they all, Courts and Public Prosecution, are the actors of Justice, which means that... the competence or incompetence to do justice or injustice belongs to them!

I say retaliation, because the Prosecutor General of the Republic, when he went to Brazil to attend a CPLP Conference, presented the expenses report, including a dinner without the hotel or restaurant bill, but only a signed declaration, here in Dili, that the money had been spent at a dinner for the CPLP delegation! After all, there could not have receipts, because the money was spent to purchase dresses and other things for the wife ... of the Prosecutor General! And it was the Cape-Verdean Advisor Arlindo who advanced the money and had to be paid, once in Dili. And it is only him, this clever Advisor, who holds this secret, which the poor judges do not know! But even if they knew, they cannot do anything ... because it is the Public Prosecution who accuses, it is not the judges! The judges only serve to 'prove' what is not proven!!! Nothing more!!!

Emilia, I hope you do not tire of reading these muddling issues, which should belong to the 'social media', which is now fashionable in Timor. They tell me that 'Facebook' invents everything, that I even feel motivated to find the necessary courage to try it and unravel some truths from our country.

Let's look back in time ...

You fought so much so we could diversify the investment of the Petroleum Fund into 'Equities', which today enabled the RDTL State to have a profit of more than 2 billion dollars! You are intelligent, Emilia, when we thought about how we should resort to loans and pay them off with that profit from this investment from our Sovereign Fund.
And your decision to control the accounts of the oil companies only revealed your sense to defend the interests of the Timorese State! I remember, and you also remember, how those ignorant on the matter “accused” you, in the case of that American advisor who took advantage to deceive us, but who ultimately fell into the hands of American justice.
The Transparency Portal you introduced was an exceptional act!!! You're great, Emilia! You are not an ordinary servant of the State who does the same things, every day, in the same way, repetitively for years, as a habit that secures the salary he/she receives ... most of the time, without merit! And there are many of those in important institutions of the State and who make supposed decisions in the name of the State!

You revealed, during the time in which you served our State, as Minister, an inexhaustible desire for constant improvement. The reform you introduced on the training and professionalising the Ministry’s staff is something unique, not noticed by many, although they recognize the impact that this is being reflected in the system you have created.
I know that you remember how many times I yelled at you and you cried... with some nervousness that you may have had to break your principles of rigid financial control. But, on the other hand, I believe that you will remember so many other times that all your fellow members of the Government praised you in the sense that if it were not for your strength, your energy, your unwavering will to not yield to the pressures and impose financial management rules, the Government would have fallen sooner and the State would have slipped into an unsustainable financial crisis!

I can tell you, Emilia! The State of RDTL owes a great deal to you, a physically weak woman but with an out-of-the-ordinary honesty! I pay this tribute to you, with humility and admiration!

You were overly scrupulous in many matters that concerned possible acts that would harm the State! You were also very concerned about the lack of corrective measures at institutions that lacked or lacked the will to adopt the established rules for the financial management of public money.

That is why I cannot accept that you have committed a crime of economic participation in business that would have damaged the State. The beds are being used, and the President of the Court of Appeal himself has benefited from the use of these types of orthopaedic beds when he got a ‘stroke’ and was hospitalized.

The money for a fictitious dinner in Brazil hurt the State! Because, after all, it was to buy 'little things' for the dignified wife of His Excellency, the Prosecutor-General of the Republic! It was the State that paid these trifles of conjugal love!

The money that went into the pocket of the President of the Court of Appeal injured the State because the businessman failed to finish the work that was awarded to him! And the President of the Court of Appeal was asking for additional money to complete the work!
Do as I do, Emilia! Do not allow yourself to be dominated by the bitterness caused by frivolities of spirit ... of people, inert in thought, devoid of principles, vulgar in attitude, empty of analysis and distorted in the virtual logic of social and political reality of our
society's contemporary life, still embryonic but already revealing of much disbelief and an unstoppable desire for disunity and intolerance and, at the same time, full of excessive ambitions.

But, Emilia, let us return to look back in time ...

Your strength, your commitment to defending Timor-Leste from the pressure of the international community and above all from the community of donors who liked to play games to the beneficially naive beneficiary countries was simply brilliant!
Your defence of our principles, which made us stand out and, in a way, imposed our ideas at the Busan / South Korea meeting, making the United Nations adopt our measures, was really spectacular!

There, I must say, you affirmed yourself, as Timorese, as woman and as leader! And what about your role as promoter of a new policy regarding fragile states! The leaders of fragile states love you, Emilia! You are the Mother who conceived the 'g7 +'... have you forgotten?

We all owe you,  and if Timor-Leste is respected today by these countries, which look at us as a magnificent example of moving from 'fragility to resilience', this is due purely and simply to your devotion to this noble cause ... to support the countries and populations most in need ... without asking for anything in return!

The world needs these examples! And you, Emilia, began to introduce a new concept of aid!

And I do not accept, from the bottom of my sinful soul, that you are incriminated today with something that does not make sense, in relation to your person, in relation to your activities, in relation to your participation for the improvement of people's lives, beyond the physical horizon of our country.

Emilia, I believe in you, because I know you well, since I called you to Salemba in late 1999 to help me think about independence ... to help me discuss with Sara from the World Bank, who was extremely helpful in our analysis of the country's future challenges.
And with you, my thoughts also embrace the other victim of the injustice of Justice of our country, Madalena Hanjam!

Cruelty does not come only from violent actions, cruelty comes from the sophisticated human mentality of imposing its power on others, cruelty is revealed in the lack of consideration and petty mindedness shown by the smallness and frivolity of actions, of those who are locked in narrow and limited preconceptions.

Emilia, Madalena, Suharto is with you! And along with Suharto, the Sacred Mountains and Souls will rise ... to declare your innocence!

Dili, January 25, 2017

Kay Rala Xanana Gusmão
The Suharto of Timor-Leste


Wednesday 18 January 2017

Timor-Leste aviation industry – everyone is better off with two truly independent providers

Timor-Leste aviation industry – everyone is better off with two truly independent providers
*Cosme da Costa Araújo
January 2017

In a small market economy such as Timor-Leste aviation industry, no competition allows a single provider to monopolize the market and do whatever it wants, charging higher price for low quality service. But too many competitors could fuel collusion, or a price war, which ultimately lead to deterring and driving out competitors, and retaking of monopoly position. For now, everyone would be better off with two truly independent providers.

Not everyone is as lucky as Marvi
Our journey into the New Year begins with a jubilant welcoming of Maria Vitoria, the third runner up of the 2nd Asia Dangdut Academy. A record crowd turn-out for a previously unknown Timorese teenage girl nearly brought Dili to a standstill. Marvi, as she is now known, epitomizes the Chinese prophecy for 2017 – the year of the Rooster – the year of dawn and awakening, triumph and success for those who work hard.
But not everyone is as lucky as Marvi. Air Timor, for example, a company that is dear to many proud Timorese for flying with “Timor” name and run by many Timorese businessmen, decided to terminate its Denpasar flights and reduce the frequency of its Singapore flights. The inconsistent application of the regulations by the Government and overcapacity are the main reasons leading to the reduction of its route network, significant layoffs and the surrender of any Timor-Leste airline opportunities to Indonesian carriers. The Government dismissed Air Timor’s claims and responded that “Timor-Leste is a free market, whereby Government’s role is merely to do with regulations”. The Government went further to blame the company to bring the disaster into itself for lacking managerial capacity and inability to resolve its internal affairs.

A market too small for many competitors
Accessing to Timor-Leste from other countries is predominantly by air. Air connections are limited to three entry points: Singapore, Denpasar and Darwin. Dili-Denpasar route was first serviced by the Merpati Nusantara Airlines. The monopoly position it enjoyed allowed it to charge an exuberant one-way price above $300. The entry of Batavia Air in 2010 offered an alternate transportation for the Dili-Denpasar route and the price fell accordingly by 30%. Sadly bankruptcies took toll on both companies forcing them to cease their operations in 2014 and 2013 respectively. Sriwijaya Air, another Indonesian private airline, began flying to Dili in 2013. A year later with the entry of Air Timor, in partnership with Citilink, the price for a single trip fell considerably to around $100 or less. Sriwijaya apparently colluded with Nam Air, one of its subsidiaries, waged a price war and dumped the price to $70, far below the market price. Air Timor succumbed and left the route in early 2017. Consumers’ enjoyment of low airfares was short-lived with one company again dominating the market, and the price is skyrocketing, back to its previous record high.
With a small market of about 100,000 passengers flying in a year, there are so many seats available compared to market demand that the three airlines could only achieve 50% or less Load Factor. Too much competition actually results in everyone worse off situation. When a small market is shared among a larger number of firms, the unit cost rises as few economies of scales are realized. The higher unit cost necessitates higher price being charged. In a market where airlines usually need 70% to break-even, competition forces companies to run at margin loss which leads to a price war and the subsequent failure and return to monopoly ultimately does not benefit consumers.
Australian airline market with approximately 60 million passengers flies domestically, only two providers service the market – Qantas and Virgin. Its international airline industry remains quietly regulated and is subject to detailed capacity controls. More competition should be encouraged for the Dili-Darwin route, which is still dominated by Air North.

An indication of an apparent colluded “duopoly”
Timor-Leste has seven slots available to fly from Dili to Indonesia. The Government of Timor-Leste issues licenses to both Sriwijaya Air and Nam Air, each as a separate independent company. In fact, Nam Air is a subsidiary of Sriwijaya. With a different cost structure and economies of scales leveraged from its wider operation in the other Indonesian market, and the transfers of Nam Air passengers on low-capacity days, Sriwijaya enjoys the competitive advantage over Air Timor. The deep pocket it has enabled it and its subsidiary to wage a price war that Air Timor is not able to match. The actions of the both airlines indicate an apparent collusion to force rivals out and to maintain its monopoly position. All of us would have felt the impacts as price is skyrocketing immediately after Air Timor’s decision to terminate its Dili-Denpasar route.

Government failures exacerbate market failures
The Government is right that in a free market economy, the Government’s role is to set and enforce regulations. Therefore, Government has been intervened to correct market failures through regulations. However, in many instances, Government intervention can also fail to achieve an efficient allocation of resources.
To ensure aviation safety, the Government enacted legislation that stipulates aircraft must be no more than 20 years old. There is no ambiguity in the legislation. Air Timor was asked to replace its 18-year-old aircraft with a new A320 Airbus. But Sriwijaya and NAM are allowed to operate its 22 year old aircrafts.  The Government argues that both airlines are technically assessed to still be suitable for operation regardless of its 22 year old aircraft, which contradicts the clear stipulation of the law.
The Government’s inconsistent and discriminatory enforcement of the legislation violates the provision and the intention of the law itself. And by allowing both airlines which were ranked last year among the 10 least safe airlines in the world and banned from flying in Europe and by relying the assessment carried out by other countries on the safety of the aircrafts, the Government puts the safety of its own citizens at risk. The very people they vow to protect when they come to office. This type of legal uncertainties may set a bad precedent that could deter future potential investments.
Towards the end of 2016, the Government introduced a price support regulation which set a minimum price the airlines can charge. However, the regulation was repealed in the Council of Ministers. How the minimum price came about is still unknown. A price floor is fine, as long as it is set fairly close to the equilibrium price. The Government needs to do further study to determine what the equilibrium price is. It is clearly above the low price that forced Air Timor out of the market.
After the termination of Air Timor operation, the price is skyrocketing. A return ticket for Dili-Denpasar is now close to $300 or more. The Government has to swallow its pride to intervene by monitoring and controling the price charged by now a single provider. How the Government is going to do this remains unclear. If it is trying, the current price suggests it is not doing a good job. These are few examples of government failures which exacerbate market failures. The Government can be sued for breach duties and violation of the law.

Everyone is better off with some competition
Timor-Leste aviation industry is a market too small for too many competitors. We have seen and experienced that a monopoly provider is able to charge a higher price at will, reaping the benefits at the expense of the customers. The two truly independent providers offer us alternate and affordable options. But more than two providers will either fuel collusion, or a price war, driving out competitors which ultimately lead to the charging of high price. For now, everyone would be better off with two truly independent providers.
What the Government can do is to set a minimum price to stop future price wars and encourage Air Timor or other low carrier to enter the market. If the market is not big enough, the Government needs to put a price ceiling so that traveling is affordable for as many consumers as possible. An alternative option would be, in Timor-Leste case, flying could be considered as public goods. Therefore, a national commercial airline can be introduced, jointly financed and run by the Government in partnership with the private sectors – a typical Public Private Partnership  (PPP) arrangement.   

Support “Rai-Nain” – Timor owned, Timor led
Timor-Leste is in need for foreign direct investments (FDIs) to help create jobs, reduce unemployment, improve living standards and create revenues for the government. These byproducts are secondary to the main objective of FDIs, which is to maximize profits whenever and wherever opportunities exist. But FDIs will leave the country without notice when such opportunities no longer exist. Let’s see what these investors would do when Petroleum Fund runs out.
Only domestic Timorese investors, the “rai-nain”, will stay put to help out their country and their people. During the dark hours of our struggle, we vowed to unshackle ourselves from any form of dependence. And we will never “kaer kuda talin rasik”, if we halfheartedly support the likes of Jape Konsu, Jackson Lay, Clarissa Lay, shareholders of Air Timor, and many other Timorese who are not dependent on the government’s handouts. They help create jobs, pay taxes, and more importantly keep the money circulating in our economy, instead of repatriating it overseas. Surely such local businessmen warrant our support rather than the companies that squander public money on precarious projects. When other countries forbid foreign airlines to compete in their domestic market, bail out their ailing national carriers, and force their public servants to fly their national carriers, why can’t we support ours.
A free market economy sounds good in theory. But not many countries, who preach it, practice it. It reminds me of a wise Timorese man once told his confidant “every theory is good; but the only one that is useful, is the one that fits the reality of our country”.
* The opinions expressed in this article are the author’s own and do not reflect the view of any entity or person that author works or associates with.

References
ABC News, (2017), Air Timor: Government policy, suspected corruption ‘destroying’ East Timor’s only airline.
ADB, (2015), Growing the non-oil economy: a private sector assessment for Timor-Leste.
Air Timor, (2017), Press Release
Ch-Aviation, (2017), Air Timor closes Bali route, blames government policy, dumping, www.ch-aviation.com
Investopedia, (2017), What is an ‘Imperfect Market’
Lusa, (2017), Companhia aérea timorense culpa política do Governo por perdas de 3 milhões de dólares
Lusa, (2017), Governo timorense espera que indonésia Citilink continue voos entre Díli e Bali
Ross, D., (2015), Aviation safety vs commercial profits, www.policyforum.net
The Economist, (2002), Fair play, free markets
The Economist, (2013), Spot the difference: legacy vs low-cost carriers
The Economist, (2015), The collusion delusion: Airline competition

BARRIERS TO LONG-TERM FINANCING AT AFFORDABLE RATES: INTRODUCING A NATIONAL DEVELOPMENT BANK TO SUPPORT TIMOR-LESTE PRIVATE SECTOR DEVELOPMENT

BARRIERS TO LONG-TERM FINANCING AT AFFORDABLE RATES: INTRODUCING A NATIONAL DEVELOPMENT BANK TO SUPPORT TIMOR-LESTE PRIVATE SECTOR DEVEL...