East-Timor: Investing

FDI in Figures

According to the World Investment Report 2023 published by UNCTAD, FDI flows to Timor-Leste reached USD 262 million in 2022 after registering negative values for the three previous years. At the end of the same period, the total stock of FDI reached USD 1.49 billion. Traditionally, the main sector attracting FDI is the oil and gas sector, but there are also opportunities in the services, tourism, and agriculture (timber, coffee, and vanilla) sectors. The main investing countries are Indonesia, the United States, and Australia. Through its autonomous agency, the National Petroleum and Minerals Authority (ANPM), the government engages in contracts with foreign firms to explore and exploit offshore oil and gas reserves. The pre-qualification process for Timor-Leste's second licensing round, comprising 11 onshore and 7 offshore blocks, concluded on January 14, 2022. Thirteen companies submitted bid documents, and the results were announced on April 22, 2022, with five blocks awarded. Oil and gas revenues are deposited by the government into the Petroleum Fund, functioning as a sovereign wealth fund. The majority of fund income is derived from investment returns, while revenues from oil and gas constitute a relatively minor portion of the overall income.

The investment climate remains challenged by inadequate regulatory frameworks, corruption, limited personnel capacity, and deficient infrastructure. While the government is striving to tackle these obstacles, progress on reforms has been slow due to constrained human resources and a bureaucratic legislative system that consumes time. Foreign investors are legally permitted to invest in all sectors except for postal services, public communications, transportation, protected natural areas, funeral services, and weapons production and distribution, which are exclusively reserved for the state. In sectors open to foreign investment, there are no restrictions on the extent of foreign ownership or control. Under the constitution, land ownership is restricted to citizens only. Timor-Leste has implemented laws in 2017 and 2018 to facilitate and safeguard foreign private investment, aligning with international agreements and streamlining bureaucratic processes. Private Investment Law No. 15/2017 allows foreigners to acquire private property rights for investment and reinvestment projects, within the limits established in the Constitution and relevant legislation on land and commercial entities. In 2022, Timor-Leste was granted observer status by ASEAN member states, who have also tentatively agreed to approve its application for full ASEAN membership. Additionally, the country is actively pursuing accession to the World Trade Organization (WTO), with the joining protocol having been signed in February 2024. TradeInvest Timor-Leste serves as the investment and export promotion agency for Timor-Leste. It aims to aid potential investors and assist foreign companies in identifying business opportunities within the country. Acting as a comprehensive resource, TradeInvest offers services ranging from licensing and taxes to investment opportunities and permits. Additionally, it educates importers on proper procedures and policies and provides post-investment aftercare services. Timor-Leste ranks 70th among the 180 economies on the 2023 Corruption Perception Index and 143rd out of 184 countries on the latest Index of Economic Freedom.

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Latest Update: May 2024