Intraregional aid in Southeast Asia could be a viable alternative for countries wanting to assert their independence and engage with countries outside the global North.
According to the Lowy Institute's Southeast Asia Aid Map, Southeast Asia receives an average of more than $30 billion in aid and development funding per year from the international community, but there is also transfer of development aid within the region, with developing countries in Southeast Asia playing dual roles as recipients and donors.
Intra-regional development cooperation includes grants, loans and other assistance provided by Southeast Asian countries to their neighbors. Given that the region is largely developing, almost all aid and development funding provided to Southeast Asian countries comes from the international community. However, China's development spending in Southeast Asia has fallen by two-thirds in eight years, and donations from major Western countries as well as Japan, South Korea and India are below pre-pandemic levels. Developing countries in Southeast Asia will need to find alternative sources of funding to navigate an increasingly difficult and fragmented aid environment.
Southeast Asian countries' decisions to accept or solicit aid from various partners often carry political implications, especially in the context of the US-China great power rivalry. Regional aid has therefore emerged as a politically palatable alternative for Southeast Asian countries that assert their independence and consciously want to engage with sources of aid other than the Global North and multilateral development banks. While regional aid cannot realistically match the volumes provided by major international partners and is not entirely free of geopolitical implications, it is an important means by which countries can express solidarity, exert influence, and demonstrate their self-concept as they evolve from aid recipients to aid providers.
Regional aid is a form of South-South cooperation, a concept established at the Bandung Conference in Indonesia in 1955. The development of regional aid in Southeast Asia must be understood as part of countries' foreign policies; it incorporates non-alignment and post-colonial solidarity, and is an indication of growing wealth, technological capability and national power. It is also useful to situate it in the context of growing pressures to localize aid.
With all this in mind, the emerging contours of intra-regional cooperation in Southeast Asia are worth keeping a close eye on. The Initiative for ASEAN Integration (IAI) is the main multilateral mechanism for this, but it does not publish data on its funding or activities. This makes it difficult to track this cooperation, but it appears to account for a very small portion of aid to the region, accounting for just US$633 million, or 0.25 percent, of the total official development finance flows received by Southeast Asia between 2015 and 2022. But as Southeast Asia develops rapidly, with several large economies leading the way, it is increasingly possible to get viable development solutions and resources from closer to home.
South-South Aid
(selected year, in millions of US dollars, rounded up to one decimal place)
Donor countries in the region 2020 2021 2022 Total (2015-2022) Thailand 55.4 71.6 58.0 538.8 Vietnam 57.5 0.8 0.17 3.2 Cambodia 0.15.6 na 6.2 Singapore 0.14.8 na 5.6 Timor-Leste 4.7 Indonesia 0.9 0.5 0.11.8 Philippines 0.10.1 na 1.1 Malaysia 0.10.1 na 0.7 Brunei Darussalam 0.10.1 na 0.6 Laos 0.10.2 na 0.6 Myanmar 0.10.1 na 0.5 Total 114.6 84.1 58.2 633.8 Source: Southeast Asia Aid Map
Currently, Thailand is the leading donor of regional aid, accounting for $540 million (in 2022 USD terms) or 85% of South-South aid. Thailand is sub-regional focused, with a focus on its low-income Mekong River basin neighbors, and limited contributions further afield. Thailand's development policy, led by the Thailand International Cooperation Agency, promotes a “sufficiency economic philosophy.” Thailand has exported this philosophy to Cambodia and Laos through workshops and training courses, but its main contributions are basic infrastructure such as bridges and roads.
Vietnam is a relatively recent donor, but it has significantly increased spending during the pandemic, building schools and dams in Laos, as well as providing $1.25 million in COVID-19 financial assistance to Cambodia, Laos, and Myanmar. Vietnam’s emergence in this role is particularly symbolic: it is on track to move out of the less-developed CLMV group, with a per capita GDP ($4,316 at current 2023 prices) closer to that of Indonesia or the Philippines than it is to Cambodia, Laos, or Myanmar.
Admittedly, this form of regional cooperation is still relatively small-scale, but its political force and its potential as an expression of independence and solidarity should not be underestimated.
Despite being a high-income country, Brunei is virtually non-existent in this area, offering only scholarship programs for ASEAN participants.
Singapore, the region's most powerful economy, also plays a surprisingly limited role in regional aid. Its Singapore Cooperation Programme provides training courses primarily for civil servants from other ASEAN countries, and also for Timor-Leste, which is nearing ASEAN membership. This transfer of technical knowledge is typical of South-South cooperation among developing countries. But Singapore is a high-income country, with one of the world's highest GDP per capita (PPP) and an economy comparable in size to Thailand and Vietnam. Its much poorer neighbours may well ask why Singapore's financial strength is not being harnessed.
Malaysia has offered the same technical cooperation model to 144 countries around the world with a very broad geographical mandate, with a clear focus on South-South cooperation, since 1980. Similarly, the Philippines also manages technical cooperation through its Technical Cooperation Council, but on a smaller scale.
Despite its history as the host country of the Bandung Conference, Indonesia only established an international development agency in 2019. So far, the agency has focused on Pacific and African countries, as well as strong humanitarian assistance to Palestine, but has been more modest in its activities in Southeast Asia. More recently, it has provided financial support to Laos' ASEAN chairmanship. After a history of bitter conflict between Jakarta and Dili, Indonesia is providing technical assistance on reforms and standards to support Timor-Leste's ASEAN membership application.
Admittedly, this form of regional cooperation is still relatively small-scale, but its political potency and potential as an expression of independence and solidarity should not be underestimated. Providing aid to neighboring regions is also part of the national governance of ambitious emerging middle powers and projects influence and prestige.
2024/260
