RISK MANAGEMENT IN VOLATILE MARKETS IN TIMOR-LESTE
Abstrak
This paper examines risk management in the context of market volatility in Timor-Leste, a small, resource-dependent economy facing persistent fiscal, environmental, and institutional vulnerabilities. The study is motivated by the country's continued reliance on petroleum revenues, limited economic diversification, and growing exposure to global shocks such as commodity price fluctuations and climate events. The central research question is: How can Timor-Leste manage economic risks in the face of increasing market volatility to ensure long-term fiscal and economic stability? The novelty of this paper lies in its integrated analysis of macroeconomic, financial, operational, and environmental risks, specifically tailored to Timor-Leste’s structural conditions an area that remains under-researched in existing literature. Employing a qualitative-descriptive method, this study is based on secondary data drawn from government reports and multilateral publications, including economic performance reviews, trade statistics, and institutional assessments from 2018 to 2024. Findings indicate that despite modest GDP growth recovery and reduced inflation in 2024, fiscal sustainability remains at risk due to overreliance on the Petroleum Fund and low domestic revenue. The research highlights key mitigation strategies, including fiscal discipline, economic diversification, financial sector strengthening, and climate-resilient infrastructure investment. The study concludes that effective risk management in Timor-Leste requires coordinated institutional action, supported by long-term reforms. The findings offer practical insights for policymakers and stakeholders seeking to reduce volatility and promote inclusive, sustainable growth.Referensi
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World Bank. (2016). Making Risk-Informed Investment Decisions. Washington, DC: World Bank.
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Auty, R. M. (1993). Sustaining development in mineral economies: The resource curse thesis. Routledge.
Baffes, J., Kose, M. A., Ohnsorge, F., & Stocker, M. (2015). The great plunge in oil prices: Causes, consequences, and policy responses. World Bank Group Policy Research Note.
Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593–1636.
Bauer, A. (2013). Managing the public trust: How to make natural resource funds work for citizens. Natural Resource Governance Institute. https://resourcegovernance.org
BCTL. (2024). Economic Performance Report 2024. Banco Central de Timor-Leste. https://www.bancocentral.tl
Behl, A., Dutta, P., Sheorey, P., & Mangla, S. K. (2023). Risk and resilience in emerging economies: Towards a framework for sustainable decision making. Journal of Risk and Financial Management, 16(1), 15.
Böll Foundation Southeast Asia. (2022). Timor-Leste: Development Challenges and Priorities. Jakarta: Heinrich Böll Stiftung Southeast Asia.
Boslaugh, S. (2007). Secondary data sources for public health: A practical guide. Cambridge University Press.
Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in Psychology, 3(2), 77–101.
Calvo, G. A., & Reinhart, C. M. (2002). Fear of floating. The Quarterly Journal of Economics, 117(2), 379–408.
Chakrabarti, R., & Sen, S. (2020). Revisiting Markowitz: Behavioral biases in portfolio selection. Journal of Behavioral and Experimental Finance, 26, 100287.
Coface. (2023). Country and Sector Risk Barometer – Timor-Leste. Retrieved from https://www.coface.com
Creswell, J. W., & Poth, C. N. (2017). Qualitative inquiry and research design: Choosing among five approaches (4th ed.). SAGE Publications.
Flick, U. (2018). An introduction to qualitative research (6th ed.). SAGE Publications.
Ghosh, A. R., Ostry, J. D., & Chamon, M. (2012). Two targets, two instruments: Monetary and exchange rate policies in emerging market economies. IMF Staff Discussion Note SDN/12/01. International Monetary Fund.
Hamilton, J. D. (2003). What is an oil shock? Journal of Econometrics, 113(2), 363–398.
Hull, J. C. (2017). Options, futures, and other derivatives (9th ed.). Pearson Education.
Humphreys, M., Sachs, J. D., & Stiglitz, J. E. (Eds.). (2007). Escaping the resource curse. Columbia University Press.
IMF eLibrary. (2024). Timor-Leste: Economic Indicators and Impact of External Shocks. Washington, DC: IMF.
IndexMundi. (2023). Timor-Leste Exchange Rate Data. Retrieved from https://www.indexmundi.com
International Monetary Fund (IMF). (2024). Article IV consultation report: Timor-Leste. International Monetary Fund. https://www.imf.org
International Monetary Fund. (2023). Fiscal Transparency Evaluation: Timor-Leste. Washington, DC: IMF.
ISO. (2018). ISO 31000: Risk management – Guidelines (2nd ed.). International Organization for Standardization.
Johnston, M. P. (2017). Secondary data analysis: A method of which the time has come. Qualitative and Quantitative Methods in Libraries (QQML), 3, 619–626.
Krugman, P. R., & Obstfeld, M. (2018). International economics: Theory and policy (11th ed.). Pearson Education.
Markowitz, H. (1952). Portfolio selection. The Journal of Finance, 7(1), 77–91.
Mazzucato, M., & Kattel, R. (2021). Mission economy: A moonshot guide to changing capitalism. Harper Business.
Naseem, S., Ejaz, A., & Aamir, M. (2022). Applying Modern Portfolio Theory (MPT) to ESG-based investments: Evidence from emerging markets. Journal of Sustainable Finance & Investment, 12(3), 623–639.
Neuman, W. L. (2014). Social research methods: Qualitative and quantitative approaches (7th ed.). Pearson Education.
OECD. (2020). Strategic crisis management: COVID-19 and beyond. Organisation for Economic Co-operation and Development. https://www.oecd.org
Raddatz, C. (2007). Are external shocks responsible for the instability of output in low-income countries? Journal of Development Economics, 84(1), 155–187.
Saunders, M., Lewis, P., & Thornhill, A. (2019). Research methods for business students (8th ed.). Pearson Education.
Timor-Leste General Directorate of Statistics. (2023). Timor-Leste annual trade statistics 2023. https://www.statistics.gov.tl
UNDP. (2023). Public Sector Risk Management for Resilience. United Nations Development Programme.
UNDRR. (2023). National Disaster Risk Management Policy of Timor-Leste. United Nations Office for Disaster Risk Reduction.
United Nations Development Programme (UNDP). (2021). Integrated risk management framework for fragile states. https://www.undp.org
United Nations Development Programme. (2023). Macroeconomic Outlook and Resilience in Timor-Leste. Dili: UNDP Timor-Leste.
United Nations Office for Disaster Risk Reduction (UNDRR). (2020). Disaster risk reduction and resilience building in fragile contexts. https://www.undrr.org
Williams, J., Flynn, M., & Bui, H. (2022). Institutionalizing risk management in public administration: Lessons from OECD countries. Public Administration Review, 82(1), 101–114.
World Bank. (2013). Fiscal Risk Management: Guidance Note. Washington, DC: World Bank.
World Bank. (2016). Making Risk-Informed Investment Decisions. Washington, DC: World Bank.
World Bank. (2024). Timor-Leste Economic Update 2024: Navigating Uncertainty. Washington, DC: World Bank. Retrieved from https://www.worldbank.org
World Bank. (2024). World development indicators 2024 and Timor-Leste macroeconomic updates. https://www.worldbank.org
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