Southeast Asia Aid Map: 2025 Key Findings

Key Findings

• Regional development support increased modestly in 2023 but remained below pre-Covid levels.

• US, EU, and UK aid cuts could see official development finance to the region decline by more than $2 billion in coming years.

• Western aid cuts and rising trade tensions will reduce Southeast Asia’s development choices and risk ceding ground to China.

• Aid cuts will also deepen a development divide, with poorer countries and social sector priorities falling behind.

• Southeast Asia’s infrastructure race has slowed to a crawl.

• The region’s energy transition is dangerously underfunded, with global implications.

• Progress on climate and social inclusion may come under pressure.

Overview

A wave of impending aid cuts is set to hit the region hard

Southeast Asia finds itself at an uncertain moment in its development trajectory. The region’s highly successful export-driven economic model is at risk as the Trump administration looks to dramatically reshape the global trade order, with Southeast Asia potentially facing especially punitive US tariffs. At the same time, official development finance (ODF) to the region — encompassing traditional aid, such as grants and concessional loans (ODA), as well as other official flows (OOF) from foreign governments and multilateral bodies — is set to decrease as major Western donors cut back on foreign aid.

This third edition of the Southeast Asia Aid Map shows total ODF in 2023 grew modestly (the latest full year of reporting) to reach $29 billion — up from $26.5 billion in the previous year but well below the pre-pandemic average of $33 billion. This year-on-year uptick in ODF was largely driven by increased non-concessional loans from the region’s largest development partners. China ramped up disbursements by almost 50%, with an acceleration in the implementation of key infrastructure projects such as the Jakarta–Bandung High-Speed Rail in Indonesia and the East Coast Rail Link in Malaysia. The World Bank and Asian Development Bank also increased their disbursements, providing substantial budget support to the region’s major economies in the wake of the Covid-19 pandemic.

However, aid cuts by major Western donors are expected to see total ODF inflows decline in coming years. In 2024, seven European governments (France, Germany, the Netherlands, Sweden, Finland, Austria, and Italy) and the European Union announced $17.2 billion in foreign aid (ODA) cuts to be implemented between 2025 and 2029. Even more drastic has been the Trump administration’s decision to halt around $60 billion in ODA — most of the United States’ overseas aid program — beginning in early 2025. The United Kingdom followed suit, announcing reductions in annual ODA of around $7.6 billion, as it redirected government funding towards defence.

Based on recent announcements, this report projects total ODF to Southeast Asia will fall by more than $2 billion, back to about $26.5 billion by 2026. Driving this is a 20% expected reduction in bilateral aid to the region, which is projected to decline from about $11 billion in 2023 to $9 billion in 2026. Poorer countries and social sector priorities such as health, education, and civil society support that rely on bilateral aid funding are likely to lose out the most.

Aid cuts will deepen a pre-existing development divide. Southeast Asia’s higher-income countries are already capturing the lion’s share of international ODF, while lower income nations such as Timor-Leste, Cambodia, Laos, and Myanmar that rely more heavily on grants and concessional loans are being left behind despite rising poverty in these countries in recent years. If the current trajectory continues, especially amid Western aid cuts, this divide will become more entrenched, undermining the region’s long-term stability, equity, and resilience.

Whereas geopolitical competition at least promised higher development financing to countries in the region, the impending reduction in development support risks leaving many important sustainable development priorities even more underfunded. Across the region, ODF plays a key role in funding infrastructure, climate action, humanitarian relief, civil society support, gender equality, and disability inclusion. But despite substantial economic development over decades across most of Southeast Asia, about 13% or some 86 million people in the region still live on less than $3.65 per day.

The centre of gravity in Southeast Asia’s development finance landscape looks set to drift East, notably to Beijing but also Tokyo and Seoul. This comes after several years in which Western donors had shored up their role as development partners to the region, especially as China’s ODF contracted from its earlier highs.

Combined with potentially weakening trade ties with the United States, Southeast Asian countries risk finding themselves with fewer alternatives to support their development. Even as the infrastructure race slows, China’s relative importance as a development actor in the region will rise as Western development support recedes. Beijing retains a substantial pipeline of infrastructure projects and has shown continued appetite to take on major projects. In 2023, there was a fourfold increase in Chinese infrastructure project commitments — from a low of $2.5 billion in 2022 to almost $10 billion the following year — due to the revival of the Kyaukphyu Deep Sea Port project in Myanmar.

By contrast, Western alternative infrastructure offerings have effectively failed to materialise in recent years. Similarly, Western promises to support the region’s clean energy transition have yet to translate into more projects on the ground — of global concern given coal-dependent Southeast Asia is a major source of rapidly growing carbon emissions.

Despite a negative outlook, there are some important positive trends to be found in the data: a growing share of ODF incorporates climate change, gender equality, and disability inclusion objectives. A critical question is how the Trump administration will approach and seek to influence the agendas of the multilateral development banks, which have led the way thus far on climate and social inclusion objectives in regional development.

Analysis

Regional development support increased modestly in 2023 but remained below pre-Covid levels

In 2023, total ODF to Southeast Asia grew slightly to reach $29 billion, up marginally from $26.5 billion in the previous year. However, the region’s ODF remains well below pre-pandemic levels. The uptick in ODF during 2023 was largely driven by the region’s largest development partners. China ramped up disbursements by almost 50% compared to 2022, accelerating the implementation of major infrastructure projects such as the Jakarta–Bandung High-Speed Rail in Indonesia and the East Coast Rail Link in Malaysia. The multilateral development banks (MDBs) also increased their ODF disbursements, providing substantial budget support especially to the region’s major economies to assist with managing the longer-term economic fallout of the Covid-19 pandemic. The United States and France increased their contributions as well, though on a smaller scale. Meanwhile, contributions from other donors declined as a group, led by a steep 28% drop in funding from Germany, the largest bilateral European development partner in the region.

The modest year-on-year lift in total ODF in 2023 was driven by an increase in non-concessional loans. These loans make up more than half of the region’s development finance and primarily benefit the larger regional economies that are better equipped to absorb them. In 2023, they were heavily directed towards infrastructure — from China and the MDBs — but also increasingly used to promote financial sector reform and inclusive post-pandemic recovery. Funding for banking and financial services — that is, activities that support the development, regulation, and accessibility of financial systems and institutions — surged by 84% in comparison to 2022, reaching a record $3.4 billion, largely driven by the MDBs and Germany. Over the longer term, however, non-concessional lending has been trending down since 2015, the first year covered by the Southeast Asia Aid Map, reflecting shrinking Chinese financing as Beijing reined in its Belt and Road Initiative and adopted a more targeted approach.

Grants and concessional loans (ODA) have been largely stable since 2015, outside of a spike during the pandemic. However, ODA is set to decline amid sharp cuts to foreign aid by major Western donors.

US, EU, and UK aid cuts could see official development finance to the region decline by more than $2 billion in coming years

Since the end of the Southeast Asia Aid Map reporting period in 2023, many major Western donors have chosen to step back from international development efforts. In 2024, seven European governments (France, Germany, the Netherlands, Sweden, Finland, Austria, and Italy) and the European Union announced $17.2 billion in foreign aid (ODA) cuts to be implemented between 2025 and 2029. Even more notable have been the reduction by the United States, with the Trump administration in early 2025 abruptly halting around $60 billion — the majority of its overseas aid. The United Kingdom followed, announcing reductions in annual ODA of around $7.6 billion.

These cuts will hit Southeast Asia hard. Between 2015 and 2023, Team Europe, the United States, and the United Kingdom together contributed about one-third of all ODA to Southeast Asia, with a particular focus on humanitarian and social sector priorities such as health, education, and civil society support.

Based on current budget documents, public announcements, and calculations by other researchers, we estimate that total ODF to Southeast Asia could decline by 8% or more than $2 billion, falling to $26.5 billion by 2026. This projection is driven by a 20% expected decline in bilateral aid (ODA) from $11.3 billion in 2023 to $9 billion in 2026, while assuming other financing flows remain stable. Bilateral aid per capita would fall from $16 to $13, or by about 22%.

For each donor, we assume ODA flows will remain steady at the level of already announced or expected cuts. The United States is expected to slash its foreign assistance by 83% in 2025. Annual ODA from Team Europe is expected to see a 20% decline. Germany, the largest EU donor, has already reduced its aid program by 13% in 2024, and its newly elected conservative government has indicated further cuts to public spending. France, the EU’s second-largest donor, reduced its ODA by 11% in 2024 and is on track for a possible 40% cut in 2025.

Asian donors are expected to maintain relatively stable ODA flows. Japan reduced its aid by 6% in 2024 but is expected to keep its funding steady thereafter. South Korea is projected to increase its ODA disbursements by 2% annually from 2024 onwards. Meanwhile, we expect Chinese aid to remain stable in the near future.

Western aid cuts and rising trade tensions will reduce Southeast Asia’s development choices and risk ceding ground to China

Declining Western aid risks ceding a greater role to China, though other Asian donors will also gain in importance. Chinese ODF reached its lowest recorded levels in 2022 but rose by $1.6 billion to reach $4.9 billion in 2023. This was mostly driven by disbursements in large economies such as Indonesia and Malaysia, reflecting major infrastructure projects including the Jakarta–Bandung High-Speed Rail and Malaysia’s East Coast Rail Link. Despite challenges with many projects, China retains a substantial pipeline of infrastructure works that will maintain its presence as the region’s largest infrastructure financier. In 2023, China also finalised the revival of the Kyaukphyu Deep Sea Port project under the China–Myanmar Economic Corridor framework, resulting in a fourfold rise in the dollar value of new project commitments, from a low of $2.5 billion in 2022 to almost $10 billion in 2023.

ODF from Asian donors is expected to remain broadly stable in the near term. Aid cuts by major Western donors will therefore see the centre of gravity in Southeast Asia’s development finance landscape drift towards Asian donors. This comes after several years in which Western donors had been improving their relative importance in the region, especially as China’s ODF contracted from its earlier highs. In future, development finance in Southeast Asia will be increasingly shaped by Tokyo, Seoul, and Beijing, leaving Brussels and Washington with a diminished role. China could gain in importance, especially in the Mekong subregion as well as in Indonesia.

China’s development financing carries its own important nuances. Rising nationalism, political volatility, and growing concerns over debt sustainability in many Southeast Asian countries have led to increased scrutiny of Chinese-funded projects. China is adjusting by refining its ODF and transitioning to fewer, smaller, and more targeted projects. Indonesia, Malaysia, and Thailand are navigating China’s development finance opportunistically — seeking, accepting, and rejecting projects based on their own priorities and needs. Lower-middle income economies such as the Philippines and Vietnam have taken a more restrained approach, engaging with China only when it aligns with domestic priorities. Poorer economies such as Cambodia, Laos, and Myanmar, which have limited access to alternative financing, remain heavily reliant on China and have much less room to negotiate.

In this environment, reduced ODF from Western governments will shrink the pool of development financing options for Southeast Asian countries, leaving them with reduced room to manoeuvre and less leverage to negotiate favourable terms with Beijing. This is unfolding at a time of growing external pressures: the Trump administration’s new “reciprocal tariff” regime has reignited global trade tensions, potentially hitting Southeast Asian exports hard and destabilising key industries. As both aid and trade ties with the West weaken, many countries in the region may find themselves with limited alternatives and increasingly dependent on China, despite their efforts to diversify.

This poses three key risks. First, the ability of Southeast Asian countries to recalibrate their development partnerships and assert greater agency may be undermined. Second, the lack of competition could reduce the pressure put on China to reform the Belt and Road Initiative to address existing concerns about debt sustainability and project quality. Third, as global development budgets shrink, remaining funding is more likely to be geared towards serving donor interests, not necessarily the region’s development needs. This will further challenge Southeast Asian countries’ agency to channel financing to their domestic development priorities.

Taken together, these trends risk eroding Southeast Asia’s bargaining power and ability to shape the development support that countries receive.

Aid cuts will also deepen a development divide, with poorer countries and social sector priorities falling behind

The consequences of recent aid cuts are far from uniform, but they are likely to hit the region’s poorer and more aid-dependent economies the hardest, along with sectors where Western donors have traditionally played a leading role.

In larger economies such as Indonesia, Thailand, Malaysia, the Philippines, and Vietnam — where aid is small relative to the country’s own resources, and non-concessional lending plays a major role — the effects will be less significant. Although development support for important social sector priorities could be significantly affected..

By contrast, smaller and more aid-dependent nations are far more exposed. Between 2015 and 2023, foreign aid (ODA) made up 95% of total official development finance in Timor-Leste, 84% in Myanmar, and 81% in Cambodia. In those economies, Western ODA is particularly important for human development activities. In Laos, for instance, education ODA from the United States, United Kingdom, and European Union is equivalent to 22% of the government education budget, and health ODA from those donors is equivalent to 11% of the country’s health spending.

Across the region, Western aid cuts risk harming progress in health, education, and general environmental protection. Aid from the United States, United Kingdom, and European Union plays an outsized role in these sectors, funding 68% of biodiversity and environmental development projects, 37% of education, and 18% of health. Alarmingly, these donors also account for about two-thirds of development funding for civil society. Reductions in Western aid will disproportionately impact these critical sectors.

Humanitarian support, while somewhat protected from US cuts, also faces headwinds. Team Europe, responsible for about 25% of humanitarian aid, is seeing major cutbacks from key players such as Germany and France. Asian donors provide roughly 34%, with their support remaining relatively stable for now.

Southeast Asia’s poorest countries — Cambodia, Laos, Myanmar, and Timor-Leste — have already lost out the most amid stagnating ODF to the region, despite facing high and rising poverty. Total ODF flows to these countries have almost halved since 2020, falling from $9.8 billion in 2020 to just $5.2 billion in 2023. This has occurred even as these countries have faced higher rates of extreme poverty, with World Bank estimates for the share of people living below $2.15 PPP per day having risen in Laos, Myanmar, and Timor-Leste (estimates for Cambodia are not available).

Equally troubling is that the decline in ODF to these countries mostly reflects a reduction in aid, though non-concessional loans have also declined sharply. Concessional loans to lower income countries have fallen from more than $3.7 billion in 2020 to $2.4 billion in 2023, though they remain slightly above the pre-pandemic average. More concerning is the sharp decline in grant funding, which has fallen by one-third since 2020 and is now 25% below pre-pandemic levels. Two main factors explain this trend: Myanmar’s 2021 military coup, which led most development partners to withdraw; and Laos’ mounting debt burden, which is affecting its access to even concessional finance. Only Japan, China, and the United States remain engaged in Myanmar. Meanwhile, Cambodia has seen increased support from traditional donors and steady backing from China. Aid to Timor-Leste has remained relatively stable.

By contrast, development support to the region’s stronger developing economies — Indonesia, Vietnam, and the Philippines — is steady, while poverty in these countries has continued to decline. The composition of ODF to these stronger economies has also remained stable in terms of grants, concessional loans, and non-concessional loans.

The result is a deepening development divide: Southeast Asia’s higher income countries are capturing the lion’s share of international ODF, while lower income nations are being left behind despite pressing needs. If the current trajectory continues, especially amid Western aid cuts, this divide will become more entrenched, undermining the region’s long-term stability, equity, and resilience.

Southeast Asia’s infrastructure race has slowed to a crawl

Despite much grand rhetoric, infrastructure competition in Southeast Asia has largely failed to heat up — settling more into a simmer than a boil. Tightening infrastructure competition has reflected a slowdown in Chinese spending rather than a rise in alternative offerings. Beijing is recalibrating its approach, shifting towards fewer, smaller, and more targeted infrastructure projects. In 2023, China financed just 17 projects worth $3.5 billion, a 17% increase from 2022 but still far below the 67 projects and $5.2 billion recorded in 2015. Meanwhile, key platforms intended as the West’s answer to the Belt and Road Initiative, such as the Global Gateway and the Just Energy Transition Partnerships, have had little impact to date.

Infrastructure financing from traditional partners has remained stagnant, despite years of announcements from Western groupings such as the G7, Quad, and European Union. Total infrastructure financing from traditional sources (Europe, the United States, Japan, South Korea, and the MDBs) was just $3.8 billion in 2023, 35% less than the pre-pandemic average of $5.9 billion. Nor has there been an acceleration in pipeline project financing, with new commitments from traditional donors ticking up slightly to $9.2 billion in 2023 but still much below the pre-pandemic average of $12 billion. Moreover, the vast majority of infrastructure financing from traditional partners has continued to come from the MDBs, Japan, and South Korea. European donors have played a modest role, providing around $600 million in infrastructure financing in 2023. The roles of the United States and United Kingdom remain miniscule, at just $59 million and $6 million respectively.

Aid cuts will further weaken the ability of major Western donors to compete with China in the infrastructure space, especially in more ODA-reliant economies such as Cambodia, Laos, Myanmar, and Timor-Leste. This trend is set to continue unless development finance institutions such as the US International Development Finance Corporation, British International Investment, and other European equivalents can increase project transactions in these lower income contexts — which has thus far proven difficult — or scale up their concessional financing. Meanwhile, China retains an infrastructure pipeline of some $70 billion in planned spending, suggesting Beijing is well positioned to maintain its role as the region’s leading infrastructure financier. Overall, however, meeting the huge infrastructure financing gap facing the region — estimated at around $2.8 trillion — will likely become even harder.

The region’s energy transition is dangerously underfunded, with global implications

Donors are falling particularly short when it comes to supporting Southeast Asia’s clean energy transition, with ODF for clean energy in decline over recent years. This is of global significance. Energy production in Southeast Asia is heavily dependent on coal, and its fleet of coal-fired power plants is relatively young. The International Energy Agency (IEA) projects the region will account for about 25% of future global energy demand growth to 2035.

Without faster decarbonisation, this will be associated with a similarly large increase in carbon emissions and see Southeast Asia’s emissions become more than 60% higher than those projected for the European Union, and three-quarters as high as those for the United States. To avert this trajectory, annual clean energy investment in Southeast Asia needs to quadruple from current levels to $130 billion by 2030.

However, ODF support for clean energy has declined markedly since 2018 largely due to a slowdown in Chinese lending to debt-distressed Laos for large hydropower dam projects. Although two plants remain under construction and continue to receive disbursements, overall funding is tapering off. The efficacy of much of this investment is also dubious, with Chinese financing having created billions of dollars in overcapacity in Laos’ domestic energy market — as detailed in the Lowy Institute’s 2025 report, Trapped in Debt: China’s Role in Laos’ Economic Crisis.

Meanwhile, traditional development partners have made big promises for additional clean energy financing. Most notable are the Just Energy Transition Partnerships deals signed in 2022 between Indonesia and Vietnam with G7 countries and other partners, worth $20 billion and $15 billion respectively. Yet 2023 saw the lowest level yet of clean energy ODF in Southeast Asia at less than $710 million — down from $1.7 billion in 2018, and equivalent to just 6% of the $12 billion the IEA thinks is needed annually from development partners by the early 2030s.

Worse, the IEA figure is for concessional finance, and on that measure, the international community provided just 2% of what is required, with the rest being provided as non-concessional loans.

Traditional partners — led primarily by the MDBs and Japan — account for 42% of total clean energy ODF since 2015, averaging $550 million per year. In 2023, there was a modest uptick due to increased World Bank support for clean energy projects in the Philippines and Vietnam. Annual commitments from traditional donors have remained relatively stable, averaging around $740 million, potentially indicating a turning point or mild recovery in the years ahead.

In contrast, commitments from non-traditional donors have been mostly uneven. Driven largely by Chinese hydro projects in Laos, they have dropped sharply since the last major commitment in 2018, averaging just $100 million per year since then.

Overall development financing for clean energy has been declining since 2018 with little sign of a new pipeline of projects being built up. Instead, recent Western aid cuts could worsen the trend given Team Europe and the United States currently account for about 20% of ODF for clean energy.

Lacklustre support for the region’s clean energy transition has been punctuated by record high assistance for extreme weather events. In 2023, the number of people affected by extreme weather events and natural hazards was more than double the 2015–22 average, driven by Typhoon Doksuri/Egay in the Philippines, Cyclone Mocha in Myanmar, and severe droughts in Indonesia. Development partners, especially the World Bank, the United States, and the UN’s Central Emergency Response Fund, reacted with a surge in emergency relief.

Progress on climate and social inclusion may come under pressure

Southeast Asia’s traditional development partners are increasingly incorporating greater climate change mitigation and adaptation, gender equality, and disability inclusion objectives into their projects. However, shifting priorities under the Trump administration in the United States threaten to derail this progress.

Climate financing

Despite a donor focus on climate change objectives, clean energy typically only accounts for around 15% of this climate funding. The remainder is focused on a diverse range of climate change mitigation and adaptation initiatives, including forestry management, financial sector projects to increase access to green finance, governance programs to improve disaster resilience, and the building of climate-resilient infrastructure.

Over the past decade, ODF incorporating climate objectives has steadily increased, both in absolute terms and as a share of total ODF. Between 2015 and 2023, climate-related funding grew from $9 billion to $11.5 billion, rising by an average of 6% per year. In 2023, that represented 40% of total ODF to the region. That year, there was a small dip in total climate ODF. This was primarily driven by a reduction in Japanese funding, while that from most other major partners saw an increase.

Most of the growth in climate ODF has come from projects where climate objectives are classified as a “significant” rather than “principal” objective, meaning climate considerations have been integrated into broader development projects instead of being the primary focus of the investment. For example, climate action is increasingly identified as a “significant” goal in the policy triggers attached to multi-billion-dollar budget support loans. This has allowed ODF targeting climate objectives to grow even as projects with a “principal” climate objective, such as renewable energy generation, have declined.

In 2023, funding for projects with climate as the “principal” objective declined in both absolute and proportional terms, representing just 13% of total climate finance — the second-lowest share in the past decade after 2020, when funding focus was switched towards Covid-19 related support.

The Asian Development Bank (ADB) estimates Southeast Asia requires $210 billion annually for climate-resilient and low carbon infrastructure investment. Based on historical patterns, multilateral and bilateral development finance typically account for around 65% of climate finance, implying an expected ODF contribution of $136.5 billion per year — unless private and domestic public investment were to grow dramatically. However, ODF investment in infrastructure projects with climate goals remains low and fell from $4.5 billion in 2022 to under $4 billion in 2023 — less than 3% of that needed, based on the ADB estimate. While Japan and the ADB have stepped up support for climate-sensitive rail, subway, and urban commuter projects, serious funding gaps remain in water, energy, and communications infrastructure.

Social inclusion financing

This year, for the first time, the Southeast Asia Aid Map online database includes a unique tag and filter to identify projects that integrate disability inclusion as an objective. The methodology is based on the OECD Development Assistance Committee’s disability inclusion marker, and includes estimates for the 77 development partners (out of 106) in the Aid Map database who either do not use the marker or do not report to the Organisation for Economic Co-operation and Development (OECD). On a similar basis, the Southeast Asia Aid Map already includes a tag and filter for projects incorporating gender equality objectives.

The MDBs have led the charge for the integration of disability inclusion and gender equality objectives into their activities. However, over-reliance on the MDBs for this kind of support is now a vulnerability.

The proportion of total ODF to Southeast Asia that integrates disability inclusion targets has risen steadily from 8% ($818 million) in 2015 to 17% ($4.5 billion) in 2023, with more than 70% of that support coming from the MDBs, especially the ADB (54%). The story is the same for gender equality funding. The proportion of total ODF to the region incorporating gender equality objectives hit a record high in 2023 at 45%, or $13 billion, with the MDBs (especially the ADB) the source of more than two-thirds of this funding, followed by major bilateral partners Japan, Germany, and the United States.

The intersection of policy markers across climate, gender equality, and disability inclusion represents a new frontier in ODF provision and measurement. Around 14% of total ODF in 2023 integrated all three policy goals to some extent.

There are storm clouds on the horizon, however. The MDBs are currently the largest source of ODF support for climate, gender equality, and disability inclusion. The United States is the largest and second-largest shareholder at the World Bank and ADB respectively. Pushback against climate and inclusion objectives from the Trump administration and its scepticism towards multilateralism could have major consequences for ODF support for climate action and social inclusion in the region.