Business

Opportunities for Investment in Timor-Leste’s Tourism Industry

As a young and dynamic nation in Southeast Asia, Timor-Leste is steadily positioning itself as an emerging tourism destination. With pristine beaches, rich cultural heritage, and untapped eco-tourism potential, the country presents a compelling case for investors seeking opportunities in the tourism industry. While still in the early stages of development, Timor-Leste’s government is actively working to enhance infrastructure and attract foreign investment, making it an opportune time to explore business prospects in the sector.

A growing market with unique opportunities

According to Aseanbriefing.com, tourism in Timor-Leste remains largely undiscovered compared to other Southeast Asian destinations. The country saw a significant increase in tourism in 2024, with approximately 80,000 international tourists visiting, representing a five percent growth compared to the previous year. Most tourists came from the following countries:

• Australia: 30%

• Indonesia: 25%

• Portugal: 15%

• China: 10%

• Other countries: 20%

The average spending per tourist in 2024 was approximately US$120 per day, amounting to US$840 per trip on average. Post-pandemic recovery efforts have underscored the need for investment in infrastructure and services to support the growing demand. Target demographics include eco-conscious travelers, divers, cultural tourists, and high-end travelers looking for exclusive island retreats. Timor-Leste’s strategic location and relatively low tourist saturation make it an attractive alternative to established destinations like Bali and Phuket.

Sectors primed for investment

Several key sectors in Timor-Leste’s tourism industry offer promising investment prospects:

• Beachfront accommodation and resorts

• Eco-tourism and adventure tourism infrastructure

• Cultural tourism facilities

• Food and beverage establishments

• Transportation services

Strategic locations for investment

Several geographic areas in Timor-Leste stand out for their tourism potential:

• Dili and surrounding areas

• Atauro island

• East coast beaches

• Mountain regions

• Cultural heritage

Government policies supporting investment

The Timorese government is actively encouraging tourism investment through various policies and incentives, including:

• Tax incentives

• Land acquisition processes

• Customs duty exemptions

• Legal stability agreements

Government investment and infrastructure support

The Timor-Leste government has been actively investing in tourism infrastructure. In 2024, the government hosted the first Tourism Investment Forum, aiming to attract both local and international investors. Key projects include:

• Development of eco-tourism sites

• Enhancement of cultural and historical tourism attractions

• Improvement of diving and whale-watching facilities

Additionally, the Timor-Leste Public Transport Master Plan (TLPTMP) was launched in 2024 in collaboration with the Asian Development Bank (ADB) to improve transportation. This includes:

• 30 weekly flights to and from Dili, connecting with Australia, Indonesia, and Singapore.

• New bus routes and improved public transport facilities.

Addressing challenges and risks

While the opportunities in Timor-Leste’s tourism industry are significant, investors should also be mindful of the challenges. Limited road networks, connectivity issues, and underdeveloped hospitality infrastructure may require additional investments to enhance accessibility and services. The tourism and hospitality sector also faces skilled labor shortages, highlighting the need for training and workforce development programs to ensure service quality. Additionally, seasonal fluctuations in visitor numbers can impact business sustainability, requiring adaptive strategies. Timor-Leste continues to navigate governance and policy adjustments as a relatively young nation, which can influence investment stability.

Timor-Leste’s tourism industry is at a pivotal stage, with growing demand and strong government backing. Businesses can establish a strong presence in one of Southeast Asia’s most promising emerging destinations by adopting strategic market entry approaches and leveraging incentives provided by the government.