29 October 2014

Timor-Leste seeks feedback on Secured Transactions reform plans

THE GOVERNMENT of Timor-Leste is proposing to introduce secured transactions reforms to promote broader access to finance and improve the enabling environment for business in the country.
As part of a program of extensive public consultations, Ms. Veneranda Lemos, Timor-Leste's Secretary of State for the Support and Promotion of Private Sector (SEAPRI), has released a discussion paper* to explain the reforms. Published in Portuguese, English and Bahasa Indonesia, the paper lays out the key issues related to the proposed reform, including an outline of the major legal issues that need to be addressed.

What is secured transactions reform? 

Secured transactions reform focuses on unlocking the value of movable property. Movable property is everything owned by an individual or a business excluding land or buildings, ie. vehicles, machines, crops, equipment, inventory and accounts receivable. The reform aims to ensure a borrower can easily offer movable property as collateral for a loan. And if the borrower does not repay the loan, the lender should be able to easily enforce its rights over that property. If the reform is implemented successfully, access to finance should increase in the country.

Without access to finance, investment is limited and growth potential wasted. Credit is required for many business transactions and consumer purchases. Access to finance for both individuals and businesses is crucial to the development of the economy and the private sector, but this access remains severely constrained in Timor-Leste.

From the discussion paper: Domestic Credit to Private Sector as a % of GDP as at Q4 2013.

SEAPRI is receiving technical assistance on the reform effort from the Pacific Private Sector Development Initiative (PSDI), cofinanced by the Asian Development Bank, the Government of Australia, and the New Zealand Government. PSDI has already supported like reforms in eight Pacific Islands countries, with initial results showing more lending, lower interest rates, and a wider array of collateral being accepted. PSDI will continue to provide support to Timor-Leste throughout the reform process, after the law is passed and through the implementation phase.

Call for submissions

SEAPRI is seeking feedback prior to the drafting of legislation and both citizens and stakeholders are invited to respond with written submissions. SEAPRI requests all submissions be made prior to 1 December, 2014. Submissions can be made in English, Portuguese, Bahasa Indonesia or Tetum in writing or by email to:
ATTN: Tony Duarte, Chief of Staff
Secretary of State for the Support and Promotion of Private Sector
Avenida Presidente Nicolau Lobato, close to the Government Palace, Third Floor
Email: timor.securedtransactions@gmail.com
Click here to view or download the discussion paper in Portuguese,English, Bahasa Indonesia.

* If you are having trouble viewing the documents, email PSDI at info@adbpsdi.org and we will email them to you.