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The Portuguese began to trade with the island of Timor in the early 16th century and colonized it in mid-century. Skirmishing with the Dutch in the region eventually resulted in an 1859 treaty in which Portugal ceded the western portion of the island. Imperial Japan occupied Portuguese Timor from 1942 to 1945, but Portugal resumed colonial authority after the Japanese defeat in World War II. East Timor declared itself independent from Portugal on 28 November 1975 and was invaded and occupied by Indonesian forces nine days later. It was incorporated into Indonesia in July 1976 as the province of Timor Timur (East Timor). An unsuccessful campaign of pacification followed over the next two decades, during which an estimated 100,000 to 250,000 people died. In an August 1999 UN-supervised popular referendum, an overwhelming majority of the people of Timor-Leste voted for independence from Indonesia. However, in the next three weeks, anti-independence Timorese militias - organized and supported by the Indonesian military - commenced a large-scale, scorched-earth campaign of retribution. The militias killed approximately 1,400 Timorese and forced 300,000 people into western Timor as refugees. Most of the country's infrastructure, including homes, irrigation systems, water supply systems, and schools, and nearly all of the country's electrical grid were destroyed. On 20 September 1999, Australian-led peacekeeping troops deployed to the country and brought the violence to an end. On 20 May 2002, Timor-Leste was internationally recognized as an independent state.

Location

Southeastern Asia, northwest of Australia in the Lesser Sunda Islands at the eastern end of the Indonesian archipelago; note - Timor-Leste includes the eastern half of the island of Timor, the Oecussi (Ambeno) region on the northwest portion of the island of Timor, and the islands of Pulau Atauro and Pulau Jaco

Natural Resources

gold, petroleum, natural gas, manganese, marble

Population - distribution

most of the population concentrated in the western third of the country, particularly around Dili

1154625
Tetun Prasa 30.6%, Mambai 16.6%, Makasai 10.5%, Tetun Terik 6.1%, Baikenu 5.9%, Kemak 5.8%, Bunak 5.5%, Tokodede 4%, Fataluku 3.5%, Waima'a 1.8%, Galoli 1.4%, Naueti 1.4%, Idate 1.2%, Midiki 1.2%, other 4.5%
DILI (capital) 228,000 (2014)
Conventional long form
Democratic Republic of Timor-Leste
Conventional short form
Timor-Leste
Local long form
Republika Demokratika Timor Lorosa'e [Tetum]; Republica Democratica de Timor-Leste [Portuguese]
Local short form
Timor Lorosa'e [Tetum]; Timor-Leste [Portuguese]
semi-presidential republic
Name
Dili
Geographic coordinates
8 35 S, 125 36 E
Time difference
UTC+9 (14 hours ahead of Washington, DC, during Standard Time)
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Since independence in 1999, Timor-Leste has faced great challenges in rebuilding its infrastructure, strengthening the civil administration, and generating jobs for young people entering the work force. The development of offshore oil and gas resources has greatly supplemented government revenues. This technology-intensive industry, however, has done little to create jobs in part because there are no production facilities in Timor-Leste. Gas is currently piped to Australia for processing, but Timor-Leste has expressed interest in developing a domestic processing capacity.
Inflation
-1.205%
Total tax rate (% of commercial profits)
11.2%
Real Interest Rate
14.871%
Manufacturing, value added (% of GDP)
0.923%
Current Account Balance
US$ -533,075,100
Labor Force, Total
295,237
Employment in Agriculture
51.21%
Employment in Industry
8.87%
Employment in Services
39.52%
Unemployment Rate
4.02%
Imports of goods and services
US$ 1,338,000,000
Exports of goods and services
US$ 81,000,000
Total Merchandise Trade
64.37%
FDI, net inflows
US$ 5,478,700
Commercial Service Exports
US$ 61,712,800
coffee, rice, corn, cassava (manioc, tapioca), sweet potatoes, soybeans, cabbage, mangoes, bananas, vanilla
printing, soap manufacturing, handicrafts, woven cloth
Commodities
oil, coffee, sandalwood, marble
Partners
Commodities
food, gasoline, kerosene, machinery
Partners
Country Risk Rating
E
The highest-risk political and economic situation and the most difficult business environment. Corporate default is likely.
Business Climate Rating
D
The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Intercompany transactions can thus be very difficult to manage in the highly risky environments rated D.
  • Oil and gas reserves in the Sea of Timor
  • Support from the Community of the Portuguese-speaking countries
  • Vulnerability to natural disasters (landslides, violent winds, flooding)
  • Under-development infrastructures
  • Deficit of human capital
  • Very high dependency on oil revenues (98% of exports)
  • Almost half the population lives below the poverty threshold
  • High level of unemployment amongst the young (40%)
  • Low banking intermediation

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