Development issues in the Asia-Pacific region to watch out for in 2015

Flags of ASEAN member countries. This year will serve as a litmus test for the bloc on whether its members are ready to cooperate with each other for a more concerted collaboration with the rest of the world. Photo by: USAID

Whether the rest of Asia and the Pacific like it or not, China may prove to be a much more influential driver of development in the region in the next few years — what with the country’s growing infrastructure investments in developing Asia and Africa, talks of a China-led infrastructure bank and the establishment of a new multilateral development bank where China will also be a major player.

This is something other economic giants such as Japan, South Korea and Australia — three donor countries that have yet to sign up to the Asian Infrastructure Investment Bank — need to consider if a concerted effort toward inclusive and sustainable development in the region is to be achieved.

But China is not the only Asia-Pacific country that may steer the region’s development course. Over the past 12 months, Asia-Pacific has seen a tremendous shift in both economic growth and development progress. While Myanmar has continued to implement the necessary reforms to attract foreign aid and investment, other Southeast Asian nations and the rest of the Pacific remain highly vulnerable to the disastrous effects of natural disasters and climate change. South Asian nations, meanwhile, are still plagued with sanitation and health issues.

What will the next 12 months have in store for the Asia-Pacific region? Here are five development issues that stand out.

1. Launch of the AIIB.

One of the most talked about development in 2014 is China’s intention to set up the controversial Asian Infrastructure Investment Bank.

Announced in October 2013 by Chinese President Xi Jinping, the new development bank is often seen as a strong alternative to the Japan-backed Asian Development Bank and the U.S.-led World Bank. China aims to finish recruiting AIIB founding members by June so that the bank can start operations by the end of this year. Twenty-four countries have currently agreed to be AIIB founding members, with New Zealand signing up just this Sunday.

AIIB’s launch may prove crucial to the region’s development as it will not only inject additional — and much-needed — infrastructure funding, but it will also provide alternatives to other developing countries that borrow money or rely on aid to kick-start their development.

But China’s intention to dominate the bank’s governance and capital structure is cause for concern for traditional donors. Because the East Asian country’s aid program continues to be mired with transparency and accountability issues, donors such as South Korea remain hesitant to join AIIB.

2. ASEAN Economic Community.

2015 marks an important year for the 10 member nations of the Association of Southeast Asian Nations: It is the year when their dream of a harmonious subregional community will see concrete steps to fruition.

The next 12 months will serve as a litmus test for the ASEAN on whether they are ready to cooperate with each other for a more concerted collaboration with the rest of the world. While several achievements have been made, particularly in trade matters, gaps in development and political processes remain a challenge for the so-called latecomers to the association, which could widen and not narrow the inequality gap over time.

There is also a question of whether the target focuses too much on the economic narrative — that is, to stave off the seemingly excessive influence of China in the region — at the risk of abandoning humanitarian priorities.

ASEAN will have a huge task ahead for its member states and for the rest of the region.

3. Climate resilience.

While Asia-Pacific is blessed with the geographic diversity that has helped fuel its dramatic economic and cultural growth, its location also makes it extremely vulnerable to natural disasters and the negative effects of climate change. The onslaught of Typhoon Haiyan in 2013, the past weeks’ severe flooding in Malaysia and the yearslong climate-induced mass evacuation in the Pacific serve as tangible evidence of this.

A lack of climate resilience in many parts of the region has perpetuated a vicious cycle of poverty and destruction. Countries that remain ill-equipped to handle climate-related disasters would have to boost resilience before they move on a path toward inclusive and sustainable development.

The climate talks in Lima, Peru, in 2014 and the upcoming talks in Paris, France, this year will set the tone for global climate efforts in the short and medium-term.

4. Australia’s decreasing foreign aid budget.

Under the Labor government, Australia was poised to grow its foreign aid program to 9.4 billion Australian dollars ($7.6 billion) by 2017-18. But 15 months into his term, Prime Minister Tony Abbott cut the country’s aid budget three times, the most recent amounting to AU$ 3.7 billion over four years.

These cuts are part of Abbott’s widespread campaign to tighten spending and bring the budget back to surplus. Many countries in Southeast Asia and the Pacific — which also are among the most vulnerable to climate change and traditionally received large sums of aid money, if not the biggest, from Australia — are likely to be affected negatively by these cuts.

But Australia’s surprise announcement of a AU$200 million pledge over four years to the Green Climate Fund at last year’s climate talks in Lima gave critics of Abbott’s foreign aid policy a sliver of hope.

Will Australia continue on its path toward austerity and introduce more aid cuts in the year ahead? It will be interesting to see how the country’s foreign aid narrative develops throughout the year.

5. Sustainable development goals.

Lastly, 2015 marks the end of U.N. Millennium Development Goals and the beginning of the talks for their successor, the sustainable development goals. While the MDGs have provided a good development template for governments to include in their national policies, progress has been mixed.

Countries in the Asia-Pacific need to be aware and take active participation in the crafting of the SDGs as well as in its implementation. ASEAN countries, for one, have already expressed their intention to complement the post-2015 development agenda with their own set of goals, although some experts suggest this may be an additional burden for the 10 member states.

Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.

You have 2 free articles left
Log in or sign-up to unlock all of the free news on Devex.

About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.