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The Advertiser
29-07-2025
- Business
- The Advertiser
Why Australia should worry about who's helping our neighbours
As Western countries slash foreign aid and trade tensions escalate, south-east Asia is facing a development squeeze that risks weakening both its resilience and autonomy. With Washington retreating and Brussels distracted, China is steadily consolidating its role as the region's dominant development partner, now delivering over a third of all support to south-east Asia. This is a deeply uncomfortable picture for Australia, given our future is wedded to that of our region. Australia cannot compete head-to-head with China on financing. But it is hardly a passive bystander. Prioritising Australia's foreign aid to where it is needed most, boosting cooperation with Japan and South Korea as major infrastructure financiers, and lifting our commercial engagement all need to be part of how Australia adjusts to a changed regional landscape. The Trump administration has abruptly cut about US$60 billion in overseas aid. The European Union and seven of its member states have pledged a further US$17 billion in cuts through to 2029. The UK has already slashed more than £6 billion a year. These are not temporary belt-tightening measures. They are a sustained withdrawal. The impact in south-east Asia will be uneven. Larger economies like Indonesia, Malaysia and the Philippines will weather the storm. But in Cambodia, Laos, Myanmar and Timor-Leste, the consequences will be substantial. Western aid funds schools, clinics, civil society groups, environmental protection, and humanitarian relief. The sudden drop in aid to these areas will deepen the divide between Southeast Asia's haves and have-nots, undermining long-term stability and regional cohesion. Meanwhile, the centre of gravity in development finance and influence is drifting from the West to the East. The most recent Lowy Institute Southeast Asia Aid Map shows that Chinese financing to the region has rebounded in recent years, driven by big-ticket infrastructure projects in Indonesia and Malaysia. Japan and South Korea, though quieter, remain consistent, with South Korea signalling plans to scale up its aid efforts. In contrast, Western donors are fading from the field, leaving the shaping of development priorities increasingly to others. As Western presence shrinks, south-east Asian nations - particularly the most aid-dependent - are left with fewer choices and less negotiating power. Many will turn to Beijing by necessity, not preference. The result: reduced agency, potential for less transparency, and fewer checks on how projects are selected, financed, and delivered. This turning point presents an opportunity for Australia to step up. Unlike many of our Western counterparts, Australia has not dramatically cut aid to the region. At around $900 million annually - mostly in grants - we are already the third-largest provider of grant-based assistance in south-east Asia. That is a national asset, if we use it wisely. First, we must direct aid where it is needed most. In Cambodia, Myanmar, and Laos, up to 80 per cent of support for education, health, and civil society comes from Western donors. As that funding disappears, Australia can play a crucial stabilising role. While recent initiatives, such as the $2 billion Southeast Asia Infrastructure Financing Facility, are aimed at boosting private investment in larger economies like Indonesia and Vietnam, poorer nations require a different approach: targeted, sustained, grant-based support. Australia should pursue a dual-track strategy: maintaining commercial engagement in emerging markets, while rebalancing some aid towards countries that lack access to private capital but face the most urgent development needs. Second, we should deepen partnerships with like-minded Asian donors. As Western aid pulls back and China's influence is poised to grow in its wake, we should be working more closely with regional partners that share our values. Japan and South Korea share Australia's commitments on transparency, accountability, and long-term engagement. They also have substantial financial firepower. Australia should spearhead a coalition of partners to identify critical funding gaps and fill them, through co-financing, joint programs, and co-ordinated technical assistance. This would give Southeast Asian countries real alternatives to opaque or debt-heavy financing models. Finally, our Southeast Asia Economic Strategy must deliver. The strategy has rightly recognised the need to boost Australian business engagement. While still in its early stages, it has made promising strides. But momentum must be sustained. As south-east Asia's export-driven development model comes under pressure, there is an opening for Australian businesses to play a larger role. Australia doesn't need to outspend China. But we do need to show consistency, intelligence and credibility in how we engage. Aid is not charity; it is statecraft. It is how we help shape favourable outcomes, support stable growth, and ensure Australia has a lasting voice in a region that will define our future. The choices we make now will determine whether south-east Asia continues to develop with us, or without us. As Western countries slash foreign aid and trade tensions escalate, south-east Asia is facing a development squeeze that risks weakening both its resilience and autonomy. With Washington retreating and Brussels distracted, China is steadily consolidating its role as the region's dominant development partner, now delivering over a third of all support to south-east Asia. This is a deeply uncomfortable picture for Australia, given our future is wedded to that of our region. Australia cannot compete head-to-head with China on financing. But it is hardly a passive bystander. Prioritising Australia's foreign aid to where it is needed most, boosting cooperation with Japan and South Korea as major infrastructure financiers, and lifting our commercial engagement all need to be part of how Australia adjusts to a changed regional landscape. The Trump administration has abruptly cut about US$60 billion in overseas aid. The European Union and seven of its member states have pledged a further US$17 billion in cuts through to 2029. The UK has already slashed more than £6 billion a year. These are not temporary belt-tightening measures. They are a sustained withdrawal. The impact in south-east Asia will be uneven. Larger economies like Indonesia, Malaysia and the Philippines will weather the storm. But in Cambodia, Laos, Myanmar and Timor-Leste, the consequences will be substantial. Western aid funds schools, clinics, civil society groups, environmental protection, and humanitarian relief. The sudden drop in aid to these areas will deepen the divide between Southeast Asia's haves and have-nots, undermining long-term stability and regional cohesion. Meanwhile, the centre of gravity in development finance and influence is drifting from the West to the East. The most recent Lowy Institute Southeast Asia Aid Map shows that Chinese financing to the region has rebounded in recent years, driven by big-ticket infrastructure projects in Indonesia and Malaysia. Japan and South Korea, though quieter, remain consistent, with South Korea signalling plans to scale up its aid efforts. In contrast, Western donors are fading from the field, leaving the shaping of development priorities increasingly to others. As Western presence shrinks, south-east Asian nations - particularly the most aid-dependent - are left with fewer choices and less negotiating power. Many will turn to Beijing by necessity, not preference. The result: reduced agency, potential for less transparency, and fewer checks on how projects are selected, financed, and delivered. This turning point presents an opportunity for Australia to step up. Unlike many of our Western counterparts, Australia has not dramatically cut aid to the region. At around $900 million annually - mostly in grants - we are already the third-largest provider of grant-based assistance in south-east Asia. That is a national asset, if we use it wisely. First, we must direct aid where it is needed most. In Cambodia, Myanmar, and Laos, up to 80 per cent of support for education, health, and civil society comes from Western donors. As that funding disappears, Australia can play a crucial stabilising role. While recent initiatives, such as the $2 billion Southeast Asia Infrastructure Financing Facility, are aimed at boosting private investment in larger economies like Indonesia and Vietnam, poorer nations require a different approach: targeted, sustained, grant-based support. Australia should pursue a dual-track strategy: maintaining commercial engagement in emerging markets, while rebalancing some aid towards countries that lack access to private capital but face the most urgent development needs. Second, we should deepen partnerships with like-minded Asian donors. As Western aid pulls back and China's influence is poised to grow in its wake, we should be working more closely with regional partners that share our values. Japan and South Korea share Australia's commitments on transparency, accountability, and long-term engagement. They also have substantial financial firepower. Australia should spearhead a coalition of partners to identify critical funding gaps and fill them, through co-financing, joint programs, and co-ordinated technical assistance. This would give Southeast Asian countries real alternatives to opaque or debt-heavy financing models. Finally, our Southeast Asia Economic Strategy must deliver. The strategy has rightly recognised the need to boost Australian business engagement. While still in its early stages, it has made promising strides. But momentum must be sustained. As south-east Asia's export-driven development model comes under pressure, there is an opening for Australian businesses to play a larger role. Australia doesn't need to outspend China. But we do need to show consistency, intelligence and credibility in how we engage. Aid is not charity; it is statecraft. It is how we help shape favourable outcomes, support stable growth, and ensure Australia has a lasting voice in a region that will define our future. The choices we make now will determine whether south-east Asia continues to develop with us, or without us. As Western countries slash foreign aid and trade tensions escalate, south-east Asia is facing a development squeeze that risks weakening both its resilience and autonomy. With Washington retreating and Brussels distracted, China is steadily consolidating its role as the region's dominant development partner, now delivering over a third of all support to south-east Asia. This is a deeply uncomfortable picture for Australia, given our future is wedded to that of our region. Australia cannot compete head-to-head with China on financing. But it is hardly a passive bystander. Prioritising Australia's foreign aid to where it is needed most, boosting cooperation with Japan and South Korea as major infrastructure financiers, and lifting our commercial engagement all need to be part of how Australia adjusts to a changed regional landscape. The Trump administration has abruptly cut about US$60 billion in overseas aid. The European Union and seven of its member states have pledged a further US$17 billion in cuts through to 2029. The UK has already slashed more than £6 billion a year. These are not temporary belt-tightening measures. They are a sustained withdrawal. The impact in south-east Asia will be uneven. Larger economies like Indonesia, Malaysia and the Philippines will weather the storm. But in Cambodia, Laos, Myanmar and Timor-Leste, the consequences will be substantial. Western aid funds schools, clinics, civil society groups, environmental protection, and humanitarian relief. The sudden drop in aid to these areas will deepen the divide between Southeast Asia's haves and have-nots, undermining long-term stability and regional cohesion. Meanwhile, the centre of gravity in development finance and influence is drifting from the West to the East. The most recent Lowy Institute Southeast Asia Aid Map shows that Chinese financing to the region has rebounded in recent years, driven by big-ticket infrastructure projects in Indonesia and Malaysia. Japan and South Korea, though quieter, remain consistent, with South Korea signalling plans to scale up its aid efforts. In contrast, Western donors are fading from the field, leaving the shaping of development priorities increasingly to others. As Western presence shrinks, south-east Asian nations - particularly the most aid-dependent - are left with fewer choices and less negotiating power. Many will turn to Beijing by necessity, not preference. The result: reduced agency, potential for less transparency, and fewer checks on how projects are selected, financed, and delivered. This turning point presents an opportunity for Australia to step up. Unlike many of our Western counterparts, Australia has not dramatically cut aid to the region. At around $900 million annually - mostly in grants - we are already the third-largest provider of grant-based assistance in south-east Asia. That is a national asset, if we use it wisely. First, we must direct aid where it is needed most. In Cambodia, Myanmar, and Laos, up to 80 per cent of support for education, health, and civil society comes from Western donors. As that funding disappears, Australia can play a crucial stabilising role. While recent initiatives, such as the $2 billion Southeast Asia Infrastructure Financing Facility, are aimed at boosting private investment in larger economies like Indonesia and Vietnam, poorer nations require a different approach: targeted, sustained, grant-based support. Australia should pursue a dual-track strategy: maintaining commercial engagement in emerging markets, while rebalancing some aid towards countries that lack access to private capital but face the most urgent development needs. Second, we should deepen partnerships with like-minded Asian donors. As Western aid pulls back and China's influence is poised to grow in its wake, we should be working more closely with regional partners that share our values. Japan and South Korea share Australia's commitments on transparency, accountability, and long-term engagement. They also have substantial financial firepower. Australia should spearhead a coalition of partners to identify critical funding gaps and fill them, through co-financing, joint programs, and co-ordinated technical assistance. This would give Southeast Asian countries real alternatives to opaque or debt-heavy financing models. Finally, our Southeast Asia Economic Strategy must deliver. The strategy has rightly recognised the need to boost Australian business engagement. While still in its early stages, it has made promising strides. But momentum must be sustained. As south-east Asia's export-driven development model comes under pressure, there is an opening for Australian businesses to play a larger role. Australia doesn't need to outspend China. But we do need to show consistency, intelligence and credibility in how we engage. Aid is not charity; it is statecraft. It is how we help shape favourable outcomes, support stable growth, and ensure Australia has a lasting voice in a region that will define our future. The choices we make now will determine whether south-east Asia continues to develop with us, or without us. As Western countries slash foreign aid and trade tensions escalate, south-east Asia is facing a development squeeze that risks weakening both its resilience and autonomy. With Washington retreating and Brussels distracted, China is steadily consolidating its role as the region's dominant development partner, now delivering over a third of all support to south-east Asia. This is a deeply uncomfortable picture for Australia, given our future is wedded to that of our region. Australia cannot compete head-to-head with China on financing. But it is hardly a passive bystander. Prioritising Australia's foreign aid to where it is needed most, boosting cooperation with Japan and South Korea as major infrastructure financiers, and lifting our commercial engagement all need to be part of how Australia adjusts to a changed regional landscape. The Trump administration has abruptly cut about US$60 billion in overseas aid. The European Union and seven of its member states have pledged a further US$17 billion in cuts through to 2029. The UK has already slashed more than £6 billion a year. These are not temporary belt-tightening measures. They are a sustained withdrawal. The impact in south-east Asia will be uneven. Larger economies like Indonesia, Malaysia and the Philippines will weather the storm. But in Cambodia, Laos, Myanmar and Timor-Leste, the consequences will be substantial. Western aid funds schools, clinics, civil society groups, environmental protection, and humanitarian relief. The sudden drop in aid to these areas will deepen the divide between Southeast Asia's haves and have-nots, undermining long-term stability and regional cohesion. Meanwhile, the centre of gravity in development finance and influence is drifting from the West to the East. The most recent Lowy Institute Southeast Asia Aid Map shows that Chinese financing to the region has rebounded in recent years, driven by big-ticket infrastructure projects in Indonesia and Malaysia. Japan and South Korea, though quieter, remain consistent, with South Korea signalling plans to scale up its aid efforts. In contrast, Western donors are fading from the field, leaving the shaping of development priorities increasingly to others. As Western presence shrinks, south-east Asian nations - particularly the most aid-dependent - are left with fewer choices and less negotiating power. Many will turn to Beijing by necessity, not preference. The result: reduced agency, potential for less transparency, and fewer checks on how projects are selected, financed, and delivered. This turning point presents an opportunity for Australia to step up. Unlike many of our Western counterparts, Australia has not dramatically cut aid to the region. At around $900 million annually - mostly in grants - we are already the third-largest provider of grant-based assistance in south-east Asia. That is a national asset, if we use it wisely. First, we must direct aid where it is needed most. In Cambodia, Myanmar, and Laos, up to 80 per cent of support for education, health, and civil society comes from Western donors. As that funding disappears, Australia can play a crucial stabilising role. While recent initiatives, such as the $2 billion Southeast Asia Infrastructure Financing Facility, are aimed at boosting private investment in larger economies like Indonesia and Vietnam, poorer nations require a different approach: targeted, sustained, grant-based support. Australia should pursue a dual-track strategy: maintaining commercial engagement in emerging markets, while rebalancing some aid towards countries that lack access to private capital but face the most urgent development needs. Second, we should deepen partnerships with like-minded Asian donors. As Western aid pulls back and China's influence is poised to grow in its wake, we should be working more closely with regional partners that share our values. Japan and South Korea share Australia's commitments on transparency, accountability, and long-term engagement. They also have substantial financial firepower. Australia should spearhead a coalition of partners to identify critical funding gaps and fill them, through co-financing, joint programs, and co-ordinated technical assistance. This would give Southeast Asian countries real alternatives to opaque or debt-heavy financing models. Finally, our Southeast Asia Economic Strategy must deliver. The strategy has rightly recognised the need to boost Australian business engagement. While still in its early stages, it has made promising strides. But momentum must be sustained. As south-east Asia's export-driven development model comes under pressure, there is an opening for Australian businesses to play a larger role. Australia doesn't need to outspend China. But we do need to show consistency, intelligence and credibility in how we engage. Aid is not charity; it is statecraft. It is how we help shape favourable outcomes, support stable growth, and ensure Australia has a lasting voice in a region that will define our future. The choices we make now will determine whether south-east Asia continues to develop with us, or without us.
7NEWS
22-07-2025
- Business
- 7NEWS
7NEWS The Issue Podcast: Donald Trump's foreign policy aids China
President Donald Trump 's withdrawal of foreign aid is raising fears that China will increasingly dominate development in southeast Asia. A new report by the Lowy Institute shows Beijing is getting the upper-hand, putting pressure on the Albanese government to act. It's the third edition of Southeast Asia Aid Map, a comprehensive database tracking official development finance flows across the region. The map shows total official development finance to Southeast Asia increased modestly to US$29 billion in 2023, but the region is facing a much bleaker outlook, with the Trump administration's decision to scrap about US$60 billion in aid and European countries pulling back more than $US25 billion. Speaking to 'The Issue,' a 7NEWS Podcast, Senior Economist Alexandre Dayant says if Australia does nothing, 'China will become a bigger leader of development finance because others are retracting'. 'You could argue southeast Asian nations will have less agency to push back on Chinese aid projects but also to push for better quality of them. 'Foreign aid provides you with long and strong relationships, I think it is sometimes a tool that we forget.' China dominates the region by focusing on infrastructure, whereas Australia spends on health and education. Among China's development projects in Australia's backyard is a $16 billion mega railway in Malaysia, a 600MW coal fired power station in Vietnam, and a $5.6 billion industrial park in Indonesia dedicated to nickel production. According to the Lowy Institute China has committed 34 per cent of all aid funding in the region, Japan 12 per cent, South Korea 6 per cent, the United States 3 per cent and Australia just 2 per cent. To combat Beijing, experts like Alexandre Dayant want the Albanese Government to increase aid, and work with like minded partners, still invested in the region, such as Japan and South Korea. Australia's Minister for International Development, Anne Aly, has defend the Albanese's Governments handling of foreign aid. 'Our neighbours in the Pacific and Southeast Asia look to us, they look to us as a trusted partner,' Aly said.
South China Morning Post
09-02-2025
- Business
- South China Morning Post
Closing USAID will leave Southeast Asia and US objectives worse off
Published: 9:30am, 9 Feb 2025 Updated: 11:24am, 9 Feb 2025 The Trump administration's decision to freeze international assistance and gut federal agencies has sent shock waves across the globe, with profound implications for Southeast Asia. One of the most significant consequences is the shuttering of United States Agency for International Development programmes, a move that threatens to disrupt humanitarian aid, development initiatives and disaster relief efforts across the Greater Mekong region. Since its establishment in 1961 by US president John F. Kennedy, USAID has been a cornerstone of US global engagement. The agency promotes sustainable development, reduces poverty and fosters stability in developing nations while advancing economic growth and social progress as a key instrument of US foreign policy. In 2023, the United States remained the world's largest provider of foreign aid, allocating nearly US$68 billion to support humanitarian efforts and security initiatives. However, within just a week of assuming office, the Trump administration abruptly froze all foreign assistance, sending a shudder through international aid communities and foreign governments alike. The sudden withdrawal of USAID funding raises critical concerns about the long-term impact on regional development, governance and security in Southeast Asia. The renewed focus on foreign aid in the second presidential term is unsurprising given the continued emphasis on US President Donald Trump's 'America first' policies and his administration's disregard for multilateralism during his first term. This strategic shift was further solidified in the Heritage Foundation's Project 2025 playbook, which advocates for slashing foreign assistance. The budget cuts have severely affected the Mekong region, where millions face food insecurity, health crises and dangers from unexploded Vietnam war-era ordnance in Laos, Cambodia and Vietnam. The US has provided US$750 million for mine-clearing efforts in those three countries since 1993, but that funding has stopped. The latest episode of the Straight Talk Southeast Asia podcast included an appearance by Grace Stanhope, a research associate at the Lowy Institute specialising in Southeast Asian aid. Stanhope, who works on the institute's Southeast Asia Aid Map as part of efforts to increase transparency of aid tracking, said 'this freezing of aid poses severe challenges for many nations in the region , but especially for the poorest ones such as Cambodia, Laos and Myanmar'. 02:40 'Landmines girls' clear unexploded bombs left from the Vietnam War 'Landmines girls' clear unexploded bombs left from the Vietnam War
South China Morning Post
09-02-2025
- Business
- South China Morning Post
How Trump's hobbling of USAID cedes Southeast Asia to Chinese influence
Published: 9:30am, 9 Feb 2025 The Trump administration's decision to freeze international assistance and gut federal agencies has sent shock waves across the globe, with profound implications for Southeast Asia. One of the most significant consequences is the shuttering of United States Agency for International Development programmes, a move that threatens to disrupt humanitarian aid, development initiatives and disaster relief efforts across the Greater Mekong region. Since its establishment in 1961 by US president John F. Kennedy, USAID has been a cornerstone of US global engagement. The agency promotes sustainable development, reduces poverty and fosters stability in developing nations while advancing economic growth and social progress as a key instrument of US foreign policy. In 2023, the United States remained the world's largest provider of foreign aid, allocating nearly US$68 billion to support humanitarian efforts and security initiatives. However, within just a week of assuming office, the Trump administration abruptly froze all foreign assistance, sending a shudder through international aid communities and foreign governments alike. The sudden withdrawal of USAID funding raises critical concerns about the long-term impact on regional development, governance and security in Southeast Asia. The renewed focus on foreign aid in the second presidential term is unsurprising given the continued emphasis on US President Donald Trump's 'America first' policies and his administration's disregard for multilateralism during his first term. This strategic shift was further solidified in the Heritage Foundation's Project 2025 playbook, which advocates for slashing foreign assistance. The budget cuts have severely affected the Mekong region, where millions face food insecurity, health crises and dangers from unexploded Vietnam war-era ordnance in Laos, Cambodia and Vietnam. The US has provided US$750 million for mine-clearing efforts in those three countries since 1993, but that funding has stopped. The latest episode of the Straight Talk Southeast Asia podcast included an appearance by Grace Stanhope, a research associate at the Lowy Institute specialising in Southeast Asian aid. Stanhope, who works on the institute's Southeast Asia Aid Map as part of efforts to increase transparency of aid tracking, said 'this freezing of aid poses severe challenges for many nations in the region , but especially for the poorest ones such as Cambodia, Laos and Myanmar'. 02:40 'Landmines girls' clear unexploded bombs left from the Vietnam War 'Landmines girls' clear unexploded bombs left from the Vietnam War
