2020 Economic Impact of Covid-19 on MSMEs and Timor-Leste’s Tourism Sector
Over the course of 2020, the Covid-19 pandemic had an unprecedented worldwide impact. In Timor-Leste, micro, small, and medium enterprises (MSMEs) were particularly susceptible to the economic impact of the pandemic, and MSMEs in the tourism sector experienced the worst setbacks. To improve understanding of the scale of Covid-19’s impact on tourism MSMEs in Timor-Leste and MSMEs in general, The Asia Foundation conducted interviews with 342 MSMEs (59% in the tourism sector) from May to August 2020. Although Timor-Leste’s swift Covid-mitigation response limited the spread of infection throughout much of 2020, the year-long ban on international travel and closure of the country’s international borders had grave economic impacts. The research 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. As Timor-Leste lays the foundations for its economic recovery, it will be important for its strategy to be guided by evidence on the impact and challenges faced by MSMEs. This study seeks to understand these challenges to develop inclusive and sustainable recovery options for MSMEs, particularly those in Timor-Leste’s now vulnerable tourism sector.