East Timor: From oil to beer

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East Timor HeinekenIn its bid to diversify its heavily oil-dependent economy, East Timor is turning to a different liquid: Beer.

This month, Dutch beverage giant Heineken kicked off construction of a new brewery in the small Southeast Asian nation, investing $40 million in  a plant that will produce a new brand of beer, as well as three Heineken-affiliated brands, namely Tiger, Bintang and ABC, as well as some soft drinks. The plant will have a capacity of 30 million liters of beverages a year and will start production by the end of 2016.

The investment is the first production facility of a multinational company in East Timor, whose economy is more than 90-per cent dependent on oil and gas exports, and to some extent on coffee, sandalwood and marble. The domestic industry is small, mainly comprising textile, handicraft, soap manufacturing and printing.

Heineken, whose imported brands already have some 80 per cent market share in East Timor, is counting on the young and growing population of the country. According to the International Monetary Fund, East Timor’s population is expected to grow by 16 per cent to 1.47 million in 2020 from an estimated 1.27 million at present.

There is also no local competition. East Timor used to have its own beer brand, Buffalo Beer, produced in a brewery in the capital Dili, but the facility closed in 2006.

And unlike in its large neighbour Indonesia, there are no religious restrictions on the consumption of alcohol in the Christian country. While annual per capita alcohol consumption in East Timor is currently at a low five to six liters, less than half the comparable figure for Papua New Guinea, demand for alcoholic beverages is expected to grow in tandem with economic development.

Due to slumping oil prices, East Timor is trying hard to diversify its economy and invites investors to the country which wants to position itself as a trade hub between larger economies in Southeast Asia and Australia. However, foreign manufacturers are still cautious about making large-scale investments because of many persisting hurdles, including the country’s poor ports, an inadequate customs clearance system and insufficient laws related to land expropriation and finance.

Things might change when the country’s government carries on with important infrastructure investment and its bid to join the Association of Southeast Asian Nations (ASEAN) and with it the ASEAN Economic Community. The Asian Development Bank is helping in establishing legal frameworks to crate a functioning business environment.

The country is now also planning to launch a special economic zone and invites hospitality groups to invest in the tourism sector.

 

 

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Reading Time: 2 minutes

In its bid to diversify its heavily oil-dependent economy, East Timor is turning to a different liquid: Beer.

Reading Time: 2 minutes

East Timor HeinekenIn its bid to diversify its heavily oil-dependent economy, East Timor is turning to a different liquid: Beer.

This month, Dutch beverage giant Heineken kicked off construction of a new brewery in the small Southeast Asian nation, investing $40 million in  a plant that will produce a new brand of beer, as well as three Heineken-affiliated brands, namely Tiger, Bintang and ABC, as well as some soft drinks. The plant will have a capacity of 30 million liters of beverages a year and will start production by the end of 2016.

The investment is the first production facility of a multinational company in East Timor, whose economy is more than 90-per cent dependent on oil and gas exports, and to some extent on coffee, sandalwood and marble. The domestic industry is small, mainly comprising textile, handicraft, soap manufacturing and printing.

Heineken, whose imported brands already have some 80 per cent market share in East Timor, is counting on the young and growing population of the country. According to the International Monetary Fund, East Timor’s population is expected to grow by 16 per cent to 1.47 million in 2020 from an estimated 1.27 million at present.

There is also no local competition. East Timor used to have its own beer brand, Buffalo Beer, produced in a brewery in the capital Dili, but the facility closed in 2006.

And unlike in its large neighbour Indonesia, there are no religious restrictions on the consumption of alcohol in the Christian country. While annual per capita alcohol consumption in East Timor is currently at a low five to six liters, less than half the comparable figure for Papua New Guinea, demand for alcoholic beverages is expected to grow in tandem with economic development.

Due to slumping oil prices, East Timor is trying hard to diversify its economy and invites investors to the country which wants to position itself as a trade hub between larger economies in Southeast Asia and Australia. However, foreign manufacturers are still cautious about making large-scale investments because of many persisting hurdles, including the country’s poor ports, an inadequate customs clearance system and insufficient laws related to land expropriation and finance.

Things might change when the country’s government carries on with important infrastructure investment and its bid to join the Association of Southeast Asian Nations (ASEAN) and with it the ASEAN Economic Community. The Asian Development Bank is helping in establishing legal frameworks to crate a functioning business environment.

The country is now also planning to launch a special economic zone and invites hospitality groups to invest in the tourism sector.

 

 

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