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Data Collection Survey on Industrial Development for Timor-Leste

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Data Collection Survey on Industrial Development for Timor-Leste The Democratic Republic of Timor-Leste Data Collection Survey on Industrial Development for Timor-Leste Final Report June 2014 Japan International Cooperation Agency (JICA) International Development Center of Japan Inc. １R KRI International Corp. JR 14-026 The Democratic Republic of Timor-Leste Data Collection Survey on Industrial Development for Timor-Leste Final Report June 2014 Japan International Cooperation Agency (JICA) International Development Center of Japan Inc. 㸦㻵 KRI International Corp. 㻭㻵 㻔㻗㻐㻓㻕㻙 Exchange Rate May 2014 USD 1 ＝ ¥ 102.58 (JICA Rate) 出所：National Statistics Directorate, Democratic Republic of Timor-Leste (2006) “Timor-Leste Census of Population and Housing 2004.” Map of Timor-Leste Photos taken during the field work in Timor-Leste Dili Port CCT(Coffee factory) Gota (Water Company) Timor Block Building Industry Timor Gas ASZ Moris Foun Handicraft Group Coconut Oil production English learning course(ETDA) Salt industrials CNEFP SEPFOPE employment signboard Abbreviations ADB Asian Development Bank ADN National Development Agency AEI Specialized Investment Agency ANAAA National Agency for Academic Assessment and Accreditation ASEAN Association of South‐East Asian Nations ATP Accredited Training Provider BCTL Central Bank of Timor-Leste BNCTL National Commercial Bank of Timor-Leste CCT Cooperative Café Timor CCI-TL Chamber of Commerce and Industry of Timor-Leste CEOP Employment and Career Guidance Center CNEFP National Centre for Employment and Professional Training DIT Dili Institute of Technology EFA Education for All ETDA East Timor Development Agency GDP Gross Domestic Product GDP/C Gross Domestic Product per capita GIS Geographic Information System GNI Gross National Income HACCP Hazard Analysis Critical Control Point IADE Institute for Business Development Support ICT Information and Communication Technology IFC International Financial Cooperation IMF International Monetary Fund INDMO National Labour Force Development Institute ILO International Labor Organization ISC Industry Sub-Commission JICA Japan International Cooperation Agency KOICA Korea International Cooperation Agency LFP Pragmatic Framework Study of Labor Force Planning 2014 LNG Liquefied Natural Gas MAF Ministry of Agriculture and Fisheries MCIE Ministry of Commerce, Industry and Environment MOFA Ministry of Foreign Affairs and Cooperation MOE Ministry of Education MOF Ministry of Finance MOH Ministry of Health MOJ Ministry of Justice MOPCOM Ministry of State and the Presidency of the Council of Ministers MOPW Ministry of Public Works MOSA Ministry of State Administration MOSS Ministry of Social Solidarity MOT Ministry of Tourism MOTC Ministry of Transport and Communications MPRM Ministry of Petroleum and Mineral Resources NFQ National Qualification Framework NGO Nongovernmental Organization PPP Public-Private Partnership SDP Strategic Development Plan SEAPRI Secretariat of State for Support and Promotion of Private Sector SEPFOPE Secretariat of State for Vocational Training and Employment SOLS24/7 Science of Life Studies 24/7 TVET Technical Vocational Education and Training UNFPA United Nations Population Fund UNTL National University of Timor-Leste WB World Bank EXECUTIVE SUMMARY 1. Back ground of the study Timor-Leste suffered various political disruptions after gaining independence in 2002, but has achieved relatively steady economic growth thanks to oil revenues from the Bayu Undan and Kitan deep-sea oil and gas fields after the establishment of a petroleum fund in 2005. Public safety has rapidly improved in line with the stable economy. The election in 2012 was successfully completed without serious problem. With its social stability and the withdrawal of the United Nations Mission in East Timor (UNAMET) at the end of 2012 after being stationed in the country since 1999, Timor-Leste is now at the stage of self-sustaining development, as described by the catchphrase “Good-bye Conflict, Welcome Development”. In 2011, the Government of Timor-Leste announced a Strategic Development Plan (2011-2030) (SDP) with the aim of becoming an “Upper Middle Income Country”. The SDP states that the development of the Timor-Leste economy will be built around the growth of three critical industries: agriculture, tourism and petroleum. It also mentions that in order to achieve the objective, it aims to create job opportunities and to develop human resources by breaking away from excessive dependence on oil and establishing key industries. The Government is formulating a 5-year investment plan while major ministries are making mid-term plans for projects to achieve the objectives of the SDP. The most desirable output of the development program is employment creation. The statistics for 2010 estimate the population of Timor-Leste at 1,066,409 with an annual growth rate of 2.4%. The population will double by 2039 if this high growth rate continues. The youth population is expected to increase sharply, with 15,000 to 16,000 people entering the labor market every year, and yet Timor-Leste has not succeeded in fostering key industries to absorb the working population. Therefore, the immediate establishment of key industries is essential to absorb this working population. To generate employment, it is necessary to diversify industries and develop new ones, as the Timor-Leste government recognizes. However, it is difficult to diversify industries because the Timor-Leste market is small due to the small population, while the petroleum sector is too large to allow other sectors to grow. Amid this environment, the Timor-Leste government has started industrial development programs including small business training, technical and vocational education and training (TVET), and overseas training. The Data Collection Survey on Industrial Development for the Republic of Timor-Leste (“The Study”) aims to achieve the following objectives by analyzing the current industrial human resource development and enterprise development which are the key factors for industrial development and diversification, and by analyzing the gap between the policies and current status of Timor-Leste in order to identify what kinds of human resource development and enterprise development are required. The study was carried out based on previous studies such as the “Study on Business Opportunities i Development of Timor-Leste 2013”, “Study on Cooperation for Timor-Leste’s Accession to ASEAN 2013” and “Pragmatic Framework Study of Labor Force Planning 2014”(LFP). The field survey was carried out mainly by interviewing MCIE and other relevant ministries, 40 major private enterprises, vocational training schools, private associations, producers groups, and NGOs. The results of the study were announced to the ministries, private enterprises and related organizations in a seminar titled “Industrial Development of Timor-Leste, The role of MCIE in Human Resource Development” organized with MCIE. 2. Current situation and issues of industries in Timor-Leste Agriculture, which is the dominant primary industry, heads the list of strategic sectors of the SDP. However, agriculture and fishing in Timor-Leste are mostly at the stage of self-sufficiency for families or small communities. For food, people in the cities such as Dili still rely on imports. For example, only 25% of the rice produced in Timor-Leste is traded and the rest is domestically consumed. Coffee is exported as an organic, Fairtrade product and accounts for 60% of non-oil exports. Vegetables produced in the districts are transported to Dili and distributed through markets. Due to the lack of a value chain, the quantity is limited. There is a pilot project organized by a supermarket to purchase vegetables directly from farms in the districts and deliver the vegetables to Dili using its own fleet. Modernization of the food industry and logistics system is essential for the development of both the agriculture industry and human resources who sustain the progress of agricultural technology. The secondary industry in Timor-Leste is led by the mining industry (oil and cement) in the capital-intensive industries and by the construction industry in the labor-intensive industries. There are signs of manufacturing being started by local capital, such as the start-up of five mineral water enterprises in 2 years. The LFP estimates that the labor force in the secondary industry will rise to 104,000 in 2030 from 22,000 in 2010. To achieve this big increase, human resource development, upgrading of traffic infrastructure and the smoothing of finance are essential. The key measure, which attracts little attention, is to create and improve middle management and engineering. Many companies wish to replace foreigners by Timorese, but they cannot find appropriate human resources. From a macro perspective, it is very difficult and undesirable for all mid-level human resources to be foreigners. Thus, the development of mid-level human resources is crucial. The major oil and gas fields are Bayu Undan and Kitan, both of which are deep-sea oil fields. Bayu Undan has attracted investments from Conoco Phillips, ENI, Santos, Inpex, Tokyo Electric and Tokyo Gas, while Kitan has attracted investments from ENI, Timor Gap (owned by the Timor-Leste government) and Inpex. The royalty income from these fields was 2.7 billion US dollars in 2013, while other revenue was just 146.3 million US dollars, thus oil and gas accounted for 94.8% of the government’s total revenue of 2.8 billion US dollars. In Timor-Leste, the Tasi Mane Project is being implemented as a national project.
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