Timor Leste in ASEAN: A catalyst for regional growth (Part 2)

This article is part of a two part series. You can find part one here.

4. Implications of ASEAN inclusion for existing member countries

The ten current ASEAN members will be greatly impacted by Timor Leste's admission, which will further the bloc's common sustainability objectives, regional stability, and economic integration.

4.1 Economic integration and market expansion

The accession of Timor Leste broadens the geographic scope of ASEAN and strengthens regional integration as a whole. Even though Timor Leste's GDP is currently the lowest in ASEAN—less than 15% of Laos's—its advantageous position makes it stand out. With its location at the meeting point of important Indo-Pacific shipping lanes, such as the Ombai-Wetar Strait and the Timor Sea, Timor Leste provides ASEAN with a new southern port and a new entry point for exports, particularly in the fields of technology and agriculture. This increases the durability and connectedness of the bloc's supply chain as a whole.

Table 3: ASEAN FDI inflows and key investment sectors 

4.2 Strengthening regional stability and influence

By welcoming and assisting a small, democratic country that emerged from conflict, such as Timor Leste, ASEAN strengthens the bloc's founding ideals and enhances its reputation as a force for stability, democracy, and growth. By doing this, ASEAN demonstrates its dedication to its declared ideals and increases its collective voice and credibility on the international scene. The independent, non-aligned foreign policy of Timor Leste fits very nicely with ASEAN's long-standing non-alignment position. In the face of growing major power competition in the Indo-Pacific, its involvement can strengthen ASEAN's "centrality" and collective agency in navigating complicated geopolitical dynamics. 

ASEAN may further establish itself as a distinctive and successful regional integration model by successfully integrating Timor Leste, a country still battling post-conflict development and major obstacles.

4.3 Addressing the development gap

Timor Leste still has to finish 66 of the 84 legal documents that are necessary, most of which are related to the ASEAN Economic Community (AEC) pillar. This emphasises how important it is for current member states to continue providing significant technical support and capacity building in order to guarantee successful integration. For Cambodia, Laos, Myanmar, and Vietnam (CLMV nations), ASEAN's Initiative for ASEAN Integration (IAI), which was introduced in 2000, has demonstrated a track record of reducing the development gap. With Timor Leste's official inclusion as an IAI beneficiary nation in 2024, a systematic framework for focused assistance was established.

5. Singapore: The ideal accelerator for Timor Leste's development

With its strategic advantages, financial strength, and vast technical know-how, Singapore is in a unique position to act as a potent catalyst for Timor Leste's growth and ASEAN integration.

5.1 Strategic neutrality and non-alignment

Singapore exemplifies a foreign policy that prioritises preserving cordial ties with all nations and cautiously avoids escalating neighbours' fears as a founding member of ASEAN and a dedicated supporter of the Non-Aligned Movement. Often referred to as "poly-alignment," Singapore's diplomacy enables it to uphold strong ties with key world powers, such as China and the United States, without formally aligning itself, making decisions based on values rather than loyalty. Singapore is a very reputable and trustworthy development partner for Timor Leste because of its unwavering neutrality and steadfast respect to the rule of law.

5.2 Financial capabilities and green finance leadership

Singapore actively uses its status as Asia's preeminent financial centre to foster regional growth. By 2030, green investments into ASEAN nations are expected to exceed US$200 billion annually, according to the Monetary Authority of Singapore (MAS), with Singapore being well situated as the hub for this rapidly expanding industry. MAS pledged to issue up to $35 billion in green bonds by 2030 to finance infrastructure projects, as part of its extensive Green Finance Action Plan, which was introduced in 2019. Additionally, programs such as the Green Investments Partnership (GIP) seek to raise up to US$5 billion for transitional and green infrastructure projects throughout Asia.

Table 4: Singapore's green finance initiatives and commitments 

5.3 Technical expertise and capacity building

The transformation of Singapore from a resource-poor island to a world powerhouse offers a wealth of technical know-how that is directly relevant to the problems facing Timor Leste. Lessons can be learnt from its "Smart Nation" transformation and track record of efficient public sector operations and good administration. The Singapore Cooperation Programme (SCP) offers comprehensive governance and public administration training. 

Developing nations like Rwanda have made it clear that they want to adopt Singapore's urban development and governance methods due to its reputation for "clean systems," "rule of law," and effective government.

Table 5: Singapore Cooperation Programme (SCP) areas of assistance relevant to Timor Leste 

Use case: Digital transformation through "Leapfrogging" 

By utilising Singapore's sophisticated digital economy and artificial intelligence know-how, Timor Leste's comparatively undeveloped digital infrastructure offers a chance to "leapfrogg" conventional growth stages. By streamlining public services, drawing in digital investments, and opening up new economic opportunities for its young population, Timor Leste can accelerate diversification by implementing Singapore's emphasis on AI literacy and digital government services.

5.4 Enhancing mutual renewable energy transition goals

Timor Leste and Singapore's partnership has great potential to accelerate their respective goals for the transition to renewable energy and pave a win-win route towards a sustainable future. As Asia's preeminent centre for green finance, Singapore can be crucial in raising the significant sums of money needed for Timor Leste's renewable energy initiatives. By 2030, the MAS expects green investments in ASEAN nations to total US$200 billion annually, with Singapore acting as the sector's strategic hub. 

"Singapore, which plans to import approximately 30% of its electricity from low-carbon sources by 2035, can directly benefit from Timor Leste's abundant renewable resources" .

6. Recommendations for maximizing mutual benefits

Targeted strategies are crucial for all stakeholders to fully realise the transformative potential of Singapore's position as an accelerator and Timor Leste's ASEAN inclusion.

For Timor Leste:

• Prioritize institutional and legal reforms: Focus on regulatory alignment and enhancing the investment climate, particularly resolving unresolved land titles, while you expedite efforts to finish the 66 AEC legal documents that are still pending.

• Targeted human capital development: Ensure that rural areas are reached and gender gaps are addressed by making strategic investments in high-quality education and vocational training programs suited to industries like agribusiness, sustainable tourism, and the blue economy.

• Accelerate renewable energy deployment: Use ASEAN Power Grid potential to facilitate cross-border energy trade, aggressively seek for green finance options, and proactively pursue the 50% renewable energy objective by 2030.

• Enhance digital transformation: Adopt Singapore's "Smart Nation" concept to promote innovation in new digital industries, increase digital literacy, and expedite government services.

For Singapore:

• Expand tailored capacity building: Strengthen governmental financial management, build private sector capabilities, and help Timor Leste fulfil its AEC obligations by deepening the SCP, IAI, and STARS initiatives.

• Facilitate green finance and infrastructure investment: Encourage private investment in renewable energy and sustainable infrastructure projects by actively connecting Timor Leste with its top green finance ecosystem and Infrastructure Asia initiatives.

• Share governance and digital expertise: Provide useful support and information sharing in the areas of intelligent urban planning, effective digital government services, and AI integration, modifying Singapore's successful models to fit Timor Leste's particular situation.

For ASEAN:

• Sustained support for integration: Continue to promote Timor Leste's integration in a flexible and encouraging manner by offering regular financial and technical assistance via the IAI and other channels.

• Inclusive policy making: In regional policy debates, make sure Timor Leste's voice and particular development difficulties are sufficiently represented and taken into consideration in order to promote an ASEAN Community that is genuinely inclusive and cohesive.

• Promote private sector engagement: Using regional value chains and trade agreements such as the RCEP, actively promote and facilitate private sector investment from member nations into Timor Leste's non-oil sectors.

Conclusion (Part 2)

For the long-term peace and prosperity of the entire ASEAN region, Singapore's position as a growth accelerator for Timor Leste is not only beneficial but also strategically necessary. Timor Leste's development trajectory can be considerably reduced in risk and bottlenecked by Singapore by combining its financial leadership in green investments, unmatched technical expertise in governance and digital transformation, and steady dedication to capacity building through established programs. This partnership is the perfect example of the ASEAN values of cooperation and progress. The way forward necessitates consistent, concerted efforts from all parties involved, guaranteeing that Timor Leste can not only overcome its present difficulties but also become a dynamic, sustainable, and contributing member of the ASEAN family, thereby enhancing the bloc's overall resilience and influence in a changing global environment.

Next Steps

1. Joint Task Force Establishment: Using Singapore's experience with regulatory harmonisation, establish a combined task force between Singapore and Timor Leste to explicitly handle the completion of the 66 AEC legal instruments that are still pending.

2. Renewable Energy Investment Roadshow: Plan a focused investment roadshows, for example with institutions such as Infrastructure Asia and Singapore's MAS to introduce Timor Leste's renewable energy projects to local and foreign green finance investors.

3. Digital Government Pilot Programs: Utilising Singapore's Smart Nation experience, implement pilot initiatives in Timor Leste to improve digital literacy, particularly in remote regions, and develop core digital government services.

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