Timor-Leste’s Accession to ASEAN: Benefits, Risks and Challenges

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After protracted negotiations, Timor-Leste is on track to become the eleventh member of the Association of Southeast Asian Nations (ASEAN). In a recent ASEAN summit, held in Phnom Penh, member nations voted in favour––‘in principle’––of Timor-Leste’s inclusion into ASEAN, initially as an observer. In the summit of 2023, a roadmap for full membership will be presented. If followed through, the roadmap will enable Timor-Leste to be, sooner or later, fully incorporated in what has become a Southeast Asian project in liberal economic integration by joining the ranks of the ASEAN Community currently made up of ten nations––Singapore, Thailand, Laos, Cambodia, Vietnam, Myanmar, Malaysia, The Philippines, Brunei and Indonesia­­. To arrive at this point, Timor-Leste has had to work hard to fulfil the criteria for membership by signing various treaties, opening embassies in each member country, and demonstrating a commitment to ASEAN objectives, values and regulations.

Timor-Leste’s State Secretariat of ASEAN Affairs is leading the process of adopting ASEAN’s institutional framework. Most challenging for Timor-Leste is the legal reform associated with one of the three Pillars of ASEAN, namely the ASEAN Economic Community (AEC). Some ASEAN member states have also expressed concerns that the Timor-Leste economy remains too underdeveloped to integrate successfully into ASEAN, while noting serious problems related to infrastructure, human resources, corruption and clientelism, political volatility and the ever-present potential for social unrest. ASEAN ‘fact-finding missions’ to Timor-Leste have also drawn ambivalent conclusions about Timor-Leste’s economic prospects. Timor-Leste’s only productive oil field––Bayu Undan––is currently being decommissioned, and the state budget is almost totally dependent on the savings from oil and gas production which are invested in Timor-Leste’s sovereign wealth fund – the Petroleum Fund. However, due to volatile world markets and excessive government withdrawals to finance spending on infrastructure and administration, the Fund has lost significant value over the last two years. A recent World Bank report suggested that if current trends continue, the Fund may be exhausted by 2034. At the same time, many observers have expressed doubts that Timor-Leste will be able to establish a dynamic, diversified industrial base which can provide employment for the growing youth population, and revenues to replace those already received from gas and oil extraction.

Nevertheless, Timorese leaders have continued to respond to ASEAN’s reservations with assurances that the country is ready. Finally, it appears that ASEAN has conceded, just as one may suspect a geo-strategic subtext: ASEAN has had to reassess the risks of leaving Timor-Leste outside the sphere of ASEAN influence in the face of an increasingly assertive China. Not surprisingly, Western powers have been energetic proponents of Timor-Leste’s ASEAN accession, have contributed to strengthening Timor-Leste’s bid, and are currently involved in the in-country legal and institutional processes that will make full integration possible.

Timor-Leste’s optimistic diplomacy abroad has tended to reflect the rhetoric at home. Inside Timor-Leste, the political elite has emphasised the ‘inevitable’ advantages of prospective ASEAN membership: it will attract foreign investment, stimulate the economy, expedite development, offer a pathway towards a more diversified economy, boost human capital and employment, help lift Timor-Leste out of poverty, provide business, work and study opportunities abroad, and so on.

Fundasaun Mahein, alongside many academics and critical observers, is reluctant to comment on what Timor-Leste’s integration into ASEAN may bring. We are not inclined to speculate about the effects of something that has not yet happened. We certainly do not follow the unqualified enthusiasm of Timor-Leste’s leaders. If (not when) ASEAN membership stimulates foreign investment in Timor-Leste, we suspect that this will evolve over many years. We understand that foreign investment and trade will naturally flow to its most profitable point (just like water flows through cracks), Timor-Leste or not, ASEAN or not. Foreign investment requires that a viable––the most viable––investment opportunity exists. Given that agriculture, mining, tourism and basic manufacturing present the main foreign investment options for developing countries, Timor-Leste does not stand out. Factors conducive to foreign investment are the existence of valuable natural resources, possibilities for high-yield and broad-acre agriculture, excellent infrastructure and services, an educated or skilled workforce, transparent justice system and stable government. By these measures, Timor-Leste faces stiff competition from abroad and is unlikely to be a favoured destination.

Fundasaun Mahein also understands that the Timorese State’s challenge to remain solvent in the wake of oil and gas dependency is immense, and, in the absence of anything else, is not convinced that the development of tourism will suffice. In the field of human resources, we are aware of the obstacles that must be overcome to improve the nation’s pool of expertise. We also know that, as a rule, free trade favours cheaper imports and jeopardises local production for the non-competitive and less developed countries (all other things being equal). Furthermore, ASEAN members conduct most trade not with each other but with external partners (although ASEAN membership can also facilitate foreign investment from outside ASEAN). At the same time, international investment in ASEAN countries comes mainly from beyond ASEAN borders. ASEAN membership itself, therefore, may not spark the rapid transformation that some Timorese leaders anticipate.

And yet this is not to be overly gloomy, because ASEAN for Timor-Leste was always intended to be a gradual process of incorporation. Much remains in the hands of Timor-Leste’s policy makers to ensure that Timor-Leste’s accession is fruitful. Fundasaun Mahein has observed that many more human resources and capacity exist in Timor-Leste, but they are not properly utilized. We have seen a significant number of qualified and highly experienced Timorese experts who are relatively inactive at work and not sharing their expertise, simply because their roles and activities have not been appropriately delineated. As FM wrote in December, the current reliance on foreign advisors, moreover, may not only be unnecessary but counter-productive. A related issue is that well qualified workers (many of whom have received postgraduate education overseas) are not receiving positions that match their skills. In fact, 90 per cent of those with tertiary education remain unemployed. These organisational problems can be remedied with appropriate policy and investment.

In the short term, more practical matters­––and potential risks––should receive more attention. Timor-Leste must commit to ASEAN member rules––paying membership fees, maintaining the ten embassies, hosting events and summits, attending 1,200 or more meetings annually, and budgeting for a sizeable diplomatic corps and the attendant bureaucracy. Therefore, the immediate fiscal pressure on the State will be enormous. Participation in ASEAN may exacerbate existing inequalities  between Timor-Leste’s elites and the vast majority of citizens. (Academics have long criticised ASEAN elitism and lack of interest in ‘the people’.) When observers stress that the real motives behind Timor-Leste’s ASEAN membership quest touches on national identity and regional belonging, we may wonder whether this will only apply to the upper echelons of Timorese society. An ASEAN identity may not mean much to the Timorese majority.

An indirect short- to medium-term effect of ASEAN integration may be the increase in bilateral agreements to enable Timorese to take up unskilled work abroad. For instance, Brunei recently proposed to take 20,000 Timorese labourers. With an estimated 20,000 Timorese already working in the United Kingdom, Brunei’s proposal, if implemented, would double the number of Timorese working overseas. Instead of real development, Timor-Leste is at risk of becoming another source of ready (and most likely cheap) labour in ASEAN countries, just as domestic dependency on remittances will grow. A burgeoning remittance economy will have clear benefits, although the questions of equity, exploitation and sustainability arise. As Fundasaun Mahein has previously documented, increased migrant labour in the face of limited economic opportunities at home also carries the risk of human-trafficking.

This brings us to consider a more egregious issue. The building of the ASEAN Economic Community (AEC) makes for the streamlining of border controls and the freer cross-border passage of goods, people and services. When in 2016 the United Nations Office for Drugs and Crime (UNODC) issued a stark warning about the “dark side of greater ASEAN integration”, it foresaw how compromised border scrutiny amidst increasing trade would facilitate cross-border criminality such as drug smuggling, people trafficking, and piracy. The UNODC’s predications did in fact materialise as evidenced, among other things, in the exponential growth in methamphetamine trade and use across Southeast Asia. While the AEC is surely not the only driver of flourishing regional interstate crime, Timor-Leste should heed the warning given its incipient drug market and people-trafficking operations. ASEAN integration coupled with an under-resourced police force may make Timor-Leste an even more attractive refuge for dubious elements.

This brings us to the second Pillar of ASEAN, namely the ASEAN Political-Security Community (APSC). Although ASEAN has found itself on the back foot in confronting the proliferation of regional criminality, Timor-Leste must take advantage of the ASEAN counter-measures that have been adopted to tackle the scourge. ASEAN avoids subsidising national security (or anything ‘national’ for that matter––a crucial point of difference with the European Community), but at least it creates an institutional framework for dialogue, Interpol operations, information-sharing, policy-making and capacity training, not least for new members. An ASEAN Timor-Leste must be prepared for significant challenges, but it can also look forward to modest ASEAN support towards building a stronger national security apparatus. This is likely to have ramifications for other problems, such as illegal fishing and shark poaching in Timorese waters and the use of Timor-Leste as a source of, point of passage for, or destination in various illicit activities.

Beyond these logistical and practical issues, much of the APSC will have limited consequences and, unlike for the AEC, involves little preparatory work. Timor-Leste signed the 1967 Treaty of Amity and Cooperation in Southeast Asia (and various amendments) in 2002 and it upholds the values of durable regional peace, territorial integrity, peaceful resolution of disputes, and non-interference in the domestic political affairs of member nations. Indeed, ASEAN credits itself for consisting of “caring societies”, although it must be stated that this “caring” is not consistent with the ample expressions of state authoritarianism, violence and human rights violations across Southeast Asia. Timor-Leste’s democracy appears commendable by comparison. Just as Timor-Leste could pass on a few lessons to its ASEAN friends, it must also resist a home-grown authoritarian temptation for which ASEAN could provide tacit approval.

The final Pillar of ASEAN is the ASEAN Socio-Cultural Community (ASCC). The ASCC focuses on human development. It envisages a Community that promotes social welfare, poverty eradication, education, equality of opportunity, human rights, environmental protection, cooperation on climate and natural disasters, all underpinned by a deep respect for cultural diversity and an (arguably facile) pledge to ‘narrow the gap’ between wealthier and poorer members. The inter-governmental activities designed to execute the ASCC agenda are equally diverse, if limited. Fundasaun Mahein does not discuss these activities here in detail. We only want to alert readers to the dangers of subscribing uncritically to ASCC human welfare rhetoric, which is contradicted by the ASEAN principle of non-interference in domestic matters of member nations. In practice, the ASCC depoliticises human rights by avoiding discussion of State abuses while enthusiastically holding criminal networks accountable.

To conclude on a reflective note, readers will be aware that in this communiqué, Fundasaun Mahein has departed from its usual approach of identifying tangible problems (usually related to security) in Timor-Leste society, examining their causes and effects, stimulating debate and advocating for the implementation of remedial policy. This is clearly not possible when it comes to Timor-Leste’s imminent accession to ASEAN and its subsequent trajectory, not only because it lies in the nebulous future but also because its ramifications will surely be complex, both positive and negative. At this stage, Fundasaun Mahein can only reasonably advocate for the need for more, and broader, public discussion. Such discussion should go beyond Timor-Leste’s diplomatic and domestic political discourse by addressing some of the potential issues that, perhaps, Timor-Leste might well anticipate now and be prepared for later.

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