DOING BUSINESS IN TIMOR-LESTE

ANZ CEO Timor-Leste, David Dennis

ANZ Head of Commercial, David Lin

Day 2 Session: “Taking part in Timor-Leste Emerging Market”

Timor-Leste International Investment Conference 7 June 2016

ANZ is Timor-Leste’s only AA-rated bank

Our award winning FX, Trade and Cash Management Platforms make operating in multiple countries easier and more efficient for our clients The only bank in Timor-Leste able to provide extensive relationship coverage with Timor’s major trading nations in Asia Pacific.

ANZ IN TIMOR-LESTE

ANZ Timor Leste 1 branch | 8 ATMs | 36 staff

ANZ IN THE PACIFIC

Presence in 12 Pacific markets for over 135 years, 56 branches, 228 ATMs, 2,000+ staff

Products & Services – Comprehensive banking solution spanning both retail, business and institutional banking

COUNTRY SNAPSHOT • Rated N/A • Democratic Government • GDP ~USD1.8Bn (2016F) • GDP Growth (%)

• 2015F = 6.2% • 2016F = 6.0%

• Inflation • 2015F = 3.1% • 2016F = 3.3%

• Fiscal Balance • 2015F = 22.5% • 2016F = 19.0%

• Local currency USD • Main Exports – Hydrocarbons Source: ANZ Economics

TIMOR-LESTE OVERVIEW

• Government key focus areas: Agriculture, Tourism and Petroleum. • Petroleum related activities generates 84.9% of Timor’s

Government revenues. • Coffee accounts for over 90% of non-oil merchandise exports &

represents further opportunities. • Little onshore minerals exploration, but gold, oil and gas,

manganese, limestone and marble have been identified as potential resources. These industries are under-developed and would benefit from international investment and development.

• The sectors offering the majority of opportunities are oil and gas, infrastructure and building and construction inputs.

• Business opportunities in Timor-Leste will increasingly relate to major infrastructure projects, particularly as the government ramps up public spending on these to achieve goals in the Strategic Development Plan.

Photographer: David Kirkland

POSITIVE FUTURE AHEAD

POSITIVE SIGNS FOR A STRONG FUTURE:

A strategic plan 2011-2030.

Increasing pace of development and change.

Seamless transition of Government in 2015. Stable. New elections in 2017

Petroleum fund of ~USD$16.58Bn (March 2016)

Continued interest from MNCs exploring new markets, infrastructure and spin off industries / opportunities.

Number of planned infrastructure projects in pipeline (Tibar, TL Cement, Suai)

Established FIU and AML/CTF legislation. Further revision expected in 2016/17

ANZ level of confidence – 15-years in Timor-Leste and committed

POSITIVE FUTURE AHEAD

INCREASINGLY EASY TO DO BUSINESS:

Improved company registration (SERVE)

Transitional Land Reform Act is a work in progress with recent draft presented to Council of Ministers.

Companies Code is a work in progress

Fiscal reform program underway.

Increased investment in education

Strong support by Government for Investors. New Special Investment Authority

Electronic Payments platform for all Banks launched 2015

Planned interchange between banks 2016/2017. On going collaboration between banks to implement Financial services master plan

A QUICK SCAN OF TIMOR WITH A SWOT MINDSET

Geographically well placed to benefit from Asian Century

Clear strategic plan including financial services master plan

Growing connectivity with key trading partners

$16.58bn wealth fund – capital available to fund inclusive growth

Infrastructure challenges outside of main commercial centres

Developing institutional and legal frameworks

Lack of skilled resources across some sectors (although improving)

Limited economic/export diversity

Natural disasters (droughts)

Dependent on energy imports

Low Oil price impacting PWF

Emerging governance structures

Sustainability of budget spending

Pent up demand for infrastructure development (PPPs) and associated FDI flows – positive trickle down effect (eg: Tbar)

Mega projects and trickle down opportunities they create (eg. Suai)

Strong trade growth (both inter and intra-regionally), especially with Asia

TIMOR-LESTE AND THE ASEAN

Value in being a part of a high growth, low volatility community

Timor would be the smallest member of the ASEAN with a GDP currently around 15% the size of the smallest member Laos

GDP 2013 $ trillion

Real GDP growth, 2000–13 %

GDP volatility, 2000–13 %

Debt to GDP, 2013 %

Inflation 2013 GDP deflator, %

United States 16.8 China 10.0 Russia 4.2 Japan 243.2

India 7.0

China 9.3 India 7.0 India 2.4 Italy 132.5

Russia 6.5

Japan 4.9 ASEAN 5.1 United Kingdom

2.3 United States 104.5

Brazil 6.5

Germany 3.6 Russia 4.4 Italy 2.3 France 93.9 ASEAN 2.8

France 2.7 Brazil 3.2 Germany 2.3 United Kingdom

90.1 Germany 2.3

United Kingdom

2.5 Canada 1.9 Japan 2.2 Canada 89.1 United Kingdom

2.1

ASEAN 2.4 United States 1.8 Brazil 2.2 Germany 78.1 China 1.7

Brazil 2.2 United Kingdom

1.5 China 1.8 India 66.7 United States 1.5

Russia 2.1 Germany 1.1 United States 1.7 Brazil 66.3 Canada 1.5

Italy 2.1 France 1.0 Canada 1.7 ASEAN 46.7 Italy 1.4

India 1.9 Japan 0.8 France 1.6 China 22.4 France 1.1

Canada 1.8 Italy 0.0 ASEAN 1.5

Russia 13.4 Japan -0.6

The key focus for Timor-Leste should be on connectivity as it is geographically at

the periphery of the ASEAN as it currently stands

TIMOR-LESTE: INFRASTRUCTURE OVERVIEW BUILDING FOUNDATIONS FOR THE FUTURE

TIMOR-LESTE: KEY FIGURES

1,426km of National Roads and ~3,900km of District and Rural Roads (US$408m to be spent between 2016-2020)

~66% of population have access to clean drinking water and ~40% have access to sanitation facilities

1 international airports and 7 national airports (US$207m to be spent between 2016-2020)

~75% of population have access to electricity (2015) compared with just 22% in 2007

1 international seaport (US$207m to be spent between 2016-2020

KEY STATE INITIATIVES – NEAR TERM (2015-18)

Upgrade of Suai Airport (~USD80m) Upgrade of Dili Airport (TBC) Suai Breakwater (USD718m) Upgrade of Oecussi airport and power plant (USD 79m). Suai to Beaco Highway – stage 1 (~USD275m) KEY STATE INITIATIVES – MEDIUM TERM (2018-25)

Sunrise LNG Project (~USD 15.0bn) Oil Refinery (USD 3.0bn) and Oil Storage Tank Farm (USD

150m) South Coast New Towns Development (USD 250m) Ongoing National Road Network upgrades (USD500m) Oecussi - development of tax free zone is progressing. PRIVATE INVESTMENT

Tibar Port PPP (new port for Dili) (~USD278m+) TL Cement plant ~USD$400m+ planned Heineken production facility (~USD40m) Increasing investment in quality residential and commercial

developments. MNC engagement increasing

FINANCIAL SECTOR DEVELOPMENTS

Financial Services Master Plan “Spurring Growth 2014-2025”

National Payments System Strategy

ACH and RGTS in place

Next phase in interchange and developing the foundations for a digital future

New payments and agents legislation in place

Financial sector legislative reforms underway

Development of Investment Agency positive

Accounting Standards development underway

Financial literacy training engagement also improving

OPPORTUNITY – DIGITAL CONNECTIVITY AN ENABLER OF GROWTH THE PHONE IS ALREADY IN OUR HANDS – THE OPPORTUNITY IS YOURS

Source: World Bank, ANZ Research

Timor- Leste has the highest Mobile Phone penetration rate in the Pacific

On average, each person has at least 1 mobile phone

Low Internet penetration (1% of population) reveals tremendous upside potential towards digital connectivity, with mobile phones a ready and preferred medium

FINANCIAL INCLUSION A PRIORITY FOR ANZ

Photographer: David Kirkland

DISCLAIMER

Disclaimer: This presentation is issued by Australia and New Zealand Banking Group Limited (“ANZ”, which term shall include its officers, employees, representatives and agents). The information and opinions contained in this presentation (upon which ANZ may have acted or may act for its own purposes) are published for the assistance of recipients but are not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipients. While such information and opinions have been compiled or arrived at by ANZ in good faith and from sources believed to be reliable, no representation or warranty, express or implied, is made or given as to their accuracy, completeness or correctness. Any opinions contained in this presentation may be changed by ANZ at any time and without notice. ANZ accepts no liability whatsoever for any loss or damage, whether direct or indirect, consequential or otherwise, howsoever arising (whether in negligence or otherwise) out of, or in connection with or from any use of the contents of and/or omissions from this presentation. The material contained in this presentation is confidential and may not be reproduced (in whole or in part) to any other person without the prior written consent of ANZ.

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