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On December 13, 2016, the Embassy of the Republic of Indonesia (Indonesian Embassy) in Dili held a “Business and Investment Tips in Timor Leste” Seminar. It so happened that I was appointed to be the Moderator. Lots of interesting information about the current business situation in Timor Leste, how the Government of this new country is working hard to attract investors and improve the ease of doing business in Timor Leste.
The seminar, which took place at the Indonesian Cultural Center (PBI) in Dili, was opened by The Head of Representative of the Indonesian Embassy in Dili, East Timor, Mr. Idhi Maryono.
The seminar went well, and the participants who were mostly Indonesian entrepreneurs and representatives from various Indonesian State Own Enterprise (SOE) in Timor Leste were enthusiastic in participating and discussing with speakers to dig deeper into the business potential in this country.
I made this note in the hope that it will benefit anyone who is exploring business opportunities in Timor Leste.
BUSINESS REGISTRATION IN TIMOR LESTE
The first speaker at the Seminar was Mr. Florencio Sanches, Executive Director of SERVE (Servico de Registo e Verificacao Empresarial) of Timor Leste. He explained about “Business Registration Reforms In Timor Leste”
I am frankly amazed by the various efforts made by the Government of Timor Leste in carrying out reforms, deregulation, trimming bureaucratic flow, and simplification of procedures, which in turn succeeded in simplifying and shortening the time needed to register a Business Entity.
The registration time for this business entity was significantly shortened from 118 days in 2013 to only 1 to 5 days in 2014, even specifically for “Sole Trader and Single Shareholder with Limited Liability”, SERVE Timor LESTE guarantees that business registration can be completed in 1 day.
To simplify Registration, SERVE also cut the number of documents needed, from previously reaching 17 Documents to only 6 Documents, and in terms of costs, SERVE guarantees that there are no fees for business registration in Timor Leste.
Types of Business Entities in Timor Leste
The Following Types of Business Entities in Timor Leste:
- ENIN = Soler Trader (Empresario Em Nome Individual)
- UNIPESSOAL, LDA = Single Ownership With Limited Liability (Sociede Unipessoal Por Quotas Limitada)
- LDA = Limited Liability Company = (Sociadade por Quotas Limitada)
- S.A. = Joint Stock Company (Sociede Anonima)
- R.P. = Branch Of A Foreign Company (Representacao Permanente)
- E.P. = State Owned Enterprise (Empresa Publica)
- S.N. = National Branch (Sucursal Nacional)
More details about the requirements required for registration of these types of Business Entities, can be seen in the pictures below:
Business Registration Certificate
Based on Decree Law No. 35/2012, here are the Types of Business Registration Certificates issued by Timor Leste SERVE:
- CERTIDAO DO REGISTO COMERCIAL (CRC) / Business Registration Certificate (BRC)
- CERTIFICADO DO REGISTO COMERCIAL (CRC) / Certificate For Business Registration
- AUTORIZACAO THE EXERCICIO DE ACTIVIDADE / Authorization To Conduct Activity
- LICENCA COMERCIAL / Business Lincese
To simplify and accelerate the issuance of this business registration certificate, Mr. Florencio Sanches said that some types of documents even now do not require the signature of relevant officials. “So there is no longer a story about registration permits that have not yet come out because officials are on duty outside the city,” he said.
INVESTMENT IN TIMOR LESTE
Next is the second guest speaker, East Timor’s Trade-Invest Executive Director, Mr. Eng. Arcanjo da Silva, M. AgrEc explained about the Investment procedure in Timor Leste.
He enthusiastically explained the steps taken by the Government to create an attractive investment climate in Timor Leste, including:
- “Keep Calling You”. The East Timor Trade-Invest Division will proactively pick up the ball, and continue to monitor the progress of Investors to obtain investment licenses in Timor Leste. Even if necessary, the Trade Invest Divison will assign a special officer to assist each investor in completing the required licensing documents at Other institutions. “So if normally, investors need to contact us and continue to ask the progress of investment permits, now we do the opposite. We will be proactively contacting Investors to monitor and help them accelerate the process to get investment permits,” said Mr. Arcandjo da Silva.
- Harmonization of all laws and regulations in Timor Leste, including synchronization with regulations in other countries, especially ASEAN countries
- Post Investment Care, ensuring that investors who have invested in Timor Leste get their rights, and are not complicated by other agencies.
Investors with FDI (Foreign Direct Investment) above 1.5 Million USD, can register to obtain an Investor Certificate, to get several benefits, including:
- Tax Holiday (100% of Corporate Tax-Free, 100% Income tax-free, 100% sales tax-free, 100% service tax-free, Exemption Customs duties) with duration according to the district where the investment was carried out (five years for Dili & Baucau, ten years for Atauro & Oecusse and eight years for other districts).
- Ease of obtaining land / Lease agreement to utilize state land/property for a maximum period of 50 years (renewable once for an equal period).
5 Main Pillars of East Timor’s Investment Priorities
Currently, there are 5 Main Pillars of the Timor Leste Government’s Priority in attracting foreign investment, namely: Petroleum & Gas, Agriculture & Fisheries, Tourism, Industry & Manufacture, and Infrastructure.
1. Petroleum & Gas
- National Oil Company Development – TIMOR GAP, E.P.;
- Development of the mining industry through the application of mining regulations, the transformation of the National Petroleum and Mineral Authority (ANPM) and the creation of the National Mining Company – TIMOR MINES (MDT);
- Implementation of a multi-year project – TASI MANE, which is the development of three industrial clusters on the south coast: Suai Supply Base, Refinery and Petrochemical Industry in Betano and Natural Gas Liquefied Beaço Installation.
2. Agriculture & Fishery
With the main strength:
- coffee, sandalwood, cashew, coconut, candlenut, nutmeg, vanilla, garlic, cinnamon, cassava, corn, mango, horticulture (fruits, vegetables, tomatoes, potatoes, etc.), fisheries, aquaculture, livestock and agroforestry.
- Improved agricultural practices to increase rice, corn, coffee, vanilla, nutmeg, and coconut oil production, and strengthen community resilience to climate change and population growth, through training and technical assistance to farmers.
- The Government supports cultivation activities, including fish and plants, such as tilapia, seaweed and shrimp and crabs.
Strengthening the potential of the tourism sector by developing ecotourism, the sea, history, culture, and adventure, as well as rehabilitation and construction of infrastructures such as roads, trails, and tourist resorts.
4. Industry & Manufacture
Potential: cement, mineral water, sodium (salt), marble, ceramics, clothing, carpentry, ore, and other minerals.
The private sector receives support from the Government of Timor-Leste in providing basic agricultural facilities, such as seeds, fertilizers, and sprays.
Infrastructure development includes Roads and bridges, Water and Sanitation, electricity, telecommunications, and transportation, both land and sea.
For more information about Investing in Timor Leste, you can also visit the official website of TradeInvest Timor-Leste at:
EXCISE / CUSTOM IN TIMOR LESTE
The next speaker was the Director-General of Custom (Alfandega) of Timor Leste, Mr. Jose Fatima Abilio.
He explained the role of Customs (Alfandega) in Timor Leste, Customs handling procedures, Importation & Exportation Documents, Import Duties and Taxes, and excise duty rates for certain types of goods (excise duty).
Basically, there are four main functions of Custom (Alfandega) in Timor Leste, namely As a Revenue Collection, Protect our Borders, facilitate Facilitate Legitimate Trade and strengthen partnerships between Customs and Trade (Strengthening the Trade) Partnership between Customs and Trade)
Related to Administration in Importation & Exportation in Timor Leste, the following documents are required, according to the entry/exit points of goods:
Import Duties And Sales Taxes in Timor Leste
Import duties/import taxes in Timor Leste consist of:
- Import Duty is 2.5% of Import Value.
- Sales Tax is 2.5% of Import Value & Import duty.
Excise Duties / Excise in East Timor
At present, there are only 10 (ten) types of Goods subject to Excise Duties or Excise, as follows:
- Beer: US $ 1.90 / liter
- Wine, vermouth, fermented beverages like cider: U.S. $ 2.50 / liter
- Ethyl alcohol (other than denatured) and other alcoholic beverages: U.S. $ 8.90 / liter
- Gasoline, diesel fuel products, and other petroleum products: U.S. $ 0.06 / liter
- Tobacco and tobacco products: U.S. $ 19.00 / kg
- Cigarette lighters: 12% of the excise value
- Smoking pipes: 12% of the excise value
- Arms and ammunition: 200% of the excise value.
- Motor cars and small passenger vehicles (with an excise value exceeding the U.S. $ 70,000): 35% of the excise value.
- Private boats and aircraft: 20% of the excise value
Thus, the notes from “Business Tips Seminar in Timor Leste” Dec 13, 2016
Hopefully, this article is useful to you.