This chapter aims to crystallize the transport and power sector policy issues that challenge the Transitional Administration in East Timor and that will face the new East Timorese indigenous administration immediately after its inauguration. These issues have loomed large as the backdrop during the emergency rehabilitation phase of 1999–2000. While many of the problems facing the transport and power sectors are a legacy from the previous Indonesian administration, they are in no way unique to East Timor. However, the new administration must not delay its response: a series of crucial policy decisions is needed, and these decisions will shape the economic potential of the whole country.

The restoration of East Timor's infrastructure has to date concentrated on the physical provision of road access, landing of goods at the ports, airport safety, and power and water supply at the main population centres. Chief among concerns about sector management is the limited capacity of the new government to finance the recurrent costs of maintenance and operation of the reinstalled facilities. As a result, the affordability of service levels is a subject of debate.

TRANSPORT SECTOR POLICY ISSUES

Introduction

Transport is central to development – to poverty reduction and economic growth. Transport is an intermediary service: while it alone cannot reduce poverty, it serves a penetrating role in the economic development process, and complements delivery of crucial services such as health clinics, schools and extension services. Inherently, transport provides access to markets and employment, and contributes to security and the strengthening of nationhood by allowing the administration to reach its constituent populations. It helps to reduce poverty by increasing economic efficiency, leading to lower costs and prices, and providing access to employment opportunities. Transport enhances agricultural production and improves rural commerce. It promotes rural-urban communications, thereby reducing urbanization, and improves the quality and quantity of health and educational services. The effects of transport policy are thus pervasive, affecting economic performance and incomes, income distribution, prices, poverty, human settlements and the environment.