Enhanced Cooperation and Integration Between Indonesia and Timor-Leste

Executive Summary

This Enhanced Cooperation and Integration between Indonesia and Timor-Leste— Scoping Study responds to requests by the governments of Indonesia and Timor-Leste made to the Asian Development Bank in February 2017. The request from the Government of Indonesia was driven by a desire to tackle spatial inequality and address poverty in the nation’s second-poorest province by emphasizing development from the margins. For Timor-Leste, the study supports Strategic Development Plan goals for economic growth and diversification, particularly Timor-Leste’s application for membership in the Association of Southeast Asian Nations (ASEAN). Cross-border collaboration between Timor-Leste and Indonesia’s Nusa Tenggara Timur (NTT) province in the form of trade, investment, and cooperative production provides a means of addressing national inequality, diversifying economic growth, and importantly, reducing poverty in the border areas.

The study is predominantly qualitative, based on existing research and consultations with more than 250 individuals in government, the private sector and civil society, both in Indonesia and Timor-Leste. The work has been developed broadly through two phases. The first phase looked at crosscutting issues such as transport connectivity, trade flows, access to business and financial services, and the business and investment climate. It also explored the rationale for supporting cross-border collaboration through a border economic zone, and identified sectors for cooperation with high potential. This forms the content of Part I. The second phase delved more deeply into those sectors identified as the most promising sectors for cooperation—tourism, presented in Part II; and livestock, presented in Part III.

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