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Tourism in Timor-Leste: Small Businesses, Big Impacts

May 12, 2021

By Gobie Rajalingam

Covid-19 has devastated Timor-Leste’s tourism industry. The country’s Covid response was swift: a year-long ban on international travel, closure of the country’s international borders, and restrictions on domestic travel and business operations. By taking these steps, Timor-Leste was able to limit the spread of infections throughout much of 2020, but at the expense of enormous disruptions to the tourism economy.

Tourists shop for homemade mementos

Timor-Leste’s post-Covid tourism strategy must consider the needs of businesses and the expectations of would-be travelers. (Photo: Julian Apse / The Asia Foundation)

A forthcoming study by The Asia Foundation that surveyed 342 micro, small, and medium enterprises (MSMEs) in Timor-Leste found that tourism-related businesses in aggregate have been operating at just 23% of their pre-Covid level. Almost half of businesses that depend on international travelers have closed or curtailed their operations.

From June to August of 2020, the government of Timor-Leste outlined a series of subsidies and allowances to support both employers and employees affected by the pandemic. The survey found, however, that awareness of these subsidies among businesses was low—ranging from 20% to 65% depending on the type of subsidy—and that, overall, businesses believe the government subsidies do not address priority areas.

For example, one of the government’s key initiatives has been a social security subsidy to employees. Only 7% of employers identify this as an important service, however, while over a third of MSMEs (35%) and tourism businesses (38%) say that what they really need is credit guarantees and short-term tax exemptions.

Recognizing a lack-of-information problem, the Foundation, with support from the New Zealand Embassy in Timor-Leste, has created a business information portal, www.empreza.tl, that will be used in cooperation with the country’s Chamber of Commerce and Industry to disseminate up-to-date information to the private sector.

Tourist shops for local food

Post-Covid travelers now expect greater emphasis on safety and hygiene. (Photo: Julian Apse / The Asia Foundation)

As Timor-Leste lays the foundations for its economic recovery, it will be important to evaluate the country’s tourism strategy, its responsiveness to the needs of businesses, and its alignment with the expectations of would-be travelers. The government’s Council of Ministers has taken the first steps, approving Decree Law No 24/2021 on April 28, 2021, which suspends the compulsory quarantine for fully vaccinated travelers. For this policy to be successful, however, Timor-Leste must vaccinate its own vulnerable population, which is currently experiencing the rampant spread of Covid following last month’s disastrous Easter floods and the mass displacement that followed.

The new law lays out a process for establishing “travel bubbles” with selected nations, but several considerations remain to be addressed before Timor-Leste can expect an increase in tourism demand. When choosing a destination, international travelers are now placing greater emphasis on safety, hygiene, and cleanliness protocols than they did before Covid-19. In the Asia-Pacific, more travelers emphasized clear health and safety precautions (73%) than price (37%), location (46%), or exclusive offers (35%) when selecting accommodations.

To ensure that Timor-Leste is equipped to respond to the post-Covid travel market, health and safety should be prioritized at every juncture of the customer journey—aviation, surface travel and transport, accommodations, and food and beverage facilities. Efforts to enable Covid-safe travel have been outlined for the aviation sector, and similar initiatives in the food, beverage, and accommodations industry have begun that will need continued support and coordination from development partners, government bodies, and private-sector stakeholders.

Woman serving coffee and pastry to customer

Coffee, Timor-Leste’s largest non-oil export, and tourism, a key piece of the economy, could both benefit from better marketing. (Photo: Julian Apse / The Asia Foundation)

Despite this progress, Timor-Leste remains a little-known destination among potential travelers, with just 24% having seen any marketing information. Lack of awareness affects exports as well as tourism. Coffee has historically been the country’s largest non-oil export, but coffee exports in 2020 fell by over 75%. Almost 20% of Timorese people rely on this crop for their livelihoods, and as the annual harvest approaches, a marketing campaign could play a dual role by piquing the interest of both coffee drinkers and potential travelers in key markets.

After enduring the Covid pandemic for more than a year, pre-Covid strategies for increasing tourism to Timor-Leste remain the same: targeted marketing, support to small businesses, and making information accessible to both domestic and international travelers. The Timor-Leste government already has tools to do this through its official tourism website and social media platforms, but it must actively market the nation in a manner that is responsive to the interests and priorities of post-Covid travelers. There is an equally pressing need to make better use of data on the pandemic’s impact on tourism in order to shape subsidies that more effectively facilitate economic recovery and stability in the months and years ahead.

Gobie Rajalingam is a team leader for The Asia Foundation’s Tourism Development Program in Timor-Leste. He can be reached at [email protected]. The views and opinions expressed here are those of the author, not those of The Asia Foundation.

Related locations: Timor-Leste
Related programs: Economic Opportunity
Related topics: Covid-19, Tourism

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