CAN TIMOR-LESTE RELY ON ITS ENDOWMENT-BASED SECTORS TO ACHIEVE THE - - PowerPoint PPT Presentation

CAN TIMOR-LESTE RELY ON ITS ENDOWMENT-BASED SECTORS TO ACHIEVE THE SDP TARGETS?

Factors to take into consideration

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 50 100 150 200 250 300 350 400 Philippines Timor-Leste Fiji Thailand Cambodia Indonesia Monthly Average Manufacturing Wage (USD) Monthly Average Manfacturing Wage (USD) literacy rate (%) Primary School Enrollment (% net)

GDP by Sector in 2010

Agriculture, Forestry & Fisheries 21.4% Accom & Restaurants 3.9% Mining 0.2% Public Administration, Health, Education & Social Work 21.5% Retail & Wholesale 15.9% Real Estate Activities 11.6% Construction 7.3% Information & Communication 5.1% Transport & storage 4.3% Manufacturing 3.1% Financial & Insurance 1.7% Other sectors 4.0%

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Employment by Sector in 2010

Agriculture, Forestry & Fisheries 50.4% Accom & Restaurants 0.8% Mining 0.4% Prof, Scientific, administrative & support 3.2% Public Administration, Health, Education & Social Work 9.5% Retail & Wholesale 17.5% Construction 5.2% Information & Communication 0.8% Transport & storage 3.2% Manufacturing 3.2% Other sectors 6.0%

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2030 Targets

12187 4091 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 US$ (Millions) Nominal GDP Real GDP Inflation (right axis)

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Population & Labour Projections

Total&Popula*on& 1,800,000& Popula*on&15164& 1,112,400& Labour&Force& 660,100& Total&Popula*on& 1,142,500& Popula*on&15164& 596,400& Labour&Force& 262,000&

2010& 2030&

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How to estimate potential?

Agriculture Intensification Extensification Country case studies Tourism Fiji Vanuatu Upstream oil & gas Revenues – Petroleum

fund

Future potential - ANP Downstream oil & gas Timor Gap projections

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Agriculture

Crops – Extensification, Intensification Cash Crops – Extensification, Intensification Livestock – Extensification, Intensification Fisheries – World average fish consumption Forestry – Indonesia comparison

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Tourism

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Upstream Oil and Gas

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Downstream Oil and Gas

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Potential in 2030 – Scenario 1

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Agriculture 13% Tourism 4% Petrochemical 27% Other sectors 56%

Non-oil GDP by Sector

Agriculture 16% Tourism 2% Petrochemical 0.2% Other sectors 82%

Employment by Sector

Potential in 2030 – Scenario 2

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Agriculture 18% Tourism 11% Petrochemical 40% Other sectors 31%

Non-Oil GDP by Sector

Agriculture 22% Tourism 6% Petrochemical* 1% Other sectors 71%

Employment by Sector

Findings & Policy Recommendations

I. There is significant growth potential in the agriculture, tourism and

• petrochemical. The GovTL should therefore prioritise these sectors by

preparing sector specific short- and medium-term plans and investment strategies that are based on detailed cost-benefit assessments II. Apart from the macroeconomic benefits, a more productive agriculture sector has the potential to lower malnutrition rates, reduce inflationary pressure on food items and control population migration from rural to urban areas. Agriculture should therefore be prioritised in the short- term.

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Findings & Policy Recommendations (2)

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III. In line with experiences from other resource rich economies, the service sector is likely to play a key role in Timor-Leste’s future economy. Services are based on human capital. Education and training of the future labour force is therefore of utmost importance. Improving labour productivity will also determine whether Timor-Leste can diversify its economy in the long run. IV. The petrochemical projects provide high GDP income, but few employment

• pportunities. Timor-Leste should therefore invest in these projects as long

as they have a positive net present value. V. To boost private investment, the Government should clarify property rights. Apart from providing collateral for the financial sector, a land law would also provide security for investors and enable on-shore oil/gas and minerals explorations. The sooner Timor-Leste knows how much natural resource wealth it can rely on to support its economy, the easier it will prove to plan accordingly.

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