Timor-Leste: The Business Regulatory Environment

Timor-Leste started as an independent country facing some very difficult challenges. The country was extremely short of skilled human resources and remains so. It faced the challenge of moving from the inherited Indonesian legal system to a new legal system based on the lusophone tradition.  Added to this was the adoption of Portuguese as a new official language. 

There are gaps in key areas of legislation and regulation, but more critically, the institutions needed to enforce and administer the laws and rules do not yet have the capacity to do so effectively. The end result is a business regulatory environment that many existing and potential entrepreneurs regard as more hostile than welcoming to private investment.

The government deserves much credit for the work it has been doing since it first took office, to create a basic legal and regulatory framework to govern and encourage competitive private sector activity.  However, the work is far from complete and there remain many gaps. 

 

The challenges to creating a business regulatory environment conducive to private sector development in Timor-Leste are daunting. In practice, whatever laws and regulations do exist are applied mainly through weak institutions. Even where the laws and regulations exist, Timor-Leste inherited a situation where human capacity to enforce and administer the framework is severely limited.  The result is a legal and regulatory environment that is perceived by many in the private sector to be somewhat arbitrary and often an impediment rather than an encouragement to investment and growth.

This report reviews the legal and regulatory environment governing private sector activity in Timor-Leste, identifying progress to date, shortcomings, gaps and opportunities for development.

Download full report in:
  English (701kb pdf) 
  Portuguese  (712kb pdf)
  Tetum (577kb pdf)