Foreign Investment Promotion and Protection in Timor-Leste : Opportunities and Risks

The attraction of foreign investment, particularly in the field of infrastructure building and maintenance, plays a central role in the development of Timor-Leste. This paper discusses the advantages and potential risks of using international investment agreements as a tool to promote foreign investment. It offers a primer on how developing nations such as Timor-Leste can harness the opportunities emerging from private participation in infrastructure projects without compromising public interests. Because international investment agreements impose certain standards regarding the protection afforded to foreign investors, they may conflict with the regulatory power of the host state. The government of Timor-Leste should be aware of the scope of the state’s obligations to foreign investors when designing and implementing its policies. Like other developing countries, Timor-Leste lacks the necessary knowledge and experience to defend its interests vigorously in international arbitral proceedings. Dispute prevention is especially advisable as foreign investment is bound to play an increasingly decisive role in the development of the country