Hundreds of Timorese employed by the UN will be forced to find new jobs and the country's GDP is expected to take a hit.
But the United Nations has been preparing staff for the transition and officials say the impact won't be significant.
Correspondent: Stephanie March
Speakers: Gary Grey, UNMIT acting Chief of Staff and Political Director; Ana Teresa Sequeira, UN employee; Michael McGovern, business owner
MARCH: When the UN mission leaves at the end of the year, it takes with it some sought after jobs. 900 Timorese directly employed by the mission will be out of work.
A further 1,300 security guards employed by a private firm contracted by the UN will also need to be deployed elsewhere. Gary Grey is the acting Chief of Staff for the United Nations mission.
GREY: And then, you could obviously add people's own household staff if they have houses. I would guess maybe there is a couple of hundred, a few hundred people involved there.
MARCH: He says while the impact will be noticeable it's not huge.
GREY: The total UN involvement in the economy is around 50 million dollars. I think the important thing is to put that into the context of the overall national economy. If you look at GDP we had 4.1 billion GDP in Timor in 2010. So that is a pretty small percent, that is only around one percent of GDP.
MARCH: Wherever the United Nations sets up a mission it knows one day that mission will finish. In East Timor, the UN has been preparing staff for the day they find themselves out of work.
GREY: More than 90 percent of our staff have taken part of this programme we have called National Staff Certification where we have offered a number of training courses in all kinds of areas, like information technology, translation and interpretation, administration, even creating small businesses.
MARCH: Ana Teresa Sequeira has been working with the UN for five years in the public information office.
SEQUEIRA: When I hear about my contract will end soon I feel a little bit sad, because I don't think I am going to get a job soon. But fortunately, I got a job as a media manager.
MARCH: Do you think it will be as easy for your colleagues to find work?
SEQUEIRA: I think, all of my colleague in communication and public information office I think have enough skills to find another job after UN mission ends.
MARCH: Are there enough jobs around in Dili at the moment, or are jobs quite few and far between?
SEQUEIRA: I think it is only few and some colleagues are still looking for a job.
MARCH: It's not just those employed directly by the UN that will be affected. Gary Grey again ..
GREY: It will affect specific sectors more, obviously in the restaurants around Dili where you might see a good percentage of the people there being from the UN side.
MARCH: While many businesses have been preparing for this for years, some are still expecting tough times ahead. Michael McGovern , the owner of the Dili Beach Hotel, says 50 per cent of his business come from the United Nations.
McGovern: I expect 2013 to be extremely hard, very very hard.
MARCH: He has been hoping the tourism sector would pick up, but say high airfares from Australia make it prohibitive for travellers.
McGOVERN: All we can do now is cut our staff and cut costs , we have 36 rooms and a very big restaurant and bar, so we expect the rooms to come back 50 per cent.
MARCH: And how many local staff do you think you'll have to get rid of?
McGOVERN: Probably, initially 20 percent. We've got sixty staff.
MARCH: The United Nations peacekeepers pulled out of East Timor once before - in 2005 - with disastrous consequences.
In 2006, the country descended into violence, and the Australian Military and UN returned. While it's not entirely certain how the local forces will cope this time, Gary Grey says he thinks the UN's departure is a good thing.
GREY: The overall picture is very positive, the fact because the fact we are withdrawing is indication of the stability of the country and fact got through last year smoothly in terms of the election period. People had been concerned about before would be a risky period and we got through that very smoothly and the situation is very calm, and has remained calm.