Tipping the balance: What’s at stake in Timor-Leste’s bid to join ASEAN?

A local fisherman's boatin the waters off Atauro Island, Timor-Leste. United Nations

Twenty years after independence, Timor-Leste struggles to define its future beyond foreign influences and a volatile fossil fuel economy. Its bid to join ASEAN is finally moving ahead and represents a key piece of its development agenda.

By Skylar Lindsay

The Southeast Asian nation of Timor-Leste turns 20 on August 30, two decades after the country voted to become independent and end Indonesian occupation.

The country has made enormous strides during its short period of sovereignty, working to move beyond its colonial history and violence. The government’s bid to join ASEAN has been a key piece of its plans for Timor-Leste’s development. But the process has been slowed by long-standing concerns that its economy and infrastructure still aren’t robust enough and new concerns about the country’s political and economic independence present an additional barrier.  

Now the 20-year-old government is preparing for a visit from ASEAN officials in September. The officials’ fact-finding visit will assess its readiness to join the regional bloc.

Timor-Leste’s Foreign Minister Dionisio Babo Soares expressed optimism following a tour of ASEAN’s member states. “One of the concerns is [ASEAN member states] want to see Timor-Leste not only as a democratic country but one with strong institutions, a country that can rely on itself and not succumb to other powers,” he said.

As in all coastal communities in Timor-Leste, the ocean both feeds and sustains villagers. For generations, coastal communities have relied on a wide range of fish for their livelihoods.
Photo: United Nations

Regional ties are key to supporting Timor-Leste’s independence 

East Timor first declared independence from Portugal in 1975 after over 450 years of colonization but was quickly invaded by Indonesia. During the ensuing 24-year occupation, some sources estimate that 200,000 or more people, almost a third of the country’s population at the time, were killed by the Indonesian military, separatist guerrillas, starvation and disease.

In 1999, the U.N. sponsored a referendum on independence in East Timor. Nearly 80% of voters chose separation. But in the run-up to the vote, the Indonesian military and pro-Indonesian militias embarked on a campaign of violence. In almost three years, 70-80% of the country’s infrastructure was destroyed. The U.N. stepped in to administer the country until its formal independence in May 2002.

ASEAN membership represents a chance for Timor-Leste to move beyond its violent colonial past and determine the future of the state.

Timor-Leste has undergone dramatic development since it first petitioned ASEAN

Timor-Leste began pushing to join ASEAN in 2011, just 12 years after declaring independence. Singapore, Malaysia, Brunei, Laos and the Philippines expressed doubts that the country’s infrastructure and economy were strong enough to contribute to the regional bloc. 

The U.N. now ranks Timor-Leste higher than Cambodia, Myanmar or Laos on its Human Development Index. All ASEAN member states have now indicated that they’re ready for the process to move ahead. However, the bid has been slow to gain momentum.

The issue of political and economic independence has become a key sticking point for the country’s bid. Access to clean water, education, malnutrition and unemployment are still major issues and the country receives more outside development assistance (ODA) per capita than any other country in Southeast Asia—nearly three times more than Laos, the runner-up. 

“Timor-Leste is still struggling with all of the basic services they have to deliver,” Dr Maria Ortuoste, Associate Professor of Political Science at California State University, East Bay, told ASEAN Today. “A big goal for them is to diversify their economy.”

The Timor-Leste government has been working to increase the skills of its labour force, securing agreements for its citizens to work and learn abroad.

There are still lingering concerns

In 2006 however, Timor-Leste’s government was shaken by an attempted coup.

“At the time, they were worried that Timor-Leste would become a ‘failed state’,” Ortuoste told ASEAN Today. “They’re worried [sic] that it would have an impact on ASEAN meeting its goals for the ASEAN Vision, in terms of slowing down progress.”

There are still questions as to whether Timor-Leste would be able to host the meetings associated with the ASEAN chairmanship. But Vietnam is set to take over the ASEAN chair for 2020 and if the chair continues to rotate alphabetically, Timor-Leste would not have to host an ASEAN summit for a decade, allowing plenty of time for preparations.

Timor-Leste has also had pointed moments with many members of ASEAN that colour its political position in the region. In 2016, Laos refused to host the civil society ASEAN People’s Forum and Timor-Leste stepped in. Former president and Nobel Peace Prize laureate José Ramos-Horta has spoken out against the ethnic cleansing of Rohingya in Myanmar and called for perpetrators to be held accountable. 

However, ASEAN governments who face criticism over domestic rights issues will not have to fear diplomatic pressure from Timor-Leste. Given that the young nation is trying to strengthen diplomatic ties with ASEAN states, and has toned down its language on human rights abuses in Myanmar to avoid jeopardizing its bid, it would be unlikely to rock the boat on arrival.

Timor-Leste’s government uses Chinese investment to entrench risky fossil fuel development

There are also concerns from ASEAN nations that Timor-Leste’s reliance on Chinese financing and trade could grant Beijing undue influence over the country’s foreign policy. Timor-Leste’s foreign policy has been shaped by economics as it worked to ramp up development and foreign direct investments. Until now, Timor-Leste’s largest trading partners have been, in order, Singapore, Australia, Indonesia and Thailand. But the government is deepening economic ties with China.

Coffee is one of Timor-Leste’s most important crops, bringing much-needed revenue to the country.
Photo: United Nations

Timor-Leste is one of the most oil-dependent nations in the world, with around 90% of its economy dependent on petroleum. The country’s largest gas and oil development, the Bayu-Undan reserves, are expected to be fully tapped by 2022.

ASEAN membership could help the country to diversify its economy but it could also exacerbate this issue if policymakers aren’t careful. “There are a lot of fledgeling industries and just opening up the market could be detrimental to Timor-Leste developing the other sectors in its economy,” Ortuoste told ASEAN Today.

Australia and Timor-Leste signed a treaty last month over the Greater Sunrise oil and gas field, guaranteeing the young country at least 70% of the revenue from the fossil fuel extraction. The CEO of state-owned fossil fuel company Timor Gap, Francisco Monteiro, now claims that the country’s share will be worth over US$76 billion.

Much of the country’s plans to expand its economy centre on a project to develop the Greater Sunrise reserves, known as Tasi Mane. The initiative will turn Timor-Leste’s southern coast into a petroleum hub, extracting billions of dollars of oil and gas in the Timor Sea and processing it within the country before export. The project includes a refinery, petrochemical plants and liquified natural gas (LNG) facilities.

But the project shows three major issues with the country’s current development model.

First, Timor-Leste is deepening its dependence on fossil fuels in an increasingly risky gamble as demand for oil and gas drops. Even if the world’s governments do nothing to limit greenhouse gas emissions, this decline in demand could cost the global economy a trillion dollars. If governments act to address the climate crisis and limit emissions, global economic losses could hit US$4 trillion when the current carbon bubble bursts. 

This will do nothing to alleviate concerns from ASEAN nations over the strength of Timor-Leste’s economy. If the carbon bubble bursts, it will be a major setback for Timor-Leste’s ASEAN bid and its domestic development agenda. If the crash comes after Timor-Leste has joined ASEAN, member states will be reluctant to help the country rebuild its economy.

Second, Timor-Leste’s development now relies heavily on top-down Chinese-backed investment projects. The country has reportedly taken out a US$16 billion loan from China’s Exim bank to finance the Tasi Mane project. Myanmar, Laos and Cambodia are already heavily influenced by financial dependence on Beijing and some ASEAN states don’t want another member beholden to Chinese interests.

A woman harvests rice by hand in Timor-Leste.
Photo by Martine Perret/UNMIT

The way the government and Timor Gap are implementing the Tasi Mane project also appears to jeopardize the country’s chances of diversified, equitable development.

The government plans to use 1,113 hectares of community land for the project. Local communities complain of transparency issues and a lack of compensation, with some community leaders saying the government has violated their compensation agreement. People across the Tasi Mane project area, from Suai to Beaço, use the land to raise livestock, harvest salt and farm rice, coconuts, moringa, teak, mangoes and other fruit.

“Since the beginning, the south coast has been serving as food storage in Timor,” said Manuel Monteiro, director of the HAK (Hukum, hak Asasi dan Keadilan) Association. “When we build a refinery it will affect the area’s potential to produce food”.

According to HAK and other groups, focusing solely on oil and gas development is unsustainable and could endanger the country’s food supply, forcing them to import even basic staples like rice from Vietnam.

Could ASEAN membership offer a more stable economy and foreign policy?

Ramos-Horta has denied that Chinese influence is becoming a problem in the country and said he believes Chinese influence is still outweighed by ties to Australia and Indonesia. Some analysts have suggested that ASEAN membership is one way for Timor-Leste to balance the influence of any single regional power and deepen ties with other regional partners like Singapore and Thailand.

Opening the economy will expose domestic industries to fierce competition— not just from Vietnamese rice. But the country’s Ministry of Foreign Affairs and Cooperation (MNEC), which is spearheading Timor-Leste’s ASEAN bid, says membership would help the country pursue security, economic development and integration, and socio-cultural matters.