INASIA

Weekly Insights and Analysis

ASEAN: Shaping the Future of Regional Development in Southeast Asia

October 24, 2018

By Thomas Parks

Development cooperation is taking on new geopolitical significance. Earlier this month, the U.S. Congress passed legislation create the U.S. International Development Finance Corporation, which is intended to help stimulate private-sector infrastructure investment in the developing world. Asia is one of the primary targets for this new institution, which will have $60 billion in new assistance funds. Also this month, Japanese Prime Minister Abe hosted the leaders of Thailand, Myanmar, Laos, Cambodia, and Vietnam, announcing a major new infrastructure initiative focused on Southeast Asia. And in September, the European Union announced a new strategy for connecting Europe and Asia with a framework for expanded development financing. These new initiatives are generally intended to provide alternative sources of development finance for countries that are currently involved in China’s Belt and Road Initiative.

Photo/Leandro Justen

The new Southeast Asia initiatives are entering an already crowded field. There are more than a dozen major regional development schemes in the Lower Mekong subregion alone. Traditionally, these initiatives have been led by a multilateral bank, like the Asian Development Bank. But there is now a trend towards more direct, bilateral cooperation, as donor governments such as China, South Korea, India, Japan, Australia, the European Union, and the United States seek to strengthen their ties with the region through development cooperation.

Clearly, this is an important new opportunity for Southeast Asian countries to fill major infrastructure gaps and meet other development needs. But there are also significant risks. Malaysia’s decision to cancel $23 billion of Belt and Road Initiative projects is a clear signal that ASEAN countries are concerned about these risks, particularly surging debt levels. Several other countries in the region will be under enormous debt burdens as a result of projects currently being developed or planned for the near future. Furthermore, the collapse of the dam in Champasak Province, Laos, in July is a clear reminder of the potential environmental and safety risks from the surge in infrastructure development. The quality of infrastructure currently being built will have a lasting impact on the region—for better or for worse—for decades to come, as governments are obliged to maintain and operate the new structures.

The context of development cooperation in Southeast Asia is also being transformed. In addition to the influx of new initiatives by major powers outside the region, ASEAN governments are becoming development assistance donors themselves. Half of ASEAN member-state governments are now donor countries, including Thailand, Indonesia, Singapore, Malaysia, and Brunei. While still a small percentage of overall development assistance funding, intra-ASEAN development cooperation is growing and gaining prominence.

Recent developments in the region indicate that governments are looking for new ways to shape development cooperation on a regional basis. Thailand recently reinvigorated the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy with the release of a new master plan and the announcement of a new fund for infrastructure and connectivity. The symbolism of this move cannot have gone unnoticed by policymakers and analysts tracking the region. It is a clear move for the governments of Thailand, Cambodia, Laos, Myanmar, and Vietnam to more directly shape development cooperation in their region by creating a locally led platform.

The Asia Foundation’s recently released report ASEAN as the Architect for Regional Development Cooperation argues that countries in the region have the interest and capacity to more directly shape regional development in Southeast Asia, but they currently lack the mechanism to do it. ASEAN has traditionally provided the architecture for collective engagement with major powers outside the region on political and security issues. The East Asia Summit, for example, has become the central platform for regional security cooperation, giving ASEAN member-state governments much greater influence than they would have acting bilaterally. In our report, we argue that ASEAN could play a similar role in regional development cooperation.

Photo/Leandro Justen

With Thailand taking over the ASEAN chair in 2019, there are strong prospects of ASEAN playing a more robust role on regional development cooperation. Thailand is one of the oldest and most significant development donors in ASEAN, and currently plays the lead role on sustainable development issues. The Thai Ministry of Foreign Affairs has been working with several development agencies, particularly the UNDP and UNESCAP, to analyze the complementarities between ASEAN’s development-related goals (as captured in the ASEAN 2025 vision statement), and the UN-led Sustainable Development Goals. Thailand is also planning to make sustainable development one of the central themes of its chairmanship, and it has announced its intention to open a new ASEAN Centre for Sustainable Development Studies and Dialogue.

There are some skeptics, however, who generally argue that ASEAN is not well suited to play a more significant role in regional development cooperation, and there are clearly some key challenges and practical constraints. First, most development assistance is bilateral—negotiated directly between the donor and the recipient government—and some national agencies involved in development may object to a stronger role for ASEAN. Second, ASEAN is primarily a government-to-government platform, which has made engagement with nonstate actors quite difficult. Third, the ASEAN Secretariat, with its already overextended staff (of less than 300 people) would find it difficult to step into a significant new role without added resources. In addition, critics would argue that ASEAN is highly siloed between different policy areas, making it very hard to work across sectors as is often needed for development cooperation.

Photo/Leandro Justen

Our report specifically addresses these concerns by trying to plot a practical and realistic path forward, citing examples of how ASEAN has already overcome some of these challenges in specific areas. Here are a few suggestions from the report on how to do this:

1. ASEAN Centrality and development. The concept of ASEAN Centrality should be adapted to include regional development cooperation. Given the geopolitical nature of the recent surge in regional development initiatives, it is clear that ASEAN countries would be better off engaging with donor nations as a collective.

2. An ASEAN framework for development assistance in Southeast Asia. ASEAN member states can shape development in the region by creating a regional framework that reflects ASEAN’s broad priorities and values. This would allow ASEAN to influence development programs throughout the region without playing a direct role in oversight and implementation.

3. ASEAN should focus on the strategic level, not the project level. Following the lead of the East Asia Summit, ASEAN should shape regional development assistance through strategic-level platforms for dialogue and coordination. While ASEAN should continue to be involved in some projects and initiatives, the expansion of ASEAN influence is unlikely to occur through a greater role in project implementation.

4. Find practical new ways to engage with nonstate development actors. The report includes several examples of how ASEAN sectoral bodies and policy centers have engaged more broadly with development actors such as INGOs, civil society, and the private sector. These examples are useful models for the rest of ASEAN.

5. Suggestions for the ASEAN Centre for Sustainable Development Study and Dialogue. The report provides several specific examples, building on lessons from past centers, of how the planned institution can have a positive impact.

6. Development actors need to change as well. Nonstate development actors can engage much more effectively with ASEAN if they understand the culture and processes and do not seek exceptions or shortcuts. Rather than seeking “buy-in” for one’s project or agenda, it’s much more effective to adapt one’s approach to support ASEAN-led initiatives.

The Asia Foundation is planning a series of discussion forums and launch events around its new report across Southeast Asia over the coming months, including in Bangkok (late November) and Jakarta (January). If you are interested in organizing a forum in your country, please let us know.

Thomas Parks is The Asia Foundation’s country representative in Thailand. He can be reached at thomas.parks@asiafoundation.org. The views and opinions expressed here are those of the author, not those of The Asia Foundation.

Related programs: International Cooperation
Related topics: ASEAN

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