This paper intends to start a conversation about a broad yet crucial question: what does the future hold for Timor-Leste? And in turn, what does that mean for the Indo-Pacific region? It examines key challenges confronting the country over the next decade, with a focus on how economics, governance, and the transnational issues of climate change, pandemic preparedness, and geopolitics will impact the small island nation.
Timor-Leste has accomplished a great deal over the past two decades but faces headwinds that, if left unaddressed, could undo much of what it has achieved. Its future is not preordained, and decisions made by Asia’s youngest nation over the coming years will determine the direction it takes. Australia and Indonesia loom large in this equation, and they will certainly have a vested interest in the course Timor-Leste chooses to take.
Key findings:
- Timor-Leste has come a long way since gaining independence in 2002, but its reliance on oil and gas revenues could lead to a 'fiscal cliff' within the next decade when its sovereign wealth fund is currently projected to run dry.
- Despite being one of Southeast Asia’s most vibrant democracies, a potentially destabilising transition from the political leaders of the Generation of ‘75 also looms on the horizon.
- Transnational threats will compound the economic and political challenges facing the country. Instability would likely result in international geopolitical ramifications that far outstrip Timor-Leste’s size.
