Lowy Institute South-East Asia aid map reveals retreat of US and Europe from Australia's region
The Lowy Institute's latest South-East Asia aid map warns some of the region's poorest countries, including Myanmar, Cambodia, Laos, and Timor-Leste, will suffer due to $US60 billion ($92 billion) worth of aid cuts from the US.
China would "continue to play a really big role as the region's infrastructure provider," said Grace Stanhope, a research associate with the Lowy Institute's Indo-Pacific Development Centre, who co-authored the report.
"Infrastructure is certainly a soft power tool that China has used not only throughout South-East Asia, but in the Pacific, South Asia, all over the world," she said.
Lowy's report cited China's construction of high-speed rail between the Indonesian cities of Jakarta and Bandung, as well as funding for Malaysia's East Coast Rail Link.
Due to a delay in the public release of data, Lowy's report focused on the situation in 2023, since when major geopolitical shifts have occurred, not least due to the return of US President Donald Trump to the White House.
After returning to office in early 2025, Mr Trump moved to abolish the US Agency for International Development (USAID), which had previously provided over 40 per cent of humanitarian funding worldwide.
Major European development providers such as Germany, France, the Netherlands, and Sweden — as well as the European Union — have also withdrawn some $US25 billion ($38 billion) from their aid budgets.
Despite enduring poverty and reliance on external aid for its economic survival, Cambodia saw Sweden end its bilateral aid program in 2024.
Lowy's analysis found that while spending for humanitarian aid responses to natural disasters in South-East Asia had increased, support for longer-term climate adaptation in the region remained inadequate.
Yet, she said Western nations had not made good on financial pledges for middle and low-income countries to aid their transition to clean energy.
"If that support is not being delivered, we're at political risk of being perceived as not following through on our promises," she said.
The world's entire aid and development system had been "rewritten and rebuilt" over the past six months, Ms Stanhope said.
The Australian Council for International Development's head of policy and advocacy, Jessica Mackenzie, recently told the ABC's Pacific Beat that the US was previously the top contributor to the World Bank and Asian Development Bank, which would also have major flow-on effects.
"A lot of projects are still coming down the line that are going to be cancelled from those [institutions]," she said.
"The US was working on a lot of projects with DFAT [Australia's Department of Foreign Affairs and Trade] … as soon as that US funding is stripped, the whole project stops.
The ABC revealed last week that the US had returned $1.5 million to DFAT, which Australia had provided to USAID to deliver a clean water project in Indonesia.
Still, the Lowy analysis noted that South Korea and Japan remained major aid donors to South-East Asia.
Ms Stanhope said the East Asian democracies had larger development programs than Australia and were able to use public finance to lend to South-East Asian countries to develop sectors such as energy, transport, and communications.
"Australia can stick to doing our more traditional, very human-based development, and we can trust that for the infrastructure and the bigger-spending, more visible [projects] … Japan and Korea are very trusted partners," she said.
Australia's expenditure on overseas development assistance is among the lowest of comparable rich countries, providing 19 cents for every $100 of national income in 2024, according to Oxfam Australia.
"Outside of the OECD, Australia trails behind countries like Malta and Croatia, who give more as a proportion of their economies," Oxfam Australia's acting head Chrisanta Muli said earlier this year.
But Ms Stanhope said Australia continued to play an important regional role, for example by being the largest development provider to Timor-Leste and running specialist programs focused on gender, climate, and disability.
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