Financial services company Credit Corporation has expanded its regional footprint by establishing operations in Timor-Leste. Country Manager, Chris Durman, outlines the vision to Business Advantage PNG.

Credit Corp Country Manager, Chris Durman

‘It’s early days for Credit Corp in Timor-Leste, but we are business-ready and our initial focus will be on leasing and lending for plant and equipment, infrastructure, development and investment projects,’ says Durman.

Durman has been with Credit Corp for just over two years. Previously, he has had various roles overseeing ‘start-ups’ for banks and finance companies in Australia, PNG (where he grew up) and Timor-Leste.

The Timor-Leste operation will be similar to CC’s approach elsewhere in the Pacific (it has subsidiaries in Fiji, Solomon Islands and Vanuatu, in addition to its main operation in Papua New Guinea). focusing on the needs of entrepreneurs, investors and operators who are building the local, established companies that require support from financiers.

‘There were various reasons for venturing into Timor-Leste.’

‘The commercial banks operate in similar markets, but we see opportunities in dealing with smaller ticket requirements,’ says Durman.

‘By doing so, we will be creating some competition. This can only benefit our clients, and ultimately the country.’

Durman says there were various reasons for venturing into Timor-Leste, including the size of the population (at 1.3 million, the second most populous market in which Credit Corp operates), its use of the US dollar as its currency, a well-managed sovereign wealth fund (the Petroleum Fund  is currently worth US$16.69 billion), one of the ‘most favourable’ tax rates in the world of 10 per cent, and external debt of just US$311 million.

Improved

Durman notes that Transparency International rates Timor-Leste as ‘the most improved country’. A major influence has been the country’s Strategic Development Plan (SDP).

‘It’s an economy based largely on oil and gas exports.’

‘The SDP is a 20-year vision that reflects the aspirations of the Timorese people to create a prosperous and strong nation. Closely followed and monitored by successive governments since implementation in 2011, it is our ‘road map’ into the future.

‘The SDP outlines plans to build four pillars of social capital, infrastructure, economic foundation and institutional frameworks. Other opportunities include tourism and building and construction.’

Stage 3 of the SDP, between 2021 and 2030, will focus on eradicating extreme poverty, building a stronger private and cooperative sector and creating a diversified, non-oil and gas economy. ‘The plan is for Timor-Leste to be an upper middle-income economy by 2030,’ he says.

Durman notes private sector investment is significant, with recently approved projects including Dili’s port development at US$278.3 million and a brewery investment by Heineken, owner of PNG’s SP Brewery.

‘It’s an economy based largely on oil and gas exports, and there is the potential for the revenue streams from this to generate excellent revenues for Timor-Leste well into the future.

‘We are not directly reliant on revenues from the Wealth Fund, the oil and gas incomes. But the distribution from the fund goes, in part, to finance projects awarded to the many contractors here.’

Expansion

Credit Corp is currently based in the capital, Dili, but Durman is already checking out opportunities in Suai and the western enclave of Oecusse. Suai is fast becoming a major centre on the south coast, supporting activities related to petroleum and minerals, agriculture and tourism.

A new airport opened in June 2017, marking the completion of a US$1.4 billion (K4.5 billion) major infrastructure project that included a 1500-metre airstrip, a supply base, Suai airport and a local highway.

‘The support has been exceptional.’

A special economic zone has been established in Oecusse (ZEESM), a part of Timor-Leste located within the borders of Indonesia.

‘It’s a fascinating district,’ he says, ‘first settled in the mid-1500s by the Portuguese. Spending on the Zone will exceed US$1.1 billion (K3.5 billion) between 2015 and 2020.’

Durman says setting up an office in Timor-Leste was not difficult, ‘provided you observe the requirements within the laws of the country’.

‘We were welcomed by the Central Bank, as well as other organisations in Timor-Leste.

‘The support has been exceptional—and this is in a regulated, well-managed industry.’

Credit Corp is the only finance company operating in Timor-Leste, according to Durman. He claims increased competition ‘will improve services and the infrastructure of the country’.