Aid to Southeast Asia hits a ten-year low, and banks now give more than governments

The money rich countries and global banks send to Southeast Asia for development is shrinking. Writing for the Lowy Institute, Rahul Nath and Roland Rajah use the think tank's 2026 Southeast Asia Aid Map to show that this funding fell 9.8 per cent in 2024, from 28.9 billion dollars to 26.1 billion. That is the lowest level in a decade, and their team estimates it fell by at least another 800 million dollars in 2025.

The retreat is led by the region's two biggest partners. Lowy's figures show Japan made the single largest cut in 2024, down 1.5 billion dollars, and China cut 1.1 billion. The United States also pulled back, and more German spending covered part of that. Across all the governments that give money directly to other governments, the fall was 1.1 billion dollars, and the authors expect at least 1.8 billion more to disappear in 2025 as multi-year budget cuts take effect.

What remains comes increasingly from development banks: the Asian Development Bank with 5 billion dollars, the World Bank with 4.7 billion, and the Asian Infrastructure Investment Bank, which raised its lending to 2.75 billion. Together the banks provided 12.7 billion, and for the first time they gave more than all national donors combined. It is not the same kind of money. Banks mostly lend, and most of that lending is not concessional, meaning it comes without the soft terms of aid, even if it is still cheaper than borrowing on the open market. Grants pay for the things a loan does not suit, like clinics, teacher training, and disaster drills.

Nath and Rajah write about the region as a whole and do not break Indonesia out. But Japan and China are the two names behind much of Indonesia's recent big construction, from the Whoosh railway to Patimban port, and both are now spending less.

Why it matters

If you work in public health or disaster response, the outside money behind your program is more likely to arrive as a loan than a gift, and loans have to be repaid from a budget that already struggles to collect enough tax. For everyone else, the test is what gets built and what gets dropped: watch whether the next big partnership Jakarta announces is grant money or debt, and who signs it.