East Timor votes for parliament amid huge challenges

East Timor headed to the polls to elect a new parliament on Saturday as Asia's youngest democracy battles economic challenges 15 years after gaining its independence from Indonesia.

About 760,000 people were expected to cast their votes for candidates from 21 parties, in the first parliamentary elections since United Nations peacekeepers left the tiny nation in 2012.

The polls come at a tough time for the country, with key oil reserves running dry while the government struggles to resolve a long-running row with Australia over lucrative energy fields.

But despite fears of violence, there were no reports of unrest in the run-up to the election and on election day.

"I am proud that as president I can ensure that the [election[] process went peacefully and that we have established a democratic country …," said president Francisco Guterres.

Voters turned up at polls early, eager to vote for their favourites.

"I am happy I can vote today because it's important we choose the best to lead our country," said Mateus Araujo.

The election will determine the choice of prime minister for the former Portuguese colony.

The prime minister, who is chosen by the winning party or a coalition of parties in parliament, oversees the government and is the most influential political figure in East Timor.

The presidency is a largely ceremonial role but one that can help keep the peace between feuding politicians.

East Timor's two main parties, Fretilin and CNRT, are expected to fare well in the election. But the newly established People's Liberation Party is also predicted to become an important force, with leader and former president Taur Matan Ruak promising to tackle corruption.

The head of CNRT, Xanana Gusmao, was optimistic about the election outcome, however.

"The party has high hopes that we will win," Mr Gusmao said.

East Timor faces huge problems: half of its population live in poverty and the current government is struggling to improve the livelihoods of its 1.2 million people.

As well as diversifying the resource-rich economy away from a reliance on oil, the country's leaders must agree a new sea border with Australia after tearing up a contentious maritime treaty that cuts through energy fields.

Preliminary results will be known by Saturday evening, though official results will not be announced until early August.