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Dili is booming, but can it last?

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7 February 2012 09:13

Gordon Peake is a Visiting Fellow at the State, Society and Governance in Melanesia Program, Australian National University. He is inTimor-Leste doing research for a book.

With a presidential election due on 17 March, Dili seems a much safer, happier, more content city than when Timor-Leste went to the polls five years ago.

Back then, taxi drivers did not feel safe being out of their homes after dark. Now the waterfront in Dili is thronged each night with families and young couples spending money on the little stalls that sell chicken satays, grilled fish and beer. High-end restaurants that were previously the nearly exclusive domain of international advisers now have just as many Timorese customers.

Money is sloshing around the capital like wine in a decanter. Dili now has a baby clothing store, a dry cleaner, a cellar door and even one shop that sells aquariums, sure mercantile signs of disposable income. A large shopping plaza opened last year. The capital's streets are choked with traffic, and one can see pimped-up Hummers with tinted windows contouring around the city's potholes. Huge new government offices are being built. This is a gold-rush town.

The spending is fueled by the oil and gas reserves in the Timor Sea. Nearly three-quarters of Timor-Leste's GNI comes from oil and gas reserves located under the seabed between its southern coast and Australia.

Flush with revenue, the Government is trying to spend the nation out of poverty. In 2002, the budget was $67 million; this year, it is $1.7 billion. Ambitious plans for the future will require even higher allocations of public spending and perhaps borrowing, something the previous government was resolutely against.

The goal of the Government's glossy Strategic Development Plan 2011-30 is to transform Timor-Leste into an upper-middle income country in less than twenty years. There are plans for seven universities, high-speed internet throughout a land that currently has intermittent electricity, food supply exceeding demand, a universal social security system, an extensive network of land and marine national parks, a national ring-road and a law regulating almost every conceivable practice and behaviour. 

National self-confidence is high; Finance Minister Emilia Pires is likening the tiny nation to an Asian economic powerhouse. In 2010, she told the travel and lifestyle magazine Monocle, 'If the first decade of the 21st century was dominated by China then I feel the second decade will be for Timor-Leste'.

The question, however, is whether today's smiles and good times are a temporary bubble inflated by oil and gas revenues or the start of something more permanent. More on that in a follow-up post.

Photo by Flickr user US Pacific Fleet.

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