Bureaucratic Authoritarianism in Latin America: re-assessing military’s salvation narrative

Author – Fidelis M.L Magalhães

 

http://aitaraklaranlive.wordpress.com/

 

BACKGROUND

Authoritarianism is not new to Latin America. After all, almost every country in the region had been under the rule of a number of authoritarian regimes since their independence. Previous authoritarian regimes included liberal and conservative from the mid 1800s and populist from 1930s. Yet, the strand of a new authoritarianism or otherwise referred to as Bureaucratic Authoritarianism (henceforth BA) seemed to capture the interest of many observers of Latin American politics.

 

Various military generals that came to power under BA claimed that their intervention was needed in order to save the nation from civilian corruption and irresponsible economic policies that plagued the region. They argue that thanks to BA regimes that the region was spared from a total economic and social collapse. For instance, the current success of the Chilean economy is claimed to be a result of General Augusto Pinochet’s good economic policies. This is despite the sentencing of General Jorge Rafael Videla, the ex-Argentinean dictator, to life imprisonment on 22 December, 2010 for his role in waging the “the dirty war” (BBC, 2010). The debate about the legacy of military regimes in Latin America is still ongoing.

 

It is against this light that this paper seeks to analyze the military’s claims that they fought against endemic civilian corruption and their acts were driven mainly by ethical and moral demands. This paper would like to put to test their claims by assessing corruption within military itself and its impacts on the larger society in the periods preceding and during BA. In so doing, it touches upon the impacts of military cooperation and subsequent professionalization. Hence this paper covers three key issues; a general characterization and political economy of BA regimes, internal corruption within the military in Latin America and lastly the impact of military cooperation in contributing to the establishment of BA.

 

This paper is organized as follows; first, it defines BA and outlines its general features and point at their differences from the previous populist regimes. Second, it revisits the military’s claim of moral and ethical superiority over civilian politicians. It seeks to analyze corruption within the military itself. Third, it analyzes the contribution of military cooperation in laying the foundations for the creation of BA; and finally, it concludes.

 

WHAT IS BA AND ITS MAIN FEATURES

The term bureaucratic authoritarianism was first coined by Guillermo O’Donnel, an Argentinean political scientist, in mid 1970s in explaining the nature of the authoritarian regimes that ruled the region from 1960s to the 1980s.[1] Unlike other forms of authoritarianisms, in his view, BA is a type of authoritarianism generally ruled by a military junta rather than a caudillo and marked by the increasing capacity of the state institutionalization of suppression of political dissidents and civil society groups by the military with the aim to transform the country into a modern capitalist society.

 

Whereas its predecessors were practically incapable of controlling various political forces, BA seemed to achieve greatest success not only in containing the dissident elements in the society but also in de-politicizing and excluding them from political participation in the state as a whole. De-politicization here referred to the deactivation through killing, suppression and kidnapping of any suspected members of political movements within the society. This was made possible only by the institutionalization of coercion. As Farcau (1996:16) put it: the killings no longer involved just open combat with violent demonstrators in the streets but included an apparent effort toward the systematic elimination or at least the exclusion through terror of an entire political class and extending even to those simply suspected of harboring resentment of the regime, including members of the middle class and upper classes and even the military itself.

 

This, the military hoped, would lead to a new engineered society in which the state was to be apolitical and to be based on technocratic capacity to achieve development.

 

BA states also relied heavily on three core social classes; the military for order and domination of other social classes, the business elites for the achieving a modern-transnational open economy and the technocrats for the formulation of pro-market economic policy and managerial capabilities for achieving better structural transformation (O’Donnel, 1979). In this sense what differentiated BA from the previous populist authoritarianism was the fact that while the former garnered popular sectors as its support base, BA on the contrary, depended primarily on the coalition of the above mentioned groups, normally with the military at the helm.

 

In terms of its main features, BA, despite its solidly authoritarian appearance, had to continuously deal with its inherent fragility. The first source of this fragility was in its very nature. The fact that it was founded upon suppression and economic domination of a small minority over the popular sector exposed the regimes to challenges and contestations from the majority. This was worsened by the military’s common practice of granting preferential treatment to small business elite. The intertwining of business with the military/state interests turned the state into anything but Evans’ embedded autonomy. The state succumbed to business interests, and vice-versa. This contributed to crafting of a state which did not stand beyond any interest group but rather perceived to be the representative of the business elite (Cardoso, 1979; Schneider, 2004).

 

In order to maintain control the military resorted to the use of coercion. The action, however, not only resulted in their subsequent collapse but also in the fracturing of the state as a whole. The combination between a minority rule and an excessive coercion undermined the very legitimacy of the state. To better understand the impact of BA regimes, we should revisit the definition of the state. The state is:

“Fundamentally a social relationship of domination, or more precisely, one aspect—as such, comprehensible only analytically—of the social relations of domination. The state supports and organizes these relations of domination through institutions that usually enjoys a monopoly of the means of coercion within a defined territory and that are generally viewed as having alegitimate right to guarantee the system of social domination. As such the state should be understood from and within civil society, though in its objective, institutional form it appears to be, and proclaims itself to stand, above society” (O’Donnell, 1979:286-87)

 

This is now obvious that BA were by nature predestined to collapse in the long run due to emphasis on coercion and not legitimacy, and by suppressing all popular sectors. Ideally while the state uses coercion in order to ensure the monopoly of violence, it nevertheless, should advocate consensus, which can be gained through either hot or banal nationalism, allowing mechanisms for participations and access to substantive justice via the judiciary. These would strengthen state legitimacy from the citizens, since only via such means that the state may stand within, and at the same time beyond, the civil society. The state should also maintain (perceived) autonomy from any interest group and encompass all sectors of society. In the case of BA, the state, in contrast, was seen to be the advocate of an elite group which privileged and contributed to the strengthening of economic domination by a small upper bourgeois class. Cardoso (1979) claims that BA states focused primarily on strengthening of the executive and its technical capabilities, privileging the business elite, increasing centralization, elimination of the roles of the legislatures, control of judiciary by the executive. Resultant from this, despite the military’s invocation of nationalist symbols, the BA regime lacked unifying factor. It was thus opposed by the majority of the national civil society.

 

Furthermore, in order to understand the key policy divergence between BA and the previous populist regimes one should return to the period in the preceding to BA regimes. BA came into being partially due to the dissatisfaction of the military and the bourgeois elites with the way their countries were run under populism. They perceived its rule responsible for the destruction of the economy and politics. Chiefly among what they saw as economically destructive outcomes were the notably high inflation rates, corruption and political intensification driven primarily by pressure groups, such as unionized labor workers “activated” under the populist regimes. Precisely, the military’s key discontentment concerned ‘the preferential treatment” through initiatives such as wage increase and the general populist attempt to distribute income responsible for the high rate of inflation and the retardation of the economy (Cardoso 1979 and O’Donnel, 1979). Its primary motivation was to put an end to the populist period and impose neo-liberal economic policies.

 

The military and the business elites were not in favor of the ISI (Import Substitution Industrialization) strategy adopted by previous regimes arguing that state subsidies afforded massive wage increase and manufacturing subsidies burdened government’s spending, and thus led to debilitation of domestic savings, budget deficit and a high inflation. The ISI also created unattractive value for country’s exports in the international market since the strategy required appreciation of the exchange rate in order to facilitate cheaper imports of technologies which inversely reduced the country’s savings, depleted foreign exchange reserves and unbalanced Terms of Trade (Hartlyn and Morley, 1986).

 

Beyond disagreements over the economic and social policies, the military also saw clear financial advantages by being in power. Hence, in the next section this paper attempts to point out that the reasons for military intervention had roots in populist era. Also the reasons were far from altruistic and moralistic. Contrary to what is claimed, corruption did not exist in the civilian sphere alone and rampant corruptions were often home-grown inside the military institution itself. In fact rather than civilian corruption, military corruption had more profound impacts on national politics and development.

 

THE ROLE OF THE MILITARY AND BA

 

Military often used instability and civilian corruption during the populist period as the pretext for intervention to establish BA. It claimed that it had the moral duty to intervene as the savior of the nation and guardian of sovereignty. The military also claimed that it was the only institution capable of ending the cycle of rampant civilian corruption. For example in the case of Brazil, the view that civilian corruption resulted in the collapse of the nation could be traced to the “war of triple alliance (1865-1870), in which Brazil defeated its smaller neighbor Paraguay only after years of bloody fighting” (Smallman 1997:41). The army used the event to claim that the prolongation of what should have been an easy war was due to the corruption by the civilian politicians who stole state fund rather than investing in the armed forces. This led some military leaders to believe that, as Floriano Vieira Peixoto (a former vice-president) put it, “it is he (the soldier) who knows how to purify the blood of the social body that is corrupted like ours” (ibid: 42).

 

However, in contrary to the claim the reality pointed otherwise. Military institution was far from clean. In fact corruption and mismanagement was also chronic inside the military institution. There were cases such as the misuse of funds by army generals for personal gains since the time of the Old Republic in the early 1900. Army generals used “public fund to pay for numerous concubines…And stealing coal intended for navy ships and embezzled public fund to pay gambling debts” (ibid: 43). Corruption in the army even led to various internal fights. A group of lieutenants in the Brazilian army rebelled in 1922 but were crashed by senior officers under the command of the Minister of War General Setembrino, perceived to be the most corrupt. The rebellion would resurface two years later and would also be crashed by the same general (ibid). It was only a few years later that the military managed to quell internal rebellion against its leadership. Despite this the rebelling younger officers, interestingly, also blamed civilian politicians for “corrupting the leaders for their political ends”. The generals were seen to be victims of civilian political gains. The argument was, nevertheless, simply to safeguard the reputation of the military institution. As a matter of fact, military generals were not simply passive agents who were victims. Their increased participation in corruption was partially driven by the ascension of military leaders, such as Vargas and later Peron in Argentina, to power and their direction participation in development. The newly risen military leaders were obliged to allow corruption in the military to flourish as a way to buy off loyalty (ibid). This was the case with the Estado Novo in Brazil where Vargas himself was only a colonel and hence relied heavily on more senior generals, many of whom were corrupt, to maintain control over the military.

 

Furthermore, the change of military tactic from classical military training to anti-communist insurgency in the 1950s with emphasis on the “popular defense” allowed the military to have control not only of its own affairs but also of national development. Throughout the military gained more skills in development programs and began to perceive it-self as a development agency. This coincided with the increase role of the US as a key military partner to Latin America out spacing European countries. The US also shifted its military aid to the region from hemispheric security from external threats to a more inward looking security in which domestic communism was the key threat (Baines, 1972:474). Latin American armies were advised by their American advisers to swift from focusing on heavy armaments to light arms and training of small mobile units specialized in counter insurgency (Francis, 1964). From the 1950s to the 1960s Latin American militaries began to focus on “civic action”. It was “basically the use of military forces on projects useful to the local population in such areas as education, public works, public health and agriculture” (ibid). By being in charge of key development programs, the military also became they key institution which held 52 percent of the internal security aid from the US of which 15 percent was spent on civic action programs (Op.cit: 475). This heightened corruption inside the military. The military established close links with the business communities, and often engaged in bribery and open corruptions. The corruption led to another round of internal war within the armed forces.

 

The issuance of the “Colonel Manifesto” in 1954, similar to the one of the 1920s by the lieutenants, openly criticized the corruption within the country and in the army itself. The colonels and junior officers called for renewal inside their institution which led to Vargas’ suicide and the overthrow of his successor regime (Smallman, 1997). The problem, nevertheless, was obviously driven by an intertwining of military and business interests. Military commanders developed closed ties with the business elites and they began to challenge the authority of the government. This shows that the argument used by the military that the BA intervention was needed in order to save the country from civilian corruption was partial and unfounded. The military itself was part of the overall problem and was not by means insulated from it.

 

Rather than saving the nation from all ills, it is more plausible that the military[2] intervened to guarantee its own survival. The military saw the populist regimes as being too sympathetic towards the leftist groups. This intensified their suspicion of, and enhanced their animosity towards, the civilian government. These fears were intensified by two pivotal events, even though they took place eleven years apart–the Cuban revolution in 1959 and the 1970 election of Salvador Allende, a Marxist candidate, into Chile’s presidency. The Cuban revolution brought a fear of the communist domino effect in Latin America. A fear that was not only ideological but also pragmatic considering one of the first policies taken by the Castro regime after coming into power was to dismantle the Batista military (Fitch, 1998:17). So in that sense, the military’s position was for institutional survival. The latter, however, confirmed the military’s fear that, if unhindered, electoral democracy would only lead to the rise of anti-military communist regimes. Intervention was needed for the sake of saving the nation from communism even if that meant democracy would have to be suspended. The fear of communism was heightened by the left’s increasing optimism of the possibility of creating Cuban like revolutions throughout the region. An example of such optimism is evident in Allende’s statement of the Cuban revolution:

 

Cuba’s fate resembles that of all Latin American countries. They are all underdeveloped—producers of raw materials and importers of industrial products…..The Cuban revolution is a national revolution, but it is also a revolution of the whole Latin America. It has shown the way for the Liberations of our people (Loveman and Davies Jr, 1997:130).

 

Adding to the effects of the abovementioned events, it is possible to suggest that while the Cuban revolution may have directly driven military actions in Brazil and in Argentina in the 1960s, the latter, on the other hand, may have influenced military’s decision to return to full control in 1976 in Argentina.

 

Conclusion:

To conclude, the first feature of Bureaucratic Authoritarianism is the presence and type of participation of the military. Under BA the military is the key institution in charge of the regime and normally ruled by a junta rather than by a caudillo. In addition, military ruled by favoring the technocratic executives, prioritizing business elites, suppressing all democratic oppositions and curtailed the power of the legislature and judiciary. Despite its omnipotence and the omnipresence of its security apparatus, BA remained fragile and never managed to gain legitimacy due to its reliance on minority control and orthodox economic policies. In general BA regimes implemented orthodox policies such as fiscal discipline, reduction of budget deficit, devaluation of currency to make exports more competitive and form capital. Its policies aimed to reduce wage level and depress the living standards which did not benefit workers, wage earners and people living on fixed incomes (Cardoso 1979).

 

In terms of the military’s claim that their intervention aimed to stop civilian corruptions, the reality was more nuanced. In fact, as much as civilian corruption was an issue for Latin America military corruption was a more decisive factor for political changes in the region. Many of the military coups since the Old Republic sprang out from internal military conflicts due to corruption. Hence it was rather unfounded to assume that BA regime was somewhat different and represented a force against civilian corruption when the military institution itself was heavily corrupt.

 

Changes introduced by, and incentives acquired from, military cooperation with the US. Cooperation with the US, the fact that it emphasized on civic action, allowed the military to be in charge of a significant economic portfolio. It began to directly intervene in the local development and awarding contract to businesses. This increased exponentially corrupt practices within the military. Nevertheless, the cooperation with the US did not serve as the main source of military corruption. Rather Latin American military was already corrupt and the cooperation with the US only intensified the existing corruption and ruthlessness.

 

Hence, BA in Latin America was nothing but another manifestation of the military’s self interest. Civilian politicians might have been corrupt, but it would be erroneous to think that the military was clean.

 

[1] To be exact, it was first established in Brazil in 1964 led by General Castello Branco (1867-1967) in the toppling of the constitutional government of João Goulart (1918-1976), seen as a successor of the Vargas regime after Getulio Vargas committed suicide in 1954. In the Argentinian case, however, BA came to power twice. The first was when the army took control in 1966 until 1973, and then ended with the return of Peron in 1973. The full military rule would only resume in 1976 and lasted until 1983. The Chilean case, in contrast, presented itself to be somewhat more linear. There the BA period can be safely identified as the period when the military, under the leadership of General Augusto Pinochet, seized power from the democratically elected Marxist president Allende in 1973 and lasted in late 1980s.

 

[2] Prior to the 1940s Latin American militaries were mostly trained by the Germans, French and other European countries. For instance, the shift in Brazil only took place with the modernization of the armed forces under President Vargas who took office in 1930 and began to intensify links with the US

 

Bibliography:

Baines, M. John ‘US Military Assistance to Latin America: An Assessment”. Journal of Interamerican Studies and World Affairs, Vol. 14, No. 4, Special Issue:Military and Reform Governments in Latin America (Nov., 1972), pp. 469-487

BBC (2010) ‘Argentina Former Leader Jorge Videla Jailed for Life’. Accessed on March 22, 2014 from: http://www.bbc.co.uk/news/world-latin-america-12064831

B. Loveday “Protected Democracies”: anti-politics and political transitions in Latin America’ in B. Loveman and T. Davies (eds.) The Politics of Antipolitics: the military in Latin America (1997)

B.R. Schneider Business Politics and the State in Twentieth-century Latin America (2004) Chapt. IX.

C. Anglade & C. Fortín ‘Introduction’ in C. Anglade & C. Fortín (eds.), The State and Accumulation in Latin America: vol I (1985).

Dix ‘Populism: authoritarian and democratic’ LARR XX 2 (1985) 29-52.

Francis, Michael.J ‘ Military Aid to Latin America in the U.S. Congress’ Journal of Inter-American Studies, Vol. 6, No. 3 (Jul., 1964), pp. 389-404

Farcau, Bruce. The Transition to Democracy in Latin America-The Role of the Military. Library of Congress (1996)

F.H. Cardoso ‘On the Characterization of Authoritarian Regimes in Latin America’ in D. Collier (ed.),The New Authoritarianism in Latin America (1979).

Fitch, Samuel. The Armed Forces and Democracy in Latin America. John Hopkins press (1998).

G. O’Donnell ‘Tensions in the Bureaucratic-authoritarian State and the Question of Democracy’ in D. Collier (ed.), The New Authoritarianism in Latin America (1979).

J. Hartlyn & S.A. Morley ‘Political Regimes and Economic Performance in Latin America’ in J. Hartlyn & S.A. Morley (eds.) Latin American Political Economy: financial crises and political change (1986).

K.L. Remmer & G.W. Merkx ‘Bureuacratic-authoritarianism Revisited’ LARR XVII 2 (1982) 3-40.

Loveman and T. Davies (eds.) The Politics of Antipolitics: the military in Latin America (1997)

P. Smith ‘The Rise and Fall of the Developmental State’ in M. Vellinga (ed.) The Changing Role of the State in Latin America (1998)

Smallman, Shawn. ‘Shady Business: Corruption in the Brazilian Army before 1954’ Latin American Research Review, Vol. 32, No. 3 (1997), pp. 39-62

Service Sector in Timor-Leste - Challenges and Impacts

Authors : Guteriano Neves and Bojamma Gandhi

http://aitaraklaranlive.wordpress.com/

Introduction

Timor-Leste has been experiencing what is known as double-digit non-oil economic growth during the last five years. It is broadly agreed that this growth is boosted by expansionary fiscal policy, pursued by the Government. Without deeper exploration, one indicator of this growth can be observed in the expansion of service sector in Dili, specifically. As it is obvious, many new businesses are set up in Dili, such as hotel and accommodation, wellness services, management consultancies, banking and Telecom sectors etc. During the last three months, Department of Documentation, Analysis and Research of the Presidency of Republic conducted qualitative interview of Business owners across the sector operating in Dili, to find out the motivation of the business establishment, their experiences in doing business in Timor-Leste, input purchase, dealing with the Government, as well as their future plans. Based on these interviews, and deeper analysis on the nature and structure of the Timor’s economy we conclude that there is positive trend on the economy of Timor-Leste, and strong confidence on the domestic economy among businessmen who are operating in Dili. However, it is arguable that since most of the inputs are not generated in Timor-Leste, these businesses have not had a wider trickle-down effect on Timor’s economy.

 

Service Sector Dominates Non-oil GDP

Service sector is the biggest contributor for the non-oil GDP. According to the statistics from the Ministry of Finance of Timor-Leste, since 2004, more half of the non-oil GDP is from service sector and it continues to grow. In 2005 Service Sector accounts for 60.7% of non-oil GDP and in 2011, it was 59.4%. Looking deeper to sub-sector, there are three areas that are the biggest: public administration, retail and wholesale and real estate activities that dominate service sector in Timor-Leste in a given year.

 

Compare to agriculture, although it is believed to be the main source of livelihood of most Timorese, in term of its contribution to the GDP, it continues to decline. According to the most recent statistics released by the Ministry of Finance, in 2005, agriculture sector contributes 30% of Timor’s GDP whereas in 2011, it declined to 15.9%. The biggest decline took place in 2011, where agriculture sector decline by 5.7% compare to 2010. In total, between given period, agriculture sector decline 2.0% on the annual basis. Understanding this, one needs to take into consideration also that most of agriculture activities have not been commercialized; hence, it is not counted to the GDP. Manufacturing sector is experiencing the biggest growth rate in a given period by 15.1% growth rate in a given year, or grow by 2.16% every year.

 

The fact that Timor’s non-oil GDP is dominated by service sector is not unique to Timor’s economy therefore is seen as the positive trend to modern economy. At the regional level, according to the most recent report, released by the Asian Development Bank, since 1975, service sector already accounts for more than 43% of the GDP output in developing Asia, and in 2010, it accounts for more than 48% of the GDP output. As such, the growing of service sector in Timor-Leste is seen as the positive sign of modern economy. As stated in the proposed 2014 state’s annual budget, given that primary sector declines, and the growing of the manufacture sector, is seen as the positive trend as it moves from agrarian based economy to modern upper middle-income countries.

 

Although it seen as the positive trend, it is obvious that most of the most of the activities in the service sector takes place in Dili. Almost all hotels, restaurants, real estate activities, salons, banking are in Dili. This is due to the fact that by nature, service sector flourish in a place where middle class exists. Thus in the case of Timor, most of middle class are in Dili, and most of them are benefited from recycle of petrodollars. Secondly, Dili is the administrative centre where since 1999, most of international staff live and spend their money at, and now most of the public servants live. Due to this, service sector does not have wider impact for the national economy. Another concern is in term of labour share. Although it is the biggest contributor of the GDP, it is not the biggest employer. In Timor-Leste, is still considered that agriculture is the biggest employer. This trend is shared regionally, whereas although service sector is the biggest portion of the GDP, but in term of labour share, it is still lower than agriculture. According to the Business Activity Survey, released by the Department of National Statistic, in 2011, total employment in the private sector was 58,000; out of which, 30% are in the Construction, retail and wholesale, as well hotel and accommodation. Given the importance of service sector in Timor-Leste’s economy, it is critical to understand the dynamic that involves in this sector.

 

Types of Services in Timor

There are various types of service that operate in Timor, especially in Dili; some in large-scale, and some in smaller scale. The following are some of the booming services that operate in Dili.

1. Public Administration
2. Hotel and accommodation
3. Salon, spa and gymnasium
4. Banking and Financial Service
5. Security services
6. House-keeping services
7. Renting – commercial space and houses and apartments, vehicles
8. Travel agencies
9. Professional services
10. Financial services
11. Marketing, advertisement and printing services
12. Health services
13. Private schools
14. Auto repair workshops
15. Insurance providers

Hotel and Accommodation Industry

In general, the Hotel Industry has improved over the last 10 years. Many new hotels and restaurants have opened up during the United Nations Organisation’s (UNO) time here and after, creating an affordable and quality oriented segment. Although there was a worry that UNO’s departure will have wider impact on this industry, our interview shows that UNO’s departure from the country has not had damaging effects, as their usual clients are Embassies, Non Government Organisation’s (NGO), International Organisations, business persons, the Government and few tourists. According to some hotel owners, the departure of UN is positive for Timor’s economy, as UNO’s presence is always associated with the conflict and war.

 

The restaurants and the housing accommodation have taken a hit in their business with the departure of International employees of UNO. A very few popular restaurants have consistent business.

We learnt in our interviews, that investments made range from 2 millions up to 8 million USD. In term of access to land, most hotels own the land the hotel building is on, but some continue to rent and lease the land. Most businesses have met and in some cases have even exceeded expectations.

The profitability of hotels varied with some popular hotels operating at a consistent profit and some have seen a slump in profits with the opening of new hotels in Dili. The locals own very few of the big hotels that cater to International standards.

 

The inputs that the hotel industry requires in terms of building raw materials, furniture, cutlery, decorative items, and kitchen equipment are sourced from neighbouring countries like Australia, Indonesia and Singapore. Even in some cases, spare parts of kitchen equipment, maintenance and trained technician to fix it in case of a breakdown are not available in the country. Challenges also lie in terms of access to technology for e.g. inconsistent and slow Internet connections hamper the reputation of the hotel especially with the Business people. Sometimes, basic vegetables and fruits, dairy and meat products are not available in the market for months, making it hard for the restaurants to serve a dish in its entirety. If some places do have the inputs that are in shortage, the prices shoot up immediately.

 

Most vegetables and fruits are locally procured. Some hotels have designated families in the districts to grow vegetables and fruits for them. However, this does not guarantee yearlong uninterrupted supply of consumables. Most recently, the prices of products that are being imported have gone up. Many restaurants have increased their prices of food and drinks by 2 to 3 USD.

Most ground level and mid-management employees are Timorese, with Managers being Internationals. There is professional and on job training provided to all the recruits. Every establishment has Human resource policies, which support promotion, leadership and constant training.

 

Banking and Financial Services

Banking and Financial Sector consists of five banks – three private – Caixa Geral de Depositos (CGD)/BNU from Portugal, Mandiri Bank from Indonesia, Australia New Zealand Bank (ANZ) from Australia and New Zealandand two State owned Banks – Banco Nasional Comericio and Banco Central Timor-Leste, and two money transfer companies – Western Union and Moneygram. BNU has been operative in Timor-Leste since the Colonization and suffered discontinuation during the Indonesia occupation, while Bank Mandiri, Central Bank and ANZ Bank were established during the UNO administration period.

 

When the commercial banks were established, initially all of them operated as deposit banks, and not retail banks. In the last 3 to 4 years, Personal and corporate lending were introduced by some banks as the country’s stability improved, and the laws pertaining to investment and commerce were created. Due to the fact that Timor-Leste is endowed with natural resources, mainly – oil and natural gas, the country is attracting various types of investors.

 

Due to the increasing users of banking systems and services, ANZ has started diversifying their products and services to increase their customer base. Services such as personal loans, Internet banking, cheque drop offs, customer service via telephone, cash-in cash-out programs have been introduced. Mandiri Bank is issuing visa cards.

 

Banking Institutions have invested in capacity building in the form of Intellectual property via brining in experts from other countries to train Timorese on all aspects of Banking. The Banking Experts also provide Advisory and guidance to the Government on Finance and sustenance.

 

Although there are many improvements, the future looks optimistic with various projects underway; the financial institutions face quite a few challenges. There is a strong feeling of growth and security, which helps the Banks attract and invest in lending to more Investors.

 

Telecommunication Industry

After a decade of Independence, Timor-Leste’s telecom industry has seen a surge in the year 2013. When Indonesia retreated from the country, it also destroyed about 70% of the physical infrastructure that existed. Even through the 2006 crisis, telecommunication sector continued to show growth with mobile telephone sector growing steadily. There is a steady but slow growth in the Enterprise Consumer market for both Telephone and Internet. So far, the Capital Investment varies from 40 to 50 million USD, with more investments planned for the year 2014.

 

Portugal Telecom created a subsidiary called Timor Telecom (TT) in 2002 and was initially granted an exclusive license in the market until 2017. In March 2012, however, an agreement was reached between the government and TT to end its monopoly earlier than planned. A tender was subsequently launched for two mobile licences. By 2013 the two new operators – Telkomsel from Indonesia and Telemor from Vietnam launched their respective mobile offerings and the market is rapidly changing due to competition mainly on pricing.

 

Although, the telecommunication prices in Timor-Leste is now diversified and competitive, the fact remains that the charges for services are among the highest in Asia, in comparison with the telecommunication and internet prices in India for example.

 

According to the recent report published by marketresearchreports.com,[1]After recording huge annual growth rates over a number of years from 2006 onwards, by the start of 2014 the country’s mobile subscriber base had increased rapidly in a short period of time and penetration was close to the 60% mark. Fixed-line network expansion did not see the same growth, with fixed tele-density down around 0.3%. The Internet market data is hard to find. However, it remains concentrated in Dili. Fixed broadband service subscribers continue to remain extremely low. The advent of mobile broadband Internet access provided a boost to the Internet sector.

 

Report Highlights:

- After surging in the 2008/2009 period, the East Timor mobile market grew by around 30% in both 2010 and 2011
- However, total mobile subscriber growth was ‘flat’ in 2012, ahead of the licensing and launch of two new operators
- The Timor Telecom monopoly had officially ended in April 2012 and the two new operators were licensed in July 2012
- In the newly competitive market, mobile subscriber numbers had reached an estimated 700,000 coming into 2014.
- In sharp contrast with the mobile market, both fixed-line subscriptions and internet usage in its various forms remained especially low, with only modest growth likely in the short term
- The government was also in the process of setting up a new independent regulatory authority for the sector. See more at: http://www.marketresearchreports.com/paul-budde-communication-pty-ltd/east-timor-timor-leste-telecoms-mobile-and-internet#sthash.rdkhAfVQ.dpuf

[1]http://www.marketresearchreports.com/paul-budde-communication-pty-ltd/east-timor-timor-leste-telecoms-mobile-and-internet. Excerpts from the report

 

For Operational activities, the human resource used are mainly the locals. The companies make use of the International Labour Organisation’s program to provide employment in the villages to the locals on short-term basis to perform manual labour, while the technical and managerial roles are performed by Internationals.

 

Although challenges persist, some companies have exceeded expectations with some of their yearly goals achieved. They get a sense of business security after the Presidential and General elections in 2012. The Companies have plans and goals to introduce more technology to diversify the market further. As Timor-Leste is a new market with an increasing number of young populations and enterprise set ups, the market absorption for various products is good.

Wellness Industry

There are number of salons, spas and gymnasiums run both by the locals and internationals. The businesses are doing well with most costumers being the locals. There was slight dip in the first six months of the year after the departure of UNO, but the market has picked up since.

 

The quality of the newly opened salons, spas and gymnasiums are of International standards. Compared to the rest of Asia, for e.g., Bali and Thailand, these services are very highly priced, and the quality is not up to the mark of the price being charged.

 

A common problems encountered by the businesses were physical security threat of the buildings due to stone throwing and burglary. Some establishments have moved to Timor Plaza for a ‘worry free’ business environment and have seen great results.

 

Travel Agencies

Daily flights	Sriwijaya	Air North	Silk Air
Destination	Bali and Jakarata	Darwin
Weekly twice / thrice			Singapore

 

The motivation behind establishing travel agencies is that in the period between 2006 and 2007, the agency services were limited, and the consumers were very high given the UNO presence in the country. At present the consumers are mostly private corporates, locals and Government Institutions.

 

Timor- Leste faces its own share of challenges in the travel segment too. Timor-Leste is not a member of IATA. Therefore, there is no International representation of the country. As the nearest Office is in Bali and Singapore the communication between the agencies and IATA is delayed. The costs of telecommunication, electricity, Internet and building rent are high. All these elements increase the price of the tickets considerably and the cost is passed on to the customers.

 

Flights such as Merpati and Sriwijaya are blacklisted in the European market forcing tour groups to fly via Singapore, increasing the costs significantly. Europeans do not want to fly to Indonesia due to the high risk factor, and there are no daily flights to Singapore. Lack of public transport increases the price of the tour, as renting cars becomes the only option.

 

Most travel agencies have stopped working with the Government related institutions as they have faced issues regarding delay and non-payment of dues in the past. Numerous complaints have been registered at the Finance and Treasury and some cases are pending for over three years.

 

Many travel agencies also face issues in terms of discipline. In most cases the agencies need to have an International staff member as backup. Most locals hired do not speak Portuguese or English making language a barrier and hiring more difficult.

 

In spite of the overwhelming challenges future prospects are encouraging. Group tours are predicted to pick up next year with Europeans, mainly Germans and Portuguese visiting Timor-Leste for adventure Tourism. This is a result of one the travel agency participating in a Travel Fair in Europe. A cruise ship from Australia will resume tourism activities here next year. Operations to Timor-Leste were halted after the 2006 crisis.

 

The travel agency fraternity is of the opinion that the services in Timor-Leste would be better if the Government invests in obtaining an IATA membership. Many travellers from the country transit via Bali frequently, so a special arrangement could be made to avoid paying visa fees for travellers arriving from Timor-Leste. Slight face-lift for the existing guest houses/Pousada, regulating entry fees into touristic spots, making the beaches crocodile free zones would attract more tourists. Participation in various International travel fairs would help in spreading the country’s tourism aims.

 

Management Consultancies

The motivation behind setting up Management, Law, IT firms are because of the market needs and requirements, common official and working languages and projects and contracts with the Government and existing clients. Costumers are from Timor-Leste, Singapore, Australia, Indonesia, and Malaysia.

 

Since 2005, there have been many Management Consultancies of various functions being set up in Timor-Leste. These setups have seen the sector expand and are attracting more establishments, as there is a sense of business security.

 

There are some fundamental issues that are still present that needs attention from the Government authorities. The Consultancies are of the opinion that the requirement to have a Resident Director who is a local does not seem to work, as the shareholders find it difficult or nearly impossible to trust an outsider to be in a decision making position in a privately held company.

 

For a business set up, the International shareholder has to get the Company registration documents (certificates, by-laws) endorsed by the Timor-Leste Embassy in the home country. Although there is legal provision for Timorese Diplomatic representative in any country to endorse documents of this nature, only the Timor-Leste Embassy in Portugal is equipped to so.

 

Although the laws of the country are adapted from Portugal and are in the Portuguese language, many students continue to study law in Indonesia. Once back in Timor, they struggle to speak the official languages on a professional level and to understand the existing laws of the country.

Challenges

 

The country is slowly showing business maturity and the various improvements that the business set ups have seen in the last 12 years are a proof to that, other than the new development projects that are stemming up. Business opportunities continue to expand. Despite the improvements, there are some common challenges that most business set-ups continue to face, which needs to be addressed.

 

A year back, the timeline for Business registration process was more than 6 months. With the introduction of ‘Serve’ program by the Government, the timeline has been reduced to 4 weeks. The Notary Office is composed of two notaries. They do not have a back Office to provide secretarial assistance. Therefore, the process to obtain signatures from the Notaries is prolonged. There are no standard templates for documents; hence, the format and content of documents are ever-changing.

 

Across most businesses the locals are hired more than Internationals for Administrative and manual jobs. The Internationals continue to perform Managerial roles because there is a shortage of skilled Human Resources at the Managerial level. Many inputs required to run businesses here have to be procured from other countries, as there is no large-scale manufacturing sector in the country. Timor-Leste depends on Indonesia, Australia and Singapore for most of its inputs.

 

Due to the long history of Colonization, and the subsequent Occupation, displacement of people, and the legal uncertainty with regards to the land, people do not feel secure about their investments in the country.

 

The double-digit inflation in the country increases rent, hiring services, living and imports costs while driving up the operational costs. ‘Opportunity costs’ are also high due to frequent travel requirements and non-availability of daily flights.

 

The process to obtain associated Public Services such as Work VISA, driving license and public transport are cumbersome. Corresponding VISA or resident permits are not issued for the period of the license.

 

The Official languages of Timor-Leste are Tetun and Portuguese and the working languages – English and Bahasa Indonesia. Most business people from Asia and Pacific do not speak the Official languages, which has created a huge language barrier. There is a need to build English-speaking skills to enable a thorough business environment.

 

Some businesses also face the threat of physical security as they have suffered property damage because of stone throwing, vehicle theft and drunken youth bothering the customers. Many a businesses are hesitant to conduct business with Government related institutions as they have faced issues with payment delay, and sometimes non-payment.

 

The Telecom Companies continue to face Operational, Legal and Human Resource issues. One of the main issues faced in the land compensation during the infrastructure establishment around the country. On many instances, more than 2 or 3 groups lay claim on the same piece of land. Hence, the companies end up spending 3 times the projected cost to erect antennas and towers. This is due to the non-existence of Land Law. There is always an uncertainty that the next ruling Government might change its policies and revoke current agreements (E.g., Timor Telecom’s monopoly agreement).

 

Due to the fact that Timor-Leste does not have a large-scale manufacturing sector, all the inputs have to be procured from other countries. This creates delay in the implementation of the plan, and increases the cost considerably.

 

There is no legal framework for security collateral for the lending program. Due to the fact that the Land Law is still not been promulgated, many civilians lay claim to land without legal documentation, which makes it impossible to lend without legally endorsed collateral.

Some Companies are of the opinion that some of the local companies lack business maturity as there is no business training by the Chamber of Commerce. Hence, business mentoring is required at least on due diligence, accounting and tendering process.

The high inflation rates, few jobs, trade imbalances, lack of clear State policies and laws and non-existent manufacturing sector threatens the economy and the business success of these companies.

Conclusion

 

Timor-Leste is experiencing a confident, slow and steady trend in the growth of its service sector, as it dominates the Non-oil GDP. With the decline in the primary sector, the manufacturing sector is growing by 2.16% every year. The 2012 General and Presidential elections that were democratically successful and peaceful, has created an impression of political maturity and stability in the country.

 

There are both large and small scales set-ups in this sector with Telecom being the largest. Service sector is centralised to Dili due to the concentration of trade, employment and State Administration.

The UNO’s departure did not have tremendous damaging impacts on the economy. It can also be viewed as economy back to normalcy. A large number of International community still live in Dili and contribute to the service sector considerably.

 

Despite the various challenges, most businesses see positive prospects for this Industry, as many new establishments are being set up. Most hotels are occupied with Business people who are looking to find new opportunities in the emerging economy.

 

When the Land Law is promulgated, there would be an increase in the banking activities, as pledging legally endorsed collateral would become a norm. The market will witness further diversification of services and introduction of new technologies.

 

There is also a huge scope for improvement in the telecom sector. If the existing telecom companies decide to provoke a price war, the consumers will enjoy lower fees for services, more products and better access.

 

The country needs to find creative approach towards Tourism. Tourism Industry has an immense potential. If Tourism activities picks up, it will certainly provide a big boost to the service sector, and overall the economy of the country.

A

n efficient and well-equipped public administration system would go a long way to enable a convenient business registration and other related public services. This seems to be the biggest bottleneck across all sectors.

 

There is a need to bridge the language barrier to facilitate both the Portuguese and the English-speaking investors.

***END***

Buat Barak Ba Bro!

Hey bro!! Fitun mutin nee
Hosi ruin Ita hotu nian

Hey bro!! Mean nee
Hosi ran Ita hotu nian

Hey bro!! Nakukun ne’e

Hosi terus ita hotu nian

Hey bro!! Kinur ne’e

Hosi riku ita hotu nian

Hey bro!! Ukun an nee
Hosi povu Jaco to Oecusse

Ohin o hisik kosar ba moris di’ak
Ohin o Husik Seluk Ba Morris kiak

O SOE kiak mai ha’u ulun
O Sosa Prado ba o nia Kidun

Fó hamlaha ba ha’u kabun
Fó pensaun Ba o nia sasán vital

O trata di’ak o nia saúde vital
Saúde ema kiak trata la loos

Ibun hakilar, salva osan povu

Liman hit kartaun, gasta osan povu

Prado mamar, vidru metan, AC malirin
Oin pensaun, lian projetu, kakutak sa’e aviaun

Oin mahar tan bolsu mahar
Ain tuur mamar tan fuan mamar

Isin besi asu ba kilat musan
Isin borus ho dollar musan

Hakarak o ukun nafatin la’o
O hakarak ha’u ain nafatin la’o

Sura mesak istória luta
Sura mesak osan mina iha nia konta

Mate ka moris ukun rasik an

Mate ka moris ukun ba an rasik

A Luta Kontinua, vitória sempre

Kontinua Luta atu sempre hemu bir Victoria

Fatuhada, 23 Marsu 2013
Hosi: Juvinal Dias, Le'e ona durante Palku Arte Popular iha 5 Abril 2014

 

http://juvinaldiaz.blogspot.com.au/2014/04/buat-barak-ba-bro.html?m=1

 

Is Timor-Leste really a rich country?

I just want to point out one important thing. 

Everyone in Timor-Leste, including our leaders, think that Timor-Leste is a rich country endowned with abundant natural resources such as oil and gas. 

This is actually not true. 

In fact comparing to other countries, Timor-Leste does not produce much oil and gas, but it is the second most dependent oil country in the world, after South Sudan. 

This is a proven fact. 

The true fact is that Timor-Leste is not rich as everyone thinks. 

It is better to acknowlege and tell the public that we are not that rich, so that we would be careful in our spending, otherwise we spend reclessly knowing falsely that we are so rich.

Temos o dever patriótico de aprender o português

Ceremónia de Entrega de Certificado - Curso Língua Portuguesa

Bom dia a todos.

Excelências

Senhores e senhoras.

Estamos todos reunidos hoje aqui, para celebrar uma ceremónia de entrega de certificados de conclusão de curso da língua portuguesa, que foi frequentado pelo os funcionarios do Ministério e foi dado pelo o Governo Brasileiro atraves do Programa de Qualificação de Língua Portuguesa.

Senhores e senhoras

"O portugues em Timor é como o capim. Está em toda parte, enraizado e está no coração do povo Timorense". E por isso, com o apoio do doador, como o Brazil, "faz renascer a língua portuguesa em Timor".

Quando falamos sobre o apoio do Brasil, lembro-me um deputado federal, o saudoso João Hernmann Neto, quando era presidente da comissão parlamento de amizade Brazil-Timor.

Ele disse e eu cito “o brasil, o maior país de língua portuguesa do mundo, tem uma imensa responsabilidade para com o Timor”. E na minha opinião o Brasil está a cumpri-la muito bem.

O governo brasileiro, atraves da cooperação brasileira, desde inicio da nossa independencia, continua dar o apoio ao Timor, quer na forma financiamento e tanto na forma asisténcia técnica.

Alguns deste apoio, se não me enganho, começou com a formação dos professores na língua portuguesa no Ministério da Educação, e agora extende-se aos funcionarios públicos dos outros ministérios, começando com o Ministério das Finanças.

E por isso, em nome de todos os meus colegas, agradecemos o governo brasileiro por seu apoio.

Agradecemos tambem o Ministério das Finanças que nos deu esta rara oportunidade.

Agradecemos os professores, especialmente a professora Arizângela Figueiredo, por sua dedicação e paciência. 

Agradecemos o senhor Augusto e seu equipe e outras pessoas que não consigo mencionar todo aqui.

Esperamos que a nossa boa cooperação se mantena. E prometemos que em 2014 vamos fazer melhor do que o ano pasado.

Para concluir, quero fazer lembrar aos meus colegas, que nós, como a nova geração, temos "o dever patriótico, eu repito, o dever patriótico", de aprender o português.

A luta continua.

Obrigado.

 

Efficiency in public spending - study case of Timor-Leste

EFFICIENCY IN PUBLIC SPENDING

STUDY CASE OF TIMOR LESTE

 

Basilio Ribeiro de Carvalho Soares

 

The budget execution of the government of Timor Leste for the fiscal year 2011, 2012 and 2013 respectively have shown that the amount of the expenditures incurred are greater than the revenues received during for the each fiscal year (Annual Audited Financial Report Ministry of Finance 2011, 2012, and crystal Report 2013). This indication eventually leads this nation to the shortage of the fund every year. However, this shortage of the fund is covered by the Petroleum Fund so that this deficiency of the budget execution can be resolved.

The Petroleum Fund itself is a fund that is collected from sources such as gross receipt (including tax revenue) of the oil sold or the export of the petroleum and any amount received from the net investment return from Timor Leste Sovereign Wealth Fund (Petroleum Fund Law 2005). However, the petroleum Fund Report 2012, in their findings, has asserted that the production of oil from Bayu Undan and Kitan fields will completely diminish in a decade or so. If this inefficiency of the budget execution will occur in the years ahead and the oil production at South Sea of Timor Island will run out, this country will face a financial crisis like what is happening now in Greece, Portugal and Spain.

Efficiency is a level of performance which describes how far an institution either a government institution or a company is expected to increase its output and to achieve the expected outcomes without absorbing further resources. Efficiency is also described as a comparison between input and output or the costs and benefit. For instance, a machine, at a given cost, will be considered as efficient, if it can produce a large amount of quantity of outputs compared to other equipment.

Although it has been criticized that the government budget had been inefficiently executed these past few years (2011, 2012 and 2013) respectively, the trend of inefficiency in the government budget spending will be likely to continue in the future years ahead. Furthermore, in order to resolve this problem and to make the fund to be spent efficiently, there are some options that are considerably important to be decided by the government and these options could become solutions for the government to make the budget execution becoming more efficient. These options are preparation of the projected cash flow, proper planning programs made by each line ministry including clear identification of goals, eradicating the corruption practices.

Cash flow forecast is an accounting tool that is used to estimate any potential amounts of revenue received and the disbursements are going to be made during a given of period (generally monthly basis) in the future. It is important that the government has to prepare its own cash flow forecasts in order to manage its cash efficiently. The objective to prepare the projected cash flow is to provide the owner of the fund (the government) the projected amount for the future cash requirement so that the liquidity crisis can be avoided as well as both the cash outflow and inflow of the government can also be monitored. Furthermore, a good cash flow forecast enables good cash flow management. This will help the government to ensure the funds that have been allocated in the budget book will meet the government needs. Hence, with a proper cash flow forecast, it will avoid the possibilities to absorb more resources. Also, it will help the government to reduce its borrowing. It is a fact that, in Timor Leste, during these last three years, most of the line ministries, have executed the fund recklessly without making a proper projected cash management, how much they are going to use the fund, when these funds are going to be utilized and for what purposes the funds are going to be used. For instance, most of the line ministries have drafted a budget and allocated dollars amount into each activity or program and these dollars amount will be used for the activities that have been set up in their annual working plan. However, the day when the program is implemented, the amounts of dollars that have been allocated in each activity of the program in the budget book are not sufficient enough to fund this particular activity. As a result, these particular line ministries will do a “Virement - Transferring the funds from one activity to another activity.” Consequently, some other particular activities or programs might not be successfully implemented because of the shortage of the funds. This is a result of the absence of a cash flow forecast.

Another issue that has to be examined is there are no clear plans and goals that put in place. Like other developing countries, Timor Leste also determines the size and the composition of the budget which can be assumed to reflect legitimately the goals of its own people. However, in a technical level a question that needs to be raised is how efficient the money that has been allocated to each function or program will be executed?  This is the classic case in economy called guns versus butter where the government to some extent will spend more money to increase the capabilities of its military defense and reducing the budget allocation for social goods (health and education) compared to what the people would prefer to have. As an example, in Timor Leste, in 2013, there was a controversial program organized by the Ministry of Tourism. This Ministry has created a program called “Miss Tourism 2013” (later called Miss Timor Leste) which was not included in their “2013 annual working plan” and also there was no funds allocated in their fiscal budget 2013 for such activity. This program was criticized by the parliament and societies as this program did not have any advantages to promote Timor Leste Tourism Sector. However, the Minister of Tourism insisted to run this program and convinced the people that this program will give the advantage to promote Timor Leste’s Tourism Sector. The reason they provide to the parliament, the government and the societies was by running this program, it could help the government to expose Timor Leste tourism sector and this sector will eventually be known all over the world. In order to support this program to run successfully, the Ministry made a transfer – called virement - of the budget from other activities or program to this “Miss Timor Leste” Program which was not included in their “2013 budget.” As a consequence, some of other important activities that had been included in their “2013 annual working plan” were not successfully implemented.

Furthermore, the delay in implementing programs also frequently happens in the line ministries. Hence, the delay affects the budget spending will not be executed and it eventually leads to the inefficiency. The delay occurs because of the following reasons:

1.      Too much bureaucratic administrative process.

2.   The inflexible laws or regulations and also sometime there are now laws in place that allow the programs to be executed. However, if there is an initiative to drat the laws, it will still take time to draft the laws.

3.   Unplanned working activities. For instance, when a program or a project has been agreed to be executed and must be finished in a certain period, this plan sometimes must be postponed because there is an urgent meeting or another activities that need to be finalized shortly.  

4.   Lack of experienced and skilled employees in both management and technical areas.

 This delaying process will eventually give impact on the execution of the budget as some of the programs might not be probably implemented at the end of the fiscal year. Thus, this leads to inefficiencies.

 

 Lastly, corruption is the common problems that all countries in the world are facing. Corruption in its various forms will definitely undermine the development of a country and also has a significant negative impact on the efficiency of public expenditure and productivity. Corruption and inefficiency can also be linked because when an individual who engages in this corruption practice, there will be an increase in inefficiency which means the dollar amounts that should be spent for the development of the country have been used for the personal purpose. Hence, inefficiency of public spending occurs. Let’s take a look an example of the case of Minister of Justice RDTL, Mrs. Lucia Lobato who was allegedly engaged in a corruption practice, in which she has been convicted and already jailed in 2013. Bribe is another instrumental component of corruption practice. If the corruption are not exist, the money would have been used efficiently for public interest such as upgrading the physical infrastructures by building the roads, bridges and buildings, improving health and education system and so on.

 

Alternative solutions that need to be considerably taken in order to tackle out the problems mentioned above and to make the budget efficiently spent are designing a template to record the cash flow forecasts, establishing a clear annual working plan including making clear goals, recruiting the right technical people to conduct the technical work activities, providing moral education to our children started from the basic schools, drafting the anti-corruption law.

 

First of all, by designing a template of the cash flow forecasts, the government will be able to predict the budget execution in a year so that the government will be able to forecast how much amount of dollar will be spent, how these dollar amount will be allocated in a certain each activity, when these budget spending will be appropriately executed and for what purposes these funds are going to be used so that the funds will not be used recklessly. Efficiency has also to do with the comparison between costs and benefit because the public spending will be said efficient when at a given the amount spent, it produces the largest possible benefit for the country’s population.

 

Secondly, it is necessary for each line ministry to make a clear annual working plan including clear goals and they must stick with the plan so that any potential overlapping and unplanned programs can be avoided. They also need to understand that the annual plan they are drafting in each year must reflect and be linked with the National Strategic Development Plan that had been drafted and launched by the government of Timor Leste. By making a plan, the line ministries will have the ability to determine whether the tasks may be attempted or not, to find out the most effective solutions how to reach the targets in efficient ways, to understand what are the best strategies, to have clear goals toward the future and have preparations to overcome any unexpected difficulties without absorbing more resources.

 

Another solution is that in the strategic management it is important to implement the concept “putting the right talented-skilled employees in the right positions” and this notion must be started implementing as earlier as possible. It is necessary to recruit the right technical people to conduct the activities that are related with their educational background and experiences in the related areas. If an institution is going to recruit the wrong technical people, this can adversely affect the business’ effectiveness and efficiency at performing some function.

 

Besides establishing a legal institution to fight the corruption such as establishing a commission Anti-Corruption institution, moral and ethical education should be introduced and taught in early childhood education so that our children will understand and be able to distinguish the bad and good behaviors because corruption, in this case, is considered as a bad behavior and it harms the country’s development. Also, the government needs to start thinking to draft the anti-money laundering laws in order to fight the money laundering practices.

 

Furthermore, the government also needs to provide better salary and incentives to its employees so that these employees will not engage in any form of corruption practices.

 

Another important factor is keeping the inflation as lowest as possible. Due to the rises in prices, any amount of income seems to be not sufficient enough for every individual. If the inflation rate is being kept low, the societies will have the purchasing power to sustain their lives.

 

Which areas are most important to increase the efficiency of public expenditures? Health, education and infrastructure are the most important areas. If the government is going to increase the budget execution and to prioritize to these sectors and off course the budget execution should be well organized and fully controlled, it will produce outcomes such as increasing the educated, skilled and qualified human resources, attracting more investors to invest in country, more literacy, increasing in human capital, good health system and so on.

 

Why education, health and infrastructure are so important?

 

Education is important because it is considered as an investment in physical capital for a country’s long-run economic success. For example, if an individual is well educated, that person might generate new ideas about how best to produce goods and services and these ideas eventually enter into society’s pool of knowledge so everyone can use them.

 

Health sector is considered as important also because if the people live in the good health condition, these people will be more productive in producing goods and services and if these people become more productive and more goods and services produced, it will give an impact in the increase of national economic growth.

 

Infrastructure is another important point. If the roads, bridges and buildings are built, the investors might come to build their businesses in country. The investors will not bear the costs to run their businesses in a country where the physical infrastructures remain poor.

 

To sum up, by establishing the cash flow forecasts, drafting clear annual working plan and clear goals as well as putting the system in place to tackle out the corruption, the inefficiencies of budget execution, in the future, might reduce. Furthermore, if good health and education system as well as the physical infrastructure put in place and if the government seriously to increase the budget spending in efficient ways in those areas and off course they need to seriously monitor and control these budget spending, these sectors will become important sectors that will trigger the increase of economic growth. Therefore, the budget execution on public interest will be efficiently used, and the outcomes will benefit to the people.

Inflasaun iha Timor-Leste – “causas, consequências e soluções”

Inflasaun iha Timor-Leste – “causas, consequências e soluções”

Cosme da Costa Araujo

Inflasaun sai tiha tópiku ida interesante durante debate orsamentu jerál estadu 2014. Ema hotu, iha bibán ne’ebá (to’o agora mós sei), koalia konaba inflasaun. Bibán ne’ebá sai hanesan kulminasaun husi halerik tomak ba inflasaun -  sasán folin a’as - ne’ebé kleur tiha ona ita hasoru, haré no rona.

Inflasaun laos akontese deit iha Timor-Leste. Nasaun seluk mos hasoru problema hanesan. Inflasaun ne’ebé mosu iha Timor-Leste hanesan konsekuênsia inevitável husi prosesu dezenvolvimentu nasionál.  Ho taxa kresimentu ekonómiku ne’ebé bo’ot, akompaña mos ho taxa inflation ne’ebe a’as.

Inflasaun laos buat a’at ida ne’ebé ita tenki halakon tiha kompletamente. Inflasaun laiha mós la diak ba dezenvolvimentu sósiu-ekonómiku nasaun ida nian, hanesan nasaun Japaun ne’ebé besik dékada rua ona hasoru hela problema deflasaun (sasán folin tun) ou inflasaun negativu. Nune’e mos nasaun dezenvolvidu sira seluk, hanesan Estadus Unidus Ámerika (EUA) no Reinu-Unidu (RU), agora dau-daun hasoru hela problema inflasaun ida ki’ik tebes. Sira tenta hela, liu husi polítika monetáriu no fiskál inklui quantitative easing iha EUA no RU no Abenomic iha Japaun, hodi hasae inflasaun ba nível ida razoável.

Inflasaun sai problema wainhira taxa inflasaun a’as liu tiha nível ida razoável, liu-liu inflasaun dubru díjitu hanesan iha Timor-Leste. Kauza prinsipál ne’ebé hamosu inflasaun maka dezekilibriu entre demanda no fornesimentu. Dezekilibriu iha ne’e refere ba demanda ba sasán ne’ebé a’as liu tiha fornesimentu ba sasán hirak ne’e ou fornesimentu la natón hodi hatán ba demanda ne’ebé a’as.

Ema barak, hahú husi ita nai-ulun to’o ba populasaun sira, ho fasilmente identifika causas do inflação  iha Timor-Leste. Balun temin produsaun rai-laran menus, portu Dili ki’ik no servisu la efisiente no efikás, dependensia a’as ba importasaun, manipulasaun sasán folin, limitasaun infra-estrutura, sirkulasaun osan, no sst. Kondisaun desfavorável hirak ne’e hotu kontribui liu tan ba dezekilibriu entre demanda no fornesimentu. PM Xanana Gusmão, iha debate orsamentu 2014, hateten inflasaun ne’ebe bo’ot mai husi fatores oi-oin. Nune’e ita fahe fatores oi-oin ne’e ba buat rua - fatór esternu no fatór  internu.

Fatóres esternus ne’ebé hamosu inflasaun maka hanesan – primeiru depresiasaun dólar. Wainhira valór dólar tun, sasán hirak ne’ebé ita sosa husi rai-liur nia folin sai karun. Ikus mai ita fa’an fali sasán hirak ne’e iha rai-laran ho folin karun liu tan. Sigundu inflasaun mosu tamba sasán, liu-liu sasán importadu, folin sa’e iha merkadu internasionál. Hetok wainhira ita nia ekonomia depende makas ba rai-liur, hanesan Dr. Mari Alkatiri dehan, maka ita sosa mos inflasaun. Ekonomistas hanaran ida ne’e inflação importado, katak inflasaun importa ou kauza ou sosa mai husi rai-liur.

Fatóres internus ne’ebé hamosu inflasaun maka hanesan – primeiru limitasaun fornesimentu. Ida ne’e refere ba kapasidade ekonomia rai-laran ne’ebé la natón hodi hatán ba aumentu iha demanda iha rai-laran. Nune’e wainhira ema barak iha Timór iha kapasidade hodi sosa sasán, maibe fornesimentu (inklui produsaun rai-laran) ba sasán hirak ne’e la natón, maka sasán hirak ne’e nia folin sei sa’e a’as. Vice MdF Santina Cardoso mós konkorda hodi dehan inflasaun sa’e tamba kuantidade produsaun iha rai-laran laiha.  Nune’e mós Ministru MCIA Antonio da Conceição, inflasaun mosu tamba Timór seidauk bele prodús rasik. Limitasaun fornesimentu (tamba produsaun rai-laran laiha ou Timór seidauk bele prodús rasik) halo fornesimentu la natón hodi hatán ba aumentu iha demanda, ikus mai halo sasán folin sa’e.

Sigundu bottlenecks liu-liu limitasaun infra-estruras bázikas impede atividades ekonómikas lao efikás no efisiente. Impedimentus sira hanesan portu Dili ki’ik no servisu la efikás no efisiente, estradas la-diak, no sst maka kria in-efisiensia, ne’ebé ikus mai hamosu kustus deznesesáriu (selu multa, kustu transporte a’as). Ministru MCIA Antonio da Conceição dehan portu no estradas ne’ebé seidauk iha kondisaun kontribui mós ba inflasaun. Wainhira vendedores nia sasán tarde iha portu Dili (tamba portu ki’ik), no hetan multa obrigatório de morante, ikus mai sira transfere multa hirak ne’e ba konsumidores liu husi hasae sasán nia folin. No wainhira sira lori sasán hirak ne’e ba distritus ho kustus transportes karun (tamba estradas la-diak), entaun folin sasán ne’ebé sira fa’an sei la hanesan ho folin ne’ebé sira sosa. Vendedores hasae sasán folin hodi rekupera fali kustus deznesesárius hirak ne’ebé sira hasai.

Terseiru, inflasaun mós mosu tamba montante osan nebe’e sirkula iha rai-laran bo’ot, maibe ekonomia rai-laran laiha kapasidade hodi absorve osan hirak ne’e. AJ Cunha hateten katak jumlah uang yang beredar sai hanesan pemicu ba inflasaun. Nune’e mós Deputadu Virgilio hateten ho osan barak nebe’e tun ba iha kraik, halo vida konsumu aumenta, (maibe fornesimentu la aumenta), nune’e inflasaun sa’e makas iha ita nia rai-laran.

Kuartu, iha mos indikasaun katak inflasaun mosu tamba manipulação do mercado. Manipulasaun iha ne’e refere ba hahalok vendedores ou fornesedores malandru balun ne’ebé mes-mesak ou hamutuk halo manipulasaun hodi hasa’e sasán folin.

Inflasaun ne’ebé a’as, liu-liu inflasaun dubru-díjitu sei fo consequências negativas ba dezenvolvimentu sósiu-ekonómiku povu ida nian liu-liu hamenus poder de compras konsumidór nian no kompetitivadade ekonómika nasaun nian.

Inflasaun ne’ebé a’as redúz poder de compras ou purchasing power ou daya beli konsumidór nian. Nune’e, ho osan (montante) hanesan, kuantidade sasán ne’ebé ita sosa sei menus ou ita presiza osan barak liu tan hodi sosa sasán ho kuantidade hanesan. Inflasaun hatodan liu povu ki’ik, tenik emprezariu Timór oan – Julio Alvaro. Nune’e ema kiak ho rendimentu fixu maka sei sofre liu tamba maioria husi sira nia rendimentu aloka ba sosa nesesidade bázika. Ho inflasaun, sira nia saláriu sei la natón atu sustenta sira nia família. Tamba inflasaun desvaloriza saláriu nominal hanesan Dr. Mari Alkatiri dehan. Maibé, solusaun ba problema ida ne’e laos liu husi hasae saláriu. Tamba sé halo nune’e sei kria deit espiral do inflação. Katak ho hasae saláriu sei hasa’e liu tan inflasaun no ikus mai ita tama ba iha ciclo do diabo ida laiha rohan.

Inflasaun ne’ebé a’as sei redúz kompetitivadade ekonómika Timor-Leste nian kompara ho parseiru komersiantes sira seluk. Ho inflasaun inputs costs sei aumenta, nune’e ikus mai prodúz produtu finais ne’ebé karun. Nune’e Timór oan sira sei prefere sosan sasán importadu (manu Timór vs ayam potong, fós-rai vs fós importadu) tamba baratu no iha rai liur ema estranjeiru sira sei la sosa produtu Timór nian tamba karun.

Fásil tebes atu idenfitika causas do inflação  iha Timor-Leste, maibe defísil tebes buka solusaun ba problema inflasaun ne’e rasik. Planu Estratéjiku Dezenvolvimentu hatúr ona katak taxa inflasaun entre 4-6 pursentu maka nivel inflasaun ida razoável ba dezenvolvimentu ekonómiku Timor-Leste nian ne’ebé diak. Ida ne’e laos tárjetu ida fásil maibe mós laos imposível.

Hanesan temin iha leten, inflasaun mosu tamba dezekilibriu entre demanda no fornesimentu - fornesimentu ne’ebé la natón hodi hatán ba demanda ne’ebé a’as. Nune’e solusaun ba inflasaun ne’e rasik tenki haré liu ba oinsa hadiak no hasae fornesimentu. Ita haré fásil, maibe defísil tebes atu atinji objetivu ida ne’e. Defísil tamba – primeiru ida ne’e rekere aproximação integrada involve parte hotu-hotu, laos Governu ou MCIA deit, maibe mós seitor privadu no populasaun tomak,  no-sigundu presiza tempu ida naruk, laos tinan ida ka rua, hodi rezolve asuntu refere.

Tuir mai ne’e soluções alternativas nebe’e hau senti bele kontribui ba hamenus problema inflasaun a’as iha Timor-Leste. Primeiru, autoridade kompetente liu-liu MCIA kontinua nafatin ho sira nia esforsu tomak ne’ebé halao hela liu husi halo intervensaun ba merkadu hanesan inspeisaun ba loja, hamosu tabela do preço, no loke loja do povo. Governu intervein tamba merkadu la funsiona lolós tuir mecanismo do mercado; liu-liu tamba manipulação do preço. Polítika ida ne’e hanesan medida temporária deit hodi hein soluções seluk nebe’e diak liu, adekuadu no sustentável. Polítika intervensau merkadu la bele kontinua permantemente, se lae bele hamosu konsekuênsias tolu – primeiru governu tenki asumi kustus tamba subsídiu ne’ebé fo, liu-liu ba loja do povo; - sigundu dezinsentiva fornesedores sira hodi halo negósiu no – ikus liu hamosu black market iha ne’ebé sei iha nafatin fornesedores malandru balun ne’ebé sei kontinua sub-subar manipula sasán folin ba komsumidores sira ne’ebé desperadu tebes.

Sigundu, presiza mos tau matan no fo prioridade a’as ba hadiak kondisaun desfavorável ou bottlenecs sira hanesan limitasaun infra-estruturas bázikas. Enkuantu hein konstrusaun Portu Tibar, Ministériu Transporte no Infra-Estrutura presiza hadiak kondisaun portu Dili no buka meius oinsa halais atrakamentu no deskaregamentu ba ró sira ne’ebé barak antri hela iha tasi laran. Husu ba funsiunáriu sira iha Portu no Alfândega servisu 24 oras nia laran inklui mos loron sábadu, domingu no feriadu.  Bele mós diak liu kontrata tiha servisu portu Dili nian ba seitor privadu. Sé halo nune’e hau fiar bele hamenus tiha ró barak ne’ebé antrian hela iha tasi laran. Ministeriu relevantes tenki tau matan mos ba infra-estrutura bázika sira seluk hanesan estradas hodi nune’e bele hamenus kustus transportes, mas liu-liu fasilita movimentu produtu ba iha merkadu.

Terseiru, redús montante sirkulasaun osan iha ekonomia. Sé ita iha osan rasik no ita nia seitór finanseiru funsiona ho diak, ita bele halo intervensaun liu husi polítika monetária – hasae taxa de juros. Timor-Leste, tamba seidauk iha osan rasik, la bele halo intervensaun polítika monetária, liu-liu hodi hatán ba fatores esternus ne’ebe hamosu inflasaun.

Iha kazu Timor-Leste nian, orsamentu jeral estadu sai hanesan fonte ba sirkulasaun osan iha ekonomia. Nune’e ita bele intervein liu husi polítika fiskál. Iha ne’e hau la propoen atu hasae taxa tamba ho taxa ne’ebé a’as bele hamate investimentu. Evidensias tinan 2012 no 2013 hatudu katak governu tau ona iha konsiderasaun limitasaun kapasidade ekonomia rai-laran, limitasaun kapasidade ekzekusaun no konsekuênsia ba inflasaun, nune’e governu desidi redúz montante orsamentu 2014. Iha redusaun ba tinan ida ne’e no tinan hirak oin mai, tenki fo liu atensaun ba redús no prevene aumentu iha despezas rekorente, tamba despezas rekorente fo impaktu bo’ot liu ba inflasaun kompara ho despezas ba kapital dezenvolvimentu.

Dalan seluk ne’ebé ita bele halo maka enkoraja ou se bele karik obriga sidadaun hotu atu poupa osan ne’ebé sira simu ba tau iha banku ka ba investimentu sira seluk, duke uza ou gasta osan hirak ne’e ba buat sira ne’ebé la fo retornu ekonómiku hanesan halo-lia. Liu husi poupansa, ita bele redús sirkulasan osan tamba ema sei konsume menus, nune’e hamenus demanda ba sasán sira. Poupansa hirak ne’e mos bele kria fali multiple effect seluk liu husi (banku) finansiamentu atividadades produtivus sira seluk.

Solusaun ikus no importante liu maka oinsa hasae fornesimentu ne’e rasik. Komesa hanoin ona identifika produtus, liu-liu nesesidadades bázikas hirak ne’ebé maka ema barak sosa ou konsumu, no bele subtitui no prodús rasik iha rai-laran. Ita hanoin uluk oinsa asegura fornesimentu sufisiente ba merkadu rai-laran, no iha tempu hanesan mos hanoin ona konaba polítika subtituisaun importasaun no ikus liu maka ita haksoit ba esportasaun. Iha faze ida ne’e, seitor públiku tenki hahú no ajuda seitor privadu hodi fo asistensia téknika no finanseiru, no liu-liu kria kondisaun favorável hodi atrai investidores (rai-laran no rai-liur) hodi mai investe iha seitor naun-petrolíferu, laos mai hadau malu fali projeitus governu nian sira. Laos seitor públiku, maibe seitor privadu maka tenki sai autor prinsipal hodi hasae fornesimentu ne’e rasik.

Hau mos propoin liu husi meiu ida ne’e atu tau kláuzula ida iha kontratu ne’ebé obriga emprezariu sira, liu-liu emprezariu lokal sira nebe’e hetan ona projeitu governu nian, hodi aloka no investe persentajen balun husi sira nia rendimentu ba iha investimentu seitór produtivu. Halo nune’e sei asegura sira nia sustentabilidade wainhira projeitu governu nia remata ona no iha tempu hanesan bele ajuda hasae fornesimentu rai-laran no hamenus dependensia ba importasaun.

Atu remata, inflasaun mosu tamba dezekilibriu entre demanda no fornesimentu – demanda a’as liu tiha fornesimentu. Inflasaun laos buat ida la-diak, maibe inflasaun ne’ebe a’as, liu-liu inflasaun dubru-díjitu, sei hamosu konsekuênsias negativas ba dezenvolvimentu sósiu-ekonómiku nasaun ida nian. Fásil tebes atu identifika causas do inflação, maibe defísil tebes atu buka solusaun ba inflasaun ne’e rasik tamba ida ne’e rekere aproximação integrada ne’ebé involve parte hotu-hotu no liu-liu presiza tempu naruk no displina hodi rezolve problema inflasaun ne’e rasik.