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Diversification Crucial for Private Sector Development in Timor-Leste - ADB
Investments in infrastructure, agriculture, institutions and skills are needed as a foundation for private sector growth and economic diversification in Timor-Leste, ADB said at a conference on economic development.
Economic diversification must be an essential part of the growth strategy for resource dependent Timor-Leste, if it is to develop a prosperous private sector and sustain broad-based growth, the Chief Economist at the Asian Development Bank (ADB) told participants at the “Harnessing Natural Resource Wealth for Inclusive Growth and Economic Development” conference today.
“Investments in infrastructure, agriculture, institutions and skills are needed as a foundation for private sector growth and economic diversification,” ADB’s Changyong Rhee said.
In many countries industrialization is essential for growth and prosperity, according to a recent ADB report. In fact, no economy has reached high-income status without reaching at least an 18% share in its manufacturing output and employment over a sustained period. In small countries rich in natural resources – such as Timor-Leste – policy and investment measures are needed to move economies up the value-chain and beyond a dependence on primary commodity production.
Mr. Rhee's presentation focused on the evolution of the private sector in Timor-Leste and other resource-rich countries in the region. He noted that Timor-Leste’s private sector is largely dependent on public sector expenditure and urged the country to create opportunities for diversified investment and employment and ensure relevant skills are available.
The conference looks at policies for promoting sustainable and inclusive economic growth in countries with abundant natural resources.
Infrastructure improvements and private sector development to drive inclusive economic growth are priority areas for ADB in Timor-Leste. Increasing access to finance opportunities is key to the initiative. ADB assistance has already produced results, helping the Institute of Microfinance Timor-Leste (IMTL) become the country’s first locally-owned commercial bank. It now has 12 branches across the country and has boosted local entrepreneurship, jobs, and investment, with 40% of loans going to women.
Secured Transactions Reform and business registry development are also key private sector development activities in Timor-Leste.
To address human resources needs in the growing economy, the ADB-funded Mid-Level Skills Training Project provides skills training in construction and automotive trades by supporting selected training centers with upgrades to their facilities and equipment. The project is also supporting the Dili Institute of Technology at Baucau and the Tibar Training Center to expand training of mid-level construction skills.