Australia reaches out to Southeast Asia through development and economic partnerships

23 November 2023

Two recent strategies show how much Australia is prioritising relations with Southeast Asia in its international engagement. In August, Australia released its first international development policy in a decade with a focus on building partnerships in Southeast Asia and across the Indo-Pacific. Then in September, the government released an independent Southeast Asian Economic Strategy on how to create more economic ballast in the relationship. Both set out an agenda for building strong partnerships with Southeast Asia to shape a shared future.

Prioritising Southeast Asia

In some ways Australia’s focus on Southeast Asia is not surprising; after all, Southeast Asia includes some of Australia’s closest and most important neighbours, including the emerging power Indonesia. Only a few years ago, however, commentators were asking if Australia was deprioritising Southeast Asia after Australia announced a “Pacific step up” that quite literally took development and diplomatic resources from Southeast Asia in order to invest them in the Pacific.

COVID-19 was a wake-up call that put paid to any argument that Southeast Asian countries no longer needed development assistance. The impacts were severe across the region, with development trajectories delayed or stalled. The new policy notes that both the ongoing effects of the pandemic and climate change have “exacted immense costs” and commits Australia to “work with our Southeast Asian partners to sustain and protect hard-won development gains”.

Whether it is helping link civil society organisations or stimulating Australian business to wake up to opportunities in the region, the Australian government will need to engage many tools of statecraft to achieve its strategic goal of deep partnerships with Southeast Asia.

Concerns about Chinese influence have also affected Australia’s perspective on Southeast Asia. Just as with the Pacific islands, it has become clear to policymakers that if Australia is not sufficiently present in the region — if it does not work hard to create partnerships — then it cannot play a role in shaping the development and diplomatic sympathies of the region.

Building development cooperation and economic links

In different ways, both the development and economic strategies focus on presenting Australia as a partner of choice.

As a development partner for the fast-growing economies of Southeast Asia, Australia will always have a smaller presence than it has, say, in the Pacific. This means that Australia needs to work hard to be responsive to partners’ needs and find its niche to have maximum impact. The new international development policy recognises this by anchoring implementation in tailored “development partnership plans”, differentiated country strategies that will be all about responding to the needs of Southeast Asian partners. The policy puts “genuine and respectful partnerships” at the heart of its approach.

And importantly the development policy does not just see building these partnerships as a job for the government. It recognises a range of actors; the policy, for example, is committed to designing a new Civil Society Partnerships Fund to support local civil society organisations. The Development Finance Review released alongside the policy discusses the role of the private sector and blended finance. It recognises that the infrastructure needs of Southeast Asia dwarf Australia’s spending capacity but that Australia can still play an important catalytic role in developing and preparing projects and helping attract private capital.

The Southeast Asian Economic Strategy also recognises that Southeast Asia has many choices of partners. It explains the importance of economic links to broader strategic goals, highlighting the impact on relations if Australia is a strong economic partner embedded in the region. Australian businesses have often been comfortable in domestic markets and most have not seized the opportunities presented by a growing Southeast Asia. Damning statistics show that a mere 250 companies drive over 90 per cent of Australian merchandise exports to Southeast Asia and Australian investors invest more in New Zealand than in the whole of Southeast Asia.

With this as the backdrop, the strategy prepared by former Macquarie Group CEO Nicholas Moore promotes a more interventionist idea of the role of the government. For example, one recommendation is to de-risk investment by providing government-supported political risk insurance. It is a tacit acknowledgement that exhorting Australian businesses to see opportunities in the region has not worked and that more is needed.

Of the 75 recommendations, the first three accepted by the government are a business exchange programme, young professional exchange programme, and “Deal Teams” made up of private and public sector experts to identify opportunities for investors and support projects through to finalisation. More of the recommendations are expected to be adopted ahead of a special summit Australia will host with the Association of Southeast Asian Nations (ASEAN) next March.

Shaping a shared future

The ASEAN Australia Special Summit will mark 50 years since Australia became ASEAN’s first dialogue partner. The two recent strategies show that the Australian government remains committed to partnering with the region, presenting itself as a partner of choice. But the sub-text of both is that the government cannot do this alone and needs to see its role as a helper which can mobilise a range of actors, including civil society, business, and finance. The Southeast Asian Economic Strategy explicitly calls for a “whole-of-nation effort with our region”.

Whether it is helping link civil society organisations or stimulating Australian business to wake up to opportunities in the region, the Australian government will need to engage many tools of statecraft to achieve its strategic goal of deep partnerships with Southeast Asia.

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 the Executive Director of the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D) and an Honorary Fellow at the Asia Institute of the University of Melbourne. Image credit: Flickr/Australian Embassy Jakarta (cropped).