ADB's Work in Timor-Leste

Timor-Leste demonstrated resilience amid the resurgence of the coronavirus disease (COVID-19) pandemic since March 2021 and the severe flooding that struck the country caused by cyclone Seroja in April 2021. In response to the devastating impact of the flooding, ADB provided a $1 million grant for immediate relief efforts for the Hamutuk Serbi Komunidade cash-for-work project.

ADB accelerated its assistance to other sectors to support the Government of Timor-Leste’s pandemic response through Timor-Leste’s first loans in the urban water, air transport, and energy sectors. The $47 million loan for urban water services will bring reliable access to 62,000 people in the municipal capitals of Lospalos, Viqueque, and Same. The $135 million loan for the expansion of Dili’s Presidente Nicolau Lobato International Airport will improve international connectivity and boost trade and tourism in the country. The $35 million energy sector loan will modernize the power distribution system, enhance electricity access, and provide a more resilient and reliable power system. Two additional projects are proposed in the road transport and urban water sectors for 2022.

To date, ADB has committed 76 public sector loans, grants, and technical assistance totaling $619 million to Timor-Leste. Cumulative loan and grant disbursements to Timor-Leste amount to $248.5 million. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Timor-Leste includes 12 loans and 1 grant worth $449 million.

ADB’s active portfolio comprises 4 active road projects to rehabilitate or upgrade 337 kilometers of national roads. Support to urban water and other urban infrastructure services are essential to improve the health outcomes and address malnutrition, a major challenge for the country. ADB’s ongoing and future activities in the agriculture sector will also contribute to improving food security and accelerate rural development.

ADB also provided technical assistance for project implementation and knowledge work. ADB is a leading partner supporting regional cooperation and has been working closely with the government on its proposed accession to the Association of Southeast Asian Nations (ASEAN) and the World Trade Organization (WTO). ADB also helps strengthen governance, fiscal policies, data, and statistical capacity, and promote gender-responsive judicial systems through ongoing technical assistance projects.

ADB has been supporting Timor-Leste since 1999, with focus on basic infrastructure — in particular, land transport and enhancing state capacity. Since its independence, there has been significant progress in the state’s capacity to deliver basic services and manage external shocks. ADB assistance helped reduce transport and energy infrastructure bottlenecks, identified as key constraints for poverty reduction and economic development. Additional investments and policy changes are still required to strengthen basic infrastructure and services, and human capital for long-term inclusive and sustainable development, as well as private sector growth.

Creating the enabling legal and institutional framework is fundamental for private sector development in Timor-Leste. ADB is supporting the preparation of a Strategic Roadmap 2022-2030 for TradeInvest, Timor-Leste’s investment and export promotion agency and the legal and regulatory framework for the electronic business registration platform (SERVE). An ongoing loan and completed technical assistance to expand Olam’s coffee operations has involved training 4,200 coffee farming households to improve the productivity and quality of their production. ADB has identified transaction advisory opportunities in waste management, renewable energy and information and communications technology (ICT) sectors.

Port views in Timor-Leste's capital of Dili. Photo: ADB

Operational challenges. Although Timor-Leste’s handling of the COVID-19 pandemic showed its capacity to respond to external shocks, the country needs to further build its capacity to manage large and complex projects. Governance and institutional capacity for infrastructure management, budgeting and planning, and project implementation and monitoring also need strengthening. Several large-scale reforms to improve public sector management and the quality-of-service delivery are underway. ADB is supporting institutional strengthening through project-based technical assistance, capacity development, and knowledge transfer

Knowledge Work

ADB provided capacity development support through different projects including training on operations and maintenance in the urban water projects and support to the establishment of Timor-Leste’s new water and electricity utility state-owned enterprises. The government’s core organizing structure for economic integration matters and legislative plan have been supported by ADB. Reports were published on topics that include COVID-19 management, investing in technical skills for the youth, sustainable road maintenance, and climate risks.

  ADB Projects in Timor-Leste Project data sheets for loans, grants, TAs

Future Directions

ADB is currently preparing the country partnership strategy for 2023–2027, which will support Timor-Leste’s pandemic recovery and inclusive development with focus on climate-resilient infrastructure and services and the development of an environment conducive for economic diversification. ADB will also continue to emphasize support to governance and institutional capacity, promote knowledge and innovation, and accelerate gender equality. Regional cooperation and integration will remain a key element of the program.

ADB investments in Timor-Leste will continue to expand in the coming years with additional projects in transport, agriculture, and water and other urban services. In addition, ADB plans to support digitization, e-governance readiness, and education, to address gaps in vocational and technical education services.