Aid to Southeast Asia falls to a 10-year low — ABC News Australia

Official development finance flows to Southeast Asia fell by almost 10% in 2024, to $26 billion. This is the lowest figure in a decade, according to a new Lowy Institute study reported by ABC News Australia.

According to the South-East Asia Aid Map, the United States, China and Japan reduced their funding for the region. The 2024 data do not yet reflect the full impact of cuts to US aid introduced by the administration of President Donald Trump in 2025.

Japan and China cut funding

Japan reduced funding for Southeast Asia by $1.5 billion in 2024. This is partly explained by the fact that funds under loans provided to the region during the COVID-19 pandemic had been fully disbursed, while major infrastructure projects were gradually wound down.

Chinese funding over the same period fell by nearly a quarter, to $5.3 billion. Rahul Nath, one of the study's lead authors, said Beijing is moving toward smaller projects and selecting funding priorities more carefully. According to him, China's caution may be linked to losses from debt write-offs and slower domestic economic growth.

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Governments in Southeast Asia have also become more selective about large Chinese loans. Some infrastructure projects had previously drawn domestic political criticism over insufficient involvement of local labor or environmental consequences.

The role of multilateral institutions

Against the backdrop of reduced bilateral financing, multilateral institutions are playing an increasingly important role in the region. In 2024, they provided almost half of all development financing for Southeast Asia.

These include the World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank. Nath noted that such organizations are less dependent on political cycles and can provide stable funding. At the same time, he said, there is a risk that they will be asked to do more with the same institutional capacity.

According to a forecast by the Organisation for Economic Co-operation and Development, aid from developed countries could decrease by 23%. The researcher warned that further reductions in support would increase pressure on social protection systems and the budgets of the region's poorest and most vulnerable states.