Timor-Leste Delegation visited Indonesia on Commerce and Industry Policy

Kazuhira NAKASATO
Industrial Development Advisor

The Government of Timor-Leste will formally to be a full membership of the World Trade Organization (WTO) in the end of August 2024 after going through the ratification procedures in the National Parliament and deposit procedure of the Protocol of Accession, and is currently preparing for full membership of the Association of Southeast Asian Nations (ASEAN) by the end of 2025. The Government of Timor-Leste also has a plan to actively participate in some multilateral economic agreements such as the Regional Comprehensive Economic Partnership (RCEP) after officially being a full membership of the ASEAN.

The economy of Timor-Leste is heavily dependent on oil and natural gas revenues, and industrial diversification is an important issue. The Government of Timor-Leste announced the National Industry Development Policy in December 2023, and it aims to promote manufacturing that can generate more stable high added value without relying on commodity markets that are vulnerable to geopolitical environments and climate change, promoting the development of the local economy, promoting industrial diversification, and developing industrial human resources. As one means of achieving the objectives of the policy, the establishment of an industrial park is being proposed.

The objectives of this project are to support Timor-Leste's participation in international economic frameworks, the diversification of industries in the domestic market, and the strengthening capacity of the Ministry of Commerce and Industry (MCI). Especially with the aim of supporting the MCI's efforts to participate in international frameworks and diversify domestic industries, this project held a study tour in Jakarta, Indonesia, from July 29 to August 3, 2024.

In addition to the MCI staff, the study tour also included representatives from government agencies involved in commerce and industry policy, such as the Investment and Export Promotion Agency (TradeInvest), international organizations such as the Asian Development Bank, and the Chamber of Commerce and Industry of Timor-Leste (CCITL).

The study tour visited the ASEAN Secretariat, the Indonesian Ministry of Industry, the Ministry of Trade, the Ministry of Investment, the KPPU (Competition Authority), and the BPKN (Consumer Protection Authority), where they exchanged opinions on issues such as the development of legal systems and practical administrative management methods required before and after joining the WTO and ASEAN.

The study tour also visited the MM2100 industrial park on the outskirts of Jakarta, where they learned about the process from site selection to establishment, industrial park management, how to attract FDI, and how to be environmentally conscious, and worked to accumulate the knowledge necessary for the establishment of the Timor-Leste's first industrial park.

On the final day of the study tour, the project invited lecturers from the Japan External Trade Organization (JETRO), the Economic Research Institute for ASEAN and East Asia (ERIA), and TMI Associates, as well as a commentator from the United Nations Industrial Development Organization (UNIDO), and discussed topics such as the potential for new trade with Japan after Timor-Leste's accession to ASEAN, the economic impact of Timor-Leste's accession to ASEAN, and legal issues for foreign companies investing in overseas markets.

The Minister of MCI also attended the visit to MM2100, which is located near Jakarta, and also attended the workshop held on the final day of the study tour, which demonstrated the high level of interest in the study tour activities shown by the Timorese government.

Furthermore, after the study tour, the project plans to hold a workshop where each participant will be assigned a field of responsibility and present what they have learned from Indonesia in that field and their recommendations for Timor-Leste. The workshop will invite executives from MCI, TradeInvest, and CCITL, and it is hoped that by having the tour participants make presentations, it will deepen their understanding of what they have learned, make recommendations for commerce and industry policy, and increase the impact of the project's activities in the future, so that the study tour will not end as a one-off event.