Timor - Military Spending

Timor's nominal wealth began to increase in 2005 when revenue from a gas field shared with Australia began to come online. The increased income went overwhelmingly to purchasing imported goods and cash pay-outs to resolve the political problems of IDPs and pensioners, however, leaving domestic production little changed and poverty levels actually worse than ten years ago. The UN ranks Timor-Leste 158th of 179 countries in terms of human development indicators. Petroleum revenue boosted nominal statistics like gross national income, making Timor-Leste look more prosperous on paper, but that stimulative demand effect had yet to filter into the real domestic economy.

During the decade of the 1990s, after the Cold War, the ASEAN States showed a consistent trend of increasing their national expenditure on the Defence sector, defining their armament procurement programmes to correspond to the imperatives of a self-sustaining reinforcement in the growing strategic uncertainty that characterised the post-Cold War period. This increase in expenditure on the Defence sector is inseparable from growth in national economic capacity, which created the opportunity to respond to the growing strategic concerns about regional and global security. In general terms, ASEAN demonstrated a positive correlation between economic growth and Defence expenditure. On this topic, the countries with the highest rates of growth in GDP showed higher rates of growth in Defence expenditure, as was the case with Singapore and Malaysia. The countries with lower rates of economic growth also increased their spending in the sector, although at a slower growth rate, as was the case with Indonesia and the Philippines.

The Defence and Armed Forces Budget have shown a significant growth over the first five years after independence. However, the development indicators of the Armed Forces are presented as less satisfactory due to the inexistence of budget execution and bad management in the development of Armed Forces.

The level of the operational state and the readiness of the Armed Forces, since the creation of the Force until the end of 2005, had positive results as the Armed Forced reached approximately 80% of its operational requirements. Having said this, the continuous absence of the legal framework itself and the lack of a retaining strategy of the military in the institutions of the Armed Forces, has significantly reduced the quality of the regular military which is incorporated in the Armed Forces. This institutional deficiency of a structural character has provoked an immediate impact on the development of the force by the quantitative reduction of permanent elements due to constant desertion which currently totals approximately 42% of total permanent elements of the Force.

Among others, factors which originate this institutional deficiency are located in the lack of decision making and in the lack of Defence Budget Planning which should constantly take into consideration the creation of feasibility mechanisms of operational funds to respond to the immediate needs of the Armed Forces in the area of operational readiness, the well-being of the military as a factor for moral support and other incentives.