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Timor-Leste officially became the 11th member of ASEAN in October 2025. This marks a significant development that reflects both ASEAN’s and Timor-Leste’s readiness and commitment. It also represents an expansion of the regional economy into an area with untapped development potential.
Timor-Leste has a population of about 1.3 million and an average per capita income of around USD 1,400. Its economy remains heavily dependent on natural resources, especially oil and natural gas, which account for more than 80% of total exports. The country’s GDP in 2023 was approximately USD 1.7 billion, indicating an early stage of economic development.
Foreign aid plays an important role in Timor-Leste’s economy. According to the country’s central bank, Timor-Leste received over USD 205 million in foreign direct investment (FDI) in 2023, with more than 65% coming from ASEAN countries, including Indonesia, Vietnam, and Singapore.
The five leading industries attracting over 93% of total FDI are:
- Construction – nearly 33% of FDI, driven by the government’s focus on infrastructure development.
- Wholesale and Retail Trade – 27%.
- Financial and Insurance Services – 13.7%.
- Information and Communication – 13.6%, mostly in telecommunications and internet services.
- Manufacturing – 5.7%. Though a smaller share, it is critical for stimulating growth in other key sectors such as agriculture.
The Timor-Leste government is actively developing key sectors, including tourism, with a focus on eco-tourism and coastal attractions—areas where Singapore has been a major investor. In agriculture, the emphasis is on high-value crops like coffee, cocoa, and mangoes, as well as modern livestock farming, irrigation systems, and fisheries.
In the manufacturing sector, the focus is on food and beverage processing for both domestic consumption and export, bottled water production, and various drinks. There are also construction materials industries, such as cement, marble, ceramics, and processed wood to support the growing construction sector. Small-scale industries include textile and handicraft production (e.g., woven fabrics and clothing), bamboo products (laminate flooring, furniture, blinds), as well as printing, soap making, and salt processing.
For Thai businesses, potential industries for trade and investment include:
- Coffee processing, where Thailand has strong expertise and technology.
- Logistics and retail, which can serve as hubs for distributing goods between ASEAN and Timor-Leste.
- Sustainable and smart agriculture, to help reduce food imports.
- Eco-tourism, especially on islands and coastal areas not yet developed commercially.
Infrastructure development projects such as roads, ports, renewable energy systems, and specialized industrial zones are part of Timor-Leste’s strategic development plan. These offer opportunities for Thai companies in engineering, construction, and renewable energy, particularly those experienced in working in developing countries.
The Thai government should take a more active role in promoting cooperation with Timor-Leste. This includes establishing joint working groups to define economic cooperation strategies, supporting Thai businesses especially SMEs in accessing market and legal information through regional trade offices, and organizing promotional activities like roadshows and trade exhibitions in Timor-Leste to build long-term economic ties.
The Thai private sector should move quickly to explore first-mover advantages in this new market. This could include setting up regional distribution centers or agricultural processing and production bases for export. However, key challenges in Timor-Leste include limited infrastructure, developing trade and investment laws, and a labor force that still requires continuous training. Thai businesses should therefore enter with well-planned strategies and coordinate with public-sector support.
Timor-Leste’s new ASEAN membership is both a political milestone and a sign of regional economic expansion. Thai businesses should consider taking an active role in building partnerships with this new member to improve their competitiveness in the region not just for short-term gains, but to contribute to sustainable, shared growth in Southeast Asia.
Author:
Ms. Namphueng Tassanaipitukkul
Senior Researcher
International Institute for Trade and Development (ITD)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section/World Beat
Volume: 39 Issue: 13026
Date: Wednesday, Nov. 5, 2025
Page: 8 (bottom-left)
Column: “Asean Insight”
