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DATE=10/7/1999 TYPE=BACKGROUND REPORT TITLE=EAST TIMOR ECONOMY NUMBER=5-44433 BYLINE=AMY BICKERS DATELINE=HONG KONG INTERNET=YES CONTENT= VOICED AT: INTRO: As peacekeepers try to secure East Timor from pro-Indonesian militias and refugees trickle back to their towns and villages, daunting challenges lie ahead for East Timor. Among them, the rebuilding of the territory's economy. Amy Bickers has more from the V-O-A Asia News Center. TEXT: East Timor is expected to become one of Asia's smallest countries, as soon as Jakarta ratifies the August referendum which showed overwhelming support for independence. It will be a state born in ruins. The burning, looting and killing that followed the announcement of the referendum's results destroyed many town and villages. But community leaders and international aid agencies are already thinking about how to create a viable economy. Chris Manning, an expert in East Timorese issues at the Australian National University, says efforts will center on the farming sector. /// MANNING ACT /// It is fundamentally an agricultural economy with a large government sector. It has been fairly dependent on Indonesian government transfers over the years. I would imagine the economy and the whole development effort will have to focus on the agricultural sector. Coffee is an important crop. /// END ACT /// Even though pro-Indonesia militias have destroyed much of East Timor, its coffee crop is intact and is expected to yield a bumper harvest this year. Sandalwood and marble are other vital resources, as are oil, gas and minerals that lie offshore. But despite these commodities East Timor is impoverished, with a per-capita income of about 400-dollars a year before the humanitarian tragedy. That is one of the lowest levels in Asia. Economists say East Timor will have to rely on aid from the international community for at least a decade. Despite aid offers from numerous countries, foreign investment is unlikely, since the territory has no manufacturing base. In the long term, analysts say that tourism could be a potential revenue earner if the future micro-state can draw visitors to see centuries-old fortresses and churches left over from the Portuguese colonial era. But for now, the economy is not even at a subsistence level. Entire villages have been burned to the ground and a substantial number of East Timor's 800-thousand people have lost all their possessions. As the people of East Timor struggle to rebuild their lives, the international community, along with East Timorese leaders, are laying plans for economic development. Mr. Manning says many basic issues remain unresolved, including what currency to circulate. /// MANNING ACT /// It is most unlikely East Timor will use the Indonesian rupiah although there are some good reasons why it might. I would think it would take its own currency and peg it to the Australian dollar or the U-S dollar or some basket of currencies. /// END ACT /// The United Nations is leading the rebuilding plan, with the help of the World Bank, International Monetary Fund and others. Recently aid donors met in Washington to discuss East Timor, and pledged to provide support to begin reconstruction and development assistance. But even with all that help and advice, the people of East Timor must build their nation from virtually nothing. NEB/AB/FC/KL 07-Oct-1999 07:33 AM EDT (07-Oct-1999 1133 UTC) NNNN Source: Voice of America .





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