East Timor President Jose Ramos-Horta is concerned an Australian taxpayer funded refugee processing centre in Dili could become a magnet for illegal people smuggling.
Dr Ramos-Horta has met with several senior Australian and Timorese officials in Dili today to discuss Prime Minister Julia Gillard's vision to build a regional asylum seeker processing in East Timor.
He says there are thousands of asylum seekers waiting in Malaysia, Indonesia and Thailand for years and years without a place of final settlement.
Dr Ramos-Horta says the centre, if it's built, can't be allowed to be seen as an incentive for people just to take shortcuts to the regular proper immigration process.
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Australia's immigration minister Chris Bowen said the proposed centre would be operational for a "very substantial period of time".
Chris Bowen also said Australia and East Timor had agreed to set up a working group to study proposals for such a facility, which would be run in close cooperation with the United Nations.
After the first round of direct negotiations on Australia's proposal, the two countries agreed to consult regional transit states including Malaysia and Indonesia, and develop a detailed plan by early next year.
"The president and I understand that if there is going to be a substantial investment it wouldn't be a short-term investment," Bowen said at a joint press conference with Ramos-Horta in Dili.
"I think the president has said very clearly that he would regard this centre as being here... for a very substantial period of time."
Ramos-Horta told AFP at the weekend that he would not accept a "permanent" detention centre for asylum applicants on East Timorese soil.
He said Tuesday that the question of whether the centre would be indefinite or have a "time limit" placed on its operations would be the subject of further negotiations with Australia.
He added that he was positive about the proposal, which was first raised in July by Australian Prime Minister Julia Gillard amid a surge in the arrival of undocumented migrants by boat in Australian waters.
"We are looking at it positively based on human considerations, stemming from our own beliefs as a people who once fled persecution, violence and poverty," Ramos-Horta said.
"Having said that we will need to discuss with Australia, Indonesia and others a more detailed concept."
The former exile during much of Indonesia's brutal 24-year occupation said the government would also have to consult the East Timorese people.
"If we are doing it we would want our people to embrace it and not... feel (it) was imposed on them, because the people who would come to Timor-Leste would have to feel they were wecome," he said.
East Timor, or Timor-Leste as it is formally known, has a wealth of energy resources but remains one of the poorest countries in Asia, with most people dependent on foreign aid eight years after it achieved independence.
Many lawmakers in the tiny country of around one million people have expressed opposition to the Australian proposal, but Ramos-Horta said he was confident they would eventually see its merits.
"Look at Australia -- 30 or 40 years ago Sydney was one of the most boring places on earth... Sydney changed completely because of migration. This I see as the benefit coming from human contact, human solidarity," he said.
Thousands of asylum seekers head through Southeast Asian countries on their way to Australia every year. Many link up with people smugglers in Indonesia for the final, desperate voyage in leaky boats.
About 100 boats carrying more than 4,000 people have arrived this year, stretching facilities to the limit and exacerbating a politically sensitive issue for Gillard's fragile Labor-led coalition.
Bowen will be discussing the issue in Indonesia and Malaysia later in the week.
