Thursday, 22 October 2009

The Dollar Dives and Horta Encourage Government to Use Oil Fund


President Jose Ramos Horta, Horta who just returned from Jakarta said he wants the 2010 government budget to put substantive budget resources towards the country's infrastructure.

"If the government put a major budget allocations towards the roads I will be 100% in support of it." he told the journalists in the Dili airport. 

The Timor-Leste roads networks is in pain even though millions has been spent to rehabilitate the natioal road network.

He emphasised that, "This country needs roads, roads and more roads, first class roads." "If we want to develop the economy. Develop the culture. if we want to improve services and delivery in education and health. And if we want tourism, we have to develop our road network," Horta argued.

According to Horta this is going to cost money and he wants Prime Minister Xanana's government to take out money from the Petroleum Fund to do it.

Horta called on the international monetary agencies to remeber his 2007 preocupation in regard to world economy. "In july 2007 when I took office as President, I imediately called the World bank, IMF, ADB and they all came to see me. I told them that I was very worry about the world economy in particularly about the depreciation of US dollar. No one listen to me. Now US Dollar is down 30% since march this year," he said with smiling face.

At this stage Timor revenues from oil and gas in Bayung Udang is saved in a US treasury bonds in USA. Horta is now worrying about TL's 5 Billions US dollar in USA treasury bond. 

"So it means the five billion Dollars we have in US treasury bank a year ago now you can reduce it by 30%. Because the purchasing power of US dollar gone down to 30%."

Horta also concerned about the cost for TL embassy in Europe will increased because US dollar is weakening against Euro. "I talk to our Foreign Minister Zacarias da Costa on the plane that how is going to estimate the budget for our embassy in Europe. You calculate a year ago in Dollar but now Euro went up 30% against dollar," he said.

For all this reason Horta give full support to PM Xanana Gusmao's governmnet to withdraw the oil fund from US Treasury bonds and starting to invest in East Timor's infrastructures. "I would support the governmnet if the Government want to use petroleum fund, NOW, to spend on roads, on bridges and on educations. He argued, " the longer we keep the money only in US treasury bond the more value we loss.And we are already losing."

Timor-Leste's President suggested that the Government start to establish a team to explore other investment options for the fund.  Horta suggested European, Japanese and Australian bonds. "So the governmnet should diversify and get out from US Dollar, apply in others Treasury bonds in particularly Europe and Japan."

Horta said he really appreciated the strength of the American Economy but, "At this stage the situation is very dangerous," for the US Dollar.

Horta ruled out some biggest economic power in the Asia -  China - starting to preoccupied with the money in US treasury bond. "I tell you the Chinese are very worried, extremely worried about their assets in USA accounts."

Horta is concerned if in the near future there is a run on the US economy and to take out their money from US means "our US$ 5 billions dollar collapse in value."

Horta said, "So I told the government to make a courageus decission in using the money in US Treasury bond to pay for our infrastructure." 

He continue that at least TL building the infrastructure rather than keep it in New York. "We already lost 30% and no one is talking about it. He told the media that TL has already lost 30% by virtue of the fact that since March 30% depreciation of US Dollar plus inflation."

Most of the Timorese don't understand the the issue of their US$ 5 billions is losing 30% of its value because not many in Dili are talking talk about it. This is first time ever publicly Horta said, "We kept talking about US$ 5 billions but one Dollar you can buy a year ago is not what you buy today." 


Anonymous said...

I love everythings U do HORTA!!! LONG LIFE!! MANY PPL LOVE YOU!!>>

Anonymous said...

Bullshit !!! Liar !!!!

Ir.Eng.Luis Pereira said...

Very True Mr. President, the more we delay in the country infrastructures the country economics will be more vulnerable, therefore, it is the time people act, government action in order to avoid such thing happens in future.

Many people say saving the PETROLEUM FUND will benefit in the future and country sustainable in long run, which is one point to another might be true, but don't forget the dollar-values will shrink in future as other foreign currencies making an emerging show up. With that I personally support the Mr. President opinion to diversified the PETROLEUM FUND in various investment portfolios one of them is country infrastructures like developing the road networks, schools, power plant and other necessary subsidies in order to boost the country economy, hence alleviating the employment rates in the country.

Anonymous said...

i do agree with mr. eng and mr. president that we need to speed up infrastructure development. however, if we dont have a looking forward long term sustaibility plan, then we just waste the money. mr. president, you can take out the money as much as you want, but if you dont have a plan how these projects will be carried out, which one should be prioritiesed, quality and cost control and others. believe me, mr. president. you will waste our money. dont rush to please the people just for the sake of your ambition to be in power again. we need to plan all of this carefully. otherwise, we will end up like nigeria and other resource curse countries. as human we are tempted with a lot of money. therefore, we just spend it on what ever we like, without thinking about its long term impacts. mr. have to balance between short term versus long term needs...dont sacrifice future generation just for things that are not priorities for current and even future generations.

loriku said...

Let me add some more points in response to Mr. Luis Pereira.
Seems to me that this gentleman really supports our government plans about infrastructures development, which I do also support and shall agree with.

But one should not mix this infrastructures development programmes with the government approval of foreign proposed project such as rubber plantations which I think is totally wrong proposal and will not contribute in any positive sense to Timor Leste development. It will be an absolutely environmental disaster to Timor Leste in the future.

The immediate profits will be certainly enjoyed by the company that operates this kind of business in our country, but the negative impacts to Timor Leste natural environment such as biodiversity, habitat and animal species losses are real and is undeniable fact. It will cause social conflict, land disputes and injustice in the country. The victims will be timorese people and their de-gradated lands, as many cases in other countries have revealed.

One can support certain development plans established by the government for the sake of the country prosperity but that does not mean a BLIND AND IMMORAL support given without seeing realistically to environmental, social, and economic impacts created by such development policies.

IDEALISM shall not mean blindness and logical dysfunctional. There are loads of case studies to be looked upon before supporting certain government policies. One example of that WRONG policy is the Prime Minister approval of RUBBER PLANTATION in the name of another so called NATIONAL DEVELOPMENT PROGRAMMES FOR THE SAKE OF NATIONAL INTEREST!

THE DREAM OF PROSPERITY shall not mean jumping through a short cut to attain it. In any implementation of a national development programme that is done without some serious planning, proper case studies will only have the consequence, as many developing countries have shown, a national disaster rather than national development. The end result will not be the prosperity dreamed but instead a misery done to the country and its people!



Ir.Eng.Luis Pereira said...

I totally agree with you. So what you're suggesting. Is there any other means of infrastructure that yields ZERO negative impact. Are we capable enough to invest in clean investment as you think of. As I know it is so easy we talk but in reality it is rather difficult.

We cannot jump so quickly into mega technologies applied by other advanced countries, we need to acknowledge our limitations that we have, limitation of the government, people and all stakeholders in the countries.

As academic I am a protectionist to the environment but we need to be analytical in dealing with it. Rubber plantation effect to the environment is not as severe as burning coils into the atmosphere, rubber plantation effect to environment is not as severe as we disposed chemical wastes into the soil, rivers and eventually it reaches to the ocean. Rubber plantation effect to the people of Timor Leste is not as severe as the government let them suffer for their unfinished dying in getting jobs and starvation. Therefore, I suggest we need to look the problems in more details.

I was sad, many people raised the issue regarding the rubber plantation in different ways, many people say that in some other countries mainly in Africa the effect of rubber plantation to the land fertility was rather horrible. And I agree with that analysis but that is not an intellectual analysis because you are comparing something that actually is not right way to compare. Try to analyse the successful countries in Rubber plantation mainly in Asia where the whether are slightly similar from one country to another which Timor Leste is part of 'em. Look at the Malaysia how they have so successful in the agriculture sector, where the rubber plantation and palm oil are major country's commodities. Look at Kalimantan (Indonesia) how they have been so successful in Rubber plantation industries. By comparing these two neighboring countries which the whether slightly same as Timor Leste has, may be we can minimize our analysis error.

LorikuRply said...

Mr Luis, The problem here is not about applying advance technology to have a reduce impact of rubber plantation but rather being able to see the reality and fact that we can not afford to sacrifice huge amount of lands of OUR LITTLE HALF TIMOR ISLAND to such unproductive and demanding project in term of land usage.
With little lands that our organic farmers in Timor Leste have now, they are able to produce some food crops for their own consumption and probably quarter of national consumption. If you take most of these lands from these farmers and turn them into rubber plantation how will those people and those who rely on them for food crops can survive?.. If this is not poverty life sentence then what would you call it? Do you expect low wages they would earn from rubber plantation as a substitution to their most important assets for survival and freedom which are their agriculture lands?

Mr. Luis, The issue here is not merely about environment or "analytical advanced thoughts" of impacts on things, but rather a simple and important one, it is our local farmers and community owned lands' interests which are in stake and hence they deserve our supports and need to be looked upon. You don't need to be a rocket scientist with extraordinary science theory and analysis to realise and understand such simple little things.

Why don't the government support with more positive investments in our agriculture sector by empowering our own farmers to produce more food crops instead of giving lands to big company to use for known bad monoculture practices?

Our people are mostly malnourished, they need more investment in food crops! They eat foods not rubbers and they need to drink fresh water from their natural water sources not drinking palm oil or rubber liquids!

Why don't we suggest or demand the government to invest more in food production in the country instead of keeping importing most foods from other countries? Why don't we support a good policy to empower our farmers instead of wasting our effort to promote big company's interests for their environmental unfriendly commodities?

One shall not compare the so called success in Malaysia or Kalimantan as an example for Timor Leste to follow. First of all these countries lands' size are huge in comparison to Timor Leste.
They have more lands space to be wasted, while Timor Leste is too small in size to afford this kind of risky project. Do we need geographic lessons here to be able to distinguish this fact?.. I think no need to.. Secondly do you know how much of rain forests have been and will continue to be lost in exchange to palm oil and rubber plantations in these countries that you have just mentioned in your comments above?..Do you know that recent environmental scientist studies have provided more warning of environmental disasters for most of South East Asia rubber and palm oil production countries?..If you don't then just google for more information regarding this subject and you can find scientific report as well.
You talk about their so called success but you tend to obscure your thoughts about their failures in preserving their and the global natural wealth, such as rain forests. Rain Forests losses to give space to monoculture practice of rubber and oil palm plantations are worse then you put billion tons of CO2 gasses in the atmosphere because of its vital importance as Earth Lungs! It's like someone has taken parts of your lungs from your body, imagine that happening to you, what would be the result if not DEATH!

So my mate this is not error analysis for those who oppose the govt.plans but rather a logical realisation from normal people who see facts and results with both eyes open with good faith and genuine interests for small farmers and local land owners. We are not like those blind intellectuals or politicians who tolerate all means to reach their disastrous goals and satisfied their own interests in the expenses of poor people.