Polls have closed in East Timor’s parliamentary elections in which Prime Minister Xanana Gusmao’s party faces a stiff challenge as it seeks to extend its term in office.

Voting began at 7am local time 22:00 GMT on Friday. East Timor, Asia’s newest and one of its poorest nations, has a population of more than one million people with about 620,000 eligible voters.

Political watchers said the two parties going head-to-head were the Revolutionary Front for an Independent East Timor (Fretilin) and Gusmao’s National Congress for Timorese Reconstruction (CNRT) party.

Gusmao told reporters he was confident his CNRT would win 44 of 65 parliamentary seats.

The party is campaigning on the platform of seeking foreign loans for infrastructure projects and expanding the amount of an oil fund used for the state budget beyond its current limit of three per cent.

“Every party here is very optimistic and I’m very confident. I’m confident, we will see,” Gusmao told journalists after he cast his vote at a polling station.

CNRT, Fretilin and the Democratic Party lead a total of 21 parties and alliances contesting the election for 65 seats in parliament.

Voter concerns

There have been no reliable polls, but Taur Matan Ruak defeated a Fretilin candidate and Nobel peace prize winner and incumbent Ramos Horta in a presidential poll in April. Ruak ran as an independent but was supported by Gusmao.

Another popular candidate is Mari Alkatiri, former prime minister from 2002-2006 and president of Fretilin.

Gusmao, a guerrilla leader in the fight to end Indonesian rule, became the first president after independence in 2002.

East Timor voted to break away from Indonesian rule in 1999 and after a period of UN administration, it became independent in 2002.

The Fretilin party, also a key player in the fight to secure independence, opposes foreign loans and wants to maintain the percentage of the $10.5bn petroleum fund used for the budget at current levels.

Peace and stability were also key concerns for over 600,000 eligible voters in a country that saw factional violence in 2006 as well as in the period leading up to independence.

“I have given my vote and I hope my vote will not fall to the ground and go to waste, that what the parties have promised us, such as to open more jobs and create peace, will be realised,” Floriano da Silva, a student, told the Reuters news agency.

Official results are expected on July 17 and the new government will be formed on August 8, the government said.

Gas dispute

East Timor has offshore gas resources but is embroiled in a dispute over the exploitation of the reserves with Australia’s Woodside Petroleum, which heads consortium of firms developing the Greater Sunrise project gas field.

Despite its petroleum fund, about half the Timorese population lives below the poverty benchmark of $0.88 per person per day and 50 per cent of children are underweight, according to a UN report.

Indonesia invaded East Timor, a former Portuguese colony occupying half an island at the eastern end of the Indonesian archipelago, in 1975.

It spent decades trying to crush opposition to its rule before the territory won independence following a referendum.

A United Nations (UN) mission promoting stability remains to this day, a decade after independence, but the UN said its mission will end in December and it will hand over to the state the task of policing a country in which street gangs remain a significant problem.

The former Portuguese colony is one of the world’s poorest countries, but has rich energy resources that are only starting to be developed.