October 2011 Edition No. 4 www.adb.org/Timor-Leste About ADB Country Project Milestones  The government signed contracts in September 2011 Partnership Strategies to rehabilitate the Liquica–Maubara section of the national road network and to maintain the Maliana– Country partnership strategies (CPSs) are the Asian Batugarde section. The government also issued a Development Bank’s (ADB) primary platform for designing tender for rehabilitation of the Loes–Batugarde operations to deliver development results at the country section. An existing ADB grant will fund most of the level. The CPS ensures ADB country operations align with works. government development priorities, reflect ADB’s core  A contract was issued by the government in areas of specialization, and complement the work of other September 2011 for the rehabilitation of the water development partners. system in three subzones of Dili. The works will be The CPS cycle mirrors the government’s own strategic largely funded by an existing ADB grant. planning cycle (as summarized in the figure overleaf). This  The government and ADB signed a grant in October enhances synergies and reduces transaction costs for the 2011 worth $11 million to improve the safety and government and other stakeholders. quality of drinking water in the district capitals of The country operations business plan is a key Manatuto and Pante Macasar. Upon completion, the component of the CPS cycle. Based on the CPS, this plan is rehabilitated water supply systems will provide clean updated annually to provide a 3‐year rolling pipeline of water to about 30,500 people. The grant will also help activities and the resources needed to support them. fund rehabilitation of the Lehumo Lake in Ermera. Performance assessment is very important to the CPS cycle. Performance is assessed through a country strategy final review, which is assessed and validated by ADB’s ADB‐Supported Events Independent Evaluation Department. Timor‐Leste participated in the following events in 2011 The Timor‐Leste CPS 2011–2015 was endorsed by the  Workshop for trade officials and policy makers, New ADB Board of Directors in September 2011. It outlines a 5‐ Issues in Trade Policy: Challenges and Responses from year strategic partnership with the government in support Asia, 22–26 August, ADB Headquarters, Manila, of infrastructure, financial services, and skills training Philippines; needed to meet the needs of a growing economy. The CPS  Regional consultations on climate change financing, will support the private sector to help Timor‐Leste make 1–3 September, Singapore; the transition from a public sector‐led economy.  The Asia–Pacific Financial Inclusion Forum: Expanding This edition of the Dili Bulletin provides an overview Financial Access through Regional Public–Private of the CPS 2011–2015. The CPS 2011–2015, the country Cooperation, 6–8 September, Tokyo, Japan; operations business plan 2011–2013, the final review and  Pacific regional seminar, Youth Employment and its validation, and associated studies are available on the Sustainable Development in the Pacific, 27–29 ADB website at http://beta.adb.org/countries/timor‐leste/ September, Nadi, Fiji; and strategy.  Regional conference, Knowledge Sharing and Development Effectiveness in the Asia and Pacific How to reach us? Region, 7 October, ADB Headquarters, Manila. Timor‐Leste will also soon participate in the following Special Office in Timor-Leste  ADB–World Bank Building, Avenida dos Direitos Humanos Asian Urban Forum: Financing Future Cities, 15–17 Dili, Timor-Leste November, ADB Headquarters, Manila, Philippines; Telephone +670 332 4801  Asia and Pacific Regional Conference on Electronic Headquarters Government Procurement (e‐GP), 22–24 November, 6 ADB Avenue, Mandaluyong City Bali, Indonesia; and 1550 Metro Manila, Philippines Telephone +63 2 632 4444  Updating and Improving the Social Protection Index, 23–24 November, ADB Headquarters, Manila, Philippines. Page 2

Government’s strategic planning cycle ADB cycle

SDP CPS 2011–2030 2011–2015

CPS final Annual Evaluation review and COBP budget validation

Country Dialogue, SDP Action programming loans, grants, monitoring plans and portfolio and technical review assistance

COBP = country operational business plan, CPS = country partnership strategy, SDP = strategic development plan.

The Final Review Capacity building was identified as a central challenge ADB assistance to Timor‐Leste in 1999–2005 had to the sustainability issue. The extended focus on concentrated on emergency infrastructure works. The ADB emergency works was found to have delayed a much‐ country strategy for 2006–2010 continued the focus on needed emphasis on capacity development in infrastructure while completing a transition to infrastructure, and the final review called for more rehabilitation works. It emphasized capacity development attention to be paid to building capacity. so that government agencies would be able to rehabilitate A gradual approach to building capacity was and maintain infrastructure. encouraged, based on realistic planning of the steps Over 2006–2010, ADB assistance targeted outcomes required to achieve target impacts. Designs that allow for of (i) improved availability of efficient, cost‐effective, and a sequencing of actions as part of a long‐term plan were financially sustainable transport infrastructure; considered to warrant close consideration. The final (ii) improved water supply for residents and businesses in review argued that a gradual approach will need to be urban areas; and (iii) improved access to credit. coupled with ADB’s willingness to help fill gaps in capacity The final review of the country strategy 2006–2010 while it is being built. rated the overall performance partly successful. The The final review highlighted that valuable lessons on country strategy was found to be well‐positioned and what works have been gained, and this provides a relevant, and implementation was considered effective. platform on which sustainable development impacts can The country strategy ensured that ADB assistance targeted now be pursued. It concluded that a long‐term development priorities and was provided in areas where engagement is essential to achieving results, given the ADB had a comparative advantage. ADB was identified as experience that considerable time is required to being well‐placed to help Timor‐Leste fast‐track the understand the environment and to establish efficient and achievement of its development priorities. effective modes of engagement. There were, however, shortfalls in efficiency, The validation of the final review by the Independent sustainability, and achieving development impacts. Evaluation Department confirmed the overall performance Sustainability was the main aspect of ADB’s engagement rating. The validation emphasized the importance of found to require attention. adopting a programmatic approach for technical Key factors contributing to shortfalls in performance assistance and other initiatives, wherein ADB and the were identified as (i) the political, humanitarian, and government identify a long‐term strategic target to be security crisis of 2006 and its aftermath, which slowed the pursued through a series of linked initiatives. The implementation of existing activities and the preparation validation also encouraged innovation in capacity of new assistance; and (ii) an underestimation of the development. It emphasized the importance of developing complexity of the transition from emergency to public sector supervision and monitoring capability while rehabilitation works, particularly the demands of building also helping the government outsource non‐core activities. capacity in government agencies and individual staff. Page 3

ADB assistance will continue help build the capacity The 2011–2015 Country of the public and private sectors to deliver infrastructure services. Best practice models for sustainable asset Partnership Strategy management will be established through investment and The CPS 2011–2015 will continue ADB’s strategic technical assistance projects with the goal of replication. directions in Timor‐Leste by concentrating on All ADB‐financed investment projects will be designed with infrastructure development and management. climate change and the environment in mind. Complementary assistance will be provided in ADB’s core Finance. ADB will help improve the provision of specializations of finance, regional cooperation and financial services, emphasizing the needs of small and integration, and education. Support will be provided to the micro lenders and borrowers, especially rural populations private sector to help Timor‐Leste make the transition and women. ADB will help the Banco Nacional Comércio from a public sector‐led economy. The strategy will also de Timor‐Leste complete a successful transition to Timor‐ selectively support the drivers of change of good Leste’s first locally owned commercial bank. ADB will governance and capacity development, gender equity, continue to help catalyze new technologies and other knowledge solutions, and partnerships. market innovations that extend access to finance, Support provided through the CPS will help Timor‐ particularly in rural areas (e.g., branchless banking and Leste achieve inclusive economic growth by helping to secured transactions). sustain a high rate of economic growth and sharing Technical and vocational education and training. The economic opportunities across the population. ADB government has made a large commitment to education. support for infrastructure, financial services, and skills Nevertheless, much work remains to provide the skills training will help meet the needs of a growing economy needed to run business activities and to fill gaps in a and improve the competitiveness of the private sector. rapidly growing formal labor market. With extensive An emphasis on the provision of services outside the experience in technical and vocational education and capital city will support growth of agriculture and the rural training, ADB is well‐placed to help the government economy. Poverty will be alleviated through the benefits address these skill shortages. The CPS will help initiate the of economic growth, particularly in rural areas; by activities needed to train more young people, including connecting the poor to markets; and by increasing the helping develop independent service providers. availability of basic public services to the poor. Good governance. The government will maximize the ADB support will emphasize the provision of tangible use of its own systems and processes in implementing benefits to directly contribute to raising living standards ADB‐funded investment projects, subject to ADB’s “no and to assist in building citizen confidence and trust in objection.” Selective assistance will be provided to further state institutions. strengthen the government’s planning, budgeting, and Infrastructure. The emphasis on infrastructure project management systems, including anticorruption reflects its importance to the government’s development initiatives. This will help ensure the timely implementation priorities for 2011–2015 and ADB’s established presence of projects funded with ADB support while generally and comparative strength in infrastructure. ADB will enhancing government operations. continue in the role established under the previous CPS of Gender equity. ADB will continue to help the helping coordinate capacity development and investment government mainstream gender‐equality provisions into programming across infrastructure and helping mobilize projects to promote women's empowerment, particularly financial resources for infrastructure investment. This will in rural areas. improve connectivity, help increase the efficiency of Partnerships. Assistance will continue to be delivered movement of people and goods, and expand access to the in cooperation with other development partners. ADB will basic services essential to development. The agriculture continue to actively participate in Timor‐Leste’s active sector, and rural areas more broadly, will be key program of development dialogue and coordination. beneficiaries. Results framework. ADB will monitor the ADB resources for infrastructure are expected to be implementation of the CPS using the results framework (as concentrated in roads, water supply, and sanitation. summarized overleaf), which will be updated during Support for water, air transport, and energy is expected to annual country programming and country portfolio review emphasize the private sector’s role. Support will be missions. Monitoring will determine how the results align provided for implementation of public–private with the government's development priorities. The partnerships, with ADB playing an “honest broker” role in country program will reflect updates of the results facilitating private sector engagement in infrastructure. framework. Page 4 Country Partnership Strategy 2011–2015 Results Framework

Country Development Goals 1. A healthy and educated society that addresses the social needs of the people and promotes human development 2. The productive infrastructure needed for a sustainable and connected nation 3. A prosperous, modern economy and jobs for all ADB Areas of Government Sector Objectives Indicators and Outcomes of ADB‐Supported Sectors Intervention Road transport: Core national Increased and more efficient movement of people and goods Road rehabilitation, and district roads rehabilitated At least 25% of total population benefits from rehabilitated or upgraded upgrading and or fully upgraded and widened roads by 2015 maintenance; public to international standards by transport and road A minimum of 800 rural poor and vulnerable people (at least 30% of them 2015 safety; contractor women) receive training on and participate in community‐based road development; All rural roads rehabilitated by rehabilitation and maintenance by 2015 2015 community participation Water transport: New national Increased and more efficient movement of people and goods Ports and terminal seaport under construction by Sea freight traffic increased by at least 50% by 2015 (2010 baseline: 58,000 facilities, private 2015 and operating efficiently twenty‐foot equivalent units) sector participation, by 2020 utility management Air transport: The main Increased and more efficient movement of people and goods Airports, private international airport managed Inward international air transport passengers and freight increased by at sector participation, by a commercially oriented least 25% by 2015 (2010 baseline: 75,000 persons and 330 tons) air safety airport authority by 2015 with rebuilt terminal facilities and an upgraded runway Water supply and other More people enjoying improved supply of water services Urban water and municipal infrastructure: At least 95% of the urban population has access to improved drinking water sanitation systems, Universal access by urban by 2015 (2010 baseline: 91%) utility management, households to safe, piped private sector Percentage of urban households where adult female (age 15 years or more) 24‐hour water supply by 2020 participation fetches water reduced to 10% by 2015 (2010 baseline: 13%) Energy: Universal access to Increased use of energy Utility management, reliable electricity daily by 2015 Per capita consumption of electricity in Dili increased by at least 25% by private sector 2015 (2010 baseline: 375 kilowatt‐hours) participation Per capita consumption of electricity in rural areas at least matches 2010 level for Dili by 2015 (2010 baseline for Dili: 375 kilowatt‐hours) Finance: The Instituição de Increased use of more efficient and sustainable finance services by Expansion of Micro Finanças de Timor‐Leste households and micro, small, and medium‐sized enterprises financial services, is transformed into a small The number and value of outstanding loans by micro and small financial microfinance for commercial bank providing institutions increased by at least 50% by 2015, (2010 baseline: 25,600 women and rural loans and banking services to borrowers and $12 million in loans) communities people in every district At least a 50% increase in the number of women with active savings accounts in micro and small financial institutions by 2015 (2010 baseline: 20,100) Education: By 2020, the A skilled workforce with improved technical and vocational training Technical and technical and vocational Number of Timorese with technical and vocational education and training vocational education and training system skill certificates increased from 5,300 in 2010 (37% female) to 6,800 by education and is providing the skilled people 2015, with at least 40% being women training facilities, needed to build the nation policy and strategy development ADB = Asian Development Bank Source: ADB. 2011. Country Partnership Strategy: Timor‐Leste, 2011–2015. Manila.