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“The Proposal of Project of Law No. 2/III/ (Ia) General State Budget 2013” 01 August 2013


You’re Excellency:

President of E Commission – Commission of Infrastructure, Transportation and Communication

Member of E Commission of National Parliament

Deputies of RDTL National Parliament



Budget Policy within Infrastructure Sector

Within State Budget Proposal Fiscal Year 2013, V Constitutional Government continues to conduct investment toward infrastructure area, considered as national priority of government’s plan. In respect of infrastructure allocation through capital development, there are around US$2.3 billion to be spent during this time toward this sector. However, reality maintains to show that basic infrastructure, most of them, become as people’s preoccupation.As national priority, the government has proposed certain amount of budget to be allocated toward infrastructure development in fiscal year 2013, and this estimated as US$ 891.8 million.



Entering 2013, the government launches new development programs which have declared by IV Government trough Resolution no. 2/2012, called National of village Development Program(PNDS) to replace PDL. The other one is trough DL no. 4/2012 called Integrate of District Development Program (PDID) which aimed to accommodate PDD 1 and 2.Based on State Budget Book No.3 (District allocation), it mentioned thatin 2013, the government will allocate budget toward PDID, estimated as US$93.3 million (US$68.2 million toward new project and US$25.1 million of roll over from PDD 1 & 2 fiscal year 2012). The allocation would be also toward PNDS, estimated as US$7.9 million (US$6.5 million toward PNDS and US$1.5 million of roll over from PDL 2012).



Trough State Budget Proposal No.6, IV government will still to propose around US$752.9 million of budget toward Infrastructure Fund aimed to finance multi annual projects. Most of budget would be allocated toward project likeElectricity (23.1%), Timor Sea (18, 5%) and Road (15,4%). Such distribution of expenditure has been in accord with government’s policy as well as PED, as they put these sectors into priority within Timor Leste’s development.




Points of Intervention and Recommendation toward the policy of Infrastructure Budget, fiscal year 2013:

  1. 1.     Budget Execution Capacity

Based on Luta Hamutuk’s observation during this time, planning of infrastructure budget as well as its implementation has signified that,the government has in adequate capacity to effectively manage and be responsible with such huge of budget within infrastructure area. Therefore, budget which has been invested within infrastructure area hasn’t been able to respond on people’s preoccupation, particularly basic infrastructure like road, bridge, electricity, health, education and clean water. Such fact have been identified by Luta Hamutuk trough monitoring activity during this time, toward the process of plan and implementation of projects under the program of PDD, PDL and Annual Project (mega project) which have been implemented already by the government. According to Luta Hamutuk’s observation, budget which hasn’t been executed is estimated as $409.8 million and should to undergo roll over for fiscal year 2013.This considered as incapacity of the government, particularly within process of plan and implementation, since roll over means to re-budget the remains of money, coming from projects which have been canceled in 2012. Tough most of projects which have been planned in 2012, have already implemented, however these are without qualified results therefore fail to give significant impact toward people.


  1. 2.     Infrastructure Procurement

Within execution process of Infrastructure project, government considered as indiscipline and has deviated from such commitment to work in accord with procurement mechanism, being established as legal instrument. Luta Hamutuk has identified that some of infrastructure projects like road, bridge and building have been less transparent and accountable and deviated from public procurement procedure. For example; rehabilitation project of National road in Dili, the construction of bridge of Comoro, the construction of Naval Port of Hera, the construction of Finance Minister Residence, etc. Mal-management toward state budget has occurred during the implementation of these projects. This signifies that, tough government has created procurement mechanism, however within implementation level such system is failed to be maximally functioned.  



Tough the government has once again established new form of PDD and PDL called PDID and PNSD, Luta Hamutuk observes that this policy hasn’t been able to guarantee the realization of infrastructure sector if system of plan hasn’t been well developed. Fact shows that during the past 3 years (2010-2012) many of projects under PDD and PDL were cancelled, came up with low of quality and some of them failed to respond on people’s necessities, particularly those who lived in rural area.



  1. 3.     Infrastructure Fund:
  • Luta Hamutuk ask government, particularly toward relevant bodies to clarify the number of budget stated within Book of State Budget No. 6 (Infrastructure Fund) which considered as roll over therefore being added towardProgram of Urban and Rural Development, estimated as US$7.576million. Budget which allocated toward this program in 2012, based on such proposal, had failed to be executed (0%),however in 2013 the government has proposed additional budget toward this program, estimated as US$500.  In respect of program which underwent roll over, this also include program of Airport and the development of supervising of new project.


  • Luta Hamutuk questions on the additional number of allocation toward Defense and Security Program within Infrastructure Fund. The initial budget toward this program was estimated at US$12.622 million in 2012 and considered as failed to be executed. However, the government continues to propose such additional budget which is higher than 2012 which estimated as US$20.900 million, to include additional program estimated asUS$13.120 million. Ironic, isn’t it?


  • Luta Hamutuk asks government, particularly Ministry of Public Service to clarify upon additional budget 2013 toward some of road project such as Rehabilitation process of 13 Km of Road from Maubarra-Loes, where the addition budget estimated as US$7.500 million this year.In 2012 this project had already received US$ 3,659.10million. Luta Hamutuk concerns with this situation since there are many of road projects which have been approved to be implemented within 13 districts in 2012, however none of them receive additional budget this year, except for Maubara-Loes project.


  • Based on proposal, the government will allocate new budget in 2013 toward projectof Periodic of Road Maintenance, which estimated as US$5.000 million. Luta Hamutuk asks Ministry of Public Service to conduct review toward the quality of company which responsible for this project during this time, therefore the quality of project results will stand within long term of period, in addition such allocation of budget will bring benefits toward people.In fact, almost 70% of roads which have been through maintenance project which in Dili, conducted by National Company, started to break again within less than a year.



  1. 4.     Public Transfer Program: 

Within Book of State Budget No.3, Luta Hamutuk has identified that the allocation of budget through National Plan of Village Development Program (PNDS) has created discrimination among districts. Data has showed that budget proposal of PNDS (Physical Budget) has been given only toward 4 districts, regardless 9 other districts. Therefore, before National Parliament approves upon such budget, the government needs to publicly clarify toward districts or villages which haven’t received yet such allocation to prevent from discrimination within rural level.



  1. 5.     Emergency Project

Infrastructure phenomenon usually happened during this time in Timor Leste is Emergency Project, as this project is without firm foundation. Based on data gained by Luta Hamutuk, particularly from Government spokesperson, started from 2008 until 2011 there were 279 projects which through bid of procurement. From these projects, 77 are considered as EMERGENCY project. Luta Hamutuk asks National Parliament, particularly E Commission, to conduct close control toward the work of procurement/bid of infrastructure project, therefore always in accord with Procurement Jurisdiction Regulation which regulate the requirements of Emergency Project.Luta Hamutuk observes that most of emergency project do not meet with requirements which mentioned within Decree of Law of Procurement Jurisdiction Regulation.Luta Hamutuk also would like to suggest toward institutions which responsible in conducting control mechanism such as National Development Agent (ADN), National Commission of Procurement (CNA), Administration Commission of Infrastructure Fund (CAFI) as well as institution which manage PDD, like Commission of District Development to maximize its function in securing transparency and the quality of project within national and rural level.



  1. 6.     Payment Mechanism toward Contractor

Based on Luta Hamutuk’s monitoring toward the implementation of project within district level, some project considered as fail and produce in adequate results. In addition there is a case where payment toward contractor has been deviated from prevailed mechanism which has been regulated within Decree of Law of PDD. Payment conducted by Ministry of Finance always delay. As consequence, most projects which implemented by local company have become interrupted and sometimes fail since there isn’t any adequate fund to support it. Luta Hamutuk analyze that mechanism which have been applied during this time, do not correspond with the objectives of PDD program, which one of them also intended to capacitate local company. Such objective considered as part of private sector development, therefore this sector is able to give significant contribution toward national economic growth.


Dili, 23 January 2013


Mericio Akara

Executive Director of Luta Hamutuk