Australia: A partner for Southeast Asian recovery and growth

21 February 2022

Often when people think of Southeast Asia, they think of booming economies and falling poverty rates. But COVID-19 has been a serious setback for Southeast Asia. Forecasts show lower growth with the risk of prolonged economic stagnation, making it harder for countries in danger of stalling in the ‘middle-income trap’. Pressure on healthcare systems and basic public health services will continue.

The region remains vulnerable to the medium and long-term impacts of the pandemic, which will continue to exacerbate issues of poverty, climate resilience, and inequality. The region could end up divided and with weakened regional institutions that struggle to restore the development trajectory that rising middle classes have expected. Poor economic growth could create a breeding ground for discontent and instability.

Australia as an invested insider

As one of Southeast Asia’s closest neighbours, Australia has a stake in its success. On the risk side, a region riven by income inequality and vulnerable to social unrest is detrimental to Australia’s national security. On the opportunity side, if Australia is strongly integrated with the region it will benefit from Southeast Asia's dynamism, with a material impact on Australia's economy and job creation. In the words of Prime Minister Scott Morrison, “ASEAN members’ growth underpins regional stability, and Australia’s prosperity. Your stability is fundamental to our own. Our health security is inextricably tied to yours”.

As a country that benefits from Southeast Asia's success, the current risks to Southeast Asia require broad and deep engagement by Australia, focused on the most significant challenges.

A recent report by the Asia-Pacific Development, Diplomacy & Defence Dialogue sets out pathways for Australia to partner with Southeast Asia on recovery and growth. Because Australia is not a dominant actor in Southeast Asia, it needs to identify the best avenues to maximise its influence to shape trends in the region, with a particular focus on health, education and economic cooperation. These areas provide an opportunity to promote inclusive and long-term sustainable growth as part of the regional recovery process, with health and education underpinning growth. Education is vital in developing the knowledge and skills that drive economic competitiveness and productivity, while health security remains imperative in overcoming the challenges of pandemics, health emergencies and weak health systems. These are priority areas for countries across Southeast Asia where Australia has an established reputation and much value to add.

Both Southeast Asia and Australia are prioritising health security in their responses to the immediate and long-term impacts of the pandemic, providing an opportunity for closer engagement and investment. Digital health, for example, offers a practical way of building deeper collaboration, bringing together infrastructure, research and technical cooperation. There are opportunities for collaboration on drug repurposing, where artificial intelligence shortlists drugs that can be used to intervene in earlier stages of disease and for using artificial intelligence to triage patients in isolation to determine if they require hospital care.

In education, Australia is an important player. Southeast Asian nations look to Australia as a pivotal education partner for the region, providing an opportunity for Australia not only as an education destination but also as a contributor to skills development across the region. Australia can use its position as an education provider to strengthen knowledge exchange in priority areas such as health, education and technology. It can expand services offshore to increase access to technical and vocational education and training.

Development cooperation programs remain an important tool for Australia to engage with the region. While some have transitioned away from receiving foreign aid, there are still six Southeast Asian countries that receive significant development assistance. Although aid is shrinking as a percentage of GDP in middle-income countries like Indonesia, this support continues to have an outsized impact because of its catalytic effects and its ability to influence strategic priorities.

Is Australia stepping up?

Since the start of the pandemic, Australia has demonstrated a renewed focus on Southeast Asia through a new package of economic, development and security measures to support the region’s recovery. Put together, it represents Australia’s largest funding commitment to Southeast Asia since the 2004 tsunami. On the health side, Australia’s commitment includes a regional vaccine initiative to supply COVID-19 vaccines in Southeast Asia. In addition, Australia is supporting the establishment of a new ASEAN Centre for Public Health Emergencies and Emerging Diseases.

Education and capacity-building are part of many programs, including a Mekong–Australia partnership and an enhanced training program for regional maritime states. The recent announcement of an Australia for ASEAN Futures Initiative includes 100 scholarships to support emerging ASEAN leaders, and a Digital Transformation and Futures Skills initiative to support long-term economic recovery through vocational education and technical assistance.

On the economic side, the AUD 1.5 billion loan to Indonesia for budgetary support during the pandemic is an example of Australia being a stronger partner for recovery and growth. This approach can be built on across the region. Other investments include AUD 46 million to help ASEAN countries implement trade agreements, AUD 13 million for technology standards-setting, and AUD 70 million for infrastructure advice. Australia is working to strengthen economic cooperation, including through the Indonesia-Australia Comprehensive Economic Cooperation Agreement (IA-CEPA).

As a country that benefits from Southeast Asia's success, the current risks to Southeast Asia require broad and deep engagement by Australia, focused on the most significant challenges. Australia has a stake not just in the economic trajectory of the region, but in ensuring that growth is sustainable and inclusive. It is in Australia’s interest to have safe and prosperous countries in its immediate region.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Melissa Conley Tyler is Program Lead, Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D). This piece draws on a paper recently published by AP4D “What does it look like for Australia to be a … Partner for Southeast Asian Recovery & Growth”. She thanks all the organisations involved in consultations to produce this report. Image credit: Flickr/Australian Embassy Jakarta.