Private Sector Growth Situation in Timor-Leste

Poultry Investors Vs Imported Chicken

Based on the ASIAN Development Bank (ADB) report on “A Private Sector Assessment For Timor-Leste”, the government shows promising appetite for reform, and their willingness to engage the private sector in developing alternative investment options to attract business to the country is commendable. Yet, the country also faces significant challenges in rebuilding institutions and infrastructure, and implementing good governance principles to ensure that those institutions are managed effectively for the good of all citizens. There are three main overarching economic challenges identified in the assessment such as diversify the economy, increase productivity, and improve rural livelihoods.

The special focus on enhancing private sector development in Timor-Leste when compared to firms in the East Asia and Pacific (EAP) region, the average firm in Timor-Leste is younger, smaller (in terms the number of employees), less capital intensive, and has lower labor (and total-factor) productivity levels. Lack of access to finance, poor electricity and water services, cumbersome import and business regulations, corruption and bribe requests, and low workforce skills and education levels have all been associated with weaker firm performance, and policy priorities for increasing firm performance include increasing firm access to finance, skills and affordable input, as well as easing firm entry and reducing regulatory uncertainty, based on the World Bank report from the Timor-Leste Economic Report.

Even though there is a lot of obstacles for the private sectors in the country to start their investment in non-oil sector and without a significant support from the Government of Timor-Leste (GoTL), some local investors did take risks to start their business in poultry production by find the support from other private sectors using whatever resources that they have.

Most of the Day-old Chicks (DOCs) are imported from Indonesia and transported to Timor-Leste by airplane and through the land border, and those companies formed their own out-grower farmers across the country so they can fulfill the companies’ requirements to buy the DOCs in certain amount including feed until harvest time.

Since the government doesn’t play much role in controlling the number of locally-produced chickens and number of imported chickens, has cause a lot of stress to the chicken farmers or out-growers in the country because they need to buy an extra food for their birds until all of them sold to the market.

With the Private Investment Law in the law No. 14/2011, to make this poultry market works well in Timor-Leste, the GoTL should put everything written in the law into practice by taking action to strengthening the import control to make sure they are giving the opportunity to the local investors to grow with whatever investment they had. The government also need to have a rules and regulations to control the price in the local market to make sure there is no price manipulation in the local market.

According to the Trend Economy data, chicken meat importation in Timor-Leste is increased from US$1,200 in 1972 to US$ 14,223 in 2021 growing at an average annual rate of 6.55%. This automatically shows the GoTL doesn't pay much attention at all to the growth of the private sectors in the country by not controlling the import data with the local investment that have been done, and some importers stated they always importing frozen chicken in four 40ft containers every month, but it always increased during the Christmas and New Year celebration period.

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