07 May 2009

East Timor May Invest 10% of $4.6 Billion Fund in Equities

By Aloysius Unditu May 5 (Bloomberg) -- East Timor, the world's newest democracy, may invest about 10 percent of a $4.6 billion petroleum fund in regional equities seeking to diversify from U.S. Treasuries, the government's economic adviser said.

The government needs the parliament's approval for the plan, Joao M. Saldanha, an economic adviser to the government, said in an interview in Bali, Indonesia yesterday.

The government is looking for higher-yielding assets to boost income as the U.S. dollar declines. The fund, set up in 2005, manages the revenue from oil and gas produced in the Australia-East Timor Joint Petroleum Development Area. East Timor, where 41 percent of the people live on less than $1 a day, plans to use profit from the fund to develop the nation.

We need to diversify to other instruments," to boost earnings from the fund, Finance Minister Emilia Pires said in an interview in Bali.

The dollar traded at $1.3391 per euro as of 9:35 a.m. in Singapore from $1.3406 in New York yesterday. It earlier reached $1.3438, the lowest level since April 6.

Revenue from the oil and gas area may increase to $15 billion by 2025, according to Australia's Department of Foreign Affairs & Trade.

The fund earned $129.4 million in the final quarter of last year, according to the Banking & Payments Authority of Timor- Leste. JPMorgan Chase & Co is the custodian for the fund.

East Timor, which voted for independence from Indonesia a decade ago, expects its economy to expand 8 percent this year, unchanged from last year, said Saldanha.

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