Jose Ramos-Horta is in Australia for talks with political and community leaders as his country seeks to develop its economy and play a role in regional security.
Dr Ramos-Horta witnessed the signing by Defence Minister Richard Marles and his Timorese counterpart of a defence cooperation agreement in Canberra on Wednesday.
The agreement sets out a framework for the activities of both nations' militaries in each other's countries, and aims to increase the countries' armed forces working together including on exercising, training and humanitarian assistance.
With China increasingly flexing its military muscle in the region, including a security deal with the Solomon Islands, Dr Ramos-Horta told the ABC he would not support a Chinese base.
"We have a responsibility to our neighbours, to Australia, to Indonesia, to other southeast Asian countries not to allow Timor-Leste to be a base for any hostile power or power that is perceived by our neighbours to be potentially hostile," he said.
"A prosperous, stable Timor-Leste is in Australia's best interests because Timor-Leste should sit in the geography of Australia's greater strategic interests."
One of the keys to the country's prosperity is the Greater Sunrise gas field.
East Timor is entitled to at least 70 per cent of the royalties from the field, estimated to have more than $70 billion in resource value.
It controls almost 57 per cent of the field. Australian energy company Woodside controls 33 per cent and Japan's Osaka Gas 10 per cent.
Woodside's preferred option is the already established hub in Darwin, but Timor wants the gas piped to a new site on its southern coast.
"We have a neighbour, Australia, that can make this miracle happen," Dr Ramos-Horta told the National Press Club in Canberra on Wednesday.
"This way it contributes to a very dynamic Timor-Leste economy ... you will see Timor-Leste as another Dubai or another Singapore."
When asked about his government seeking Chinese investment for the project, Dr Ramos-Horta said Beijing was not the only power in the region, pointing to Indonesia.
"We're not talking about maritime security, it's just a pipeline," he said.
"I don't think China intends to invade anyone."
During a meeting with Prime Minister Anthony Albanese, the two leaders discussed security, economic cooperation, labour mobility and skills and East Timor's ASEAN membership bid.
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