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CNRT Denounces a Record of Economic Failure

Dili – 20th June 2007

CNRT today denounced Fretilin’s claims of good economic management of East Timor. Fretilin recently described the economic policy of decentralisation a ‘recipe of waste and corruption’, the boldest acknowledgment yet of Fretlin’s policy to continue the practice of running a one party regime through direct centralisation of funds. This is despite the collective advice of the World Bank, the Asian Development Fund, and external development partners that such practice breeds corruption and immobilises the expedience of procurement.

For historical reference, the governing resolution of procurement originated with article 2000/10 on Public Procurement for civil administration in East Timor, issued by the United Nations Transitional Administrator upon independence and relevant to the country’s initial foundation under the United Nations Mandate, but needed significant revisions upon economic autonomy in 2002.

There were several key factors missing from 2000/10 which were necessary in to make it more compatible with the global regulations of the World Bank, Asian Development Fund, and the UNCITRAL, these were crucial steps needed in establishing accountability, transparency and decentralisation. The recommendations were noted in a comprehensive report in 2003 by the world bank, 2003 The Timor Leste Country Procurement Assessment Report (CPAR) which also highlighted the absence of anti-corruption legislation, noting the exclusion to any reference of ‘fraud and corruption sanctions’ that may be applied to cases and noting that there was  ‘no precept in the constitution expressly calling for application of transparency, competition and other fundamental principles for procurement.’ The report outlined 60 pages of key recommendations, most of which were ignored by the Fretilin regime, yet were crucial to the effective development of the nation.

The ineptitude of Fretilin to enact the recommendations of The Timor Leste Country Procurement Assessment Report (CPAR), resulted in a gross failure of the Fretilin parliament to effectively and efficiently procure services to citizens, 60% of whom are illiterate, two out of five of citizens are under the extreme poverty level, three out of four  live without electricity, three in five have no sanitation and no access to drinking water. These are alarming statistics for any country in 2007, especilly after billions of dollars in foreign aid and national budget allocation became available for application of anti-poverty initiatives.

The CPAR report states, ‘The strengthening of oversight institutions, particularly the weak justice sector, are crucial to addressing growing concerns of corruption. Public sector management has progressed with the promulgation of the Civil Service Act, but significant vacancies remain at high level due to lack of skilled applicants. The shortage of administration and management skills and a centralized system have raised concerns about slow budget execution, particularly in key ministries, and limited the pro-poor focus of actual spending.’

The failure to practice sound and fiscally responsible economic practice resulted in the Non-Petroleum GDP per capita to actually decrease significantly during Fretilin’s tenure of Government to an unacceptable level, a definitive sign its policy has not only failed to stimulate the economy, but indeed caused the country to regress into economic atrophy. With further maladministration demonstrated with budget execution at an overall low of 65%, with some key portfolios utilising an astonishing and meagre 5% of their budget allocation. This failure to respond because of an immobile, centralised procurement system is not only deplorable, but avoidable had best practice advice been followed.

The world bank advised in 2003 in the (CPAR) report: ‘Timor-Leste’s social indicators remain amongst the lowest in the world. To make a dent in poverty levels, it will be important to emphasize the delivery of tangible services - health, education, electricity and water- at the district level’*

The report continued to advise that the decentralisation of funds was imperative to executive level portfolios whose procurement was beyond the acceptable level of management within  a centralised procurement office: ‘A decentralisation procurement function is recommended for operating ministries such as transport and communications, Public works, Health, Education, Agriculture and Defence’*

Had Fretilin taken the advice of the World Bank ,the Asian Development Fund and key development partners in 2003, the citizens of East Timor would now have greater access to services, government ministers would have access to expedient procurement of services, and the arduous task of  educating civil servants on procurement policies and establishing district and local level procurement of services would have been initiated and well underway in establishing a modern and progressive democratic nation.

The report recommended three key actions to be executed prior to 2004 to initiate the decentralisation of procurement:

1. Establishing the High Administrative, Tax and Audit Court, called for by the Constitution (Section 145(3)), and developing the necessary expertise required for it to exercise its oversight regarding public procurement.
2. Extending the effective application of the legal framework at the sub-district and village levels, and ensuring that the necessary manuals, other instructions and user-materials are made available at those levels.
3. Ensuring that legislation forming the broader foundation for economy and efficiency, transparency, competition, and accountability is in place, including laws on contract and commercial activity, dispute settlement, ethics, and anti-corruption.

The record of Fretilin leaves little doubt that the centralisation of public procurement within a modern democratic state is not only of unsound economic principle and a reflection of poor governance, but also unconstitutional.

CNRT is committed to the principles of democracy and to upholding the Constitution of East Timor in the immediate decentralisation of public procurement by establishing international economic best practice.

CNRT will immediately establish the High Administrative, Tax and Audit Court, as per the Constitution (Section 145(3)), which will be independent of the four pillars of sovereignty and oversee the expenditure of the state with good governance and applicable recourse.

CNRT will take immediate steps to establishing a decentralised public procurement system to ease the short-term immobilisation of the current system and re-establish key services direct to the citizens.

CNRT will create a long-term education and implementation strategy which includes education of civil servants (including the drafting of manuals, materials and  launching extensive training  programs), in the local and district level to assist in executing the new procurement policies.

CNRT will take immediate action in establishing laws against corruption, nepotism, and cronyism within the public procurement systems to ensure best domestic and international trade practice in the procurement of internal contracts.

Dionisio Babo Soares, Secretary General of the CNRT states, “In totality, the leadership of the CNRT government will enact immediate and swift reform across the public procurement systems to decentralise. Firstly to ensure our citizens receive the services they desperately need, but of utmost importance is to begin building a strong fiscal foundation based on global economic best practice, as advised by the world bank, the Asian Development Fund and other key development partners. It is the beginning of good governance and our obligation to uphold the basic inalienable constitutional rights we as a nation embraced upon independence.”
ENDS.

For Further Information
CNRT Media Contact
T: +670 735 8696
E: info@cnrt-Timor.org
W: www.cnrt-timor.org

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