Commentary on MoU between Timor-Leste Minister of Agriculture and Fisheries and Indonesian company GTLESTE BIOTECH

Recently, there has been a serious issued been raised in Timor Leste regarding the signing of an agreement from Government of Timor Leste through its minister of agriculture and fisheries H.E. Mariano Sabino and an Indonesian company GTLESTE Biotech for a $100 million, 100,000 hectare sugar cane plantation, sugar plant, ethanol plant and power generation facility at the beginning of 2008. The signing of such an agreement has been a concern for academia, politics and civil-society because the MoU is unclear, therefore in this occasion I would like to comment base on the signing the MoU, I have summarized my comment in its advantages and disadvantages, I would like to suggest readers to have a copy from http://www.laohamutuk.org/ or you may get the copy from Forum-Haksesuk as I have attached a copy of MoU to its mail address.

Advantages

Ø The implementation will create more than 2000 regular employees and more than 8000 labor direct job. In this session will help Timorese to get job opportunity that eventually the unemployment rate will shrink

Ø The GTLESTE Biotech will take full responsibility for any loan guarantees required to finance the business venture. This means that the company will have full responsibility to provide any loan guarantees in order to finance the business venture which is normal for any profitable business to do it because in dealing with business the main aim is optimizing of profit.

Ø GTLESTE Biotech will be staffed by qualified personnel from Timor Leste and or experienced Indonesian assisted also by other foreign technicians it necessary. Means the company will prioritize the qualified Timorese personnel to get job opportunity and the other advantage is that the company also will welcome experienced Indonesians and from other countries to share their knowledge and skills to the Timorese so that they can develop they technical skills for up-to-date technology.

Ø GTLESTE Biotech will support Timor Leste total consumption of sugar and ethanol with reasonable prices. This is one of advantaged will be beneficial to all Timorese because the company will sell its product in reasonable prices.

Ø The product that produced by the company while consume in Timor Leste it can be exported to other countries and the Timor Leste will gain reputation in the world, such the product will be identified the product was been made in Timor Leste.

Ø GTLESTE Biotech will provide community facilities such as clinics and sporting facilities. It will help rural people to have clinics and sporting facilities in helping the community in health and sport affairs.

Disadvantages

Ø The government will grant the company the exclusive concession of 100000 hectares of unproductive land and to be utilized for sugar plantation. The 100000 hectares is a large space of land to cultivate the sugar can and ethanol so that the Timor Leste will lose their land for only producing sugar and ethanol, so it is better to minimize the land space since we all aware that Timor Leste is a small country compare with other countries in the world so it is essential to manage its territory in planning anything so that it will not a bad precedent in future, and it is avoiding the country running out of land space in future. Using the huge space of territory on one or two purposes will jeopardize other purposes such as agricultures and infrastructures purposes which have high advantages for Timorese.

Ø The company shall accord the company a 50 years contract to land use, and extendable to another 50 years contract. In this session it is normal in any company the accord of a 50 years is acceptable, however in this session is not clear that after contract duration is expired, whether the company will hand- over the fully ownership to the government of Timor Leste or not. Sadly after a 50 years contract is expired there will be another 50 years an extendable contract with the company which is not an advantage for the people of East Timorese and its government.

Ø The first 50 years contracted awarded will be irrevocable due to the high investment cost incurred by the company. Means that in the first 50 years contracted awarded not be able to change, in this session of agreement the doubt might crop up because there is no constraint in agreement states that if the company fail to fulfill what they (company) promise such as generate regular employees and labor, so the agreement must be revocable in avoiding unexpected that could occur during the venture process

Base on both advantages and disadvantages above, I would say that it is better the government to TERMINATE the agreement because it is hurting the sovereignty of the country and the national pride, because using plenty of land space in sugar and ethanol productions only is an accident. If the government plans not to REJECT the agreement, the agreement must be reviewed in order to come up with win-win solution.

Luis Pereira - University of Technology PETRONAS, Bandar Seri Iskandar, Tronoh 31750 PERAK-MALAYSIA