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Timor-Leste and ADB

ADB's country partnership strategy for Timor-Leste focuses on removing infrastructure bottlenecks and institutional constraints as well as investing in human capital.

ADB's Work in Timor-Leste

ADB Membership

Joined 2002

Shareholding and Voting Power

Number of shares held:
1,050 (0.010% of total shares)

Votes:
40,164 (0.302% of total membership, 0.464% of total regional membership)

Overall capital subscription:
$14.52 million

Paid-in capital subscription:
$0.73 million

Since achieving independence in 2002, Timor-Leste has made significant progress in state building. However, while access to essential services (particularly electricity) has improved dramatically, key human development indicators are low. The country’s prospects hinge on prudent and effective use of revenue from petroleum production to finance investments in the physical infrastructure, human capital, and institutions needed to develop an economy not reliant on income from fossil fuels.

Port views in Timor-Leste's capital of Dili

ADB has been supporting Timor-Leste since 1999 and is currently focused on helping the country remove infrastructure bottlenecks and overcome institutional constraints to open the way for a more sustainable economy.

Since 1999, ADB has committed loans, grants, and technical assistance worth $434.21 million for Timor-Leste.

Cumulative disbursements on loans, grants and technical assistance to Timor-Leste amount to $260.6 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, other special funds, and grants under cofinancing fully administered by ADB.


ADB-Supported Projects and Programs

ADB’s recent assistance to Timor-Leste has concentrated on improving transport connectivity to reduce inequalities, upgrading water supply and sanitation to deliver better health outcomes, refining education and training to address skills shortages, investing in agricultural value chains to boost rural prosperity, and expanding financial services to stimulate inclusive growth.

ADB has helped Timor-Leste rehabilitate or upgrade 126 kilometers of national roads, and a further 296 kilometers of district and national roads will be upgraded by 2022. Once completed, these roads will span the whole of Timor-Leste’s north coast, from the border with Indonesia to the eastern tip, linking the country’s north and south coasts and connecting key coffeeproducing areas. ADB has also been helping the Government of Timor-Leste to strengthen transport sector policy and planning so that improvements in connectivity can be sustained.

Timor-Leste is upgrading its road network to promote economic growth and spread petroleum wealth outside the capital city of Dili.

ADB financed the upgrading of the municipal water supply systems in Manatuto and Pante Makassar, bringing piped clean water to 2,581 households. The bank is also helping the government to pilot innovative models for the operation and maintenance of these systems, and to prepare the next phase of investments. This includes technical assistance to prepare an investment road map, master plan, and detailed engineering designs for water and sanitation upgrades in Dili and four municipal capitals, and to design institutional reforms to ensure longterm sustainability.

District Capitals Water Supply Project aims to improve the supply of safe drinking water to more people

ADB has helped upgrade facilities and introduce mid-level skills training in Timor-Leste’s five accredited training centers that specialize in construction and automotive trades. The bank supported the development of new curricula and the upgrading of teachers’ qualifications and technical skills. About 2,445 students (25% young women) received accredited construction and automotive skills training, while 25 graduate groups, comprising 124 youths (10% young women), received support to establish small businesses that will generate employment in the auto industry. ADB is also helping the government develop its plans and policies for secondary education.

ADB supported the establishment of the Timor-Leste Coffee Association, a nationally representative trade association. The bank then worked with the government and the association to develop Timor-Leste’s National Coffee Sector Development Plan, 2019–2030. ADB’s first nonsovereign investment in the country was approved in 2018 and is helping 4,200 coffee-producing households increase their incomes through training on crop productivity and quality, which will help these producers become certified suppliers to a major multinational company.

ADB has also supported key reforms to strengthen financial services for individuals and small enterprises across Timor-Leste. ADB was instrumental in transforming the Institute of Microfinance of Timor-Leste into the country’s first and only locally incorporated commercial bank—Banco Nacional de Comércio de Timor-Leste (BNCTL). With ADB technical assistance, cofinanced by the Government of Australia, BNCTL was able to implement a new core banking technology platform in 2017 and roll out a nationwide plan to introduce ATMs and point-of-sale terminals across the country. Currently, BNCTL has 13 branches in all municipalities and operates 30 ATMs throughout the country.

Banco Nacional de Comércio de Timor-Leste (BNCTL) bank tellers attend to clients at their main bank branch in Dili

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Timor-Leste in 2007. Since then, sovereign cofinancing commitments for Timor-Leste have amounted to $98.82 million for three investment projects and $15.08 million for eight technical assistance projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

While the government can draw on petroleum revenues to finance transformative investments, its capacity to design and implement large and complex projects is still developing. ADB is helping plan and implement high-quality investments and complex reforms, strengthen governmental processes for planning and implementing projects, and ensure best-practice national systems for public financial management.

The bank is working closely with the government to ensure that systems are in place for the ongoing operation and maintenance of new infrastructure. To help alleviate capacity constraints and ensure sustainable operations, ADB has supported the development of a legal and institutional framework for publicprivate partnerships in Timor-Leste and has been helping the government implement such a partnership to develop the Tibar Bay Port.

Future Directions

ADB operations in Timor-Leste are guided by the country partnership strategy, 2016–2020, which is aligned with the Timor-Leste Strategic Development Plan, 2011–2030.

The ADB program in Timor-Leste will continue to emphasize knowledge, systems, innovation, and technical expertise to accompany traditional financial support. The bank’s operations will support the government’s ongoing efforts to develop a sustainable nonoil economy by improving delivery of municipal services and strengthening the country’s business environment.

This article was originally published in the ADB and Timor-Leste: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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